3 tech companies that were born out of the 2008 Financial Crisis
- Economist predicts a COVID-19 induced global recession to take place
- Tech companies such as Slack, Uber, and Venmo were developed after the 2008’s financial crisis
- Companies are leveraging tech to sustain the impact of the pandemic
What started as a subprime mortgage crisis eventually erupted into an all-out financial crisis, most notably marked by when Lehman Brother’s investment bank filed for bankruptcy back in 2008.
More than a decade later, a similar pattern of disruption is emerging. As the novel coronavirus outbreak has placed nations in lockdowns and caused borders to shut, leaving a highly structured and connected worldwide supply chain left to crumble and stock markets in free fall.
Nations and governments are preparing for a COVID-19 global recession.
With business shutting down and liquidating en masse, the global market certainly seems a bleak place for growth and success.
There’s that old adage that “those who cannot remember the past are condemned to repeat it.” However, if this crisis is indeed history repeating itself, there were a lot of lessons learned back in 2008. In 2020, we may see a whole new wave of tech companies emerging and thriving from a potential COVID-19 global recession.
Here are some of the tech companies that were ‘born’ out of the last recession, how they adapted, and the road to becoming major players in the tech landscape.
Slack was founded by Steward Butterfield and his team after a less than enthusiastic reception for their initial project, Glitch — a whimsical online game. Glitch’s failure to take off was not fatal, and Slack’s existence would never have happened without the shelved game.
Butterfield had previously created the photo-sharing site Flickr. When it was acquired by Yahoo in 2005, the co-founder continued to stay on, eventually deciding to leave in 2008, the very year of the financial crisis, and started a new company called Tiny Speck. Their first project was the doomed Glitch.
Now, the development and shelving of Glitch is its own saga, launching and reverting back to beta status within two months, the internal communication tool developed by Tiny Speck to connect their employees between their US and Canada offices eventually emerged as one of the most popular workplace collaboration tools known today.
In 2014, Slack was launched and it came with an almost too good to be true announcement:
“Imagine all your team communication in one place, instantly searchable, available wherever you go.
To date, the app has seen its concurrent users pass the 10 million mark and consistently soared in millions, hitting 12.5 million on March 25, as reported in The Verge.
“Slack has gained a leading position in the Coronavirus theme,” according to the latest Thematic Scorecard for the application software sector.
Butterfield has tweeted that the monumental increase is a collateral impact of the pandemic, which led workforces from many sectors globally to shift from brick-and-mortar offices to makeshift work desks at home.
Slack plays a significant role in connecting teams in disparate locations.
In some senses, we were made for this. Slack’s not specifically a “work from home” tool; it’s more of a “create organizational agility” tool. But an all-at-once transition to remote work creates a lot of demand for organizational agility. From our S-1: pic.twitter.com/qFf08KdI2c
— Stewart Butterfield (@stewart) March 26, 2020
With a recent revamp of Slack’s platform, making for a cleaner and easier navigation, the look fits nicely in the timeline where businesses are grappling to get their spread-out, homebound employees working together amid the pandemic.
What started as an idea between two individuals who were unable to hail a cab on a chilly winter evening in Paris, France eventually became a tech behemoth with a valuation of $75.5 billion.
Uber was launched in March 2009 in San Francisco when Travis Kalanick and Garrett Camp developed an app for passengers to hail a ride with the tap of a button.
Fast forward to the present, the ridesharing giant has dominated the global ride-hailing market with services available in more than 600 cities, across 65 countries and is restarting its engines on self-driving technologies.
Even though the current pandemic has put a halt on its ride-hailing services, the tech titan has pivoted and expanded its services to suit the current dynamics of restricted movements from individuals and hungry homebound customers.
Uber Eats is offering to waive delivery fees in the US and Canada as it tries to help local restaurants weather the coronavirus storm. At the same time, by taking the delivery fees out of the equation, the company has a competitive edge on other providers as home delivery of goods and services spikes.
Leveraging on a massive spike of direct-to-door deliveries, the ride-sharing giant announced last month that it would expand delivery options beyond just food delivery. Uber will also include deliveries of parcels, medications, and pet supplies. These fall under two initiatives called “Uber Direct” and “Uber Connect.”
The initiatives will first launch in Australia, Mexico, and the US. As demands for rides have dwindled, the need for deliveries of quarantine daily staples has surged, presenting a sweet spot for Uber to pivot its drivers into delivery personnel. In the end, meeting the needs of customers but also providing essential jobs for its gig workers.
In October 2009, Venmo released an executive summary with the note below:
“[…] The ubiquity of cellphones plus Venmo’s magic will create an impenetrable network effect, making Venmo the preferred way to pay for everything.”
True enough, for about 40 million users, Venmo is the preferred way to pay.
The finance app that offers not only financial services but has distinguished itself with added social media-like functions. Users can comment on payments and see what friends are spending on with emojis available for the masses.
Last year, PayPal CEO Dan Schulman said Venmo is on track to hit US$300 million in revenue, as reported in CNBC. The digital payment giant announced partnerships with leading brands such as GrubHub, Uber, and Chipotle.
Presently, the ongoing pandemic sees the finance app being utilized a little differently.
Users are getting creative with the app, using it in New York City to raising funds to feed healthcare workers and also collecting donations through the app.
On a larger scale, Venmo and Square are offering to deliver users government stimulus payments. For a mobile-first society, receiving relief through mobile may be more convenient and safer than receiving their checks by mail.
Digital payments provide more security and transparency, allowing for digital records to stay updated, while also saving time and resources.
MIT Technology Review explored the concept of a publicly run payment system and how that could significantly streamline the processes of government bodies handing out relief funds, looking at the benefits to businesses and members of the public hit hard by a global crisis.
The tech company may progress in leaps and bounds beyond the pandemic as its functions open up new opportunities to reach out to unbanked individuals and transform the finance industry altogether.
6 August 2020