Triggered by a housing crisis brought on by sub-prime mortgages, bank bailouts, and one of the largest drops of the Dow Jones in history, unemployment skyrocketed, businesses shuttered, and startups suffered. But not all startups.
COVID-19 (known as Coronavirus) has had widespread affects worldwide. It’s caused a global heath crisis, shortages of medical supplies, runs on grocery stores, and, of course, a significant number of deaths. As is the case with epidemics and pandemics, the impact on local and global economies can’t be understated. Stock markets around the world have seen extreme losses. Confidence in the global economy is waning. We’ve seen this type of swing before. We can predict some of the outcomes. And they aren’t all bad.
In 2008, the United States faced what would eventually be deemed “The Great Recession.” Triggered by a housing crisis brought on by sub-prime mortgages, bank bailouts, and one of the largest drops of the Dow Jones in history, unemployment skyrocketed, businesses shuttered, and startups suffered.
But not all startups.
While investments in startups pulled back during the recession, some of today’s most well-known companies were founded, funded, and thrived.
Companies founded in 2008/2009:
🏡Airbnb
⛅️Cloudflare
🐙Github
☁ Nutanix
📟PagerDuty
💌Sendgrid
＃ Slack
⏹Square
💳Stripe
☎️Twilio
🚖Uber
📣Yammer— Yuri Sagalov (@yuris) March 7, 2020
While in a booming economy, it’s easier to experiment and survive as a company, but during a recession, it’s much harder. During a recession, companies have to be laser-focused on finding product-market fit. Experimentation may still happen, but it needs to be based on data. And companies operating and trying to survive during a recession do not have the luxury of ignoring their customers.
Combined, these companies saw over $20 billion in investment. Whether you judge a company’s success based on investment rounds or not, that’s an impressive list of companies and an impressive amount of capital flowing through products that were launched and initially funded during one of the United States’ biggest recessions. So, how did they do it?
While in a booming economy, it’s easier to experiment and survive as a company, but during a recession, it’s much harder. During a recession, companies have to be laser-focused on finding product-market fit. Experimentation may still happen, but it needs to be based on data. And companies operating and trying to survive during a recession do not have the luxury of ignoring their customers.
These companies were founded and scaled in the years between 2008-2010 (right in the middle of the recession). Their strategy for overcoming the recession and growing their businesses during a difficult time helped drive a shift toward focus on customer experience. According to a Google Trends search, 2008 was the turning point in which customer experience searches spiked.
This is no coincidence. The cost of acquiring new customers is extremely high, but the cost of losing an existing customer is even higher. This is because it costs 5 times as much to acquire new customers, so for every existing customer lost, you need to bring on two more customers if you are going to grow. Combine those two concerns with The Great Recession, and you have a recipe for intensified focus on customer relationships. These relationships were driven by user experience, customer experience, and customer engagement.
How does this all tie in with Coronavirus, Web3, and building startups today? The comparison to 2008 is pretty apt. Web3 companies today have been able to get by on intrigue alone. Built around the idea of a better web, a return to user control and privacy, and a promise of walled gardens being torn down, Web3 applications have been able to build and focus on the technology. There has been little to no focus on customers. User experience improvements have come of late, but user experience alone does not amount to a focus on customer experience or customer engagement.
Despite a lack of focus on customers, many Web3 applications have been able to raise significant amounts of capital. Venture capitalists, rightly, have been willing to make a bet on the future promised by Web3. However, it seems we are on the brink (or in the midst of) a global recession. In such times, as illustrated with the 2008 housing crisis, money does not flow. In order to get funded and survive in the Web3 space during a global recession, companies will need to focus less on interesting technology and more on product-market fit.
However, the tools to do this well have not existed up until now. The ability to analyze user activity in Web3 applications while protecting privacy and not hoarding data simply hasn’t been possible. Tools to communicate directly with customers and users of a Web3 application have been non-existent. This is why SimpleID is so important and a growing focus on customers and building relationships with those customers is so important.
The Web3 companies that will survive an economic downturn are the ones that can find product-market fit quickest. And the way to find that fit is to understand customers, engage with them, build relationships, and make money. That last point may be the most important one. Proving that you can earn revenue from a product built in Web3 is still largely a pipe dream. But it doesn’t have to be.
