June 20, 2012 12:00 PM

Just two years ago, Liam, Harry, Louis, Niall and Zayn had never even met each other. When the guys auditioned in the summer of 2010 for the seventh season of The X Factor-the U.K.’s biggest music-talent competition show-each one tried out as a solo artist. Then, despite getting mostly positive reviews for their individual talent as singers, none of them was put through by the judges. The rejection, said Harry, was “the worst feeling of my life.”

What he and the other lads didn’t realize was that their initial failures would lead to unimaginable success: Shortly after being cut from the competition, X Factor judge and mastermind Simon Cowell revealed that he had not given up on them. “I brought back these five guys and I said, ‘We’re going to give you another shot, this time as a group,'” Cowell said. “When I saw them standing there for the first time as a group, something clicked. You could just sense that they had something.”

Still, before they could fully gel, the quintet had to get to know each other. “When we got put together, we spent a week [at my house] not really working or practicing. We just kind of hung out for a bit,” Harry tells PEOPLE. “We did that to make sure we became friends first, because now, we don’t really have to make an effort to get along-we just do.” It was during that week that they came up with their band name. Harry suggested One Direction “because we were all going in the same direction as a group,” Zayn explained in their book Forever Young. (One name they rejected: Status Single-Liam’s dad’s idea).

After doing their initial boy bonding, they started working on their boy banding skills and wowed the X Factor judges-not to mention the show’s millions of viewers-week after week, making it all the way to the finals. Their performances of songs including Coldplay’s “Viva La Vida,” Kelly Clarkson‘s “My Life Would Suck Without You” and Elton John’s “Your Song” earned them high praise. “You’ve got all the ingredients for the perfect pop band,” judge Cheryl Cole, a U.K. pop star, told them after their first live performance. “I reckon the girls at home will be going crazy for you.” 1D’s members were having the time of their lives off-stage too-sharing a room and sleeping in bunk beds, unwinding after rehearsals with games of Ping-Pong, getting the chance to meet several of their music idols and hitting up glitzy movie premieres.

Then, as the season came to a close, the boys learned once again that success doesn’t always come the way you think it will. Although the group didn’t end up winning The X Factor, moments after they came in third, Cowell called them to his dressing room and made their dreams come true: He offered them a record deal on his own label. Looking back, Harry could hardly believe what they’d accomplished in their six-month X Factor journey. “It’s been a lot of laughs and a lot of haircuts!” he said. “We’ve come so far since then.”

“Our relationship isn’t contrived. Nothing about the band really is. Other than the fact that we were put together on The X Factor, we are as real as possible” -Louis

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