Each crisis often brings long-term opportunities to those who don’t want to give up. The dot-com bubble and 2008 recession gave birth to a number of startups that became worldwide leaders in their area.
In today’s article, we’ll look at several companies that were founded in hard times and grew despite widespread turmoil.
PayPal
In 2001, Confinity, a company that was working on simple, low-cost digital payments for consumers and businesses, merged with Elon Musk’s X.com, an online bank. It was renamed PayPal. Musk saw the potential future success of the money transfer business, terminated X.com, and focused on fast payments made over the internet. PayPal built a digital payment platform to bridge the gap in payments between consumers and businesses.
The company went public in 2002, then was acquired by eBay and continued to grow. Although the country struggled from the financial recession in November 2008, PayPal acquired Bill Me Later, an online transactional credit company, to broaden its offering and expand clientele.
In 2019, PayPal’s annual revenue was $17.77 billion.
Square
Square was founded in February 2009, when the consequences of the financial crisis were still affecting businesses. The original inspiration for Square occurred to Jack Dorsey when his friend, Jim McKelvey, was unable to complete a sale because he could not accept credit cards.
At that time, only registered merchants were allowed to accept credit card payments. Registering, however, was a costly and difficult process that most small business owners couldn’t afford. Dorsey and McKelvey’s idea was to make credit card processing more accessible to small businesses everywhere. The friends developed a credit card reader that transmitted data via the headphone jack in smartphones.
The company had a number of challenges, including security issues. Through forming partnerships with industry leaders and enabling strong encryption on its devices, Square succeeded to build credibility and achieve distribution among its target customers.
In 2019, Square’s annual net revenue was $4.7 billion.
Credit Karma
Unlike the abovementioned Fintechs, Credit Karma was founded in 2007, just before the financial crisis. Its cofounders Kenneth Lin, Ryan Graciano, and Nichole Mustard felt people should have free access to their credit and financial data.
Despite the economic turmoil, Credit Karma launched and provided its first free credit scores in March 2008. The company aimed to show users precise information about their financial situation so they could make better-informed financial decisions.
The recession caused a slowdown in the company’s growth. In 2008, Credit Karma hired only one employee, then hired only four more in 2009. By summer 2010, Credit Karma already had one million members. In 2017, Credit Karma’s revenue was over $500 million.
Venmo
Andrew Kortina and Irqam Magdon-Ismail founded Venmo in 2009. Kortina and Magdon-Ismail wanted to pay each other and other friends easily. Unlike any other payment service—especially banking apps that never disclose payment data—Venmo combines payments with a social platform and shows who’s paying whom to the user’s network of friends.
The app allows users to transact not only with friends but also with businesses thanks to partnerships with merchants.
The first launch was in 2009. In 10 years, Venmo had 40 million users and yielded $300 million in revenue in 2019.
Kabbage
Kabbage started during the economic downturn in 2009. Its cofounders, Rob Frohwein, Kathryn Petralia, and Marc Gorlin, wanted to help small businesses get funding to launch. According to Petralia, the crisis taught them to deal with change and to be nimble and flexible.
It took Kabbage more than one year to launch the platform. The company began providing access to loans in 2011. The following year, it was named one of Red Herring’s Top 100 North American most innovative private companies.
In 2019, Kabbage’s revenue was $200 million.
TransferWise
Two Estonians, Kristo Käärmann and Taavet Hinrikus, joined forces in 2008 to create a new online money transfer service. Their problem was in paying huge bank fees and currency conversion charges when they needed to transfer money back home from the United Kingdom.
TransferWise was launched in 2011. In 2012 it was already ranked in a number of lists, such as “East London’s 20 hottest tech startups” by The Guardian and “The 2012 Startups 100: Revealed” by Startups.co.uk. To succeed, the company expanded into new markets and localized the website to ensure they were offering the best possible service in each country.
In 2019, TransferWise’s revenue was £179.10 million.
C2FO
In January 2008, Sandy Kemper, former CEO of UMB Financial Corporation, founded a company called Pollenware. The name was later changed to C2FO based on customer feedback that stated the market delivered collaborative cash flow optimization—or C2FO.
Kemper’s idea was to solve a fundamental problem and create a match between accounts receivable and accounts payable for businesses to increase the efficiency of the working capital provided between buyers and suppliers in the business world.
Lately, C2FO reported approximately 79 downloads per month and a growth of 6.76 percent. C2FO’s estimated annual revenue is $36.2 million.
Bottom Line
As you can see, the story of most fast-growth Fintechs starts with addressing a widespread need with an effective solution that completely disrupts particular areas of the industry. Some ideas arose from the need to save money, and others facilitated connections between businesses or between a business and its consumers. You can come up with manifold ideas for improving your everyday life, especially during a crisis. The crisis may limit your movement, but it certainly doesn’t limit creativity and the ability to collaborate remotely.
