So you think we've got troubles now. Consider this: Between 1929 and 1933 approximately 7,000 of the nation's 25,000 banks closed their doors. Gross national product declined by half, and some 25% of U.S. workers lost their jobs. That's why it was called the Great Depression. But if our current problems seem minor by comparison, there is one similarity between 1929 and 1991: company builders now as then are seizing the opportunities available in bad economic climates. In "Worst of Times, Best of Times" (May 1991, [Article link]), Jay Finegan explains why hard times can be the best times for companies that are just starting out. And the same opportunities exist for companies that want to position themselves to take advantage of the eventual upturn -- as smart entrepreneurs were aware back in the 1930s.
If Inc. had been around in 1929, Walt Disney Studio would have been one of our Usual Suspects. Three years old when the depression hit, Disney Studio capitalized on the scarcity of jobs for artists and architects, assembling a team of film animators whose technical and aesthetic brilliance would define the business for decades to come. One of them was a former art student named Wilfred Jackson. Eager to join the studio, Jackson offered to work for nothing. Instead, Disney gave him a job -- with the company's janitor. Jackson eventually became a gifted animation director. By hiring talented young people like Jackson and training them himself, Disney increased his creative and production staff from 6 in the late 1920s to almost 200 by 1934. With that kind of growth, the company would no doubt have landed on the 1934 Inc. 500.
A 1932 edition of Inc. might have included an Anatomy of a Start-up featuring a nail-polish company targeting beauty salons. The experts would have found ample grounds for skepticism about the operation and its founder, Charles Revson, a young salesman who had previously been employed in a futile attempt to pitch sales-motivation materials to a depressed nation. In its first year, Revlon Inc. recorded just $4,055.09 in sales. It had four full-time employees -- Charles, his brother, a receptionist, and a delivery boy -- who worked out of a $25-a-month room in Manhattan, across the street from another young growth company, The New Yorker. Revlon's warehouse was a file cabinet, and Revson's mother often helped fill and label bottles. Our experts would have been unimpressed. What might have eluded them were two things that can spell the difference between failure and success in any economic climate: a great product and a founder whose salesmanship was to make him a legend in his industry.
A typical Inc. article in 1933 might have been titled "Selling Your Way Through Adversity" and would have featured the president of a small company named International Business Machines Corp., a manufacturer of butcher scales and coffee grinders as well as a line of tabulating machines. The article's lead would have told of a chance encounter between Thomas J. Watson Sr. and Jim Rand, president of Remington Rand, IBM's chief competitor. Why in the world, Rand asked, was Watson hiring salespeople in the depths of the depression? "You know I'm almost 60 now," Watson replied (according to his son and successor, Thomas J. Watson Jr.). "A lot of things happen to men at that critical age. Some of them get to drinking too much. Some of them are interested in girls. But my weakness is hiring salesmen, and I'm just going to keep doing that." Watson believed passionately that he could sell himself out of any bind. In 1933 that optimism turned out to be very smart, very lucky, or both. As a result of Roosevelt's New Deal policies, businesses soon had to start supplying the government with all sorts of information, and many of them chose to crank it out on IBM's tabulating machines. And so the company emerged from the depression as a leader in an industry that was just taking off.
Among today's best-known companies are many that trace their origins back to the Great Depression. They include:
1929 Consolidated Freightways, Schering-Plough
1930 American Airlines, Ocean Spray, Roadway, Texas Instruments
1931 Allstate Insurance, Bally, Baxter, Kaiser Aluminum & Chemical, U.S. Shoe
1932 GM, Hughes Electronics, Revlon
1933 Frito-Lay, Gallo, Ryder, Twentieth-Century Fox
1935 Drexel Burnham Lambert, Morgan Stanley, Tyson
1937 Polaroid, Sheraton
1939 Hewlett-Packard, Sara Lee, USAir