With experts still debating whether 2023 will bring a recession, you might be wary of starting new ventures anytime soon.
This is understandable. When the economy is in turmoil, new businesses can face greater hurdles than usual. An economic downturn may convince investors to stop investing. Potential customers may think twice before purchasing a new product.
But if history is any guide, your business idea can still thrive in the face of a recession. Several well-known startups did just that after being founded during the Great Recession between late 2007 and summer 2009.
It’s proof that even tough times aren’t enough to stop every great idea from growing into a thriving business — especially if your idea saves someone else money during tough times.
Here are five such successful companies founded during the Great Depression:
Helping people cut back is usually a winning proposition no matter the economic climate. This is especially true during recessions.
That idea led Tim Chen to start the wildly popular personal finance website NerdWallet after he was fired from his hedge fund job around the holidays in 2008. He told CNBC Make It in 2018 that losing his job at the time was “super devastating” for the 39-year-old co-founder and CEO of NerdWallet.
But, he added, unemployment also gave him the freedom to start his own business.
After responding to his sister’s question about how to find credit cards with lower fees, Chen said he was “shocked that I couldn’t find anything on Google that had nothing to do with marketing.” [or] advertising material. “
He put together an Excel spreadsheet comparing different credit cards and sent it to his sister—then decided to launch a website to provide a similar service for others. Last year, NerdWallet went public through an IPO. Chen’s company is now worth more than $700 million.
When Uber first launched in early 2009, it was billed as a cheaper and more efficient alternative to hailing a cab on the street. Not surprisingly, the idea of saving money is popular with customers amid the recession.
Uber’s idea was inspired in part by co-founder Garrett Camp, who paid $800 to hire a personal driver for himself and a friend on New Year’s Eve. He and co-founder Travis Kalanick discussed how splitting the costs could make the experience cheaper, and together they started building the app.
The service has won over years of users who are still used to spending cautiously. It’s hit some major bumps in the road since then — from allegations of sexual harassment and a toxic work culture to the FTC’s $20 million fine for driver-hiring practices, all of which led to Kalanick’s arrest in 2017. recall.
It’s undeniably transformed the transportation industry, too, while bolstering rivals like Lyft. Today, Uber’s market cap is about $50 billion.
Group buying network
Saving money is the whole idea behind Groupon, the e-commerce marketplace designed to help users track down coupons and discounts from local retailers.
Groupon started as a website called The Point, which founder Andrew Mason launched in 2007 as a platform where people could come together to further their collective goals. Then, the recession hit, and users started organizing group buying products to save money with bulk discounts.
Mason and co-founder Eric Lefkofsky saw an opportunity and renamed the platform Groupon, a portmanteau of the words “group” and “coupon.”
The past few years have not been all smooth sailing. In 2020, the company laid off or furloughed 2,800 workers, about 40% of its workforce, citing business “deterioration” during the Covid-19 pandemic. The company laid off another 500 workers earlier this year as part of cost-cutting measures aimed at generating positive cash flow by the end of 2022.
Today, Groupon has more than 20 million active customers—a lot, but less than half the 54 million customers it had in 2014.
Still, the public company has a market cap of more than $200 million.
The mobile payments platform Venmo launched in the late 2009 recession, inspired by a moment of co-founder Iqram Magdon-Ismail’s forgetfulness: He left his wallet at home before visiting his college friend and future co-founder Andrew Kortina.
The two friends have discussed how helpful it would be to transfer funds to an acquaintance using a mobile app connected to your bank account. The Magdon-Ismail misadventure cemented this idea in their minds.
In 2013, PayPal acquired Venmo for $800 million. The app currently has over 90 million users.
Even today, the app is a tool associated with financial responsibility. In 2018, PayPal CEO Dan Schulman told CNBC that he saw Venmo help people who grew up during the Great Recession become more thoughtful about their money.
“If they have their own independence, which is very important to them, apps like Venmo are very powerful in helping and empowering them to take care of their own financial health,” Schulman said.
When Brian Acton and Jan Koum founded the popular messaging service WhatsApp in February 2009, they may not have been inspired by the recession — but they were well aware of the market’s ups and downs.
The two engineers worked at Yahoo for nearly a decade before Acton lost millions when the dot-com bubble burst in 2000. They left Yahoo in 2007 and toured South America before embarking on their next venture.
In January 2009, six months after Apple launched the iOS App Store, Koum bought an iPhone. The pair anticipated the emergence of new applications and began thinking of business ideas to capitalize on it.
Initially, WhatsApp provided you with status updates from people listed in your phone’s contact list. Those early iterations of the app kept crashing and proving unpopular with their friends, so Koum and Acton rebranded WhatsApp as an instant messaging service.
In 2014, Facebook bought WhatsApp for $19 billion, making Koum and Acton billionaires. The pair continued to run WhatsApp until 2018, when they left over disagreements with Facebook over digital advertising on the platform.
In 2020, WhatsApp’s global users will exceed 2 billion.
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