9 WORST Company Failures
#9.
“Kodak”- The Eastman Kodak Company was founded in 1888 and was the most successful
company in the photography industry during the 20th Century.
They were the leaders in bringing the cutting edge of photographic technology and easy to
use cameras to the hands of consumers throughout the world.
But Kodak almost met its demise at the hands of a product that it actually invented: digital
photography.
Kodak invented this technology in 1975, but failed to jump on the innovation, believing
that common applications for it were well into the future.
Early on, the company thought that the high cost and complexity that would be needed to
make a push into the digital front weren’t in Kodak’s best interests.
So, Kodak put digital photography to the side to be picked back up when the time was financially
advantageous, but they waited too long.
By the time they switched gears, they faced competitors who had been perfecting their
business models with digital photography at the center, whereas Kodak’s model was still
dependent on printed photos.
While other companies made deals with websites, phone companies and focused on online based
imaging, Kodak floundered and in 2012 filed for Bankruptcy.
They have since come back from bankruptcy and started specializing in producing smartphones
and tablets.
#8.
“Pan American”- From 1927 until 1991, Pan Am was the largest airline company in
the United States, but due to bad foresight, callous labor practices and an uncontrollable
disaster this global giant quickly met its end.
The company basically had a monopoly on overseas travel until World War II but was dealt its
first major blow when other strong airline companies began to up their game.
Pan Am fought off the competitors with its innovations such as jumbo jets and an advanced
system for making reservations but these innovations couldn’t match the corporate aptitude and
human relations that the other airlines dealt with more astutely.
One of the main reasons for Pan Am’s failure was ironically due to its early successes.
Because of the sheer size of its fleet, it was the company hit the hardest by the 1973
oil crisis.
Just before the crisis, Pan Am had just purchased a number of brand new gas-guzzling Boeing
747s and was forced to dramatically raise ticket prices to recuperate.
As it was trying to recover from this setback it had also become a target of terrorism in
the Middle East.
To the terrorists Pan Am was a symbol of the United States overseas because it was the
largest U.S. airline servicing the area.
During the Gulf War, in the midst of financial hardships and battles with labor unions, Pan
American 103 on a transatlantic flight from Frankfurt, Germany to Detroit was blown up
by Libyan nationals above the Scottish town of Lockerbie.
The incident scared even more customers away from flying Pan Am and many travel agents
would no longer book flights on their planes.
All of these events and poor managing of them led Pan American International Airways to
declare bankruptcy and completely fold in 1991.
#7.
“Borders”- Tom and Louis Borders opened their first bookstore in 1971.
Their vast selection of books and innovative inventory system turned them into the second
biggest chain of book megastores.
Due to years of miscalculating the future of book consumption, the bookstore all but
vanished in 2011.
It all started in the mid 90s when Amazon and other online stores hit the scene.
Instead of developing their own website and focusing on online sales, the company decided
to further their storefront endeavors and expanded into Europe and Asia opening hundreds
of stores.
Their competitor Barnes and Noble, did the opposite by preparing for the digital age,
perfecting their online sales system and focusing on their storefront operations in the United
States.
When Borders did start to catch on to the online market they were already far behind
and decided to use Amazon as a host for such sales.
Because of this, as more and more sales were made online, instead of receiving 100% of
the profit they had to share with Amazon.
Borders also was caught in the past by devoting lots of money and inventory towards DVDs and
CDs at a time when digital music and video was on the rise.
While Barnes and Noble developed it’s own e-reader to grab paperless book market by
the horns, Borders was extremely slow to adapt to the change.
All of these factors came to a boiling point in 2006 when, after several years of losing
millions of dollars Borders filed for bankruptcy.
By 2011, Borders realized there was no way out and closed most of its remaining stores.
The only stores remaining are in southeast asia where it remain Borders in name only,
as they were sold to a company named Popular Holdings.
When they closed their doors they sold their brand trademark and many other assets to longtime
rival Barnes and Noble.
#6.
“Nokia”- Founded in 1865 as a paper mill, Nokia slowly worked its way from producing
paper to the latest technology.
In 1987, Nokia released the first hand-held mobile telephone and it was an all-time best
seller.
Because of the resounding success, Nokia decided to switch their company’s specialty completely
to telecommunications.
The Finnish based company would be at the forefront of cellular telephone production
and design for the next fifteen years and even created one of the first smartphones
back in 1996.
However, the aspect of creating easy to use and innovative software for their phones escaped
them as the phones they created to compete with the likes of the Apple iPhone and Google’s
Android weren’t as user-friendly and prone to bugs.
This was most likely due to the company’s desire to remain hardware focused and resistance
or inability to become software savvy.
Almost immediately after the release of the first iphone Nokia’s sales started to plummet.
In order to avoid complete failure, the heads of Nokia decided to cut their losses and sold
their phone business to Microsoft in 2013 for 7 billion dollars.
Chump change when you find out that in 2006 they were worth over 150 billion dollars.
They have since made a semi-comeback via other types of technological endeavors such as virtual
reality cameras, medical tech and networking equipment.
In 2016, Nokia made a net profit of 26 billion dollars.
#5.
“Sony”-The Japanese based company Sony, founded in 1946, is still one of the most
powerful tech companies in the world but they made a giant misstep that cost them the position
of lead-dog in the portable music industry.
Throughout the 90s the Sony Walkman was the main product people turned to for music on-the-go
but in 2001 Sony was dealt a major blow when the Apple iPod was released.
