The coronavirus (COVID-19) pandemic has dealt a severe blow to the U.S. economy.
Markets are in record declines. More than 30 million Americans have filed for unemployment and several businesses have already gone under.
It's no doubt: we may be headed for a recession.
And for many entrepreneurs, market instability is a clear sign that this is not the right time to launch their dream business.
Yet some of America’s most successful companies were started during recessions, and here are 10 examples.
1. Hewlett-Packard (1937-1938 Recession)
Just as Americans were recovering from the Great Depression, rumors of another World War started erupting. Gross domestic product dropped by 10% and unemployment rose to 20%, which paved the way for the third-worst recession in the 20th century.
It was during this recession that William Hewlett and David Packard decided to launch an electronics company by the name Hewlett Packard, according to the Silicon Valley Historical Association.
Officially opened in 1939, HP Inc HPQ has grown to become one of the largest computer manufacturers in the world with a value of $21 billion.
2. Hyatt Hotels (1957-1958 Recession)
The Hyatt Hotels Corporation H chain was born during the eight-month 1957-58 recession.
Jay Pritzker made the risky decision to buy the Hyatt House motel two months into the recession, according to the Hyatt website.
This was despite an expected reduction in travel and business activities due to the harsh economic times.
Together with his brother, Pritzker was able to grow Hyatt hotels from one motel located near the Los Angeles Airport to three hotels before 1960. Today, the Hyatt corporation runs over 900 hotels countrywide with a value of $5.6 billion.
3. Microsoft (1973-1975 Recession)
The 1973 oil embargo coupled with the stock market crash of 1973 led to a 16-month recession. GDP fell by 3.4%, and unemployment rates rose to 9% — the worst in 20 years.
This economic downturn did not discourage Bill Gates and Paul Allen from starting their new computer software business.
Launched on April 4, 1975, just days after the recession was considered officially over, Gates and Allen grew Microsoft Corporation MSFT and, within a decade, they were able to launch an IPO that made both of them billionaires.
4. Electronic Arts (1981-1982 Recession)
The 1979 energy crisis, which occurred due to decreased oil output by a new Iranian regime, resulted in the 1981-1982 recession. The unemployment rate increased to 10.8% and the GDP dropped by 3%.
The high unemployment rate didn’t stop Trip Hawkins from leaving a secure job at Apple to launch a video game software company by the name of Electronic Arts Inc. EA.
EA has grown to become the leading provider of computer and home console games, with close to 10,000 full-time employees and a market value of around $33 billion.
5. Mailchimp (2001 & 2009 Recession)
Mailchimp has experienced two growth spurts in two different recessions.
Launched during the dot-com recession in 2001, Mailchimp was initially launched as an alternative to the more expensive email software options available in early 2000.
Before 2009, Mailchimp mainly focused on large corporate clients with yearly retainers.
During the Great Recession, Mailchimp was forced to adjust its business model to survive. It shifted to a freemium model and saw its user base grow by close to 500% in one year.
6. Uber (2007-2009 Recession)
The 2007-2008 Great Recession saw the creation of several successful startups.
Uber Technologies Inc UBER is one of them. The ride-hailing app was launched in March 2009 after founders Travis Kalanick and Garrett Camp failed to find a taxi in Paris, France.
Since then, Uber has expanded into an international company spanning across different platforms, including a bike and scooter share service, food delivery and temporary work staffing.
7. Airbnb (2007-2009 Recession)
Several months before the start of the Great Recession, roommates Brian Chesky and Joe Gebbia started renting out an air mattress in their living room in San Francisco.
When the repression hit, opportunities opened up for the duo. The economic downturn resulted in many people not being able to afford hotel accommodation. With Airbnb, people could rent out short-term living quarters at affordable prices.
It also provided a way for homeowners to earn extra income.
In 2009, Airbnb received funding from top-level VCs, which resulted in tremendous growth.
8. Slack (2007-2009 Recession)
Work messaging app Slack Technologies Inc WORK first launched in 2009.
Over the years, Slack has been growing steadily, with many organizations using it to keep track and communicate with global teams.
With workers facing a coronavirus pandemic, Slack is one of the companies that has experienced an increase in demand as employees work from home.
9. Warby Parker (2007-2009 Recession)
The online prescription glasses retailer Warby Parker had its genesis in the middle of the Great Recession.
The Warby Parker founders envisioned a business that would solve the problem of ordering a pair of affordable and fashionable prescription glasses online.
Thanks to the harsh economic times, customers came flocking in high numbers, which led to Warby Parker becoming a thriving business.
The company is now valued at $1.75 billion.
10. Venmo (2007-2009 Recession)
Digital payment app Venmo got its first breath of life in 2009 as the Great Recession was nearing its end.
College friends Andrew Kortina and Iqram Magdon-Ismail launched the app to provide a cheaper way of sending cash digitally.
In 2012, online payment company Braintree paid $26 million to acquire Venmo, and Braintree was later acquired by Paypal Holdings Inc PYPL.
Recessions are an uncomfortable time for entrepreneurs and many startups. Yet they also provide opportunities for entrepreneurs with ideas on services and goods that can help people adapt to a changing world.
The COVID-19 pandemic will not be any different: it's another opportunity to turn hardship into opportunities.
Photo courtesy of Venmo.
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