SHOLEH PATRICK — Hope in lean times: Recession-born giants
With good reason, economists and analysts almost universally expect this post-pandemic recession to last longer than usual.
We’ve weathered them before, and we will again. But a recession doesn’t necessarily mean no business will grow, nor that good things don’t happen. Some of this country’s most well-known, billion-dollar businesses were born during recessions. A few have even changed the way we do business, with innovative models and new uses for technology.
Among the giants were General Electric (1892), IBM (1911), and Microsoft (1975). But hey, we can’t all invent electricity and computer technologies.
It’s true that without civilization-changing innovations like theirs, raising capital may be more of a challenge. But creativity, a solid business plan and determination can help address that. We’ll share a few tips from financial experts in the next issue of the Business Journal.
Meanwhile if you’re feeling anxious about the possibilities, here’s a little inspiration.
General Motors (1908)
Horse-drawn carriage manufacturer William Durant transitioned to the new auto industry in 1904 when he bought Buick Motor Company. But it wasn’t until 1908 — in the middle of a huge business decline — that he launched GM buy more auto manufacturers (probably at rock bottom prices). It worked. GM become one of the largest corporations in our history.
In 1928, brothers Walt and Roy Disney introduced Mickey Mouse with a short, animated feature called Steamboat Willie. When they incorporated a year later the Great Depression was underway. They figured that just meant America needed to smile even more. Too right.
Two months into the 1958 recession, entrepreneur Jay Pritzker bought a motel near LAX. Business and travel weren’t exactly booming, but he kept his eye on the inevitable upswing, opening two more hotels in two years. Hyatt’s portfolio now exceeds 900 hotels in 65 countries.
Trader Joe’s (1958)
Around the same time Pronto Markets opened in Southern California, the brainchild of Joe Coulombe. Coulombe had come home from a Caribbean vacation betting there was a domestic market for unusual international foods. While he sold the business 20 years later, there’s no doubt he influenced the grocery industry, if the spread of international foods on supermarket shelves are any indication.
For a school project, Yale student Fred Smith developed the concept of efficient and reliable door-to-door cargo delivery. A few years later he started FedEx on the heels of a recession. That one was mild, but Smith still had an uphill battle trying to sell a new idea to businesses used to cheaper mail service. Last year FedEx delivered more than 6 million packages a day (in planes provided in part by Hayden’s own Empire Airlines, a regional FedEx contractor and major local employer).
In 2007 Brian Chesky and Joe Gebbia rented out an air mattress in their California living room. When the Great Recession started a few months later, they saw opportunity. Airbnb transformed the market for people priced out of hotels, now with more than 7 million listings worldwide.
Good ideas can weather big storms. Google (1988) and Facebook (2004) started right before major economic downturns but remain two of the largest and most successful American companies, at least in terms of revenue.
If the idea of starting a new business in lean times seems too Pollyanna, consider this: Isn’t overcoming obstacles with ingenuity what entrepreneurship is all about? Leaning in. Identifying and creating opportunity where others have passed it by.
If the examples above are any indication, we know big things are possible, even now.
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Sholeh Patrick, J.D., is a columnist for the Hagadone News Network and former small business legal adviser. Contact her at Sholeh@cdapress.com.