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Massive Companies That Started During a Recession

Microsoft (1975)

Microsoft (1975)

The 1973 oil crisis (that, coupled with a stock market crash, led to a 16-month recession where the GDP took its worst hit in nearly 20 years)  did not stop Bill Gates and Paul Allen from developing their new computer software business Microsoft, which launched on April 4, 1975, literally just days after the recession was considered officially over. 

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Massive Companies That Started During a Recession

Massive Companies That Started During a Recession

https://medium.com/swlh/13-massive-companies-that-started-during-a-recession-ba769e38d0ad

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Key Ideas

Mark Twain

Mark Twain

"Whenever you find yourself on the side of the majority, it is time to pause and reflect."

What entrepreneurship is about

Challenging times can create even more obstacles between you and success. But entrepreneurship is about leaning into the obstacles and finding and creating opportunities in places others have overlooked or written-off.
As others run away from the chaos, there will be more opportunity than ever to deliver real value to the world.

General Electric (1892)

Thomas Edison officially got his start years earlier (and survived several smaller recessions during the 1880s), but launched General Electric right as the nation was heading into the Panic of 1893 (16 months where business activity dropped nearly 40% across the nation).

General Motors (1908)

His business was still manufacturing horse-drawn carriages in the late 1800s, but General Motors Founder William Durant made his transition into the newly-created automobile industry in 1904 with his purchase of the Buick Motor Company. 

Early 1908 (in the middle of the 30% business declines experienced during the 13-month Panic of 1907) Durant decided to launch GM as a holding company to acquire even more automobile manufacturers. 

IBM (1911)

It was launched by Charles Flintas the Computing-Tabulating-Recording Company (CTR) in June of 1911 and it got its start selling commercial and business machines right in the middle of a long two-year panic. 

While industries everywhere saw double-digit declines in activity, CTR thrived, later changed its name to IBM, and became the leader in technology that would support the digital revolution.

Disney (1929)

In 1928, brothers Walt and Roy Disney introduced the world to Mickey Mouse via their short-animated feature Steamboat Willie. A year later in 1929, the duo incorporated Walt Disney Productions right as the nearly 4-year Great Depression was getting started. 

It was in those times that America needed a smile more than ever, and was able to navigate the challenges of the depression.

HP (1939)

It was during the 1937–1938 recession (one of the worst recessions of the 20th Century, with GDP decline reaching nearly 19%) that William Hewlett and David Packard, recent Standform graduates, decided to formulate a plan for their new electronics company, Hewlett-Packard. 

Still feeling the sting of the recession, the duo incorporated their business on January 1, 1939, and would go on to build one of the worldwide powerhouses in computers.

Hyatt (1957)

During the Recession of 1958, entrepreneur Jay Pritzker purchased the Hyatt House motel near Los Angeles International Airport. 

Even with business activity and travel slowing during the tough economic times, Pritzker pushed on, opening two additional hotels before the end of the decade. This collection would grow to nearly 900 properties, and annual revenues exceeding $5 billion dollars!

Trader Joe’s (1958)

Born during the Recession of 1958, Trader Joe’s got its start under the name Pronto Markets in Southern California. 

After founder Joe Coulombe returned to the U.S. from a vacation in the Caribbean, he sensed an opportunity to provide unique international food offerings in his stores to consumers that were becoming increasingly more global. 

FedEx (1971)

FedEx Founder Fred Smith eventually launched the business right on the tail end of the Recession of 1969–1970. 

Though this recession was relatively short-lived and mild, Smith faced major challenges trying to sell a new, unheard of type of service to a business community that was more hesitant than usual to spend money on untested vendors.

Microsoft (1975)

The 1973 oil crisis (that, coupled with a stock market crash, led to a 16-month recession where the GDP took its worst hit in nearly 20 years)  did not stop Bill Gates and Paul Allen from developing their new computer software business Microsoft, which launched on April 4, 1975, literally just days after the recession was considered officially over. 

Electronic Arts (1982)

During the 1981–1982 Recession (which brought some of the worst unemployment rates seen in decades), Trip Hawkins left his secure job at Apple to start a new software company called Electronic Arts. 

The company would quickly grow to become a leading provider of games for the booming home computer and entertainment system market.

Salesforce, Google, and Facebook

These are honorable mentions.
They didn't technically start during recessions, but all of them were launched right before major economic meltdowns: Google (1998) and Salesforce (1999) right before the dot-com bubble burst, and Facebook (2004) shortly before the Great Recession.

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Understanding recessions are vital
Understanding recessions are vital

Recessions are part of the fabric of a dynamic economy. The average investor fears recessions because they mean lower home prices, lower stock prices, and less or no work.

Several things ca...

Naming a recession

Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.

The 2007-09 recession involved a financial crisis, high unemployment, and falling prices, and was named the Great Recession. Our current recession is still without a name.

An official recession

A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment indicators instead. Other signs of the recession include:

  • Declines in real (inflation adjusted) manufacturing, wholesale-retail trade sales, and industrial production.
  • Extended declines in production, employment, real income, and other indicators.

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Two of the biggest innovations
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Two of the biggest innovations of modern times are cars and airplanes. At first, every new invention looks like a toy. It takes decades for people to realise the potential of it.

