Worried about the economy? These 5 successful companies were started during the Great Recession
With experts still debating whether or not 2023 will bring a recession, you might be wary of starting a new venture anytime soon.
That's understandable. When the economy is in turmoil, new businesses can face greater hurdles than usual. A downturn could convince investors to hold back their funding. Potential customers could think twice about spending on new products.
But, if history is any indicator, your business idea could still thrive even a recession occurs. Multiple high-profile startups that did just that after launching during the Great Recession, which ran from late-2007 to the summer of 2009.
It's proof that even tough times aren't enough to prevent every great idea from growing into a flourishing business — especially if your idea can save other people money during tough times.
Here are five such successful companies that launched during the Great Recession:
Helping people trim down their expenses is typically a winning proposition no matter the economic climate. That's especially true in the midst of a recession.
The idea led Tim Chen to found the popular personal finance website NerdWallet, after he was laid off from his hedge fund job around the 2008 holiday season. Losing his job at the time was "super devastating" for the now 39-year-old NerdWallet co-founder and CEO, he told CNBC Make It in 2018.
But, he added, being unemployed also gave him the freedom to launch his own business.
After fielding a question from his sister about how to find a credit card with lower fees, Chen said he was "shocked I couldn't find anything on Google that wasn't basically marketing [or] promotional material."
He put together an Excel spreadsheet comparing different credit cards and sent it to his sister — and then decided to launch a website that could offer other people a similar service. Last year, NerdWallet went public in an IPO. Chen's company now has a market value of more than $700 million.
When Uber first launched in early 2009, it was billed as a cheaper and more efficient alternative to hailing a taxi off the street. Unsurprisingly, the idea of saving money caught on with customers on the backside of a recession.
The idea for Uber was inspired, in part, by co-founder Garrett Camp's $800 expenditure to hire a private driver for himself and friends on New Year's Eve. He and co-founder Travis Kalanick discussed how splitting the cost would have made the experience significantly cheaper, and together, they got to work building an app.
The service won over users who were still accustomed to years of spending carefully. It's had some significant bumps in the road since then — from allegations of sexual harassment and a toxic work culture to a $20 million FTC fine over driver recruitment practices, all leading up to Kalanick's ouster in 2017.
It also undeniably transformed the transportation industry, while inspiring rivals like Lyft. Today, Uber has a market value of roughly $50 billion.
Saving money was the whole idea behind Groupon, the e-commerce marketplace aimed at helping users track down coupons and discounts for local retailers.
Groupon started out as a website called The Point, which founder Andrew Mason built in 2007 as a platform where people could gather to further collective goals. Then, the recession hit, and users began organizing group purchases of products to save money through bulk discounts.
Mason and co-founder Eric Lefkofsky spotted opportunity and rebranded the platform as Groupon, a portmanteau of the words "group" and "coupon."
It hasn't all been smooth sailing over the past few years. In 2020, the company laid off or furloughed 2,800 employees, roughly 40% of its workforce, citing "deteriorated" business amid the Covid-19 pandemic. The company laid off another 500 workers earlier this year, as part of cost-cutting measures meant to generate positive cash flow by the end of 2022.
Today, Groupon has more than 20 million active customers — a lot, but less than half of its 54 million customers in 2014.
Still, the publicly-traded company's market value is more than $200 million.
Mobile payments platform Venmo launched in 2009 at the tail end of the recession, inspired by a moment of forgetfulness from co-founder Iqram Magdon-Ismail: He left his wallet at home before visiting his college friend and future co-founder, Andrew Kortina.
The two friends had already discussed how helpful it would be to transfer funds to acquaintances with a mobile app connected to your bank account. Magdon-Ismail's mishap cemented the idea in their minds.
In 2013, PayPal acquired Venmo for $800 million. The app currently has more than 90 million users.
Even today, the app is a tool associated with fiscal responsibility. In 2018, PayPal CEO Dan Schulman told CNBC that he's seen Venmo help people who grew up during the Great Recession become more thoughtful about taking care of their money.
"It's very important to them if they have their own independence, and these apps like Venmo are incredibly powerful in helping and empowering them to take care of their financial health," Schulman said.
When Brian Acton and Jan Koum founded popular messaging service WhatsApp in February 2009, they probably weren't inspired by the recession — but they were well aware of the ups and downs of the market.
The two engineers had worked at Yahoo for nearly a decade, with Acton losing millions of dollars when the dotcom bubble burst in 2000. They left Yahoo in 2007, and traveled around South America before embarking on their next venture.
In January 2009, six months after Apple debuted its iOS App Store, Koum bought an iPhone. The pair predicted a rush of new apps, and started thinking about business ideas to capitalize on it.
Initially, WhatsApp gave you status updates for the people listed in your phone's contact list. Those early iterations of the app kept crashing and proved unpopular with their friends, so Koum and Acton remade WhatsApp as an instant-messaging service.
In 2014, Facebook acquired WhatsApp for $19 billion, turning Koum and Acton into billionaires. The pair continued running WhatsApp until 2018, when they left amid disagreements with Facebook over digital advertising on the platform.
In 2020, WhatsApp topped two billion users worldwide.
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