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Out of Adversity Comes Opportunity
By David Moss, Founder and CEO Thasis    May 26 2020
Hundreds of years ago, Benjamin Franklin said “Out of adversity comes opportunity.” Those words have continued to ring true through the centuries and for many, including entrepreneurs, they are as relevant today as ever.

COVID-19 has created an upheaval in our society, causing financial chaos for businesses globally and making for a scary situation for entrepreneurs. At the same time, it is true that over the course of history many entrepreneurs have launched successful companies during times of adversity. Founders and executive teams have found ways to ease the adversity or build sustainable businesses despite it all, having one thing in common: They innovated to solve a problem that would have a substantial impact on the adversity their society was facing. For the entrepreneur today, this might be one of the best times to innovate, raise money, and launch a company.

Many people are unaware of the history of financial downturns in the United States, other than the Great Depression and recent recessions.  Our history is littered with many recessions and depressions, which the history books label as “panics” of a particular year.  Some of the best companies we still do business with today got started in the middle of these panics. Here are just a few examples:
 
  • During the Panic of 1837, when banks collapsed, businesses failed and unemployment ran rampant, two brothers-in-law became business partners and Proctor & Gamble was created to provide inexpensive candles and soap.
  • The Panic of 1873 to 1877 was a financial crisis that triggered an economic depression in Europe and North America. During that time, such famous companies as ADT, Coors Brewing Company, Glidden Paint, and others started or pivoted to new offerings even in some cases merging with competitors.
  • During the Great Depression, George Jenkins left his job at a local supermarket and opened the first Publix Food Store. Despite the fact that people were waiting in food lines, his store was not only profitable but has grown into one of the largest chains in the United States.
  • In 1930, instead of seeing who could make the tastiest cranberry sauce when consumers were pinching pennies, three cranberry companies pooled their resources and founded Ocean Spray.
  • Federal Express, in 1973, formally began operations as a company that would be dependent on oil, despite being right in the middle of the oil crisis. About that same time, while the United States was deeply into a recession with a shrinking GDP, Bill Gates and Paul Allen launched Microsoft.

Skip to more recent times. In 2009, right in the heart of the Great Recession, Airbnb received funding from top-tier VCs, providing a less costly alternative for travelers and an income stream for people who owned properties; and Venmo was born as a way to exchange cash digitally eliminating bank fees during a financial crisis.

Despite conventional wisdom, adversity creates opportunities for new businesses, entrepreneurs, and investors.

Billionaire investor Mark Cuban, speaking about the economy in the midst of COVID-19 told KSL Newsradio’s “Dave and Dujanovic” on April 7th,“Rather than looking at this as an ‘Oh, no’ it is really an opportunity for entrepreneurs to say, ‘Why not, or why not this, or I have a vision. Let’s give it a try’.” Cuban went on to say, “Innovation will speed up the way for the country to come back. By being proactive and entrepreneurial, great ideas will emerge to allow people to regain the confidence they had before the pandemic hit.”

So, how does this information impact start-up communities today?  Investors are still looking for great returns, and entrepreneurs still have great ideas and investment-worthy opportunities.  With that, the most attractive companies will develop solutions or pivot their current models to focus on emerging needs and requirements. Billion-dollar companies will rise up out of today’s adversity.

As I talk to investors and monitor the market, angel investing and venture capital is alive and well, with investors actively meeting with entrepreneurs where they see opportunities. Many investors are searching for business models and entrepreneurs who are looking through dark clouds to find the rainbows. Angels and other types of investors are still hosting pitch nights and similar events, albeit in a virtual format. The investment community is looking to optimize their investments towards areas such as the migration of digital “everything,” contact-less entertainment, food preparation and delivery services, infection control, safety and cleanliness, and healthcare cost containment. This shifting landscape may actually signal one of the best times to get funding.
  
If you are about to start your company or have a great idea, can you focus that idea on changing market dynamics or solving one of today’s issues?  If you have an established business, is this an opportunity to pivot that business around an area that might be more attractive given the new investment criteria?

A company whose fund-raising pitch I helped develop last year did just that.  They pivoted to allow for meeting today’s needs. As a medical device company, they developed a diagnostic device and a back-end that allows the readings from their device to be monitored and provide alarms.  Their back-end monitoring capability was secondary to the sale and use of their device. In March of this year, at the outset of the pandemic, they saw an opportunity to switch their business model to primarily focus on their monitoring capabilities and secondarily on their device, while at the same time expanding the monitoring across several vital statistics.  As a result, they have become more successful relative to home patient monitoring and have ramped up sales beyond their initial forecast. They saw the opportunity to pivot and successfully took advantage of it.

As we all deal with today’s adversity, entrepreneurs can seize opportunities that will allow for innovation and seek out solutions that build sustainable companies.  As Henry Ford said, “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.”







 
 
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