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Four SoCal Startups That Thrived Despite--or Because Of--Economic Downturns

There has been a lot of worry recently in the high tech industry and from venture investors about "headwinds" in the technology market, particularly with valuations of "unicorn" companies dropping, investors shying away from investing in rounds, and even employees looking for safer jobs. However, if history is any lesson, downturns actually have created some of Southern California's most successful technology companies, whether through forcing those companies to swizzle their business models, by removing competition from the market, or even spurring customers to more readily adopt their products to save money. Here are three Southern California startups who thrived despite--or maybe even because of--downturns.


Perry Wallack, the CFO of Cornerstone OnDemand, recently talked at the Recurring Revenue Conference, describing how the company was looking for funding in the worst possible market--after the downturn in 2008--and struggled trying to find an investor, finally raising a round in March of 2009. Just two years later, in 2010, the company had a successful IPO.


Lynda.com (www.lynda.com): Right after 9/11, the startup's founders, Lynda Weinman and Bruce Heavin, had a huge problem: the economy was tanking, and their former business---running a school teaching computer skills--went into the tank, so they were forced to reinvented themselves, and started selling their content online at Lynda.com; that decision was momentous, and allowed the company to bootstrap itself to double digit revenues. The company was eventually acquired by LinkedIn for $1.5 billion.


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GoToMyPC.com: As John Greathouse, a local investor and advisor--who helped start GoToMyPC describes, during the high-tech recession of 2001 - 2003, GoToMyPC sold a substantial number of licenses of its software, specifically due to customers looking for ways to save money during the recession. GoToMyPC was then acquired by Citrix for $225M in 2003.


LowerMyBills.com: LowerMyBills.com, Matt Coffin, the founder of LowerMyBills, has described how the company almost was unable to meet payroll, and at one point, not one investor here or in Silicon Valley would even talk to the company, and it was nearly shut down by its venture bank and fored into bankruptcy; the company eventually sold for $330M to Experian Interactive.


Are there other companies that thrived because specifically because of a down turn in the economy we've missed? Let us know!

Photo courtesy of Got Credit.