The Rise of New Industry
Economic downturns have resulted in the introduction of new businesses that are leveraging modern technology to improve how people and businesses operate. The Great Recession sparked a new industry of technology companies utilizing developments in smartphones to introduce mobile platforms resulting in people and businesses to connect more efficiently. There is now industries being developed in today’s economic decline using technology developed in the previous downturn as a foundation.
Recessions provide a chance for the economy to reset and new industries to take advantage of technological advancements to fill the gaps needed to rebuild the economy. On a list of successful companies founded during The Great Recession included companies such as Uber (UBER), Venmo (PYPL), and companies purchased by Facebook (FB) Instagram and WhatsApp. A common trend among the companies founded during the recession is the utilization of advancements in smartphone capabilities to improve the way people communicate, online shop, and more efficient methods of transportation. Although some of these companies were purchased by multi-billion dollar organizations, others are now their own multi-billion dollar companies that continue to expand, provide jobs, and contribute to economic growth.
The current economic plunge resulted from a failure of brick-and-mortar businesses that rely on customers coming to their business frequently. Quarantine guidelines resulted in the rapid adoption of video and communication methods to service at-home education and remote work. Companies such as Wix.com’s (WIX) service are in high demand as many businesses are trying to make a greater online presence for customers. Additionally, Zoom Video Communications (ZM) service has experienced high demand from schools, companies, and others to rapidly adapt to a changing environment. At-home businesses are relying on Square (SQ) and PayPal (PYPL) to accept payments. In the near future, we believe to see a more rapid increase in the use of online services directed towards individual small businesses as a foundation for start-up companies to grow and contribute to society and the economy.
Economic downturns result in a wave of new businesses that have fully adopted new technology and fill holes created as other businesses fail. It is society’s way of adapting to an ever-changing business environment to continue economic growth and prosperity. Current technology has made education and working from home easily accessible in addition to technology making it easy for small businesses to create an online presence and process payments. It is only a matter of time until we see newly developed companies that apply this technology to their business model.