In this recorded presentation at Santa Barbara City College, the speaker argues that economic recessions create fertile conditions for new firms, citing that more than half of Fortune 500 companies were founded during downturns and that firms five years old or younger have generated over 40 million jobs in the United States between 1980 and 2005. The talk highlights how startups benefit from weakened competition, cheaper labor, and a larger pool of motivated entrepreneurs. Historical examples such as Ford, Microsoft, and other large corporations illustrate that major successes can emerge from recessions. The speaker then shifts to local, SBCC‑linked case studies—Backyard Bowls (açaí‑based fast‑casual restaurant), Live Culture (a yogurt‑and‑wine venue that blends family‑friendly entertainment with local music), Phone Halo (a sensor‑based item‑tracking tech startup), and Well Design (a sustainable landscaping and food‑forest service). Funding is described as largely bootstrapped: personal savings, borrowing against assets, and family investment, rather than large external capital. The presentation also touches on the role of government stimulus for small businesses and emphasizes that innovation is not limited to high‑tech sectors; food, retail, and landscaping also offer viable entrepreneurial opportunities. Throughout, the speaker encourages budding entrepreneurs to view recessions as opportunities for job creation, personal empowerment, and community‑level economic revitalization.
Chapters
So I just wanted to share some information that more than half of Fortune 500 companies were founded during an economic downturn.
Oh, really?
So history has demonstrated that new firms during recessions create new jobs and fuel our economy. So it's interesting that job creation from startups tend to have better staying power during downturns. And founders view other companies as now weakened competition during a recession. And there's also a larger pool of cheaper labor because jobs are so scarce. Right. So all of these things present opportunity.
Well, and also with the global economy, with so many large companies wanting to lay off people just to increase their stock value and taking their labor over to third world countries, it seems like again that the approach is to become an entrepreneur and and to compete with that, you know, and create jobs.
Yes, and we're gonna see in my slides that new companies— one of my slides is about how new companies in the past that are 5 years and younger have the lion's share of job creation. Over 40 million jobs have been created by newer companies and not so much from the established companies.
Right.
But here are some companies that have been founded during economic downturns. And so you can see there, it's very interesting how large they've become and how popular and, you know, everybody knows who they are. So, you know—
Huh, Ford began during an economic downturn. Mm-hmm.
Isn't it surprising how these very successful And large companies started during either a recession or a bear market.
Microsoft started during— Mm-hmm.
Isn't that interesting?
Yeah.
So I think it's a little bit motivating to see that during a recession, it's possible to have a new idea that could become very, very successful. And so the next slide— is the statistic that I was sharing, that between 1980 and 2005, all new net jobs in the United States were created by new companies 5 years or younger. So, you know, I just think that's an interesting period, that established firms don't create the new jobs. So if we're looking at economic recovery, we're looking at new companies, small new companies that are going to start pushing the recovery by creating jobs.
So we need Obama to put more money into the stimulus package for small businesses.
Well, they're paying attention. The administration is paying attention to what the country needs in terms of entrepreneurship, which is a good thing, and it's something we haven't seen in a long time. But I wanted to say on the next slide, people don't start companies to save the economy. Yeah.
They're starting companies—
Save themselves.
To save themselves, exactly.
To take their future into their own hands. And that results in job creation and new innovations that become commercialized. So— and then the economy right now is dominated by highly innovative services in our next slide. And—
Next slide.
One of the things that I want to point out here is that innovations, yes, exist in high tech. But also in well-established sectors like food and retail. So for budding entrepreneurs out there or people that are thinking about starting their own business, they don't have to get discouraged if they're not the high-tech computer programmer type person because we'll see in these local innovative examples that I'm going to show you next that there are so many possibilities for a budding entrepreneur. Entrepreneur in this community in particular. So the first example I pull up is Backyard Bowls. I don't know if you've ever eaten there.
I haven't.
Well, my high school daughter actually turned me on to it. And these— a couple of guys started Backyard Bowls, and they are SBCC graduates. And they— it's a restaurant, but how is it different from other restaurants? And what they do is they serve— They focused on a particular ingredient, which is açaí. It's that energy berry from Brazil. And they've created a very healthy— it's sort of like a smoothie in a bowl, but it's non-dairy. And it's also fast food. You go in there and you can order the bowl to go, or you can sit and have it as a meal out of a bowl. And it's extremely popular. And I've spoken with these guys, and they turned a profit in 8 months. And they started during a recession, and they're very successful.
