A word of encouragement for all the entrepreneurs (and every other working stiff, for that matter) scrapping it out in the latest downturn: Recessions--for all the havoc they wreak--can also sow the seeds of serious fortunes.
"At a basic level, there is an important job or problem that customers can't do or solve for themselves," says Scott Anthony, president of Innosight, a Watertown, Mass.-based innovation strategy consultancy. "The best chance of creating something powerfully profitable is starting with an important, unsatisfied problem."
The nice thing about those problems is that they exist in every economic climate--and that means constant opportunities for the entrepreneurs and financiers with enough foresight, conviction and capital to nab them.
For inspiration, we flipped back through 200 years worth of US recessions and found plenty of savvy entrepreneurs who did just that.
Take Charles Wiley, who opened a small print shop in lower Manhattan in 1807--the same year the US Congress, provoked by a British warship that opened fire off the coast of Norfolk, Va., passed an embargo preventing American ships from landing at foreign ports unless authorized by President Thomas Jefferson himself.
The economic warfare triggered a painful, seven-year recession, but Wiley soldiered on, partnering with Cornelius Van Winkle, a more established Manhattan printer. The two hosted a meeting place for famous scribes like James Fenimore Cooper and William Cullen Bryant and published future legends Edgar Allen Poe and Washington Irving.
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The company eventually expanded into textbooks and other higher-margin titles. Headquartered in Hoboken, N.J., John Wiley & Sons now boasts a $2 billion market capitalization on the New York Stock Exchange.
The Panic of 1907 didn't have Charles Russell Bard running for cover. An American importer of French silks, Bard began importing and distributing urethral catheters--a tool used to relieve urinary discomfort. He later expanded his line to include cardiological, radiological and medical products. CR Bard's current market cap: $8.7 billion.
In 1918, at age 26, Cornelius Vander Starr left his job peddling auto insurance in California to clerk for the Pacific Mail Steamship Company in Yokohama, Japan. Later that year, he moved to Shanghai where he worked for several insurance firms. In 1919, as a three-year, post-World War I recession gripped the West, Vander Starr founded an insurance firm called American Asiatic Underwriters--now known as American International Group, the giant insurer near the center of the latest global financial crisis. At the time of this writing, the US government had announced a bailout package worth $150 billion to keep AIG afloat.
Even the decade-long Great Depression (1929-1939) couldn't derail Drs. Ralph Falk and Donald Baxter, two entrepreneurial physicians from Iowa who saw an opportunity to bring intravenous medical treatments to the masses. At the time, only major research institutions had the resources and equipment needed to inject a stream of medicine directly into a person's veins.
The doctor duo launched the Don Baxter Intravenous Company in 1931 and began mass production in Glenview, Ill., in 1933. Today, Baxter International, headquartered in nearby Deerfield, Ill., develops everything from pharmaceuticals and dialysis machines to cardiovascular and anesthetic equipment. Baxter's recent market value: $37 billion.
In late 1953, as the Korean War drew to a close and consumers felt the pinch of higher taxes used to fund Cold War military spending, the first issue of Playboy magazine went to press (without a date). Its creator, Hugh Hefner, envisioned a rag with the same flashy elements of his former employer Esquire but with a naughty twist: photographs of beautiful nude women.
When Hefner's boss at Esquire refused to give him a five dollar raise, Hef quit and hit up his friends to help design a new magazine in exchange for slices of equity. He worked odd jobs during the day and pawned his possessions to make ends meet. Today, the Playboy empire, now run by Hefner's daughter Christine, includes TV, books, calendars and, of course, the flagship magazine.
The troubled 1970s--a period marked by nasty "stagflation" (high inflation and stunted growth) in the US--also yielded a host of titans, including Southwest Airlines, FedEx, Microsoft and Oracle.
Count John Sperling in that group, too. A professor at San Jose University, Sperling noticed an interesting demographic shift: More adult students were retuning to school to change careers. But when he approached the school about starting an adult education program, San Jose said no thanks.
So, in 1973, in the teeth of a recession, Sperling launched Apollo Group to license course materials to traditional universities. When conventional nonprofit colleges griped about his for-profit model, he switched gears and opened the University of Phoenix, the first for-profit accredited university, with a class of eight students. Apollo Group, based in Phoenix, now has 90 campuses across the US and a $10.6 billion market cap.
Remember: There's always a problem that needs solving. And that applies to recessions, too.