As this protracted recession plays out and millions are laid off, there may be some reassurance in knowing that many of the job-creating company founders and CEOs of the future will rise from the ashes of today's unemployed.
That's the way it's played out in the past. In 1989, Bob Bales was working as project manager for technology company CACI International on a Navy contract that was suddenly canceled. Bales and 180 others were shown the door. He launched a tech company, NCSA, into the teeth of the 1990-91 recession, then launched two more in 2000 and 2006. "All told, the companies have provided more than 1,000 new jobs," Bales says.
The U.S. economy lost 3.6 million jobs in the last 13 months, and millions more will go before the economy turns around. The good news is that talented people will grow frustrated with the job search and take the dive into entrepreneurship. The number who succeed will be small.
But among them may be a Tom Stemberg, who founded 43,000-employee Staples spls after he was pushed out by supermarket chain Finast-Edwards when his division was sold in 1985; or a New York City Mayor Michael Bloomberg, fired from Salomon Bros., only to start the financial news service that made him a billionaire and today employs about 10,000.
Crushing setbacks are a critical element of success, says Yale University management expert Jeffrey Sonnenfeld, co-author of Firing Back: How Great Leaders Rebound After Career Disasters. Those setbacks often come early, and Sonnenfeld says that among MBA students at Yale, Harvard and Emory universities, 25% have already been laid off or fired. Campbell Soup cpb CEO Douglas Conant, who has a 1976 MBA from Northwestern University's Kellogg School of Management, worked his way to head of marketing for Parker Bros. when parent company General Mills gis decided to exit the toy and game business in the 1980s. He was out of work for about a year and emphasizes that it was a turning point in his life.
At USA TODAY's request, the CEO organization Vistage International surveyed its membership. Of the 2,441 who responded, one-third said they had been laid off or fired before becoming a founder or CEO. Among those who involuntarily lost a job, 78% said that, in retrospect, it turned out to be good for their careers. Only 2% say that it turned out badly. USA TODAY also asked SmartBrief, a company that e-mails news articles of interest to top executives, to survey CEOs and company owners. It found that 61% of 626 respondents said they had been laid off or fired, and half of those said it was the best thing that ever happened.
A few success stories can make a big difference. David Thomson, a former McKinsey & Co. consultant and author of Blueprint to a Billion, says 7,500 U.S. companies went public from 1985 to 2007, but the 5% (387) that reached $1 billion in revenue created 56% of the jobs.
Peter Pifer, 70, says 2009 reminds him of 1992, when he was putting his two children through college and thinking about making his stretch run toward retirement. He had given up a successful career with Scientific-Atlanta in the 1980s to start an electronics assembly company in Norcross, Ga. Ten years later, it was doing well enough to go public. Then, a competitor moved in from Alabama and "ate up all the business" just as the U.S. economy was recovering from a recession aggravated by the first Gulf War and a jump in oil prices.