Crisis as a catalyst for success is a tale as old as time. Amidst the chaos and uncertainty of the financial crisis of 2008, a handful of household names in the world of business were born. One man’s catastrophe as another man’s opportunity.
Entrepreneurial spirit has been a hallmark of previous recessions, with billion-dollar buds such as Disney, Hewlett-Packard, Microsoft, and Electronic Arts sprouting through the cracked concrete of recession. The class of 2008 ushered in a new digital age, underpinned by a shift towards the gig economy.
On paper, the idea of starting up a new business during a recession seems ill-advised. Pouring a financial outlay into a venture when the future’s been turned on its head is a significant gamble. Business isn’t made on paper, however, and many start-ups pocketed a pair of aces during this time. Between a shrunken pool of competitors and unforeseen service requirements thrown up in the wreckage of recession, the shaky economy presented arable ground to certain industries.
Technological advances of the late noughties also came into play. Significantly, the first iPhone was released in mid-2007 as well as the advent of the App Store in 2008. This triggered an industrial snowball effect which changed day-to-day life and business practices in the long term. And it just so happened to kick into gear during the financial crisis.
As will became apparent in our run down of 10 business made in the last recession, many enterprises rode the crest of the mobile technology and app development wave. Built in the ashes of recession, many of these companies are now kept constantly within reach, carried in our pockets. None more so than the first entrant on our list.
1) WhatsApp
An essential app in our era of constant communication, WhatsApp’s story embodies the tenacity of those battling through recession. Founders Brian Acton and Jan Koum, former Yahoo employees, began their journey after being rejected for jobs at Facebook. Spoiler alert – that wasn’t to be the last Facebook heard from them.
The idea first twinkled in the eye of the founders upon assessing the growth potential of the app industry. While their original bug-laden app flattered to deceive, their continued developmental efforts resulted in the ubiquitous messenger service that we know today. Pretenders to the throne have come and gone, but WhatsApp has remained strong since its 2009 inception.
Today, WhatsApp has a worldwide user base of over 2 billion users. The team behind its rampant success has changed drastically since its phoenix-like beginnings. In 2014, the founders had a far more successful meeting with the company who once turned them away, as Facebook purchased the app for approximately 19.3 billion dollars. Talk about getting the last laugh.
2) Uber
Uber is the gig economy manifested. Now the largest taxi firm in the world, the ride-hailing company provide no vehicles of their own and don’t (technically) employ full time drivers. Uber are a multi-million dollar middle man who have enjoyed one of the most rapid rises to the top.
Founded in 2009, an overpriced cab ride kickstarted the story of Uber. Frustrated after shelling out $800 on a private driver, founder Garrett Camp sought to find a cheaper form of transport. As well as lower prices, the San Francisco-based company became immensely popular due to simplicity. A nearby car could be ordered and sent to your GPS-identified location in the click of a button. No awkward phone calls, no hour-long waits, no fuss. Uber was made for the world of instant gratification.
Had the app been launched outside of recession, it’s interesting to ponder whether it would’ve been such an instant hit. A crashing economy equalled loss of employment for many, and Uber offered an easy money-maker. Ubers demand for drivers was likely met by a wave of recession-hit workers looking to make a buck. All they needed was a car and a license and they were in. The simple ideas are often the best.
3) Groupon
Who doesn’t love a bargain? Discount codes and money-saving coupons are all the more helpful during times of financial hardship. Savvy-shopper discounts were dragged into the tech age at the height of the recession, as 3 friends from Chicago set up deal-a-day enterprise Groupon. Beginning with a 2 for 1 pizza offer at their local hotel, Groupon have since offered deals for countless companies all over the world, connecting brands and customers at a time of fiscal unease.
Much like Uber, Groupon are a product of their time. As consumers and businesses alike scrimped for survival during the financial crisis, the money-saving service catered to both. Consumers who subscribed to Groupon received savings on everyday items, little leg-ups to ease the financial pressure. For businesses, Groupon solved the issue of getting people through the doors during a recession. The most successful recession-built businesses are those who provide services which make a tangible difference in people’s lives.
4) Slack
The saviour of Covid-stricken remote offices the world over, it’s somewhat fitting that Slack was established during a similar time of fiscal uncertainty. Created by the co-founder of Flickr in 2009, the work messenger app cultivated a billion-dollar valuation within eight months. The fastest growing SaaS start-up in history, Slack’s success was something of a happy accident.
The team behind Slack’s development never intended to create a workplace tool. In fact, they never set out to create a commercial product at all. Slack started life as an internal database for video game developers Tiny Speck. The potential to enrich workplace communication was only realised down the line.
The video game development team behind Slack are the secret weapon behind its success. Far from dreary interfaces, they set out to make workplace communication fun. Built in their wheelhouse of making repetitive tasks engaging, they trampled the competition. At a time where remote working and global teams are more prevalent than ever, Slack has never been more relevant.
5) AirBnB
A nomad’s best friend, AirBnb is a primary example of grabbing opportunity in the wake of the financial crisis. The journey began just prior to the collapse in a San Francisco living room. Entrepreneurial roommates floated the idea of renting out an air mattress for the night. As the great recession hit later on that year, an opportunity to expand a throwaway idea into an industry-altering business came knocking.