Innovation is driven by incentives

There are three types of incentives:

  1. "If I don't figure this out, I might get fired." It will get you moving.
  2. "If I figure this out, I might help people and make a lot of money." It will produce creativity.
  3. "If we don't figure this out now, our very existence is threatened." Militaries deal with this, and it will fuel the most incredible problem-solving and innovation in a short time.

During World War II, there was a burst of scientific progress that took place. The government was in effect saying that if a discovery had any possible war value, then it had to be developed and put in use, regardless of the expense.

The conditions for big innovations to happen

The biggest innovations seldom happen when everyone's happy or safe. They happen when people are a little panicked and worried, and when they have to act quickly.

In 1932, the stock market fell by 89%. It was an economic disaster where almost a quarter of Americans were out of work. However, the 1930s was also the most productive and technologically progressive decade in history. Economist Alex Field writes that in 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with little increase in labor hours or private-sector capital input.

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Disruptive companies are gold

Disruptive companies are well-liked by investors and stakeholders, in this tough and cutthroat industry.

According to a study, 70% of startups fail, usually within two years of operation.

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Disrupt yourself

There was a time when Netflix used to deliver DVDs on mail, but now they have disrupted the digital distribution of content. Google didn't have a viable business model till 2002, but now Youtube, Android, and its ads businesses are shattering records consistently.

We need to disrupt ourselves instead of getting comfortable in what we do now.

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Recessions come and go
Recessions come and go
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Recessions are far from equal
  • Banks are better able to handle a financial crisis than a decade ago. The 2008 recession was about the housing market and shares, which affected higher income groups.
  • The present crisis seems to be hitting the lower-income groups, the vulnerable workers, young, and less skilled. It is similar to the late 70s, early 80s recession, which affected young and unskilled workers.
  • Another lesson from 2008 is that recessions don't always lead to significant numbers of job losses. Layoffs were concentrated among a small number of people, and they stayed unemployed for a long time.
  • In this recession, far more workers will be at risk if social-distancing rules remain in place over a long period.
GDP during a crisis
  • A drop in GDP was expected during the 2020 lockdown. Shops and businesses were closed, and the total value produced by goods and services decreased. In turn, this affected the staff of those businesses earning less money.
  • Furloughs. At its peak, about nine million people in the UK were paid a furlough - the government paid 80% of their salaries, and the employer could choose to top up the rest. Other countries have similar state-backed furlough schemes. These schemes will be coming to an end, and employers will have to decide if they have to lay off employees permanently.
  • The losses are not yet crystalising. People are taking mortgage and credit holidays. It means the losses are pushed further down the road. The financial sector bubble will burst, and we will see real turmoil again.

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An Uncertain Future
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Future-proofing your career to stay relevant isn't about learning how to code or going back to college.

It is about having a career plan with a long-term vision, taking into account the current job-market conditions, economic factors, emerging opportunities, personal interests, and family realities.

Shrinking Life Cycle of Jobs

A life cycle of a job is shrinking rapidly, and if you're not re-inventing yourself or pivoting on time, you are rendered out of work sooner than in the past decades.

We need to check our career plan and ask ourselves what skills need to be developed to pursue future opportunities, in this shifting economy.

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Focus on what matters
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Steve Jobs
Steve Jobs

“Deciding what not to do is as important as deciding what to do. It’s true for companies, and it’s true for products."

Seek Simplicity
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  • Some problems, which seem complex, often have simple solutions.
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Economic Free Fall
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  • In India, with the abrupt 21 days shutdown, which was recently extended by another 19 days, only a small percentage of the 1.3 billion population is covered by any social security, and millions of daily wage or migrant workers, have no hope, future or place to stay.

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The Inventor Of Rock & Roll
The Inventor Of Rock & Roll

… was originally, according to Billboard Magazine, Rhythm & Blues music. This was until Producer Sam Phillips (Sun Records), the ‘inventor’ of Rock & Roll, started promoting little known ar...

Sam Phillips

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Race Music

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Black artists were more creative, edgy, talented, and had a wild style that was light years ahead of white performers. This made ‘race music’ popular across all demographics and regions, something that was picked up by many record companies, including Sun Records.

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The invention of scotch tape
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Richard Drew invented The Scotch transparent tape while working as a lab tech at the Minnesota Mining and Manufacturing Company, which was then manufacturing sandpaper.

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Using tape for everything

The Scotch tape was released at the start of the Great Depression when people had to mend and make do.

People used the transparent tape for everything. While many companies were going under, tape sales helped the company to grow.

Experimental work and the 15 percent rule
  • William McKnight, the executive who told Richard Drew to stop working on Scotch tape, became chairman of Scotch, then known as 3M's board. Drew helped McKnight understand that experimentation could lead to innovation.
  • McKnight developed a policy known as the 15 percent rule, which allows engineers to spend 15 percent of their work hours on experimental doodling.
  • After his tape successes, Drew led a Products Fabrication Laboratory for 3M, where he could freely develop new ideas.
  • He and his team filed 30 patents for inventions, from face masks to reflective sheeting for road signs. He also mentored young engineers to develop their ideas.