Mar 15 2009
Innovation During Recessions
No one looks forward to recessions. They are times when people become very cautious with their finances and fear for the future. In spite of all of this, its also a time of great opportunity. Many successful companies started during a recession or in a weak economy.
The Tabulating Machine Company
In 1896, William Jennies Bryan blamed corporate greed for the problems in the slowing economy in his Cross of Gold speech. A U.S. Census Bureau employee, Herman Hollerith, invents a machine that can sort census data on punch cards. Normally, it took the bureau years to process population data. This device allowed them to do it in months. Hollerith decided to move his life in an entrepreneurial direction by starting the Tabulating Machine Company. It would later be renamed International Business Machines (IBM) in 1924.
The Best $538 Investment Ever
In 1939, during the Great Depression, William Hewlett and David Packard were debating on what to call their company. It would either be Hewlett-Packard or Packard-Hewlett. A coin toss determined that the name would be Hewlett-Packard, which is a good thing. If the company was called PH, it would be more appropriate for a shampoo manufacturer than a tech company.
HP was started with $538 in a garage in Palo Alto, California. Their first product, an audio oscillator, ordered by Disney ensured their prosperity through the recession. Today, HP is the largest technology company in the world.
On the Road to Billion$
Its 1975, the economy is not great, and Watergate is still on everyone’s mind. Bill Gates drops out of Harvard and forms a partnership with Paul Allen in a company they name Micro-Soft. They develop Altair BASIC for the MITS Altair 8800. The sales from this software made the company profitable. It wasn’t until the next recession in 1981, when Microsoft released DOS for the IBM PC which lead to it eventually becoming a dominant player in the software industry.
The Dot Com Meltdown
The Internet had a severe downturn in 2001. Venture capital dried up as Internet companies failed to show profitability. Many would find it difficult to get funding for a business at this time, but Jimmy Wales and Larry Sanger start a new web site as a not for profit hobby. It rapidly grows because they borrowed unused server space from donating companies. Today, wikipedia is a leading online encyclopedia successfully competing against the traditional printed encyclopedias which dominated years before.