Now, where did they get the funds to initially, you know, buy the food and lease the restaurant or space?
Well, that's a good question, and you might want to invite them on your show to ask them. But every— almost every single entrepreneur that I've spoken to in Santa Barbara, from small like Backyard Balls to big, it's been about scrimping and saving and scrimping and saving and investing and taking that risk, which we can talk about later, how you have to take a risk. If you own a house, borrow against it or save, get family members to buy into your concept. I mean, it's— not everyone has money handed to them on a platter. And none of these companies that I'm talking about have had any blessing of that ilk. So the next company is Live Culture. Have you been there? No.
No, I'm not so little. Boring life.
Well, Live Culture started probably at the worst time possible. I think it was late 2009, mid-2009. They are across the street from Paseo Nuevo movie theater. And their concept— so it's a restaurant with a wine tasting aspect and a yogurt, soft serve yogurt. And so what they do is they bring kids together with adults, which is an interesting concept, and it seems to work. And they have a lively staff.
How do they bring the kids and the adults together?
Well, the soft serve yogurt is the most popular thing with kids right now. So they come in and then they do a little fun play with the yogurt. They have a very popular beer float where they put the yogurt in the beer and people swear by that. I haven't had one. But then the other thing they're doing is they have a band stage and they have created a relationship with an executive studio producer. And so they've been— they have new musicians perform there, and they've signed— I think they've signed 3 new musicians in Santa Barbara.
Great.
So they have sort of a very interesting, innovative combination of services and entertainment.
So do they focus on local musicians?
They're focusing on local, new, unsigned musicians.
That's great.
So they're stimulating that economy while they're also trying to make it in the restaurant bar area sector of Santa Barbara. So I think it's an interesting example of, you know, how many restaurants do we have in Santa Barbara?
And it's always surprising how many restaurants close and how many—
Retail. Yeah, I mean, we have a lot of cyclical types of businesses here, and so to make it, you have to come up with an innovative idea. My next example is Phone Halo. Now this is an example of a high-tech company and they're getting a lot of attention and they were actually featured in Santa Barbara Magazine. And what they've done is come up— and I'm not that high-techy of a person, I can try to explain what it is, but it's a way to keep track of your things. So you don't want to lose your purse or your keys., and sensors are attached to all of it that communicate with you, so you never lose your cell phone, you never lose your keys.
So how do they communicate with you?
Well, they're sensor activated, so you would put a sensor, attach a sensor to your keychain, you attach a sensor to your purse, you attach a sensor to your cell phone, and they all communicate. So if they're not all together at once, they beep. They beep or something. And they let you know. I mean, something like that. But anyway, it's just an example, and they're getting a lot of attention. And they're a high-tech sort of application for a BlackBerry or Android and iPhone. That's great. So it's kind of an interesting local, very unique innovative idea. And then I have the next slide is Well Design. This is a landscape company. They have an innovative business model. And they're working with nature and people. To achieve a balance. And so it's serving both people and nature in a harmonious way. And so it's just a little bend on a typical landscaping business that's got an innovative idea. And then the other piece— and the owner of this company is doing several innovative ideas.
Well, is it just green, or I see from your paper that it's also agriculture? Are they teaching people people how to make gardens with their small space.
Yes, right. So he has a home food forest program. And he's teaching small-scale homeowners or renters how to build a garden and be sustainable. It's a non-agricultural application. And to be able to feed yourself on some level in your backyard. —so it's, and he's growing and it's been very successful and it's another, you know, sort of everyday type of business that we see in Santa Barbara that's doing something a little different to be—
that's so needed. I mean, we're so still committed to our lawns. I mean, in my— I don't cut my— I only cut my lawn when it absolutely needs it and I don't spend a lot of time and money watering it. And so I put some cactus in front, cacti, so I don't have to The least amount of work I have to do, the better. And I'm always amazed, my neighbors, this one in particular has somebody come and cut their grass and water and fertilize 3 times a week. And we're so just addicted to having our lawns. I think that's a great idea. Wow. Well-designed to, you know, look at innovative ideas of how to use our space.
And I think well-designed is also focused on resource conservation because, you know, we don't want to be watering our lawns. We want to have— water to be doing. Yeah, we want to have sustainable, you know, drought-tolerant plantings. And so that's— I think that's part of his concept where he's trying to work with nature so that nature's happy, we're saving resources, and your garden is beautiful. Yeah, he does beautiful work. So you should refer your neighbor to him. And then
