Once they were giants.
Now their jokes from FTL
trading to Kylie Cosmetics, Theranos and beyond.
We can learn a thing or two
from businesses that scaled quickly and came
crashing down faster
than you can say billionaire.
Some of these companies are still around
limping along and a shadow
of what they once were.
Some of them don't even exist anymore.
How did they reach the top
so quickly
and why did they lose it all
even faster?
And perhaps to top all of this?
What important lessons
can we take away from them to make sure
that we never lose everything in disgrace?
Not in our personal lives,
not in our careers.
Let's look at 15 lessons
from businesses that fell from grace.
Well, come to a Locke's
First up is Research in Motion.
You might know them better as BlackBerry.
Right now, about 40% of you are watching
this video on your iPhone
or Android device.
But that could have been a BlackBerry.
There was a time when BlackBerry dominated
the smartphone space
when everyone else was focusing
on sending expensive text messages.
BlackBerry allowed us to send messages
as data which bypass
individual messaging charges.
On June 19th,
2008, the stock price
closed at 147 55.
These days, though, the company is virtually
nonexistent and the stock price hovers
around $3 a share.
So what happened?
Well, they failed to innovate.
iPhone came along
with the same features and a better design.
Instead of following the cultural
tide, BlackBerry
pushed against it, hoping
their previous success
and loyal customers
would push with them.
But that's not how it works.
Your customers don't owe you loyalty.
You owe them innovation.
Customers are loyal
if you give them what they want,
if something better comes along,
they'll leave you in the dust.
Then there's Victoria's Secret.
Now, Victoria's Secret was the ideal for people
who had already smashed
their goals for her world renowned supermodels
who walked the runway for the biggest
fashion houses.
Being a Victoria's Secret angel
was the ultimate victory.
Their story eyes were everywhere.
They were a part of a cultural zeitgeist of
freedom and empowerment
for women.
But only skinny women.
When the pressure
mounted to produce inclusive sizing,
ad Razek and Leslie Wexner,
executives of L Brands,
the parent company,
all they said no.
And that was the beginning of the end.
Their yearly fashion show
was indefinitely paused.
People moved on to other
brands, and stores closed
around the world.
Sales have fallen
by $6.4 billion.
The lesson here
Sometimes leaders will suck.
Get rid of them.
Loyalty to old ways doesn't bring in
New customers.
Yahoo!
If you're older
than 25, chances
are the first email address
you had handed
with at yahoo.com.
Yahoo!
Stood toe to toe with the biggest names
in tech, Google,
Facebook and MySpace.
They were all there.
The stock price
soared during the dot com boom,
and by all accounts, they should be sharing
the market space with Google right now.
But they missed some important opportunities.
They failed to acquire.
Google In the early 2000s,
they rejected an acquisition
offer from Microsoft in 2008.
Their leaders kept changing,
and every time
someone new would come in,
they would overhaul
the mission and goals.
Eventually, nobody knew
what Yahoo was supposed
to be anymore.
The lesson here, strangely,
is that you have to hire younger.
Yahoo was hiring businessmen
while Google was running by fresh,
hungry, barely there
college graduates.
They knew what emerging
generations wanted.
Yahoo! Didn't.
Gap Gap was a clothing brand.
That was the clothing brand,
especially in the nineties.
The clothes were comfortable, stylish and aimed
at the most lucrative fashion
market teenagers.
They scaled quickly and had the bright idea
to move into Gap, Baby
and Gap Maternity.
You'd think that diversifying would open up
opportunities, right?
But teenagers
don't want to wear the same clothes
as their baby cousins
or their pregnant aunts.
That's the harsh truth.
So they lost their core market.
They couldn't produce the quality
they needed to stay on top in the second quarter of 2023,
they saw an 11% sales
decline in online sales
and 7% in store sales.
They're still profitable, but the trendiness
and popularity with the teen
market has basically disappeared.
They're just not cool anymore.
Theranos
now, it's controversial to say that they are nurse
was ever actually at the top
because their entire business
was based on a massive lie.
So they definitely fit the fall
from grace part of this.