How did Sony not see this coming?
Well it turns out they did and as early as the mid 90s the company had the designs and
ability to create a digital music device that would’ve been years ahead of its time but
they never released it.
When they realized that they suddenly needed to catch up they found themselves in the same
boat that Nokia did with phones.
They focused too much on making great hardware and not enough on creating user-friendly software
and lacked a central vision for their product.
Instead of having a single streamlined product like the iPod with an easy to use music interface
such as iTunes they released several products that each had their own programming flaws
and weren’t compatible across devices.
In addition, the devices were made to only play a single type of music file so they were
only formatted to play music from companies Sony had contracts with, unlike iTunes which
could play several types of files.
If not for these mistakes Sony may have become the most powerful tech company in the world
and relegated Apple to focus on personal computers avoiding the music business altogether.
#4.
“Yahoo”- Founded in 1994, Yahoo was one of the dominant web portals in the early days
of the internet.
But due to a series of bad business decisions or just plain bad luck, the company started
steadily declining in 2000--leading up to their acquisition by Verizon on June 13th,
2017.
The first major mistake that Yahoo made was failing in their bid to purchase Google in
2002.
When the founders of Google told Yahoo they would sell for one billion dollars Yahoo initially
refused, when their chief executive, Terry Semel, changed his mind and decided to take
the offer it was too late, as Google decided they wanted 3 billion instead.
The next missed opportunity that Yahoo bungled was not offering more money to acquire Facebook.
Apparently, Yahoo again offered one billion dollars to buy the company but Facebook refused.
Several members of Facebook’s board came forward saying that if Yahoo had increased
the offer to 1.1 billion that they would have voted to sell.
Yet another deal that fell by the wayside was when Microsoft offered Yahoo over 40 billion
dollars to takeover in 2008.
Yahoo rejected the offer citing that they thought it was too low, but within a year
Yahoo came crawling to Microsoft and signed a deal to use Bing as their search engine,
giving up on creating their own.
Finally the main reason for Yahoo’s demise was not adapting fast enough and being content
with being a web portal in a search engine world.
#3.
“Decca Records”- Decca Records still a successful record company and exists today
as part of Universal Music Group, but makes the list due to a huge lack of foresight that
would have assured them a position as one of the world’s top music companies.
It comes down to one simple error in judgment--they didn’t sign The Beatles.
On the first day of 1962, The Beatles auditioned for the Decca’s head of Artists and Repertoire,
Dick Rowe.
They recorded 15 songs as a demo and though they were nervous, thought they had the contract
in the bag.
But when making his decision Dick Rowe infamously quipped “guitar groups are on the way out”
and turned them down, opting to go with another group.
Now this may seem like Dick Rowe was a complete moron but there a few factors that make his
position more understandable.
The Beatles and manager Brian Epstein later admitted that the demo wasn’t their best,
though they were able to use it to eventually get a deal with Parlophone from it.
It also confirmed producer George Martin’s beliefs that The Beatles’ current drummer
Pete Best wasn’t the right fit for the group and led to them replacing him with Ringo Starr.
On another note it may have partially been that The Beatles didn’t like the potential
deal that Decca could offer as it required them to pay for record pressing.
Decca would eventually recoup from the missed opportunity thanks to none other than George
Harrison, as they signed the Rolling Stones at his recommendation.
Despite it inevitably working out for both sides, Dick Rowe would forever be known as
“the man who rejected the Beatles”.
#2.
“Sharper Image”-Because of the broad unfocused nature of the quirky retail chain, you might
say it was destined for failure.
The fragile business model was based on betting on the next big thing in home appliances and
gizmos.
All it took for the brand to crumble was putting too much money into a products that failed
miserably.
That’s exactly what happened with the Ionic Breeze.
The product was designed to create a healthy environment inside of homes by purifying the
air, but what it did was closer to the opposite.
In 2003, the magazine Consumer Reports published an article that completely debunked the validity
of the Ionic Breeze, finding that it didn’t clean the air and some of the models even
released dangerous amounts of trioxygen, or ozone.
Instead of pulling the product, Sharper Image decided to sue Consumer Reports for libel
and restore their credibility.
This backfired as the court ruled in favor of Consumer Reports.
The lawsuit was extreme costly and ended up only further destroying Sharper Image’s
reputation.
The failed suit coupled with thousands of angry customers demanding refunds and voicing
their contempt with the company was a major factor in Sharper Image filing for bankruptcy
and closed all of its stores in 2008.
The company now exists only as an online store and monthly catalog.
#1.
“Blockbuster”-Though they have slowly been fading into the back of our memories
as if a dream, video stores were once a real thing and were a successful business.
Blockbuster, founded in 1985, was the biggest fish in the sea during the home video gold
rush which reached its pinnacle in 2004.
But only a few years later the company became almost non-existent.
Blockbuster went from having around 9,000 stores worldwide in the 1990s to less than
a dozen today, most of which are located in Alaska and most likely won’t be around for
long.
So what happened?
Well in 2000, the heads of Blockbuster including CEO John Antioco made a decision that in hindsight
sealed the company’s fate.
They were approached by the young upstart entrepreneur, Reed Hastings with an idea that
if Blockbuster promoted his video delivery service, Netflix, in their stores---he would
run their website and online features.
Apparently they thought Hastings was joking and brushed him off.
Within ten years Blockbuster was filing for bankruptcy and Netflix was worth over 25 billion
dollars, five times the 5 billion dollars that Blockbuster was worth at its peak.