Recessions & Innovation

I like recessions. Rather, I like them after doing some research. Looking at the last three recessions; 2001, 1990’s, and late 1970’s, you can see a common thread of innovation. As large companies scale back, two things seem to happen. First, many people can’t find jobs and stay in academia, second, smart people who would otherwise stagnate at a job get layed-off. Some of these people decide to do that “thing” they’ve aways wanted and end up changing the world. Yeah, that goes in the face of logic but patterns don’t lie.

Here’s what I’m looking at:

In the 1970’s there was a massive oil shock and the US economy is battered, the term “stagflation” is defined after years of previously poor growth (stagnant inflation). But out of that comes a transition. What was previously thought of as a “computer” shifted. Pre-1970’s a computer was a massive machine in a room. Universities strove to own just one. By 1980, you could buy a computer from Apple and take it home with you. The personal computer was born… thank you recession. It’s not a direct relation. These guys weren’t unemployed, it was more that technology was not utilized by big corporations, so small, nimble groups took them and created a leap forward.

1990’s was another financial crisis, yet, with many students wary of entering the job market a simple technology begins to move into common usage. The “interweb” became a means of students to play, communicate, and work. By 1995 you had the appearance of Netscape, the first widely accepted graphical browser. before this you only got text online. Afterwards, the world completely changed. Today, the internet could be considered the pinnacle of human intelligence (or it’s low).

2000 saw the colapse of the craze surrounding the internet. But, it also saw the development of mobile technology. More importantly, smart phones. Microsoft was tiny in the 1970’s, Amazon was tiny in 1990’s, RIM was discovered by business customers in the 2000’s at the height of the internet boom. People lost their jobs, but didn’t give up their Crackberry’s. Now Obama’s got one (well, it’s not a “Blackberry” it just does the same thing.)

So, chill out get off your lazy ass and go do that insane thing you’ve always dreamed of.

Apple, Microsoft, Amazon, Netscape, Sony, RIM, Nokia, Hewlett-Packard, Nike and others did … look what happened. (ok yeah, I know, Netscape is dead and Sony will probably be just a gaming company in 6 months but hey … they were awesome once.)