We know times are tough for businesses right now, and that companies of all stripes—everywhere on Earth—are under new financial strains and economic pressures. We also know that economic downturns and times of market upheaval are exactly when new startup journeys begin, and a next cohort of battle-hardened entrepreneurial leaders will be forged.
Our world today faces an immediate threat affecting every person on the planet, to one degree or another. So much of the normal day-to-day has been disrupted, that it’s easy to feel overwhelmed or discouraged - but the truth is that all big disruptions mean very real opportunities for savvy, nimble entrepreneurs.
As humanity works to determine what our collective future will look like, ambitious founders always rise to the occasion, and design new ways for the rest o f us to live and thrive. As the world recovers and technology continues to infiltrate every fabric of society, there has never been a better time for tech startups to solve real problems and change the world for the better.
As proof that category-defining innovators are born from hard economic times, we offer the following list of technology companies as examples. Many of these businesses are household names today, and most are now market-leading juggernauts - but all were founded or forged through the last big economic crisis of the ‘Great Recession’:
B2C & Consumer-Facing
Social
Instagram
Originally a mobile check-in app that ended up being too similar to Foursquare to compete, the company pivoted its focus to photo sharing. The combination of “instant camera + telegram” — now known as Instagram — was created.
The wildly popular US-based photo and video-sharing social networking service was released through the iOS app store in October 2010, and had 1 billion registered users as of May 2019. Instagram was acquired by competitor social behemoth Facebook in April 2012 for approximately $1b in cash and stock, a price that was widely criticized at the time for being too high, but that most now recognize was likely a bargain.
Pinterest
Ben Silberman, who collected many things as a child, went from working in Google’s advertising department and tinkering with iPhone apps to building one of the most popular websites on the internet when he was 27.
Developed in 2009 and founded in January of 2010, Pinterest is a free social media web and mobile application allowing users to upload, save, sort, and manage images and other media content through collections called ‘pinboards’. In 2013 Pinterest acquired Livestar and secured a $225 million round of equity funding that valued the company at $3.8 billion. In 2019, Pinterest IPO’d to a valuation of ~$10B.
Built by two former employees of Yahoo!, Brian Acton and Jan Koum wanted to make a messaging app that would show people's statuses next to their names. They hired a Russian developer through RentACoder.com and eventually went on to create one of the world’s most widely used messaging platforms.
Released in January of 2009, the US freeware, cross-platform messaging and Voice over IP service allows users to send text and voice messages, as well as share images, documents, locations, and more. A year after WhatsApp was acquired by Facebook for over $19B, it officially became the world’s most popular messaging application. It is currently the main communication platform in countries across Latin America, the Indian subcontinent, and large parts of Europe and Africa.
Consumer Fintech
Venmo
Thanks to a yogurt shop, we have Venmo. The founders Andrew Kortina and Iqram Magdon-Ismail—freshman roommates at the University of Pennsylvania—helped a friend start a yogurt shop, and realized how bad traditional point of sale software was. Then when Magdon-Ismail forgot his wallet during a trip to visit Kortina, their idea solidified: the prototype sent money through text messages, which transitioned to the smartphone app millions use today.
Launched in 2009, Millennials and Gen Zers abroad can’t believe their foreign friends don't have it, but many Boomers still don’t know what it is. Venmo for some is the convenience we couldn't live without, but that the big banks don’t deliver directly - now, seamless transferring from a slush fund of monopoly Venmo-dollars, or between US banks, has become ubiquitous among the tech-savvy thanks to this company. Venmo was acquired by Braintree in 2012 for $26m, which was itself acquired by PayPal in 2013 for $800m.
Coinbase
Originally launched in October 2012 as a Y-Combinator startup allowing users to buy and sell Bitcoin through bank transfers, the digital currency exchange headquartered in San Francisco is today a broker allowing users to exchange many other digital currencies, as well as fiat currencies. In 2017 the company reported more than $1B in revenue.
Founded by Brian Armstrong and Fred Ehrsam, Coinbase has two core products: a Global Digital Asset Exchange (GDAX) for trading a variety of digital assets on a professional asset trading platform, as well as a user-facing retail broker of major crypto and fiat currencies. As of 2018, the company offered buy/sell trading functionality in 32 countries, with the crypto wallet available in 190 countries.
Gig + Share Economy
Airbnb
To raise money to make their San Francisco rent, Airbnb co-founders Brian Chesky and Joe Gebbia decided to rent out air mattresses in their apartment to SF conference attendees, since the nearby hotels were all booked.
Founded in August of 2008, the online marketplace Airbnb defied investor expectations and revolutionized the travel lodging industry by enabling people to convert their unused bedrooms into temporary bed and breakfast housing. Seven months into their startup journey, the site boasted 10,000 users and 2,500 listings. By June of 2012, the company’s 10 millionth night had been booked. The company recently raised a $1b in funding from Silver Lake and Sixth Street Partners in April 2020.