Founder and CEO Elizabeth Holmes
was once the richest
self-made woman in the world.
So there is that Theranos claim
to be able to revolutionize blood testing.
But their method just wasn't possible.
Holmes is now in jail for fraud.
The company is defunct
and investors lost billions.
The lesson here is
pretty simple
Don't build your business
on a lie ever.
And speaking of
ethics, we've seen in the comments of our videos.
So we know that the fall of FDX
affected a lot of you.
It affected us.
There were big dreams
and a lot of money invested
in Sam Bankman-fried,
and it all came crashing down
after Max
was one of the largest and most influential
platforms in the cryptocurrency space.
This came crashing down
in November 2022, when it was discovered
that Alameda Research,
a trading firm founded by SBF,
held a large number of tokens
as their primary asset.
This caused a bank run.
Customers rushed to withdraw,
and FDX didn't have the liquidity
for customers to get their money.
You always need a plan
for potential crises.
The rapid downfall of FCX
shows how quickly situations can change
and you don't want to be caught
in the crossfire without a backup plan.
Toys R US.
The fall of
Toys R US was genuinely surprising.
Children are always going to want twice.
Even though the landscape
has shifted to electronic devices.
Physical toys will always be popular.
they had a massive share of the market
and there was no toy store
even close to their popularity.
And what was offered in
2005, Bain Capital
and Vornado Realty Trust acquired Toys
R US burdening with $5 billion in debt.
The debt limited the company's ability
to invest in e-commerce, store
improvements and other important areas.
Sales declined year over year
and they filed for bankruptcy in 2017.
And we learned that the negative impact
of major debt is far more powerful
than the positive impact
of a strong company.
Lehman Brothers.
Many companies fell from grace
during the 2008 financial crisis, but none
were more disgraceful
than Lehman Brothers.
It was the fourth largest investment
bank in the United States.
They were handing out mortgages
like candy during the housing boom.
So when the subprime mortgage
market collapsed in 2008, they were left
holding a massive portfolio
of worthless assets,
leading to a loss
in investor confidence.
They declared bankruptcy
in 2008,
which brought the financial market
to its knees.
The effects of the Lehman
Brothers unethical practices
and carelessness
are still felt to this day.
When you get greedy
and bite off more than you can chew,
the world will humble you
no matter how successful you are.
Humility is important.
Nobody is beyond failure.
Pan American, World Airways,
or more simply known as Pan Am.
It was an iconic
international airline of the 20th century,
but the company suffered
from a public image crisis
following the 1988
bombing of a Pan Am flight.
Their business strategy
focused on expansive growth
during the crippling oil crisis of 1973,
which put them into massive debt.
It just goes to show that even though
the business guidebooks
might push expansion and scale,
you know, sometimes it's
just not the right time for it.
Sometimes the risks aren't worth it,
and it's better to lay low
and wait for the market
to stabilize again.
Then there's Enron.
Now, Enron was an energy
company based in Houston, Texas.
It was founded in 1985
and grew rapidly.
But there had always been
a massive fraud
behind their success.
They used accounting
loopholes and poor financial
reporting to hide
billions of dollars in debt
from failed deals and projects.
Their stock price was inflated
and based on fraudulent
financial statements.
Enron taught us
that integrity matters.
Personal and professional
integrity is crucial
because building success
on deceit is unsustainable.
We must learn to never accept information
at face value,
ask questions
and verify the facts
because blind trust
can lead to serious
consequences.
MySpace.
It wouldn't
be a proper fall from grace video
without mention of MySpace,
although it is still so fondly remembered
that those familiar with MySpace
don't even want to hear about its downfall.
It hurts too much.
Launched in 2003, it was a pioneering
social network that became the most visited website
by 26, surpassing even Google.
You could connect with friends,
share photos and discover music.
It was like a mix
of Facebook, Instagram,
and Spotify.
Unfortunately,
their platform wasn't
very user friendly.
It was cluttered and full of ads,
so users slowly migrated to other platforms,
especially once Facebook
came along.
News Corp bought MySpace
in 2005 for $580 million
and sold it in 2011
for 35 million.
