Ten Businesses that Thrived During a Recession
From established brands that adapted their business model to weather the storm and come out stronger to new startups that were courageously founded at the lowest points in economic history, here are ten companies that survived and thrived during a recession:
Before the recession hit, Mailchimp primarily focused on large, corporate clients. When the company realized that this business model would not survive a recession, though, it pivoted to marketing its services to small and medium-sized businesses.
To reach this new market, Mailchimp became one of the first companies to successfully employ the "freemium" model, offering a limited version of its services that was completely free to use. By 2010, Mailchimp's user base had exploded from 85,000 to 450,000 users.
Along with showcasing the potential benefits of offering a freemium product, Mailchimp also serves as an example of how companies must sometimes rethink their entire business model in order to survive periods of economic downturn.
2. Warby Parker
Not many people had the courage to start new companies during the Great Recession, but Warby Parker is a rare example of a successful company that was founded at the trough of the country's economic downturn.
The founders of Warby Parker realized that people were paying much more for eyeglasses than they should be and became one of the first companies to allow customers to purchase affordable prescription eyeglasses online.
Any company that is able to make its products more affordable than the competition is one that is likely to thrive during a recession when consumers value affordability above all else. Despite being founded during one of the most challenging times to start a new company, Warby Parker quickly grew into a highly profitable brand and remains one of the most popular options for purchasing eyeglasses online.
In 2008, Netflix was not quite yet the streaming giant that we know today. In fact, the company had just recently begun introducing its streaming model around the time that the economy took a turn for the worse.
However, this didn't stop Netflix's new streaming service from becoming immensely popular in a short amount of time. While other companies were struggling to remain profitable, Netflix was actually increasing its membership subscriptions at a record pace.
Netflix began offering its streaming service as a response to dying video rental stores. Faced with reduced entertainment budgets, being able to access an entire library of titles for a small monthly fee was an option that many consumers were thrilled to have.
By continuing to innovate and responding to shifting consumer priorities, Netflix was able to thrive during the Great Recession. Today, the company is still enjoying the growth that it was able to experience during a time when consumers were hungry for affordable entertainment.
Along with surviving the Great Recession, Microsoft was actually founded during the 1970s recession in 1975. At the time, computers were massive in terms of both their size and expense and were used only by the large organizations that could afford them. Microsoft founders Bill Gates and Paul Allen, though, pioneered the idea of using software and "micro-computers" to make the technology affordable and beneficial for smaller businesses and personal users.
It wasn't long after that Microsoft became a household name, allowing the company to thrive throughout the 1970s recession, the dot-com bubble, and the Great Recession.
Airbnb was founded in the summer of 2008, making it another example of a company that was started in the midst of the Great Recession. As with many successful startups that are founded during a recession, Airbnb was designed to meet a need that the recession had a large role in creating. After struggling to find an affordable hotel room in San Francisco, roommates Brian Chesky and Joe Gebbia decided to tap into the sharing economy to make travel accommodations more economical for those hit by the recession. From these humble beginnings, Airbnb has become a multi-billion dollar publicly-traded company.
Like Warby Parker and other companies founded during a recession, Airbnb is a great example of how startups that are founded during an economic downturn to meet a specific need are often even better positioned to thrive than an established company that is forced to adapt.
Few industries were impacted harder by the Great Recession than the banking industry. CitiGroup, however, was one of the few banks that actually grew its assets during the recession.
What's interesting about CitiGroup's performance during the Great Recession is the fact that there really wasn't any substantial difference between the services offered by CitiGroup and the services offered by so many other banks that struggled to keep the lights on. Instead, it was largely CitiGroup's innovative marketing and branding that allowed the bank to enjoy so much success.
CitiGroup, therefore, serves as an example of how companies can leverage marketing to thrive during a recession even if their product is not recession-proof.
As a non-essential expense, it seems logical that companies producing children's toys would suffer during a recession. In 2008, many such companies did indeed struggle. Lego, however, managed to increase its profits to an all-time high.
Since the 2008 recession was largely limited to the United States economy, Lego responded by aggressively expanding its market into European and Asian countries. This global expansion enabled Lego to thrive during the recession and allowed it to enter new markets and turn Lego into a globally recognized brand.
Groupon is an example of a company that is perfectly suited to thrive during periods of economic downturn - something that should come as no surprise seeing as the company was founded in November 2008. By offering customers easy access to discounts on a wide range of products and services at a time when budgets were tight, Groupon was a company that actually benefited from the recession rather than being hampered by it.
Groupon shows that saving your customers money through your products or services is by far one of the most proven ways to make your company recession-proof.
The Great Recession played a major role in bringing about the sharing economy, and, along with Airbnb, Uber is one of the most famous examples of a company that capitalized on this new model. By allowing people to get paid for transporting passengers using their personal cars, Uber provided a new employment option at a time when many people were hungry for work while also reducing the cost of transport.
These dual benefits of Uber's business model allowed the company to find rapid success in the midst of the Great Recession. Uber upended the taxi cab industry and was instrumental in showing how the sharing economy model can be leveraged with excellent results.
"Free" is a word that always gets attention, but especially so during times of economic downturn. Founded in 2009, WhatsApp is another example of a company that utilized the freemium model to attract customers. For an entire year, customers were able to send messages for free on the app. After the first year, they were charged just $0.99 per year to continue using the app. This free year of use and low annual cost thereafter made WhatsApp an appealing alternative to mobile phone plans for cash-strapped users who sent a lot of text messages.
In 2014, Facebook acquired WhatsApp for $19 billion, cementing the company as proof that risks taken during a recession can sometimes pay off in a major way.
While no business owner hopes for a recession, the reality is that some companies actually do quite well during periods of economic downturn. New startups that are able to come in and fill a need that the recession creates, as well as existing companies that are able to adapt to shifting consumer priorities, are both poised to thrive during a recession.
As we continue to inch closer toward another recession, it's important to take the lessons that these companies can teach to heart. By continuing to innovate and adapt, you can position your company for long-term success no matter what the economy happens to throw your way.