With SimpleID, you can segment your users into logical groups based on their blockchain interactions. You can then send in-app communications to the right people at the right time. SimpleID also makes it easy to collect email addresses and protect that private information from misuse (including any potential misuse by SimpleID itself). We wrote about the architecture and cryptographic process we built out to make this possible. But here’s the quick description:
You can collect emails and send them to SimpleID. We will disassociate them from the user’s wallet address and encrypt the mapping used to make sure you can send the right email to the right user. This means SimpleID can never map an email address back to a wallet address, but you can still send emails to your users.
I believe that even in times of crisis and global recessions, there are always opportunities for startups to thrive. It’s all about finding the right product-market fit and being adaptable to the changing circumstances. Just look at companies like Airbnb and Cloud that were founded during the Great Recession and are now household names. Innovation knows no bounds!
I think the current situation with COVID-19 and the global recession can actually present opportunities for startups. Just like in 2008, when companies like Airbnb and Cloud were founded and thrived, there is always a chance for innovative businesses to emerge and adapt to the changing landscape. It’s all about finding the right product-market fit.
The article highlights the resilience of startups during times of crisis. Despite the economic downturn caused by the housing crisis and global recession, some startups like Airbnb and Cloud managed to not only survive but thrive. This shows the importance of product-market fit and the ability to adapt to changing circumstances.
I believe that COVID-19 and a global recession can actually teach us a lot about product-market fit. Just like during the Great Recession, some startups will suffer while others will thrive. It’s all about adapting to the new conditions and finding innovative solutions.
I think it’s interesting how some startups are actually able to thrive during times of crisis. It goes to show that there’s always opportunity, even in the midst of a recession or a global pandemic. Companies like Airbnb and Cloud were founded during the Great Recession and have become incredibly successful. It’s a testament to the power of innovation and adaptation.
How did companies like Airbnb and Cloud manage to thrive during the recession?
Startups like Airbnb and Cloud were able to thrive during the recession by adapting to the changing market conditions and identifying new opportunities. They focused on providing innovative solutions that addressed the specific needs and challenges brought about by the recession. Additionally, these companies were able to attract investors and secure funding, which enabled them to continue growing and expanding their operations. Overall, their success can be attributed to their resilience, agility, and ability to capitalize on emerging trends and market demands.
I think it’s interesting to see how certain startups were able to thrive during times of crisis. It goes to show that adaptability and innovation are key factors in achieving product-market fit.
It’s amazing how some startups manage to thrive even during times of crisis. The current COVID-19 situation reminds me of the Great Recession in 2008, where we saw companies like Airbnb and Cloud being founded. It just goes to show that there are always opportunities for innovation, even in the darkest of times.
How did startups manage to thrive during the recession?
During recessions, startups often have to adapt quickly to the changing market conditions. They may need to pivot their business model, cut costs, and focus on their most profitable products or services. Additionally, recessions can create opportunities for startups with innovative ideas to disrupt established industries. These startups can offer cost-saving solutions or fill gaps left by struggling incumbent companies. It’s a challenging environment, but with the right strategies, startups can not only survive but also thrive during a recession.
As a startup founder who weathered the storm during the Great Recession, I can attest that tough times can also bring opportunities. It’s all about adapting, innovating, and hustling. Don’t let fear hold you back!
It’s amazing to see how some startups were able to thrive during the Great Recession. It just goes to show that even in the face of adversity, there are always opportunities for success.
It’s interesting to see how some startups actually thrive during times of crisis. It just shows the importance of adaptability and finding unique solutions to new problems.
What factors contributed to the success of these startups during the recession?
The success of these startups during the recession can be attributed to several factors. Firstly, the economic downturn created a greater need for innovative solutions and cost-effective alternatives, which startups were able to provide. Additionally, the lower valuations and reduced competition during that time allowed these startups to secure funding more easily. Lastly, the changing market conditions forced these companies to be agile and adaptive, enabling them to quickly pivot and meet the evolving demands of customers. Overall, it was a combination of timing, resilience, and forward-thinking strategies that contributed to their success.
