3 big businesses that grew due to the crises
Updated: Nov 28, 2022
We know that nobody likes crises. Demand tends to drop sharply at the same time that costs increase for most businesses. Despite this, are crises totally harmful?
Jeff Bezos said in 2001, during the internet bubble burst: “This is healthy. It's like a biological system of natural selection. We are going through a period of consolidation. It is from the period of consolidation that the leaders, the strongest, emerge. And we are the best.” Even with great difficulties in surviving with the crisis, Amazon is today the biggest ecommerce company in the world.
With this testimony by Jeff Bezos, we can already see that crises can be faced in different ways. We can just accept the idea that it will be really difficult to survive or we can carefully watch new trends and business opportunities.
In this post we are going to tell stories of large companies that have emerged or have grown a lot not only during crises, but mainly because of them.
The 1929 crisis was one of the greatest crises in history. The United States had a 45% reduction in GDP and unemployment reached a level close to 25%. One of those people who became unemployed was Charles Darrow, a resident of the state of Pennsylvania.
During the long period he was at home, Charles remembered a game he played with his coworkers, which simulated the purchase of fictitious real estate. He thought this game could entertain his children, so he drew houses and buildings inspired by the neighborhood where he lived on a towel and set some rules.
The game that stimulated the imagination of having several properties in a difficult period like that time not only caught the attention of children, but also adults. With the great interest in the game, Charles believed that he could have a business there, so he looked for the biggest game manufacturer in the region: Parker Brothers.
The company at first said that the game was too slow and complex, so it didn't agree to produce it. Charles continued to believe in his idea and decided to produce it anyway. With the help of family and friends he manufactured 5,000 games and sold them to a department store.
The game began to be widely commented and played by people and caught the attention of Parker Brothers, which initially did not believe in the idea and accepted to produce the game that became known as Monopoly. Currently Monopoly is produced in 26 different languages and sold in 80 countries.
It was the end of the 19th century and there was a threat of recession and high unemployment in the United States. 16-year-old David McConnell was at that time selling door-to-door encyclopedias, but he had great difficulty getting the attention of housewives and, consequently, closing sales.
From a comment by his pharmacist friend, he had an idea that could improve his results. His friend commented that women were not interested in books, but rather in becoming more attractive. Thus, David had the idea of offering a perfume as a gift when presenting his books to gain attention.
With the help of his friend they created a fragrance that looked nice and David began testing the strategy. After several attempts he realized that the housewives were only interested in the perfume and not in their books, one of them even asked for two more bottles.
That was bad and good for David. He realized that there was really no interest in the encyclopedias, despite showing their clear benefits in social gatherings, studies and work for family members. On the other hand, he realized that there was a great demand for perfumes.
Thus, Avon was born. David McConnell has expanded its product line with creams and shampoos and has grown its door-to-door sales force through women's retailers.
At the time this was perhaps not so clear to David, but these products were mostly used by the wealthy and this popularization and practicality to obtain products like those was of great value to women at the time.
Imagine a Japanese company trying to sell radios in Europe right after the end of World War II. The Japanese, along with Germans and Italians, were held responsible for the destruction on the European continent. Also, combine this factor with sales being made by a Japanese door-to-door, an approach that is often not very welcome by people.
That was the situation in Komashio, the seller did not return to Japan for the simple fact that, as bad as the situation was in Europe, it was even worse in Japan, as the country was completely devastated by the war.
Komashio, repeatedly seeking to sell his radios to merchants, received a response from a Hamburg merchant that he would not buy because he was buying only quality products. Just looking for an opportunity to exhibit more of his product, Komashio made the proposal to pay for his radio to be exhibited.
The local seller agreed to exhibit the product for a week, but fearing that there would be no demand for the radio, Komashio was looking for alternatives to generate demand. He assessed the money he had and realized that there was not enough to advertise with advertisements, so, spotting a group of students on the street, he invited them to follow a demonstration of the use of radio.
After the demo, he asked if those who liked the radio would be willing to promote the product in exchange for a small fee. The students accepted and the deal was to enter the store, ask to listen and play with the radio and praise the product, in addition to buying and returning it to Komashio.
After a week of exposure, the store manager requested more radios to sell. With the dissemination of students and the exhibition of the store, sales began to occur naturally. This action, strange as it may be, was the way Sony used to enter Europe. This strategy was used in other cities in Germany and Poland.
These three stories were taken from the book Oportunidades Disfarçadas, by the brazilian Carlos Domingos. The book presents numerous other companies that emerged or grew from unusual situations or reasons, such as: crises, customer complaints, failures and errors. If you want to get inspired or try to relate these stories to the situation you're going through today to create a business, it's definitely an excellent book.
Source: Domingos, Carlos. Oportunidades disfarçadas. Sextante. Kindle Edition.