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A Look At The San Francisco Startups That Launched During A Recession

Richard Fang

From Airbnb to Cloudera, let’s explore how these tech startups launched

https://img.particlenews.com/image.php?url=1jxW0O_0ZAxpSta00Photo by Clark Tibbs on Unsplash

With recent uncertain times across the world, 2020 is shaping up to be both exciting and frightening.

Many startups have experienced cutbacks, including many needing to initiate layoffs while others were closing shop. In general, though, VC deal activity has risen since the GFC.

https://img.particlenews.com/image.php?url=3VyW9N_0ZAxpSta00

As seen in the graph below, there was a small decline from 2008–2009 before picking back up into record highs in 2018 and 2019. So far, it looks like there will be a decline in VC deal activity in general by the end of 2020.

It’s essential, however, to remember that many startups were born from lows. Every recession eventually ends, and we saw many come out from the most recent Global Financial Crisis into successful startups.

In an even more exciting chart, 2009 was the largest number of US software companies that were founded between the Years 2003 to 2014, which was just at the end of the Global Financial Crisis.

https://img.particlenews.com/image.php?url=0IjtIg_0ZAxpSta00Source: https://mattermark.com/2007-2009-financial-crisis-surprisingly-kind-tech-startups/

This shows that many founders were hungry to begin, even if it meant starting in the middle of a recession.

For this list, in particular, the focus is to provide a broad view of a variety of companies under different industries.

Airbnb

https://img.particlenews.com/image.php?url=21Ub8K_0ZAxpSta00Source: https://www.bbc.com/news/technology-50851419

Founded by Brian Chesky and Joe Gebbia as Airbed & Breakfast, Nathan Belcharcyk eventually joined as the third co-founder.

The idea was initially conceptualized during the Industrial Design Conference, where the founders initially focused on providing short term living quarters, breakfast, and business networking opportunities who were unable to find a hotel during the conference.

To sustain their business in the following early years during the GFC, the co-founders had to sell cereal boxes for Barack Obama and John McCain.

By 2009, they managed to get accepted into Y Combinator’s winter batch. Although Y Combinator co-founder Paul Graham wasn’t a fan of the idea, he was impressed by their bootstrapping techniques (around the cereal boxes).

This, of course, continued to drive the momentum after the GFC, is one of the most successful startups from the Y Combinator cohort. Although their growth was initially slow, the idea soon took over, with more people looking to make more income after the GFC by renting their own homes out.

Uber

https://img.particlenews.com/image.php?url=22p7el_0ZAxpSta00Photo by Priscilla Du Preez on Unsplash

Uber IPOed last year in 2019 at a record of $75.5 billion, one of the largest in startup history. Although it has since dropped, it is still known as one of the biggest tech companies since launching in 2009.

Garrett Camp and Travis Kalanick originally founded the ride-hailing company (which has now branched into things like food delivery) as Ubercab. The idea itself came after they couldn’t find a taxi ride in a night in Paris.

Initially, it focused on offering luxury car rides, double the price for taxis. This focused on providing a niche for ‘executives’ that wanted a more comfortable and uninterrupted ride, especially for business trips. Launching first in San Francisco, it eventually went onto expanding into New York in 2011 May and then its first international expansion in Paris in December 2011.

Having just launched near the end of the recession, Uber came at a perfect time for those looking to earn money or create income for themselves, especially those who were laid off during the crisis.

Square

Another Y Combinator company, Square, was founded in 2009 by Jack Dorsey (founder of Twitter) and Jim McKelvey.

The idea originally formed when Jim McKelvey couldn’t complete a $2000 sale of glass faucets and fittings because he could not accept credit cards. Thus Square’s first product, ‘The Square Reader, ’ focused on accepting credit card payments by connecting to a mobile device’s audio jack.

https://img.particlenews.com/image.php?url=2aHHpN_0ZAxpSta00Source: https://www.merchantmaverick.com/square-emv-chip-card-reader-unboxing-and-review/

They have since moved into other forms of technology such as Square Stands, Payroll (a tool for small business owners to process payroll for their employees), and other fintech tools.

Today, they stand at a valuation of around $40 Billion dollars, having IPOed in 2015 for only $2.9 billion dollars.

Yammer

https://img.particlenews.com/image.php?url=377iVZ_0ZAxpSta00Source: https://www.pcmag.com/news/microsoft-folding-yammer-enterprise-into-office-365-groups

Founded by David O.Sacks in 2008, Yammer is a freemium enterprise social lent working service used internally for businesses (or the intranet). It has since been acquired by Microsoft for $1.2 billion and been included in all enterprise plans of Office 365

Originally part of an internal communication system for Geni.com, it was soon spun off into its product. The product ultimately won the major prize at TechCrunch50, which helped raise enough money to kickstart Yammer and drive its growth.

By the end of 2008, we were in the middle of the financial crisis, and raising money was really hard. — This Week in Startups Podcast

David has mentioned himself that without TechCrunch50, raising money might have been a struggle without the exposure at TechCrunch. He suggests that founders during a recession should take whatever money while you can during uncertain times.

Cloudera

Cloudera is a software company that focuses on a platform that provides software and services related to Apache Hadoop. In simple terms, it helps provide a platform with data warehousing, machine learning, and analytics, all focused around the cloud or on-premise infrastructure.

Founded in 2008 by Christophe Bisciglia, Amr Awadallah, and Jeff Hammerbacher, Cloudera has grown to $3.66 Billion since its IPO in 2017.

Summary

The focus on this list was to provide insights on startups that made it big since the financial crisis in 08–09 (as well as Mailchimp’s inception during the dot-com bubble).

Many of these startups came from different industries, with founders from a variety of backgrounds.

This shows that startups can grow to incredible heights, even during uncertain times.

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Editor at CornerTech and Marketing @richardfliu on Twitter

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