Uber
The co-founder of StumbleUpon once spent $800 on a private driver, and realized that sharing the cost with others could lower the cost of direct transportation. He paired up with Travis Kalanick, who’d sold his startup Red Swoosh in 2007, and Uber—originally called Ubercab—was launched in San Francisco.
The US multinational ride-hailing company founded in March of 2009 offers services that include peer-to-peer ridesharing, ride service hailing, food delivery, and a micro-mobility system with electric bikes and scooters. It revolutionized the global taxi industry and accounted for two-thirds of the market share for ride-sharing in early 2019 as well as nearly a fourth of the market share for food delivery in 2018. Uber IPO’d in 2019 and announced an upcoming airport helicopter taxi service for JFK airport. In January of 2020, Uber completed its acquisition of Careem, a transportation network company based in Dubai, for ~$3B.
Convene
When the Great Recession hit, two 27-year-olds saw an opportunity in the flexible workspace and full service conferencing business, and subsequently created Convene.
Convene designs and services premium places to work, meet, and host inspiring events. Through strategic partnerships with prominent commercial landlords, the company operates a network of hospitality-driven locations in Class A office buildings across major U.S. cities and handles the tech-side of things by building, servicing, and supporting all of their IT/AV in-house. Named one of America’s 100 most promising companies by Forbes and a Best Workplace by both Inc. and Fortune Magazine, Convene has raised $260 million in equity funding to date.
Watch recent insights from Convene’s Co-Founder Chris Kelly in the Founder Institute webinar “How (And Why) My Business Started During the Great Recession”. Chris has been recognized twice in Inc. Magazine’s “30 Under 30” list of Most Promising Young Entrepreneurs.
Other Consumer-Facing (uncategorized)
DuckDuckGo
What is the opposite of a data-hungry website? Named after the children’s game “Duck, Duck, Goose” and self-funded for its first 3.5 years, DuckDuckGo was founded in 2008 as an internet search engine that emphasizes protecting searchers’ privacy, and avoiding the filter bubble of personalized search results.
DuckDuckGo adds privacy protection to your browser by letting users search privately, block trackers, and more, free to use. Launched in 2008, by March 2020 DuckDuckGo was averaging 56+ million daily searches. Founder Gabriel Weinberg says that “By default, DuckDuckGo does not collect or share personal information. That is our privacy policy in a nutshell.” In 2014 Apple announced that DuckDuckGo would be an option for search on their platforms (iOS8 and OS X Yosemite in their Safari browser), and Mozilla added it as a search option to Firefox 33.1.
Netflix
Marc Randolph, the Co-Founder of MicroWarehouse, an online mail-order company, and Reed Hasings, a computer scientist and a mathematician, came together to create Netflix around the same time that Amazon was taking off.
The US media-services provider and production company was founded in 1997, before even the dot-com bubble, and initially sold and rented DVDs. The company delivered its billionth DVD in early 2007, but as DVD sales began to decline, they began to offer streaming content for free to subscribers in 2007. By June 2009, over 12,000 titles were available, and in October of 2008 Netflix announced a partnership with Starz to bring 2,500+ new films and shows to “Watch Instantly.” Since the Great Recession, the online content library and streaming model first developed by Netflix has hugely disrupted the television industry and reshaped entertainment; and over the same time period, the company been one of the best-performing public stocks to own – in 2019, Netflix reported 20B+ in revenue and a net income of 1.86B.
Beyond Meat
With the goal of addressing four global issues -- human health, climate change, constraints on natural resources, and animal welfare—the seed idea fir Beyond Meat was planted. The goal was to create delicious plant-based burgers, sausage, ground meat, and more, to feed the planet in a better way. According to a Live Cycle Analysis conducted by the University of Michigan, the startup’s vegan “Beyond Burger” uses 99% less water, 93% less land, has 90% less Greenhouse Gas Emissions, and 46% less energy usage than a conventional beef burger.
Founded in 2009 by Ethan Brown, the company’s first products became available in the US in 2012, and entered Whole Foods supermarkets the following year. Beyond Meat tripled their manufacturing in 2018 when they opened a second production facility; and that same year they expanded into 50 international markets. At the time when Dunkin’ Donuts announced that they would begin selling breakfast sandwiches using the Meatless Sausage product, Beyond Meat was valued at $11.7 billion.
E-Commerce
Amazon
The classic, quintessential startup story begins in somebody’s garage. That was the case for Jeff Bezos, who quit his Wall Street job to work on a startup when he saw the potential in building an Internet company, just as the Internet was becoming more popular and accessible in the mid 1990s.
