Successful Companies Started During a Recession

 

Recession

Recession Sign

“Recessions are bad for business” is not an understatement by any means. The US has endured approximately 47 recessions since 1790. However, recessions although difficult to live through, especially for the venture capitalists, have turned out to be profitable for some very unlikely companies which got their start during one. Actually, some of the companies that are now household names were initiated during very rough economic circumstances. According to The Kauffman Foundation one study found that over half of the Fortune 500 companies of 2009 had been launched during a recession or at least during a bear market. Here are just a few examples of well established companies which got their start during a recession.

1890: General Electric

Although Thomas Edison is considered a genius, he actually chose a very rough time to launch Edison General Electric. At the time, there was a global recession because of the United Kingdom’s panic of 1890. General Electric, in Schenectady, NY merged with Thomson-Houston Company from Lynn, Mass.; and three years later faced a total collapse of the economy which was then running on the supply of gold. However, the company did survive and by 1896 found itself as one of the 12 original companies listed on the Dow Jones. The interesting thing is that it is still there after 113 years and has outlasted many recessions.

1896: IBM

In 1896 the US economy was trudging through an economic slump. That is precisely when Herman Hollerith founded the Tabulating Machine Company. Later Thomas Watson who took the company in 1924 changed the name to International Business Machines. Mr. Watson took the punch card technology to the next level and created large scale custom projects for his big business clientele. Watson also was able to lay the foundation for the company which would come to be known as “Big Blue.”

1908: General Motors

Charles Stewart and William Durant owned Buick when they worked together to found General Motors on September 16, 1908. It was a very rough economic climate at the time as the US had just suffered a huge financial crash. The crash even led to the creation of the Federal Reserve System. But during this tumultuous time General Motors began obtaining other brands such as Cadillac, Oldsmobile and Reliance Truck Company, all in one year. In 1911, they added Chevrolet. In 1923 Alfred P. Sloane took over the company and led it through a period of unprecedented growth which lasted until the 1980s.

1953: Burger King

In 1953 as the world was adjusting to the ending of the Korean War, everyone was focused on inflation. Matthew Burns and Keith J. Kramer did not yield to fears but instead decided that since everyone needed to eat, they would create a good burger that Americans would love. Their goal was to capitalize by selling franchises of their own fast food eating establishment – Insta-Burger King. James McLamore and David Edgerton who operated two franchises in Miami bought the company out and rebranded it as Burger King.

1975: Microsoft

1975 was another very rough economic time for the US. Unemployment was on the rise, inflation and gas prices that were being quadrupled all compounded the declining economic environment. Sound like a perfect time for an entrepreneur doesn’t it? But this is precisely when Bill Gates and Paul Allen founded Microsoft located in Albuquerque, NM. Then in 1979, the company moved to Bellevue, Washington and had much success which was based on the huge success of other products that were being developed at the time. Windows, MS-DOS, and Microsoft Office helped the business become one of the most successful companies of all times. Presently the company has counted 4 billionaires and 12,000 millionaires that are included in both current and former employees.

 

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About Efraim Landa

My name is Efraim Landa I am an entrepreneur and an expert in venture capital. I am the co founder of Effi Enterprises, a venture capital firm as well as the co founder and CEO of Gluco Vista, a company that is in the process of developing a non invasive glucose meter for those with diabetes.

Posted on December 22, 2012, in Business financing, financial history, investing, VC financing, Venture Capital, venture capital success story and tagged , , . Bookmark the permalink. 1 Comment.

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