The Big Mac and Ralph Lauren's Purple Label were both created by dreamers who could not wait for college graduation. The following will give investors a look at three companies headed by college dropouts that have managed to outperform the S&P 500 since the beginning of the year.

College? I'm Hatin' It
Ray Kroc, often thought of as the founder of the $16 billion McDonald's (NYSE:MCD) empire, actually bought the rights for the franchise and the name from the McDonald brothers. Ray was a milkshake salesman at the time that had previously worked in real estate and as a jazz musician. Today with over 31,000 restaurants in 118 countries McDonald's is committed to the same basic core values of quick and clean service. During the first six months of 2008, McDonald's completed a $2.8 billion buyback of 50.4 million shares and it paid out $848 million in dividends signaling that its financial house is in order. Since the beginning of the year McDonald's is nearly flat, returning -1.64% while the SPDRS S&P 500 Index ETF is down -27.66%. (For related reading, see Is Buying A Franchise Wise?)

Purple Labels Clash with Sheepskin
Ralph Lauren, known for his $4.8 billion Polo Ralph Lauren (NYSE:RL) company, displayed a passion for fashion from his school age years when he would work after school to earn money to buy suits. He moved onto selling neckties of his own design to friends. After leaving college early, serving in the army and working as a Brooks Brothers salesman, Ralph Lauren received backing to start his own necktie store under the "Polo" label. The company's popularity continues to grow. It was chosen by the U.S. Olympic Committee as an official outfitter for the 2008 U.S. Olympic and Paralympic Teams.

The exposure is good for business since Ralph Lauren's fastest growing markets outside of the U.S. are in Europe and Japan. International sales of Ralph Lauren apparel have risen from 19% of sales in 2006 to 25% of sales for fiscal year 2008. Ralph Lauren is down 8.61% since the beginning of the year.

Dropout Data King
Larry Ellison, who once worked on a database for the CIA that he named "Oracle" during the '70s, is the founder of the $22.4 billion Oracle Corporation (Nasdaq:ORCL). Ellison did not finish college, but he was exposed to computer design while attending. Later, a paper on relational database systems instigated the creation of a company that would become the information juggernaut we know today as Oracle. From fiscal 2007 to 2008 Oracle's revenue increased 25% driven by new software license revenue, software license updates and product support revenue. At -18.63% since the beginning of the year, Oracle stock is down the most among our trio of dropout startups.

Final Thoughts
Not all success stories begin with a college diploma. Investors may be shocked to learn that, along with the successful dreamers we've highlighted above, other successful dropouts include: Bill Gates, Steve Jobs, Kirk Kerkorian (dropped out in grade 8) and Ted Turner. Investor should note that entrepreneurs who can identify products and services that people or businesses need are leading companies that can outperform the broad market even during tough economic times.

Speaking of entrepreneurs and business, check out Small Business: It's All About Relationships.

Related Articles
  1. Entrepreneurship

    Top 5 Startups that Emerged in Toronto

    Learn how Toronto has built a fertile climate for startups, and identify some of the top companies to emerge from the city's hot startup market.
  2. Entrepreneurship

    Top 5 Startups that Emerged in London

    Learn why London's startup scene is so prolific, and identify some of the hottest companies emerging from this scene as of mid-2015.
  3. Active Trading Fundamentals

    The 4 Biggest Private Equity Firms in London

    Discover information about the largest private equity firms that are headquartered in London, ranked by total assets under management.
  4. Retirement

    Retirement Planning for Entrepreneurs and Small Businesses

    If your business has receiveables, here's a smart way to leverage them to build up your retirement fund fast.
  5. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  6. Investing

    The 8 Best Business and Finance T.V. Shows

    With so many talking heads to choose from, which is the right show for your business and money matter needs? We review the best shows on now.
  7. Active Trading Fundamentals

    The Biggest Private Equity Firms in San Francisco

    Learn about some of the larger private equity firms with a presence in San Francisco, including KKR, the Blackstone Group and Warburg Pincus.
  8. Active Trading Fundamentals

    The Companies of Peter Theil's Founders Fund

    Learn about the major public companies that Peter Thiel has invested in and companies that are on the verge of going public at multibillion-dollar valuations.
  9. Active Trading Fundamentals

    The Biggest Private Equity Firms in Los Angeles

    Learn why Los Angeles is a thriving market for private equity, and identify the five largest private equity firms operating in the city.
  10. Entrepreneurship

    What Does Bootstrap Mean?

    The term bootstrap refers to launching and building a business with little capital and no funding from outside sources.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  3. Freelancer

    A freelancer is an individual who earns money on a per-job or ...
  4. Donation-based Crowd Funding

    Donation-based crowdfunding is a way to source money for a project ...
  5. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  6. Sucker Yield

    When an investor has essentially risked all of his capital for ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!