10 iconic businesses created during a recession
With the ongoing coronavirus pandemic causing untold devastation to the business world, economists have predicted we could be on the cusp of a recession – or even slip into a depression.
However, just because companies across the world are struggling to deal with this unprecedented change to daily working life, there are some major global businesses that actually rose out of tough economic times. Here, Business Leader lists 10 of those household names, and their story.
In the months leading up to the last major financial crisis between 2007-08, two Californian friends and entrepreneurs – Brian Chesky and Joe Gebbia – had the idea of renting out an air mattress in their San Francisco living room. At the end of that year, the world descended into an international recession – and the pair saw it as an opportunity to expand their business. Airbnb took over the short-term living market, as people were being outpriced by hotels and the leisure industry. In the aftermath of the recession, the firm received major VC funding and their international expansion began. Airbnb is now valued at around £31bn.
In the worst financial crisis in the history of the world – the 1929 Great Depression – brothers Walt and Roy Disney incorporated a production company that had previously showcased a short-animated feature, Steamboat Willie – starring Mickie Mouse. During the depression, Walt Disney Productions created cartoons to bring happiness to those suffering from the economic crisis. One of those cartoons was Snow White and the Seven Dwarfs. It was a major success, making around £1.25m during the period. The company confirmed its place in the people’s lives as an outlet from the struggles they were facing.
During the 1979-80 energy crisis, and the subsequent recession between 1981-82, a senior member of the Apple company – Trip Hawkins – decided to leave the company and back himself to create a new software company. Electronic Arts soon rose to prominence as an early pioneer of the video games industry – and today it is the second largest company within the industry in the USA. Throughout the 1980s, the firm released software and computers. However, in 1987, they released their first video game – Skate or Die! Over the next four decades, the firm would expand internationally and now has revenue in excess of £4bn and has 10,000 employees.
A decade earlier, at the end of the 1970 recession, FedEx founder Fred Smith developed a concept of a fast and reliable door-to-door delivery service as part of a university project at Yale Business School. Although this recession was relatively less impactful and short-lived in comparison to many others of the last 100 years, Smith struggled to sell a new delivery concept to the industry – which put the business in doubt. However, he became a pioneer of modern delivery sector through its tracking service and real time updates. The global powerhouse now has annual revenues of more than £55bn.
In the late 1880s – during one of the first recessions seen in the US – iconic American inventor and entrepreneur Thomas Edison, had a series of electricity-related companies that bared his name. One of those firms was backed by JP Morgan and the Vanderbilt family. At the height of the recession in 1889, through one of Morgan’s many companies – he funded Edison’s research and helped merge all his companies into one corporation – Edison General Electric Company. Seven years later it became one of the first twelve firms listed on the newly formed Dow Jones Industrial average. The firm now has annual revenues of around £100bn.
During the last major financial crisis in 2007-08, a young Chicago-based entrepreneur created a website offering users discounts on local businesses and scholarships, called Groupon was born. The website helped companies promote their products and services by offering special deals. This aided many retailers to cope with the massive hit to the industry during the recession – and helped Groupon rapidly grow into a global household name. Through its success during and after the recession, it cemented itself as a new form of online retail. The firm now has more than 6,000 employees, has been floated on the stock market, and has a reported valued of around £2.5bn.
Although the 1929 Great Depression is currently considered the worst economic crisis in history, there was a subsequent smaller recession between 1937-39. It was in this time period where Stanford Business School alumni, William Hewlett and David Packard made the decision to create a new electrics company out of a garage in Palo Alto, California – known as Hewlett-Packard. From an initial capital investment of only £435 – luckily, one of their first customers was Disney, who acquired some of their products for their successful Fantasia movie, so by the end of their first year they had made a return of almost £5,000.
International Business Machines Corporation (IBM) is today known as a multinational tech giant that specialises in cloud computing and AI, as well as computer hardware and software. However, it was created during the 1911 recession in New York where it was known as Computing-Tabulating-Recording Company (CTR). The firm began selling commercial and business machines during the two-year economic downturn. The leading businesses within the industry saw double-digit declines, however, CTR took advantage of the turmoil and set itself apart from the competition as the industry leader. By the 1920s, the company had weathered the storm of financial recession and WW1 to become an American institution.
In the midst of the mid-1970s oil crisis, which caused a 16-month recession, two computer software engineers and childhood friends – Bill Gates and Paul Allen – set up tech powerhouse, Microsoft. The firm went on to revolutionise the world, with its products and services. Within a decade, it had made the pair billionaires, and the brand had spread across the world. Over the next half a century, the firm would introduce Windows, Office, Xbox, Outlook and many other products and services that are used by millions of people every minute, every day. Last year, the company exceeded the £100bn valuation and has cemented itself as one of the world’s leading companies.
At the tail end of the last financial crisis, former Yahoo executives Jan Koum and Brian Acton created an encrypted messaging services that enabled people to send messages around the world for free in real-time. After the pair convinced five former Yahoo colleagues to invest £200,00 into the fledgling business, it was launched on iOS and became one of the systems most downloaded apps. It soared in popularity, first in the USA, and then across the globe – leaving all over forms of instant messaging playing catch up. In 2014, just over five years after being founded, it was sold to Facebook for a jaw-dropping £15.5bn.