Whether you love or hate Bezos today, all entrepreneurs (*think we) know something about the great beast: Amazon is among the most innovative of big companies in business today. Grabbing up new market share in D2C, delivery and digital entertainment throughout the COVID pandemic, Amazon appears positioned to thrive again throughout this current economic crisis. Having survived the infamous dot-com bubble to launch its growth 'flywheel' throughout the 2008-09 financial crisis and the decade to follow, the period of the Great Recession solidified Amazon’s unconventional model into the tech behemoth it is today.
GroupOn
Founder Andrew Mason had difficulties cancelling a cell phone contract in 2006, and launched The Point in 2007 in order to leverage a large number of people’s collective bargaining power. From there, the seed for GroupOn had been planted.
Officially launched in Chicago in November of 2008, the global e-commerce marketplace has 200 million+ downloads, and connects subscribers with local merchants by offering virtual deals on activities, travel, goods and services. It is a top 5 retail ecommerce brand, it is the ranked the top 6th app of all time on iOS, it has worked with over 1,000,000 merchants, and has over 40 million active customers.
D2C
Chewy
Modeled after the shoe site Zappos, Chewy wants to build loyal, lifetime relationships with pet owners. Chewy goes the extra mile for their customers from offering pet portraits to sending handwritten holiday cards (5 million were sent in 2017). Founded in 2011, Chewy is an online retailer of pet food and products.
In 2014 the company offered overnight delivery in the northeastern part of the US, and opened a 400,000 square foot facility to do so. As a result, between 2014 and 2015 their sales more than doubled to $423 million. 2017 was a launching point for the company. By then it had five rounds of funding under the belt, and the company accounted for more than half of online pet food and litter sales in the US with a revenue of ~$2 billion. It was acquired by PetSmart for $3.35B in a May of 2017 all-cash deal, which was the largest e-commerce acquisition at the time. Chewy received the Stevie Award for Favorite Customer Service in Retail both in 2017 and in 2018. Last year it was valued at 10.2B, and employed nearly 10,000 people.
Dollar Shave Club
Razors are a common, popular, and often-overpriced product. The co-founders of Dollar Shave Club discussed this issue when they met at a party, and later created the solution that became Dollar Shave Club.
The iconic D2C startup (founded in early 2011, expanded internationally in 2012) delivers personal grooming products straight to your front door, eliminating the cumbersome customer’s experience of asking for an employee to unlock the razor cabinet. They closely studied why subscribers churn, and have maintained high retention rates. In July of 2016, consumer brand giant Unilever acquired Dollar Shave Club for $1B in cash.
Goop
Initially an email newsletter in 2008 with an editor’s note from Gwyneth Paltrow, Goop was officially incorporated in 2011. The lifestyle brand’s digital content and ecommerce provide “cutting-edge wellness advice from doctors, vetted travel recommendations, and a curated shop of clean beauty, fashion, and home” according to the Goop website. At first based in the US, Goop officially moved its operations to the UK in 2016.
In 2018, the company raised $50 million in a Series C round of funding. The following year the company’s podcast streamed on 600 Delta planes, and they partnered with Banana Republic for an eight-part podcast series called Women on Top. In 2020 the documentary series The Goop Lab released on Netflix, also promoting Goop.
B2B
Enterprise Software
Square
When Jim McKlevey encountered a square-peg-round-hole problem (a.k.a. an inability to complete a $2,000 sale of his glass faucets and fittings, because he couldn’t accept credit cards) his friend Jack Dorsey saw an opportunity. The two solved the problem by building Square.
Founded in 2009, Square is a mobile payment, financial services, and merchant services aggregator that helps millions of sellers run their business, from secure credit card processing to point of sale solutions. The firm’s first product was the Square Reader, a small piece of hardware that accepts credit card payments by connecting to a mobile device’s audio jack. In 2018 they developed the Cash App (a competitor to Venmo) and expanded the app to support Bitcoin trading. Jack Dorsey, one of the three founders, had previously co-founded Twitter in 2006, and still today serves as the CEO of both publicly traded companies, Square and Twitter, as of this publishing.
Asana
In 2008 Dustin Moskovitz and Justin Rosenstein quit working at Facebook to start Asana, which remained in beta until November of 2011.
Asana is a web and mobile SaaS application designed to help teams organize, track, and manage their work. With Asana teams can create projects, assign work to teammates, specify deadlines, and communicate about tasks directly. It also includes reporting tools, file attachments, calendars, and more. In spring of 2011 they raised a $1.2 million angel round, and later $75 million in a Series D in 2018, when they had 35,000 paying customers. In late 2018 they raised another $50 million with a valuation of $1.5B. The company currently has ~500 employees.
Slack
Slack was originally built as an internal tool in the development of the massively multiplayer online game Glitch under the leadership of Stewart Butterfield.
