Harvard Business Publishing

"Why would you want to start a company now?"

I've heard that a lot lately. The economy is down and getting worse, so it would be a terrible time to launch a new enterprise.

Or is it actually one of the best times to be innovative?

I did a little research and came up with a surprising list of companies that were founded during the worst economic downturn in US history, the Great Depression. (By the way, fundinguniverse.com is an excellent resource for any business research.)

There were plenty of big names, and a lot of them are all about innovation:

• Motorola
• Hewlett-Packard
• Xerox
• Ryder
• Unisys
• Texas Instruments
• Revlon
• Converse
• La-Z-Boy
• Interstate Bakeries (makers of Twinkies, a food that would allegedly survive any disaster)
• The Pittsburgh Steelers (one of the few franchises to survive from that time)

And it wasn't just the giants. There were also smaller companies that are still around today: Rubenstein Supply Company, Kansas City Steak, and Loehmanns Department Store. And there were introductions of new products that have lasted ever since such as Nestle's Nescafe and Kraft's Miracle Whip.

I particularly liked this quote from Purina's website where they explain how doing something new (celebrity endorsements) leads to survival and success:

"Consumer products companies rely heavily on new products, advertising and promotion to compete for scarce Depression dollars. Ralston Purina also masters the art of celebrity endorsements by sending Dog Chow® Checkers dog food to the South Pole with Admiral Byrd in 1933. That same year a cowboy named Tom Mix agrees to hawk Ralston cereals, and an army of young Straight Shooters pledges allegiance to Purina."

Why did so many long-lasting companies and products come from the Great Depression? While there's no question that a bad economy makes it tougher to raise capital and win customers, the reality is that good ideas implemented well always have room to succeed. From another point of view, limited consumer funds means that more attention is given to every purchase, and therefore the best new ideas and products have a better chance of success during a downturn because the competition can't provide the same value.

Whatever the media might say, we certainly haven't fallen as far as bread lines and veterans camping out in front of the White House. Which is to say, in a perverse way, that this downturn is possibly not bad enough for the toughest to really prove themselves. Though while we may not get Twinkies, we will not see a lack of new companies benefiting from the strictures of a slowdown.

What do you think? Is it better to keep your day job during a recession, or would you pursue an entrepreneurial dream regardless of the larger economic conditions?

See the Complete Downturn Survival Guide