Starting Your Business During a Crisis We are in a scary time that almost none of us have ever experienced in our lifetime. It’s the first time since polio was an active threat where we have had such a widespread public health fear. The coronavirus outbreak has triggered unparalleled mass layoffs, business bankruptcies, and record market declines. And if all that isn’t bad enough, venture capital is drying up.
There’s no question about it; we’re heading into a recession that will turn the world upside down. And for many would-be entrepreneurs, this market instability is the perfect excuse to table their dreams and wait for things to blow over.
But is that necessarily the right move?
There’s no question starting a business is an incredibly difficult undertaking. And yes, challenging times can stand in the way of you and success. But that’s what entrepreneurship is all about—tackling the obstacles, finding and creating opportunities in places others have overlooked or dismissed. Because as others run away from the chaos, there will be more opportunity than ever to deliver real value to the world.
If we can rely on history as any sort of predictor, recessions have served as the backdrop for some of the world’s most incredible and, in many cases, iconic businesses.
Here’s a look at five highly distinguished companies born during recessions:
1. Airbnb
Year founded: 2008
In August 2008, tech entrepreneurs Joe Gebbia and Brian Chesky launched their new business, an online platform to rent out an air mattress in their apartment in the high-rent San Francisco area. When the Great Recession hit later that year, the need for short-term, low-commitment rentals exploded exponentially. By March 2009, the site enjoyed over 10,000 users and 2,500 listings, and not long after, big-name investments started rolling in.
With the current pandemic and another looming recession, the multibillion-dollar business that disrupted the short-term rental market must convince customers it is safe to share at the same tie that health officials are warning everyone to keep their distance.
The public health emergency is pushing Airbnb and the rest of the sharing economy to evolve. To survive in a post-coronavirus world, Airbnb will have to rethink the way it operates. The ticket to success will be flexibility and responsiveness to the market.
The good news? Airbnb is reporting that people have started to plan trips again. The difference is they are opting for destinations to where they can drive. For example, Atlanta resident, Murry Evans, used Airbnb for a few weekend getaways to the North Georgia mountains, stating, "I'm sitting in my condo here in Atlanta, just on Zoom all day long. It's just been to get out of the house and get into the outdoors where I can go hiking."
2. Warby Parker
Year founded: 2010
During the "Great Recession," four friends focused on the fact that fashion-forward frames were not affordable for the average person. The company's innovative new business, which included home try-on, and low price points, successfully disrupted the once-monopolized prescription eyewear business. Thanks to its recession-proof commitment to budget-conscious customers, today, Warby Parker is worth $1.7 billion.
3. Netflix
Year founded: 1997
Rumor has it that incurring a $40 late fee from Blockbuster for failing to return his copy of Apollo 13 on a timely basis, motivated founder Reed Hastings to start a new business—an online DVD rental service. Ironically, the young company nearly dissolved several years later when Blockbuster made the fatal blunder of not buying it out during the early 2000s dot-com bubble burst.
4. Microsoft
Year Founded: 1975
In 1973, an oil crisis and a stock market crash caused the GDP to take its worst hit in nearly 20 years, leading to a 16-month recession. However, the decline did not prevent Bill Gates and Paul Allen from developing their new computer software business, Microsoft. The company launched on April 4, 1975, literally days after the recession was deemed officially over. Within a decade, the company grew significantly and, in 1986, launched an IPO that created three billionaires and 12,000 millionaires along the way.
5. Disney
Year founded: 1929
Disney Brothers, Walt and Roy, rebranded their garage-based cartoon studio, Walt Disney Productions, at the height of The Great Depression. "Steamboat Willie," starring Mickey Mouse, was their first animation to hit the big screen. It was also the first of its kind to feature synchronized sound.
Encouraged by their newfound success, the Disney brothers took on increasingly ambitious projects. The first full-length animated film, Snow White and The Seven Dwarves, premiered in 1937. Today, with a net worth of $130 billion and theme parks around the world, obviously, this Depression success story is here to stay.
Resilience is the Key in Launching a New Business
If you're like most people and need a little extra inspiration right now, look to the countless resilient and innovative companies that survived against all odds in the toughest of times but are thriving to this day.
This list is a quick look at what's possible when you decide to act in less than favorable conditions. The current market might not be ideal for everyone, but if you have an idea that you believe is ready, don't assume you have to shelve it until the world rebounds. In fact, this could be the perfect time to act.
It will not be easy, and, yes, entrepreneurs need to make better decisions, operate lean, and act quickly — much more so than if they were in the middle of a booming economy. But as these iconic brands demonstrated, nothing should stop you from chasing your dreams.
Businesses are born every day in every country around the world. Don't let this troubling time scare you out of building yours. There’s Alpharetta office space at Digital Ignition waiting for you. Come check us out today!