Economic Recession: – “A significant decline in economic activity, lasting more than a few months, normally visible in the real gross domestic product (GDP), per capita income, employment, industrial production, wholesale and retail sales.”
Economic Recession is always tough for all types of businesses. The scenarios that could unfold after the financial downturn are always unpredictable.
The history is filled with big brands such as Apple, Slack, Microsoft, Pinterest, and Google that were founded in the time of economic crisis. It’s the most suitable time for entrepreneurs to evaluate whether COVID-19 is a startup disaster or a boost to innovate?
“Many of today’s tech behemoths have been founded or built during recessions or economic downturns. Resource-crunch could sprout some serious creativity and pivot” – Inka Mero, Founder and Managing Partner at Voima Ventures.
During the 1970-s, the USA experienced a crippling economic depression that lasted long. At that time, American GDP was at its worst for the next few decades. However, for two college dropouts Bill Gates and Paul Allen it was the perfect time to start a company. They sought to make a business utilizing their shared skills in computer programming and later created the concept of free, easy, and enjoyable home and office computing.
Bill Gates and Paul Allen proved that even the darkest times in the global economy couldn’t limit the emerging technologies that enter the market and disrupt industries with their brilliant innovations. Their development helped many businesses worldwide to push their highest boundaries, and it helped Microsoft to grow into one of the most successful and authoritative organizations 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 instilled fear and paralyzed the processes in many tech companies such as Cisco, Qualcomm, and Amazon. However, there were also those who took a different approach and started working harder, investing more in innovation, and creating new products.
Despite all the challenges arisen during the crash, Steve Jobs initiated the project iPod- Apple’s next iconic music player. And after only one year of development, iPod was launched in October 2001 and become an instant hit among millions around the world. Its success also paved the way for iPad and iPhone, latter of which could be termed as the single most revolutionary technology of the century which changed the way of mobile computing for good and helped to re-establish Apple as the most valuable brand and a legendary 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 known to survive and innovatively adapt to financial downturns. Mailchimp’s transformation was also triggered by a financial recession of 2008-09.
Mailchimp in its initial stage was only focused on serving enterprise clients with yearly retainers as their business model. However, the Great Recession during 2008-2009 called for new rules, and the company was required to reimagine their entire business model. Mailchimp’s foray into freemium business in 2009 turned out to be their saving grace. That change brought incredible results and within only one year, Mailchimp’s user base swelled up from 85,000 to 450,000.
While Mailchimp was reinventing, Groupon was also the genesis of the Great Recession of 2008. The International Monetary Fund (IMF) concluded that it was “the most crippling economic and financial meltdown since the Great Depression.”
At that time, Andrew Mason created a digital platform that promoted other businesses by offering deals on their services and products to customers. It was Groupon.
Economic Recession wasn’t an obstacle for Andrew Mason. He found an opportunity to build something that was able to deliver legitimate marketing for businesses worldwide. And help them communicate with their customers feasibly. With their creative approaches to marketing, Groupon showed companies a new way to introduce services to their customers.
Slack has become one of the most famous productivity applications. Especially today, during the COVID-19 crisis, when half of the population on earth is working from home. But, did you knew that Slack was also founded during the economic crisis?
The Great Recession (2009) was the perfect time for Stewart Butterfield to build a new communication platform for businesses. Slack has literally become the backbone for many businesses today. Their organizational-agility building ability is helping hundreds of businesses worldwide.
Do you still think that recessions are death sentences for start-ups by default? We wouldn’t be so sure about this, as it may also be a perfect time for those who are ready to explore new opportunities to solve the resultant problem statements or 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.
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