01 May 2020 Innovation Born Out of Recession: 6 success stories
More than a third of the world’s population is under some form of lockdown due to COVID-19. This global effort to curb the spread of Coronavirus, has brought much of global economic activity to a halt. The International Monetary Fund has described the worldwide economic downturn as the worst since the Great Depression of the 1930s. So, with markets in record declines not seen in decades, we know challenging times lie ahead.
There’s no doubt that recessions are bad for business. However, as we take a look back through history, recessions have proven to be great breeding grounds for innovation and have paved the way for some of today’s biggest household names. Here are six companies born out of past recessions:
GM – 1908
Just after the turn of the 20th century, General Motors Founder William Durant made his transition from manufacturing horse-drawn carriages into automobiles with his purchase of the Buick Motor Company in 1904. But it wasn’t until the 13-month Panic of 1907 that Durant saw his big opportunity in the newly-created automobile industry. He launched General Motors as a holding company in 1904. And whilst the US was recovering from the financial crisis, Durant went on a shopping spree for carmakers. Within just a year, General Motors had acquired brands such as Oldsmobile, Cadillac, and Pontiac. GM had also started running manufacturing, sales, and R&D at scale. Albeit a few bumps along the way, this strategy proved to serve the automobile giant well. GM is the largest US automobile manufacturer.
Disney – 1929
At the height of the Great Depression, brothers Walt and Roy Disney founded Walt Disney Productions. The gravity of the economic downturn served as the spark the duo needed to create something innovative, new and fun. Animated shorts about a cartoon mouse named Mickey proved to be just what the world needed during those dark days. Encouraged by their newfound success, the brothers moved onto more ambitious projects, which helped propel the company to new heights. In 1937, they created the first-ever full-length animated film, Snow White and the Seven Dwarfs. The feature film became the highest grossing movie of its time and has helped the Walt Disney Company to become one of the world’s most recognisable – and successful – entertainment companies.
Burger King – 1953
Food and beverage are a classic recession-proof category – everyone needs to eat regardless of the state of the economy. And it was during the post-Korean war recession of 1953-54 that Burger King was founded. Taking advantage of America’s love for burgers and new technology, the ‘Insta-broiler’ – a special grill machine that can cook 400 burgers per hour – Keith Kramer and Matthew Burns opened the first Insta-Burger King in 1953. The following year, David Edgerton and James McLamore bought out the franchise. Only then was the franchise rebranded to Burger King and began to expand to new locations. Burger King now operates in over 18,000 locations worldwide serving more than 11 million guests daily.
Microsoft – 1975
In the early 1970’s, two college dropouts, Bill Gates and Paul Allen, spotted an opportunity to begin selling operating system software to the infant personal computer market. Despite the United States being in the midst of the Oil Embargo Recession, Gates and Allen began developing user-friendly operating software for home and office computing. In 1975, the duo officially founded the company Microsoft. Microsoft managed to beat the odds in a bad economy and has grown into one of the most successful companies in the world.
CNN – 1980
In recession-plagued 1980, media entrepreneur Ted Turner stepped in front of a camera to introduce viewers to his new TV station called The Cable Network News. It was the first channel to provide 24-hour news coverage, thus completely revolutionising how people received information. CNN rose to fame after its coverage of the Gulf War and today is watched by over 1.5 billion people around the world.
Airbnb – 2008
The genesis of Airbnb formed in 2007. It all began when roommates Brian Chesky and Joe Gebbia decided to rent out an air mattress in their high-rent San Francisco apartment. Little did they know that the Great Recession, which hit later that same year, would accelerate the need for short-term, low commitment living quarters. So in August 2008, along with their former roommate Nathan Blecharczyk, they launched a simple online platform called Airbedandbreakfast.com. By March 2009, the name had been simplified to Airbnb and the site had over 2,500 listings and 10,000 users. Whilst the company initially struggled, Airbnb was valued at $31 billion in 2019 and has completely revamped the short-term rental market.
RECESSION IS A TIME FOR INNOVATION
A shaky and sluggish economy might not seem like the right time to start up a new business. But as the 6 iconic companies above demonstrate, some of today’s most successful companies have their roots in a recession. These entrepreneurs were able to identify an opportunity, act on it, work the economic downturn to their advantage and eventually, leapfrog their competition. As a global recession is starting to look inevitable, we’ll be keeping an eye out for emerging ideas, innovations, start-ups and technologies .
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