The business communication platform is available in 8 languages and supports an unlimited number of users. The Financial Times wrote that Slack was the first business technology that crossed from business into personal use since Microsoft Office and the Blackberry. On the day of Slack’s launch, 8,000 customers signed up for the service. When it IPO’d in 2019 by NYSE direct listing, the company had over 10 million daily active users across 600,000 organizations in 150+ countries.
Zoom
If you want to be lazy and still succeed, you’ve gotta be smart. Founder Eric Yuan came up with the idea for a video conferencing platform as a solution to his need to take a 10-hour train ride every time he wanted to visit his girlfriend.
Founded in 2011, the US-based communications technology company provides video-telephony and online chat services through a cloud-based, peer-to-peer software platform used for teleconferencing, telecommuting, distance education, and social calls. Having achieved the $1 billion private unicorn valuation in 2017, Zoom went public in 2019. Their daily average users rose from 10 million in December of 2019 to 200 million in March of 2020 following the onset of COVID-19 global spread.
Cloudflare
In 2004 Matthew Prince and Lee Holloway set out to answer a basic question: “Where does spam email come from?” From that inquiry came Project Honey Pot, a system allowing website owners to track how spammers harvest email addresses. A few years later, the next step was to stop the spammers in the first place: so Cloudflare was built.
Cloudflare is a web performance and security company that provides online services to protect and accelerate websites. In April of 2009, it won the Harvard Business School’s Business Plan competition. During beta testing, Cloudflare’s 3 co-founders realized that sites were loading 30% faster, on average, due to the unwanted traffic it removed, increasing security and improving performance. Cloudflare now has offices in 3 countries and 200 data centers. In early 2014 Cloudflare acquired StopTheHacker; in late 2016 it acquired Eager; and in late 2017 it acquired Neumob. Its NYSE ticker is “NET”.
DigitalOcean
In 2003 Ben and Moisey Uretsky founded ServerStack to create a new product combining web hosting and virtual servers. Having surveyed the cloud hosting market, they felt that most hosting companies were targeting enterprise clients, and leaving the entrepreneurial software developers market underserved. As a result, they founded DigitalOcean.
DigitalOcean delivers a seamless way for developers and businesses to deploy and scale applications in the cloud. Founded in 2011, by mid-2012 the founding team had grown to five people. In 2012 they completed TechStars seed accelerator program and had 400 customers; the following year they opened their first European data center in Amsterdam, and Netcraft reported that DigitalOcean was the fastest-growing cloud hosting service in the world, in terms of web-facing computer count. By the end of 2015 the startup had raised over $123 million, and again in April of 2016 secured another $130million in credit financing to build out new cloud services.
Funding from a Crowd in the Cloud
AngelList
Serial entrepreneur Naval Ravikant and Babak Nivi used traction from the Venture Hack blog on entrepreneur financing to start a list of 25 investors who they would share companies with for the investors to invest in. In 2010, the 50 angel investors who had subscribed intended to invest $80 million USD that year.
The initial goal of AngelList was to democratize the investment process. In 2012 it expanded to include a recruiting portal for startups which has over 2 million individuals as well as over 35,000 recruiting companies. In 2013 it received a no-action letter from the SEC, which allowed the company to operate its Syndicates platform, which was noted as one of the most important innovtaions in the VC and angel investment industries. In 2015 AngelList made a deal with the 3rd largest private equity firm in China (CSC) and established a $400 million fund for early-stage startup investments. In 2016, AngelList acquired Product Hunt for ~$20 million.
GoFundMe
The founders of Paygr, a website dedicated to allowing members to sell their services to the public, built “CreateAFund” in 2008. After many upgrades, they switched the name to GoFundMe, which to date is the largest crowdfunding platform.
Gofundme is a crowdfunding platform that enables people to raise money for different life events. In less than a decade it has raised over $5 billion and receives over $140 million in donations per month. In 2015 Accel Partners and Technology Crossover Ventures bought a majority stake in GoFundMe. In 2016 the company made $100 million in revenue, and in 2017 it acquired CrowdRise.
This list is definitely incomplete—there are many other very successful, category-defining businesses that started up in previous economic recessions, and that are not yet included here—but we hope this initial list provides some inspiration, ideas for how downturns disrupt entire sectors, or just that you learned something in reading about these iconic companies. More companies will be added to the list in future, and new categories may be redefined.
Special thanks to Entrepreneur contributor Jayson DeMers and Audrey Conklin of Fox Business for their own insightful lists that contributed to the initial ideas for this piece.
Graduates of the Founder Institute are creating some of the world's fastest growing startups, having raised over $950M in funding, and building products people love across over 185 cities worldwide.
See the most recent news from our Grads at FI.co/news, or learn more about their stories at FI.co/journey.
