Coronavirus is undoubtedly having a negative effect on the economy. However, evidence from the last recession suggests that adversity builds tech companies, so what good might come out of this?
At the moment we are facing a period of great uncertainty and worry. Covid 19 is a human tragedy; one that is affecting the wellbeing of hundreds and thousands of people across the world. Health professionals are working tirelessly, putting their own lives at risk, to treat those affected by the virus. World governments and industry are working together to understand and address the challenge while providing support to victims and their families. Pharmaceutical companies are toiling day and night to search for treatments and a vaccine.
Covid 19 and the Economy
Covid 19 is also having a growing impact on the global economy. Looking back, other global tragedies have also been catalysts for an economic downturn. The catastrophic 9/11 terrorist attack sent shockwaves across the global stock markets, causing them to drop sharply. The New York Stock Exchange remained closed for just under a week; only the third time in history that the NYSE has experienced prolonged closure.
Currently, there is no definitive response to how much this pandemic will end up costing the global economy. However, In a podcast recorded last week, Mo Gowdat, former CBO of Google X anticipated that the global economy will suffer a ‘9/11’ type blow. Of course, it will be affected, he says, but it and we will recover. He predicts too, that we will rise stronger and more resilient than we were before.
Of course, Covid 19 is not a localised event. Its effects are being felt all over the world. Indeed there is hardly a nation untouched by the virus. That being said, we are witnessing it being defeated in other regions of the world. The curve is flattening, and as such, here in the UK, “this too shall pass”. By being responsible world citizens we can all do our bit to minimise the transmission of the virus by ruthlessly following the advice issued from our governments.
Mahatma Gandhi said “Adversity is the mother of Progress”, and history tells us he is right.
Airbnb, Uber, Slack Technologies, Pinterest, WhatsApp, Square and Venmo.
These names are synonymous with success and are undoubtedly some of the most iconic companies of the last decade. They are different in so many ways, but they all share a couple of resounding similarities. The first being that they have become household names; services we have come to rely on. They form the backbone of how we communicate, travel, work and pay for goods and services.
They were also all borne during The Great Recession. The era at the end of the noughties when global economies suffered a marked general decline. This period was so austere that the International Monetary Fund has concluded it to be the most severe economic and financial meltdown since the Great Depression. Some commentators have remarked it to be the second-worst downturn of all time.
These tech giants were all founded when we were facing huge adversity, just as we are today. What was less apparent to the world was that many of the entrepreneurs behind them were struggling too. We have taken a more in-depth look to see how adversity builds tech titans.
2007. Joe Gebbia and Brian Chesky were both 27 when they first had the idea for what was to later become Airbnb. Their’s is a story of persistence, determination, fear and (above all) hustle. The gents had met five years earlier at the Rhode Island School of Design. Since graduating, they had moved to New York and were struggling to pay their rent. They began to look around for extra ways to earn some cash. At that point, the local Industrial Design conference was being held in the city and as a result, all hotel rooms in the city were booked. They reacted. The pair bought a few airbeds and quickly put up a site called “Air Bed and Breakfast”. Visitors had a place to sleep and breakfast in the morning. For $80 a night, the first Airbnb guests were born.
Soon after, Harvard graduate and technical architect Nathan Blecharczyk joined the team as the third co-founder. It wasn’t all smooth sailing, however, and the trio received some hefty knockbacks before becoming the giants we know them as today. In 2008 the three entrepreneurs raised $30 000 to fund their startup by selling election-themed breakfast cereals! They went on to raise their first funding; $20000 from Y Combinator. At this point, they were still only making $200 a week, but they didn’t give up. They used the funds to travel to their biggest market, New York, to meet their users. Their research taught them that their main hurdle was that the pictures of the site listings weren’t great. Taking matters into their own hands, they bought a camera and went door to door, taking better photographs of their listings.
In 2009, Airbnb finally started taking off. The focus had shifted; from shared spaces to all types of accommodation. In March of that year, Airbnb had 2500 listings and close to 10,000 registered users.
Recent statistics show that Airbnb has over 2 million listings across 190 countries and 34,000 cities. The company is now estimated to be worth $25.5bn based on the latest round of funding of $1.5 billion. Airbnb is a truly fantastic example of how adversity builds tech innovation.
WhatsApp, too, wasn’t always the huge communication platform it is today.
WhatsApp was founded in 2009 by former Yahoo! Employees, Brian Acton and Jan Koum. After leaving Yahoo! in 2007, the friends took some time off to travel around South America. On their return, they sought employment at Facebook…but were rejected. Ironic, when you consider that in 2014 Facebook went on to acquire WhatsApp in its biggest-ever acquisition, and one of the biggest Silicon Valley has ever seen. Considering the billions that are thrown around like confetti in the Valley – that’s saying something!
In January 2009, after a chance purchase of an iPhone, Koum and Acton realised the potential of the App Store. The pair started discussing the possibilities of creating a new kind of messaging app that would display statuses next to individual names of the people. They thought on, and realised to take this idea one step further, they would need an iPhone developer. To get this started, they visited RentACoder.com and found Russian developer, Igor Solomennikov.
Koum incorporated WhatsApp.Inc later in 2009, but it wasn’t all plain sailing. Early versions of WhatsApp kept crashing. Disheartened, Koum was tempted to give up, but his friend, Acton encouraged him to hold on.
The real turning point happened in June 2009 when Apple launched Push Notifications. This facility alerted users to the fact that once a user’s status changed, everyone in that user’s network could be notified. WhatsApp 2.0 was launched with a messaging component. The number of active users leapt to 250,000.
Despite working on his own idea for a startup, Acton decided to join the company. In October 2009, Acton persuaded five of his former friends at Yahoo! to invest $250,000 in seed funding. Acton himself became a co-founder and was given a stake, officially joining WhatsApp in November.
After spending months at beta stage, the application finally launched a year later, exclusively on the App Store for the iPhone. Koum then hired a friend to develop a Blackberry version which launched 2 months later.
By early 2011, WhatsApp was one of the top 20 apps at Apple’s U.S. App Store.
Fast forward 10 years and WhatsApp is beyond massive. In February this year, WhatsApp announced that it supports 2 billion users worldwide. What a fantastic example of how adversity builds tech companies that add value for years to come!
It could be argued that quite apart from supporting its own users, WhatsApp has a more important legacy. More and more, Startups are building their own businesses around WhatsApp.
Vahan, a Y Combinator-backed startup, uses WhatsApp to help delivery startups find blue-collar workers. Digi-Prex, a Hyderabad-based startup, runs an eponymous online subscription pharmacy to serve patients with chronic diseases. Patients share their prescription with Digi-Prex through WhatsApp and the startup’s workers then deliver the medication to them on a recurring cycle. In recent years too, WhatsApp has introduced tools for businesses to connect with their customers.
Adversity is tough and sometimes the knocks may seem like too much to bear. In the worst cases, it may seem like we have lost everything and carrying on seems harder than giving up entirely. Turning it on its head, adversity can make us fearless. After all, if we feel as though we have lost everything, then what do we have left to lose?
These are surreal and anxious times, but there is and will be an end. The companies that rose to greatness during the great recession of the noughties has taught us that adversity builds tech greatness. It begs the question…can we expect the next generation of tech titans to emerge from this period of trial and adversity?
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