The global recession is a turbulence time for all businesses. We have used to be afraid of scenarios that may play out during and after the financial downturn. Different sources define this period as "a significant decline in economic activity, lasting more than a few months, normally visible in the real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales."
But, what if I’d say that the most iconic unicorns have been started during a recession?
Apple, Mailchimp, Slack, WhatsApp, Microsoft, Pinterest, General Motors, CNN, IBM, Uber, Groupon, Instagram, and more. The history of big brands founded during a recession may be enriched with new startups today. It's the right time for entrepreneurs to honestly ask themselves whether COVID-19 is a startup disaster or a boost to innovate?
“Many of today’s unicorns have been founded or built during recessions or downturns – resource scarcity can be a source of creativity and pivoting” – Inka Mero, Founder and Managing Partner at Voima Ventures.
In the early 1970-s, the USA experienced a difficult and long-lasting economic depression. At that time, the GDP got its worst position for the next few decades. However, it sounded like a perfect time to start a company for two college dropouts who created the concept of free, easy, and enjoyable home and office computing.
Photo from The Associated Press
Bill Gates and Paul Allen have shown the world that even the darkest times in the global economy aren't the limitation for emerging technologies that enter the market and disrupt industries with its brilliant innovations. Their development promised to eliminate the highest boundaries for many businesses worldwide, and it helped Microsoft to grow into one of the most successful and authoritative companies in the world.
Apple was founded much earlier during another recession in 1975. However, the Apple we know today has literally got the second birth during the dot-com bubble in 2001. That financial crash infected many businesses with fear and paralyzed their processes. However, there were also those who took a different approach and started working harder, investing more, and creating new products.
Despite all the challenges arisen during the tech bubble, Steve Jobs started building Apple's next iconic music player - iPod. Its name was inspired by the movie "2001: A Space Odyssey." After the only one year of development, iPod was launched in October 2001 and become the technology hit for millions of people around the world. It also paved the way for iPad and iPhone, helping to re-establish Apple as the most successful consumer electronics brand of that time and today.
"We believe in investing during downturns." - Tim Cook, Apple's former COO and current CEO.
Mailchimp is also familiar with how it feels to survive and drastically innovate during financial downturns. This world-famous company has also been transformed during the global economic crisis.
Mailchimp was initially focused on serving solely big enterprise clients with yearly retainers. However, the Great Recession during 2008-2009 dictated new rules, and the company was forced to rethink its business model entirely. Mailchimp's great decision was to add a freemium business in 2009. That change brought incredible results - with only one year, Mailchimp's user base grew up from 85,000 to 450,000.
Groupon was founded during the Great Recession in 2008. The International Monetary Fund (IMF) concluded that it was "the most severe economic and financial meltdown since the Great Depression."
At that time, Andrew Mason created a website that promoted other businesses by offering deals on their services and products to customers. It was Groupon.
Photo by Stephen Yang via Getty Images
The hard economic times weren't the obstacle for Andrew Mason to found a company that was able to deliver the highest-quality and great-performing marketing for businesses worldwide and help them bring the communication with their customers to the next level. With its ultra-creative approaches to marketing, Groupon showed companies a new way to introduce their products to customers.
Slack has become one of the most famous work messaging apps, especially today, during the Coronavirus crisis, when everybody is working from home. But, did you know that it was founded during the economic crisis too?
The Great Recession (2009) was a great time for Stewart Butterfield to build a new business communication platform. Slack has literally become a magic wand for many businesses today.
"In some senses, we were made for this. Slack's not specifically a "work from home" tool; it's more of a "create organizational agility" tool. But an all-at-once transition to remote work creates a lot of demand for organizational agility." - Stewart Butterfield via Twitter
Are you still thinking that a recession means the death of startups by default? I wouldn't be so sure about this… The global economic crisis is a challenging time for each and every one. However, it may also be a perfect time for those who are ready to rethink their business models, incorporate innovations in their processes and approaches, listen to what their customers need right now, and continue to implement their big ideas delivering new amazing products and services.