It might seem reckless to think about starting up a new business during a recession when the future feels shaky and the economic impacts are impossible to predict. But it turns out, forming a startup in an economic downturn can actually work to your advantage in many ways. Not only are there plenty of new and unforeseen problems to solve, but you’re up against far fewer competitors.
In fact, many entrepreneurs who saw opportunities and took risks during hard economic times have ended up creating some of the most instantly-recognizable brand names we know and love today.
Here are just a few big-name businesses that you probably never knew were founded during recessions.
Year founded: 1997
Legend has it that founder Reed Hastings was motivated to start an online DVD rental by mail service after incurring a $40 late fee from Blockbuster for failing to return his copy of Appollo 13 in a timely manner. In an ironic twist of fate several years later, the newborn company nearly crumbled when Blockbuster made the fatal mistake of refusing to buy it out during the dot-com bubble burst of the early 2000s.
Netflix weathered the storm, however, by harnessing its innovative spirit to pioneer the streaming on-demand video service we know today, leaving it’s brick and mortar competitor permanently in the dust. Today, Netflix is worth nearly $34 billion and growing, thanks to the current higher-than-ever demand for home-based entertainment.
Year founded: 2008
The multibillion-dollar business was born in August 2008, when tech entrepreneurs Joe Gebbia and Brian Chesky launched a simple online platform to rent out an air mattress in their apartment in high-rent San Francisco. When the Great Recession hit later that same year, suddenly the need for short-term, low-commitment living quarters exploded exponentially. By March 2009, the site had over 10,000 users and 2,500 listings, and big-name investments started flying in not long after. The rest is history.
3. Trader Joe’s
Year founded: 1958
The beloved grocery store had a humble start as a generic L.A.-based convenience store chain called Pronto Markets, established in the sluggish economy of the late 1950s. It wasn’t until 1967 when, inspired by a recent trip to the tropics, founder Joe Colombe rebranded his store “Trader Joe’s” and transformed it into the eclectic tiki-themed foodie love-fest we know and love today. Today, the company operates nearly 300 stores and counting across the US.
Year founded: 1975
In the mid-1970s, while the US was submerged in stagflation, two nerdy college dropouts, Bill Gates and Paul Allen, were hard at work developing the concept of user-friendly operating software for home and office computing.
By 1975, they officially founded their company under the name Microsoft in Albuquerque, which saw total revenues of $16,000 (about $400,000 in today’s money) by the end of the following year. During the early 1980s, Microsoft formed a partnership to bundle their products with tech giant IBM (which itself was founded during “The Long Depression” of 1873-1896).
Microsoft beat the odds in a bad economy and remains one of the most valuable companies in the world.
5. Sports Illustrated
Year founded: 1954
Launched in the mid-50s at the tail-end of a recession, Sports Illustrated magazine jumped on the scene just as professional sports was skyrocketing in nation-wide popularity. Originally only covering elite sports like rugby and yachting, the publication didn’t make much of a profit in its first 12 years of existence.
It wasn’t until a decade later when it broadened its coverage and added high-impact full-color photos that it became the sports magazine mainstay we’re all familiar with. Today, Sports Illustrated has over 3 million subscribers.
Year founded: 1981
When “Music Television” made its debut in the lethargic economy of the early ’80s as an “all music, all the time” cable channel, it found instant success and became the symbol of youth counterculture. Despite its stick-it-to-the-man persona, however, the channel was the end result of extensive corporate market research by Warner Amex Satellite Entertainment Company (WASEC).
While you won’t find many music videos on MTV or its many spinoffs anymore, it’s hard to ignore the massive impact the recession-born global brand has had on music marketing over the past four decades.
7. GE (General Electric)
Year founded: 1876
Currently-thriving companies that emerged during deeply troubled financial times go further back in time than you think. In the case of General Electric (GE), we’re talking nearly 150 years! The multinational conglomerate was established in 1876 by the famous Thomas Edison (the inventor of the lightbulb) smack in the middle of the six-year world recession brought on by The Panic of 1873.
The company survived, however, earning its place as one of the 12 original companies in the Dow Jones Industrial Average in 1876, where it remains to this day. Today, GE is a world leader in healthcare, aviation, infrastructure, finance, media, entertainment, and environmental and information technologies.
10. Warby Parker
Year founded: 2010
Warby Parker was founded during the Great Recession by four friends who were focused on the fact that fashion-forward frames were simply not affordable for the average person. The company’s innovative home try-on program and low price points successfully disrupted the once-monopolized prescription eyewear business. Today, the company is worth $1.7 billion, thanks to its recession-proof commitment to budget-minded customers.
Year founded: 1932
The iconic drugstore cosmetics company first made its mark in the midst of the Great Depression, when it rolled out the world’s first pigment-based red nail polish called Cherries in the Snow. The polish was so popular that the brand rapidly expanded its line to lipsticks and other makeup products. By the end of the Second World War, Revlon had grown to become the second-largest cosmetics producer in the US. Today, the Depression-era company is worth $3 billion.
The reason Revlon has been able to weather historic economic storms over the past 80 years might be attributed to “The Lipstick Effect“, a term coined by Estée Lauder chairman Leonard Lauder. During troubled times, cosmetics sales tend to be inversely correlated to the health of the economy, as consumers seek out ways to pamper themselves without breaking the bank.
Beauty business are known to be recession-proof. Read this guide to starting a beauty business if you’re thinking of starting your own!
Year founded: 1929
At the height of The Great Depression, brothers Walt and Roy Disney rebranded their garage-based cartoon studio under the name Walt Disney Productions. “Steamboat Willie”, which starred Mickey Mouse, was their first animation to hit the big screen, and the first of its kind to feature synchronized sound.
Apparently, a whistling cartoon mouse steering a ship down the river was exactly what America needed during those dark days. Encouraged by their newfound success, the brothers moved on to increasingly ambitious projects, including the first-ever full-length animated feature film, Snow White and The Seven Dwarves, in 1937. Now, with a net worth of $130 billion and theme parks around the world, needless to say, this Depression Success Story is here to stay.
Resilience is key
If you’re like most people and you need a little extra inspiration right now, look to the countless resilient and innovative companies that not only survived against all odds in the toughest of times, but are absolutely thriving to this day. Start by making your logo with Looka’s easy to use logo maker!