MySpace
taught us that you can have the best,
most innovative idea for something,
but if it doesn't look
good, people are going to jump ship.
The user experience is essential.
Revlon.
The beauty brand.
Revlon, was founded back in 1932 and started
with a single product
nail enamel.
Therefore, formula used pigments
instead of dyes,
which offered a broader range
of richer, opaque colors.
The company expanded its product line
and became one of the largest
and most recognized cosmetic brands in the world.
It was influential
in setting beauty trends
and a pioneer in mass
media advertising,
but they were incurring a large amount of debt.
And when new players entered
the market and Revlon had to innovate,
well, they were bound by
financial constraints.
They were slow to embrace
online marketing and e-commerce.
While brands like L'Oreal
and SL Order invested heavily in digital
marketing, social media presence
and direct to consumer sales models.
They stayed in their brick and mortar spaces,
so they failed to capture
the attention of millennials and Gen Z.
They're still around
mostly in drugstores,
but they're nowhere near as successful
as their former competitors.
We work
we work was founded
in 2010 and happily,
steadily expanded over
the next few years.
By the end of 2018, they reported
a valuation of $47 billion.
They rebranded
as the We Company and filed for
an initial public offering.
But their IPO filing shows
massive losses,
so investors started
questioning their business model.
A year later, in October 2019,
the company's valuation
fell to 8 billion.
They postponed the IPO.
The CEO and founder was fired.
SoftBank, a major investor,
bailed them out,
resulting in massive layoffs.
And we work continues to limp
along with less than half of its staff.
This is a hard lesson to learn,
but we all need to know that just because you have
the idea doesn't mean
you have the business acumen.
Management and big ideas
are completely different.
Parts of the brain, and not many people can do
both of them well.
You have to find the best person for each job,
and if it's not you,
then you should get out of the way.
Vine You know,
Vine was kind of a cult classic, right?
It got so big so quickly
and declined even faster
that a lot of people barely
even had the opportunity to fully enjoy the app.
It was launched in 2013
and became a social media app
for sharing short
looping videos.
It helped to launch the careers
of some of the most popular
YouTubers and Internet
personalities.
But even though it was popular, they struggled
with monetization and user retention.
When Instagram and Snapchat
launched similar features,
interest in Vine,
well, it tanked.
In 2016,
Twitter Vine's parent company
shut it down for financial reasons.
It's understandable that Vine didn't
want to follow MySpace as Method
and fill the app with ads,
but they needed to make some money.
You need monetization
when running a business
before you even launch.
That should be your number one concern.
And Vine.
They missed that boat.
And finally,
X formerly Twitter.
Is anyone really calling it
X anyway?
Where do we go from here?
The world was excited in April 20,22
when we heard that Elon Musk
had offered to buy Twitter
for a staggering $44 billion.
He promised more freedom of speech
on the platform and a crackdown on bots.
But it seems like
the exact opposite happened, right?
There is less freedom of speech
and more bots.
It was once the chosen
platform for academics,
politicians, researchers and celebrities.
It was far more personal
than Instagram or Facebook.
The harassment is rampant.
It just doesn't seem to work
like it used to.
It's now valued at $19 billion,
although some experts
estimate that it could be as low as 8 billion.
That is a staggering, unimaginable
loss, down from 44 billion.
And look, maybe they can come back for it,
but the reputation damage
is going to last for a long, long time.
Musk said he signed the initial purchasing agreement
before seeing the real numbers from Twitter.
Once he realized that
the true user numbers were inflated,
he tried to withdraw,
but legally he couldn't.
The lesson here
it is so important to assess downsides
and challenges when taking any major action.
Before you commit to anything,
you need to know as much information
as possible to understand what you're getting yourself
into. The Twitter takeover
is a pretty good example
as to why.
And that's a wrap for today, my friend.
We hope you take these lessons with you
throughout your personal life and careers.
It just goes to show that
no matter how big you are,
no matter how much people
love you, at first,
one major mistake from you
and all of that can change.
We'll see you back here next time, my friend.
Take care.