Entrepreneurs Who Rose From the Ashes

by Melanie Lindner and Anne Mintz (2008, forbes.com)

For all the financial havoc they wreak, recessions have also birthed some legendary businesses. We flipped back through 200 years worth of U.S. recessions and found inspirational examples for struggling entrepreneurs everywhere.

/ Depression of 1807 (1807-1814)
Entrepreneur: Charles Wiley
Business: John Wiley & Sons
When a British warship opened fire on an American ship off the coast of Norfolk, Va., U.S. President Thomas Jefferson turned to economic warfare, triggering a painful, seven-year recession. Congress passed the Embargo Act of 1807, preventing American ships from landing at foreign ports unless authorized by the president himself. That same year, Charles Wiley opened a small print shop and book store in lower Manhattan; later he partnered with Cornelius Van Winkle, a more established Manhattan printer, and the two hosted a meeting place for famous scribes like James Fenimore Cooper and William Cullen Bryant and published future legends Edgar Allen Poe and Washington Irving. The company eventually expanded into textbooks and other higher-margin titles. Headquartered in Hoboken, N.J., John Wiley & Sons now boasts a $2 billion market capitalization on the New York Stock Exchange.
/ The Panic of 1907 (1907-1908)
Entrepreneur: William C. Durant
Business: General Motors
In the fall of 1907, the Knickerbocker Trust Company (then New York's third-largest trust) collapsed after lending money in a failed scheme to corner the market on stock of United Copper Company. A week later, nine other major New York banks fell; the stock market cratered by half. But William Durant smelled opportunity. A Boston-born high school drop-out who had worked his way to general manager of Buick in Detroit, Durant incorporated General Motors in 1908 when he acquired Oldsmobile. Under Durant, the auto conglomerate went on to scoop up Cadillac and Pontiac. During a brief departure, Durant launched Chevrolet, which he later brought under GM's umbrella when he regained control of the auto giant in 1917.
/ The Panic of 1907 (1907-1908)
Entrepreneur: Charles Russell Bard
Business: C.R. Bard
The Panic of 1907 didn't have Charles Russell Bard running for cover. An American importer of French silks, Bard began importing and distributing urethral catheters--a tool used to relieve urinary discomfort. He later expanded his line to include cardiological, radiological and medical products. C.R. Bard's market cap on the NYSE: $8.7 billion.
/ Post-World War I Recession (1918-1921)
Entrepreneur: Cornelius Vander Starr
Business: American International Group
In 1918, at age 26, Vander Starr left his job peddling auto insurance in California to clerk for the Pacific Mail Steamship Company in Yokohama, Japan. Later that year, he moved to Shanghai where he worked for several insurance firms. In 1919, as a post-World War I recession gripped the West, Vander Starr founded an insurance firm called American Asiatic Underwriters--now known as American International Group, the giant insurer near the center of the latest world financial crisis. At the time of this writing, the U.S. government had announced a bailout package worth $150 billion to keep AIG afloat.
/ The Great Depression (1929-1939)
Entrepreneur: Dr. Ralph Falk & Dr. Donald Baxter
Business: Baxter International
Even the greatest economic downturn of the last century couldn't derail Drs. Ralph Falk and Donald Baxter, two entrepreneurial physicians from Iowa who saw an opportunity to bring intravenous medical treatments to the masses. At the time, only major research institutions had the resources and equipment needed to inject a stream of medicine directly into a person's veins. The doctor duo launched the Don Baxter Intravenous Company in 1931 and began mass production in Glenview, Ill., in 1933. Today, Baxter International, headquartered in nearby Deerfield, Ill., develops everything from pharmaceuticals and dialysis machines to cardiovascular and anesthetic equipment. Baxter's recent market value: $37 billion.
/ The Great Depression (1929-1939)
Entrepreneur: James A. Ryder
Business: Ryder Systems
In 1932, James Ryder left his construction job in southern Florida and put a $125 down payment on a Model A pickup truck to haul trash from Miami beaches and shuttle construction materials to Palm Beach. Two years later, Ryder bought several more trucks and began leasing them to other companies, including a local beer distributor. As the dire decade wore on, trucks began to rival rail cars when it came to carrying cargo. As the highway system expanded, so too did Ryder's company--now an international player worth $2.1 billion on the NYSE.
/ Recession of 1953 (1953-1954)
Entrepreneur: Hugh Hefner
Business: Playboy Enterprises
In late 1953, as the Korean War drew to a close and consumers felt the pinch of higher taxes used to fund Cold War military spending, the first issue of Playboy magazine went to press (without a date). Its creator, Hugh Hefner, envisioned a rag with the same flashy elements of his former employer, Esquire, but with a naughty twist: photographs of beautiful nude women. When Hefner's boss at Esquire refused to give him a five dollar raise, Hef quit and hit up his friends to help design a new magazine in exchange for slices of equity. He worked odd jobs during the day and pawned his possessions to make ends meet. Today, the Playboy empire, now run by Hefner's daughter Christine, includes TV, books, calendars and, of course, the flagship magazine.
/ 1973 Oil Crisis (1973-1975)
Entrepreneur: John Sperling
Business: Apollo Group
When the members of the Organization of Arab Petroleum Exporting announced an oil embargo in October 1973, citing the U.S. military's support of the Israeli army against Arab enemies in the Yom Kippur war, an already nasty economy worsened. Meanwhile, John Sperling noticed an interesting demographic shift: More adult students were returning to school to change careers. But when Sperling approached the administration of San Jose University, where he worked as a professor, with an idea for an adult education program, the school said no thanks. So, in 1973, he launched Apollo Group to license course materials to traditional universities. When conventional nonprofit colleges griped about his for-profit model, he switched gears and opened the University of Phoenix, the first for-profit accredited university, with a class of eight students. Apollo Group, based in Phoenix, now has 90 campuses across U.S. and a $10.6 billion market cap.
/ Early 1980s Recession (1980-1982)
Entrepreneur: David Mintz
Business: Tofutti Brands
In the late 1970s--a period of stagflation marked by high oil prices, a weak U.S. dollar and a decline in domestic manufacturing jobs--David Mintz, a caterer in Brooklyn, N.Y., was looking for a dairy substitute that would allow him to create kosher, non-dairy desserts that could be eaten right after a meat dish. Enter Tofutti Brands in 1981, which sold tofu-based ice cream, cookies and cakes. Even as Federal Reserve Chairman Paul Volcker cranked up interest rates, sending unemployment to 11%, Tofutti managed to thrive. Nearly 30 years later, the company now sells everything from pizza to cream cheese--all dairy-free.
/ Early 1990s Recession (1990-1991)
Entrepreneur: Robert Briskman
Business: Sirius Satellite Radio
The hangover from the savings and loan crisis, occasioned by a flood of busted real estate loans, didn't deter Robert Briskman. A former NASA engineer and chief of operations at satellite messaging company Geostar, Briskman figured out how to broadcast digital radio signals via satellite. His company, CD Radio, launched in 1991, was barely bumping along on venture funding when the Federal Communications Commission granted it a sizable bandwidth contract in 1997. Later, CD Radio changed its name to Sirius Satellite Radio, which merged with XM Satellite Radio in July 2008 to become Sirius XM Radio. The company now broadcasts commercial-free radio 24 hours a day. Market cap: $826 million.