Here is a great little article from Wired Magazine about how economic turmoil breeds innovation.
“With the world’s economies apparently snowballing into a deep recession, it feels uncomfortably Pollyannish to see signs of hope. But for the bravest inventors and entrepreneurs, conditions are ideal to pounce on a business opportunity. In periods of economic turmoil, people are hungry and work cheap, and entrenched companies often concentrate on in-house cost-cutting instead of exploring new markets, which can explode with the next turn of the business cycle. When VCs from Foundation Capital met with their nervous investors recently, the partners advised them to stay the course rather than follow their peers into the bunkers. “Our strongest companies have the potential to be whales when the market opens up,” partner Paul Holland told the group. “This is the crucible that forges great companies.”