With experts still debating whether or not there will be a recession in 2023, you might be wary of starting a business anytime soon.
That’s understandable.
When the economy is in upheaval, new businesses can face more significant risks and challenges. A downturn could make lenders and investors hold back their funding. Potential customers could become cautious and reconsider spending on new products. Severe supply chain bottlenecks could emerge.
However, if history is any indicator, your business idea could still thrive despite a recession. Many of the world’s iconic companies were founded during downturns and flourished amidst harsh economic conditions.
Here are five companies that started during a downturn and succeeded.
1. Microsoft
Year of launch: 1975, Oil embargo recession
Net worth: $2.54 trillion approximately
In the early 1970s, the USA slipped into a 16-month recession when the GDP took its worst hit in nearly two decades. During this challenging period, college dropouts Bill Gates and Paul Allen conceived the idea of user-friendly computing for homes and offices. In the years since, the company has eradicated significant technological barriers for businesses, propelling Microsoft to its current status as one of the world’s most valuable companies.
An innovation-based company, Microsoft has continued to grow with time — broadening and expanding into businesses associated with its core franchise, and in doing so, has maintained a superior business for nearly five decades.
Fundamental Learning: Keep innovating and expanding your offerings.
2. Warby Parker
Year of launch: 2010, Great Recession
Net worth: $1.5 billion approximately
This eyewear brand was founded in the middle of the Great Recession. The founders identified an enormous pain point in the market — buying an affordable pair of fashionable glasses online was nearly impossible. They filled the need with high-quality, better-looking, low-cost eyewear solutions.
The launch saw such success that the firm achieved its first-year sales targets within just three weeks. Over time, Warby Parker has built a powerful e-commerce presence and grown to fill over 200 retail stores across the USA and Canada.
Fundamental Learning: Utilize the downturn to notice gaps and pain points in the market and work to fill the need.
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3. Airbnb
Year of launch: 2008, Great Recession
Net worth: $77 billion approximately
It all started when Airbnb’s founders — Brian Chesky and Joe Gebbia — decided to rent an air mattress in their San Francisco living room. Seeking to generate additional income during a downturn, they officially launched Airbedandbreakfast.com in August 2008, at the onset of the Great Recession.
Despite being a disruptive startup that pushed the limits of the traditional hotel industry, Airbnb was turned down by seven prominent VC firms for seed funding in 2008.
The team used these rejections as an opportunity for self-improvement and fine-tuned their strategy. Later, in 2009, the firm raised funding from Sequoia Capital and experienced explosive growth. Since then, the company has grown to offer more than 7 million properties in over 220 countries and regions.
Fundamental Learning: Persist and believe in your idea while refining your strategy.
4. Uber
Year of launch: 2009, Great Recession
Net worth: $87 billion approximately
The ride-sharing company Uber debuted in March 2009, courtesy of founders Travis Kalanick and Garrett Camp. Their inability to find a ride in Paris resulted in a user-friendly app that addresses the enduring challenge within the transportation industry.
Since its inception, Uber is reported to have facilitated 42 billion trips across 70 countries and 10,500 cities worldwide. Still, it has yet to turn a profit.
Fundamental Learning: Seek the simplest solution to address a real problem.
5. Groupon
Year of launch: 2008, Great Recession
Net worth: $360 million approximately
Founded in 2008, Groupon emerged with the innovative concept of giving group discounts to consumers and introducing new customers to local businesses, bringing fresh air during challenging times.
A trailblazer in the industry, the firm became an instant hit among budget-conscious consumers scouring ways to cut costs wherever they can during the recession.
Within three years, Groupon was the fastest-growing startup, operating in nearly 35 countries and boasting 150 million subscribers to its newsletter. The firm even rejected Google’s buying offer of $6 billion in 2010, only to announce its IPO in 2011.
Fundamental Learning: Don’t hesitate to venture into uncharted territory, even when it’s scary.
The final word
There is no perfect time for starting a business. Risk and obstacles will always be part of a business, whether in a recession or no recession. All you need is to stay optimistic and realistic to manifest your idea into a successful business with a remarkable growth story.
Want to know more about startups and what it takes to get started? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, bookkeeping, taxes, HR, payroll, insurance, and recruiting — and we can help yours, too. Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
