Experts are still debating whether there will be a recession in 2023, so they may be wary of starting new ventures so soon.
It is understandable. When the economy is in turmoil, new businesses can face greater hurdles than usual. A recession may cause investors to hold off on raising capital. Potential customers may be cautious about spending on new products.
But if history is any indicator, your business idea can still thrive when a recession hits. Several high-profile startups did just that after launching in the midst of the Great Recession in late 2007 and summer 2009.
It proves that even tough times are not enough to prevent every great idea from growing into a thriving business. Especially if your ideas can save other people money during tough times.
Here are five successful companies that launched during the Great Recession.
Helping people cut spending is usually a winning proposition, regardless of the economic climate. That’s especially true in the midst of a recession.
After Tim Chen was laid off from his hedge fund job around the 2008 holiday season, the idea led him to the popular personal finance website NerdWallet. Losing his then job was “very devastating” for the co-founder and CEO of NerdWallet, now 39, he told CNBC Make It in 2018.
But being unemployed also gave him the freedom to start his own business, he added.
After being asked by his sister how to find a low-fee credit card, Chen said, “I was shocked that I couldn’t find anything on Google, basically anything but marketing.” [or] promotional items. ”
He created an Excel spreadsheet comparing various credit cards and sent it to his sister. He then decided to launch a website that could offer similar services to others. Last year, NerdWallet went public with an IPO. Chen’s company now has a market value of over $700 million.
When Uber first launched in early 2009, it was billed as a cheaper and more efficient alternative to hailing cabs on the street. Not surprisingly, the idea of saving money was embraced by customers on the flip side of the recession.
The idea for Uber was inspired by co-founder Garrett Camp, who spent $800 to hire a private driver for himself and a friend on New Year’s Eve. He and his co-founder, Travis Kalanick, discussed how splitting costs could make the experience significantly cheaper, and together they set about building the app.
The service has won users who are still accustomed to years of careful spending. Since then, there have been some significant issues, from allegations of sexual harassment and a toxic work culture, to a $20 million FTC fine for driver hiring practices, to Kalanick’s ouster in 2017.
It has also undeniably transformed the transportation industry while inspiring rivals like Lyft. Today, Uber’s market value is around $50 billion.
Saving money was the whole idea behind Groupon, an e-commerce marketplace aimed at allowing users to track coupons and discounts from local retailers.
Groupon started in 2007 as a website called The Point, which founder Andrew Mason built as a platform for people to come together to achieve collective goals. Then, when the recession hit, users began organizing group purchases of products to save money by bulk discounting.
Mason and co-founder Eric Lefkofsky saw an opportunity and rebranded the platform to Groupon, a portmanteau of the words “group” and “coupon.”
The last few years have not all been smooth sailing. In 2020, the company laid off or furloughed 2,800 employees, about 40% of its workforce, citing “worse” business amid the Covid-19 pandemic. The company laid off an additional 500 employees earlier this year as part of cost-cutting measures aimed at generating positive cash flow by the end of 2022.
Today, Groupon has over 20 million active customers. That’s a lot, but in 2014 he was less than half of the 54 million customers.
Still, the public company’s market value exceeds $200 million.
Mobile payments platform Venmo was launched late in the recession in 2009, inspired by co-founder Iqram Magdon-Ismail’s forgetfulness. He left his wallet at home before visiting his college friend and future co-founder, Andrew Kortina.
Two friends were already discussing how sending money to an acquaintance using a mobile app connected to their bank account could help. The Magdon-Ismail accident cemented that idea in their minds.
In 2013, PayPal acquired Venmo for $800 million. Currently, the app has more than 90 million users.
Today, apps are still tools related to financial responsibility. In 2018, his CEO of PayPal, Dan Schulman, told CNBC that he saw Venmo helping people who grew up during the Great Recession to be more thoughtful about managing their money. .
“It is very important that they are self-reliant, and these apps like Venmo are very powerful in managing their financial health,” said Schulman.
When Brian Acton and Jan Koum founded popular messaging service WhatsApp in February 2009, they were probably not inspired by the recession, but they were well aware of the ups and downs of the market.
The two engineers worked at Yahoo for nearly a decade, but Acton lost millions when the dot-com bubble burst in 2000.
In January 2009, six months after Apple launched the iOS App Store, Koum bought an iPhone. The two anticipated a flood of new apps and began thinking about her ideas for a business to take advantage of it.
Originally, WhatsApp provided status updates for people on your phone’s contact list. These early iterations of the app kept crashing and proved unpopular with friends, so Koum and Acton remade WhatsApp as his 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 he left after disagreements with Facebook over digital advertising on the platform.
In 2020, WhatsApp surpassed 2 billion users worldwide.
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