Thanks to the great response to my previous blog which offered some advice on starting a business in a recession (click here to read) and a fair bit more free time on my hands, I thought I would write another which looks at some businesses which surprisingly were started in times of dire economic conditions. I hope you find reading this as interesting as I did learning about these businesses but overall I hope it provides some motivation and inspiration in these challenging times.
Burger King – Started at the end of 1953 recession
The recession of 1953 was demand-driven because of dramatic changes of interest rates earlier in the year that led to an increase in pessimism towards the economy which led to a decrease in aggregate demand. It was estimated that this cost the US economy around $56Bn.
The brand was started by James McLamore and David Edgerton in Miami aiming to take on the mighty McDonalds. The aim was to offer fast, affordable food but with an increased focus on choice. It was clear that in the downturn, cheap family meals would be high on many American’s agenda. The company grew with a huge emphasis on mass advertising and adding more choices and options. The company now has over 18,000 restaurants in over 120 countries!
Revlon Cosmetics – Started in the Great Depression of 1932
The giant US based cosmetics business was founded in 1932 by brothers Charles & Joseph Revson, with the help of their chemist friend Charles Lachman. They created and launched the world’s first rich, glossy opaque nail enamel. The name Revlon was created with the Revson brothers surname by replacing the S for a L in honour of Charles Lachmans involvement.
The story goes that the brothers were huge fans of Hollywood movies and loved the posters depicting rouge-lipped, cigarette smoking actresses. They thought it would look even better if they took a drag from the cigarette with scarlet fingernails to match! The first colour launched was “Cherries in the Snow” which was a huge sensation and is still in their range today!
MTV – Started in the recession of 1981
The early 1980’s saw yet another recession grip the world. This didn’t stop the team behind MTV looking to change television forever. The idea of a “music video” and “video radio” had been trialled and failed before but MTV hit the right balance and it grew and grew. It was aimed at the youth of the day with a very edgy approach compared to mainstream media. It was a huge success and launched a number of stars from Russell Brand to Michael Jackson. In subsequent years the brand has grown and grown and added multiple channels specialising in a huge range of musical styles. It’s fair to say MTV is now far more about reality TV over music but still, it is an incredible story. And do you know what the first video played on MTV was? (answer at the bottom of the page!)
Whatsapp – Started during the 2008/09 recession
A bit of a more up to date success story next. This innovative app was started by friends Brian Acton and Jan Koum. The 2 became friends whilst working for Yahoo! They travelled around South America together and formulated the idea for Whatsapp but didn’t initially push the idea – they both applied for jobs with Facebook but both were not successful!
In 2013, a mere 4 years after they launched the app, they had 200 million active users, 50 members of staff and a valuation of $1.5 Billion! In 2014, Whatsapp was purchased for a record $19 Billion by?….. The company that had rejected the pair just 5 short years earlier; Facebook!
Groupon – Started in 2008 recession
Another from the class of 2008 is the oddly addictive E-Commerce platform, Groupon. When 3 friends decided to build this site focussing on their home city of Chicago, they had no idea how far this platform would span! On day one in November 2008, the site had a solitary offer – “2 for 1 Pizza” at a downtown Chicago motel bar. The idea was started with a simple question – “How can I get a better deal on my mobile phone (cell if your American, which they were and probably still are) package?” The answer was through leverage. If you could get a large enough group of consumers, all wanting the same thing, this collective had far more buying power than going it alone! This is how Groupon began.
The business aggressively expanded throughout the US and repeated the model across the globe reaching over 50 new locations. In 2011 the company went public and became the biggest IPO since Google in 2004 – not bad for an idea born out of trying to reduce your mobile phone cost!
Uber – Started during the 2008/09 recession
Uber is one of those great companies that do something I wish I could find a niche in. They are by far the largest taxi firm in the world but own no cars. This is like Facebook who are the world’s biggest media company but produce no content or AirBNB who are the world’s largest accommodation provider but own no property! It’s a simple idea but so powerful.
This San Francisco based service business has had it’s problems of late but you can’t argue with its 110 million users worldwide and desire to keep pushing forward with its “Uber Eats” brand extension. Uber was founded by Garrett Camp and he claims the idea formulated after he and some of his friends were charged over $800 to hire a private driver for an event. There must be a cheaper way. He found the capacity of people with cars and Uber was born!
I suppose this shows there is no good time to start a business and maybe no bad time either. I think the point I am trying to get over is it is easy to feel down in times like this but if you are creative, have an idea or just simply graft you can not only survive the meltdown, you could thrive. I recall a company called Sales force and a company called Google both started just before the “Dot Com” bubble burst and experts were predicting the end of such companies. I wonder what happened to those 2?
Oh and the first Video to play on MTV?
”Video Killed the Radio Star” by The Buggles – what else could it be!
If you haven’t read my previous blog on starting a business in a recession, it can be found here
If you are considering starting up a new business, have a look at our start up package here