From one air mattress grew a global enterprise which has put roofs over the heads of travellers in all four corners. The short-term living market is now dominated by AirBnB, and their $35 billion valuation echoes that. Choosing the right time to launch a company is a tightrope walk in itself. With the economy on its knees, it’s a walk that AirBnB mastered.
6) Square
Square pegs in round holes are often the launch pad for companies. For Jim McKlevey and Twitter CEO Jack Dorsey, the inability for some companies to accept credit cards was the ultimate square peg. Inspired by the advent of the iPhone, Square’s maiden voyage into the mobile payment industry resulted in the Square Reader. This hardware was designed to fit into an iPhone’s audio jack and take credit card payments.
Square grew into a central aggregator of mobile payments and merchant services for worldwide businesses. With financial tensions rising at the time of its launch, smoothing over the mobile payment process was particularly appealing to small businesses. Today, the Square app has been downloaded over 33.5 million times. The ever-popular financial service now helps to locate small loans, track sales, manage inventory and payments, and will likely be an ally of business as we enter the next recession.
7) Venmo
Another financial giant, Venmo, had its genesis at the tail end of the recession. While transferring money via your phone is almost taken for granted now, Venmo represents the building blocks of digital money transfer as we know it. In fact, the term ‘Venmo’ had a short-lived spell as a popular verb to describe an electronic fund transfer. Back in 2009, however, it was a dream cooked up by founders Andrew Kortina and Iqram Magdon-Ismail.
Fed up of traditional software while helping a friend set up a physical store, they set about changing the game. Their idea revolved around purchasing MP3s via text message. From these humble beginnings, Venmo became a pioneer of peer-to-peer payments. Now one of the foremost apps for digital money transferring, Venmo was the subject of an $800 million sale 4 years after it sprung into life. In the wake of a global recession, fresh-faced financial businesses with bright ideas, such as Venmo, have the opportunity to capture the minds of those who have lost faith in traditional methods.
8) Okta
Tech start-ups were among the winning sectors during the last recession. In fact, a flick through the history books sees several leading names in tech emerge post-economic downturn. The identity and software management company Okta, founded by Todd McKinnon and Frederic Kerrest, followed suit in 2009. For McKinnon, the financial crisis presented the perfect opportunity to set up a brand-new tech company. One hail mary slide show presentation to his wife titled “Why I’m Not Crazy” later, the wheels were put in motion.
It takes a bold vision to leave a secure job and jump into your own venture in the midst of a recession. Ultimately, a feeling of stagnation coupled with a growing sense of a shift in the software industry lit the technological fire which became Okta. In 2017, the recession-born dream went public with an initial valuation of $1.5 billion. Okta’s model is certainly not for the faint hearted, which makes its success story even more impressive.
9) Pinterest
We’ve all lost a few hours procrastinating through pretty pin-boards from time to time. Pinterest is a much more powerful tool than it might first appear. In fact, within 2 years of its inception, it became the third largest US social network. Not bad for a venture many investors shunned in favour of ‘safer bets’ during the recession.
Pinterest’s success is a lesson in choosing your niche and running with it. Ben Silbermen, an avid collector, spotted a gap in the market for those who shared his interests. Pinterest filled this void, allowing users to show off a snapshot of their personalities and interests through collections. Growing from 200 users in its first 4 months to an estimated base of 320 million today, Pinterest’s story is an example of the entrepreneurial spirit which fans the flames of most businesses built during crisis.
10) Asana
Another near-indispensable tool for juggling teams and projects during the coronavirus pandemic, Asana was founded in the heart of the last recession, during 2008. In many ways, the project management tool is the offspring of the juggernaut that is Facebook. In fact, its creators Dustin Moskovitz and Justin Rosenstein helped to build the social media giant (the latter coming up with the ‘like’ button – fun fact). It was during this process where the need for a tool which fosters effective collaboration among teams of all sizes became apparent.
The simple principle of Asana was to eliminate the nagging workplace struggles that can undermine a team’s output. They also had a drive to kill off workplace e-mails. From their efforts, they created an innovative software which acts as an effective project manager, managing tasks and workloads in one hub. Doesn’t that sound like a dream come true for a busy company already under the cosh during recession? With a valuation of $1.8 billion and a worldwide customer base of over 50,000 organisations, Asana’s functions are particularly in vogue, with an increased shift towards remote teams.
Predicting The Big Businesses Of The Next Recession
Covid-19’s impact on the economy has made the prospect of another great recession very real. A flow-on effect is inevitable after a long period of inactivity in the economy. When the dust settles, there’ll likely be another crop of start-ups ready to snatch up the opportunity. The gig economy is here to stay as technology has sparked global opportunities. Recession can lead to reinvention.
With that in mind, which industries are likely to hit the ground running following a coronavirus-fuelled financial crash? While the winners of 2008 offer a model, their world is practically unrecognisable. Much like their predecessors, however, the defining sectors in the post-coronavirus landscape will be responses to the conditions of the ‘new normal’ they live within. Who will be the WhatsApp and Uber of the next recession? To finish off, here’s a list of 10 potentially fruitful sectors which could shine brightly during a post-Covid recession.
- Cybersecurity
- Logistics And Delivery
- Online Education/Edtech
- Collaboration Technology
- Remote Medical Services
- Home Improvements
- Fitness and Health
- Digital Collaboration Tools
- E-Commerce Retailers
- Augmented Reality
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