As a startup founder who weathered the storm during the Great Recession, I can say that tough times can often lead to the birth of innovation. It’s during these times of crisis that entrepreneurs are forced to think outside the box and find new ways to meet the needs of the market. Don’t count out startups just yet, they have a way of surprising us.
How did certain startups manage to thrive during such difficult times?
During difficult times, startups that were able to thrive often had a few key factors working in their favor. One important factor was their ability to adapt and pivot their business model to meet the changing demands of the market. They were able to identify new opportunities and adjust their strategies accordingly. Another factor was their strong leadership and a team that was resilient and dedicated. These startups were able to navigate through the challenges by making tough decisions, staying focused on their goals, and maintaining a positive mindset. Lastly, having a product or service that was essential or in high demand during the crisis gave them a competitive edge. Overall, it was a combination of smart decision-making, adaptability, and a bit of luck that allowed certain startups to thrive during difficult times.
It’s impressive to see how some startups managed to thrive despite the challenges brought on by the recession. It goes to show the resilience and adaptability of entrepreneurs. Can’t wait to see what innovations will come out of the current crisis too!
It’s fascinating how some startups were able to thrive even during the recession. Shows the importance of adaptability and seizing opportunities.
Do you think COVID-19 will also give birth to successful startups like the recession did in 2008/2009?
Absolutely! Crisis situations often create opportunities for innovation and entrepreneurship. Just like the recession in 2008/2009 paved the way for successful startups like Airbnb and Cloud, COVID-19 has the potential to give rise to new innovative companies that address the challenges we are currently facing. It’s a matter of identifying the gaps in the market and being able to adapt to the changing landscape. So, yes, I believe we will see the emergence of successful startups from this crisis as well.
It’s incredible how some startups managed to emerge and thrive in the midst of a global recession. It just goes to show that even in the face of adversity, innovation and determination can lead to success.
It’s amazing to see how some startups managed to thrive and succeed even during the global recession. It goes to show that with the right product-market fit and determination, anything is possible!
The impact of COVID-19 and the global recession on startups reminds me of the Great Recession in 2008. Despite the challenges, some startups were able to thrive and become successful companies like Airbnb and Cloud. It shows that even in difficult times, there are opportunities for innovation and growth.
As an entrepreneur, I believe crises like COVID-19 and the Great Recession are opportunities for startups to pivot and innovate. While some may struggle, resilient companies emerge stronger and more adaptable.
As a seasoned investor, I believe that turbulent times like the 2008 recession or the current COVID-19 situation can be catalysts for innovation and new opportunities. While many startups may face challenges, those with a resilient business model and adaptability can thrive even in the toughest of circumstances.
In my opinion, the current global situation with COVID-19 and the economic recession shows us the importance of adaptability and resilience in the realm of product-market fit. It’s fascinating how some startups not only survived but also thrived during past crises, proving that innovation and determination can lead to success even in challenging times.
COVID-19 has truly highlighted the interconnectedness of our global economy and the importance of resilience in the face of crisis. It’s a stark reminder that preparation and adaptability are key factors for businesses to survive and thrive during turbulent times.
It’s interesting to see how certain startups not only survived but thrived during the uncertainty of the recession. This goes to show that challenges can often be the birthplace of innovation and success.
I believe that difficult times, such as the Great Recession and the current COVID-19 crisis, can serve as catalysts for innovation and the emergence of successful startups. Despite challenges, some companies have shown resilience and even thrived during such turbulent times.
Could you elaborate on how the startups managed to thrive during such a challenging economic climate?
During turbulent economic times, startups that focused on solving real problems, adapting quickly to market changes, and maintaining a lean operation were able to thrive. They leveraged innovation, agility, and a deep understanding of their target audience to navigate challenges and emerge stronger. It was a testament to resilience and strategic decision-making.
As someone who has closely followed the economic trends, I believe that the current situation we are facing due to COVID-19 can potentially lead to new opportunities for startups to thrive. Just like how some successful companies emerged from the ashes of the 2008 recession, I think we will see innovative solutions and resilient businesses flourish in the aftermath of this crisis.