Hi I’m Paige. Welcome to the salon. This is Mental Floss on YouTube and did you know
that in 1991, the jewelry company Ratners Group lost £500 million in value?
This was all because the CEO Gerald Ratner made a speech in which he said, “We also
do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your
butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such
a low price?’ I say, ‘Because it's total crap.’”
And that’s the first of many bad business moves, whether intentional or unintentional,
that I’m going to tell you about today!
In 2010, the CEO of LifeLock, Todd David, put his social security number on billboards
and advertisements to prove that the company could protect people from identify theft.
His identity was then stolen thirteen times.
The 1958 Ford Edsel is famous for being a failure and losing millions of the company’s
dollars. They spent tons of advertising money on things like the hour-long TV special The
Edsel Show. They also ran a promotion in which every Edsel dealer in America was given a
pony to give away to a lucky family who test-drove the car. But it turned out that people just
didn’t like the car’s appearance, price, and gas mileage.
Speaking of which, the DeLorean Motor Company went bankrupt in 1982 after they had only
made less than 9,000 DeLorean DMC-12s. It may have looked fancy, but the car only had
130 horsepower, the floormats rubbed onto shoes, and the doors stuck. I'm glad we got
one before they went out of business.
In 2002, Consumer Reports published that Sharper Image’s air purifier, Ionic Breeze, was
ineffective. Sharper Image sued them, but the suit was dismissed and the company ended
up having to PAY the Consumers Union. Then, in 2005, their air purifiers were found to
actually be BAD for the environment. In 2008, the company closed all its stores.
In 2009, Fortune Magazine named BlackBerry “the fastest growing company in the world.”
But, by 2013, the company made up only 3% of the cellphone market. They just didn’t
believe that consumers would buy smartphones with apps, so they invested in that technology
too late.
Motorola had a similar problem in 2007. They stuck with the Razr while other companies
were making smaller, more innovative phones. Also, in 2005, they built the first phone
for a small tech company named Apple. The plug got pulled on that deal and we all know
what happened next.
In 2014, Powdr Corp. ended its legal fight over one of Utah’s largest ski resorts:
Park City Mountain Resort. All because they made the “honest mistake” of forgetting
to renew their 20-year lease with landowner Talisker Corp., which was an amazing bargain
at $150,000 a year. Talisker took the opportunity to sign a new tenant.
In 2005, Rupert Murdoch’s company bought MySpace for $580 million only to sell it in
2011 for $35 million. He admitted, “We just messed it up.” He says that it was because
they added unnecessary bureaucracy.
Circuit City filed for bankruptcy in 2008 because of management issues too. Two other
major problems: putting stores in inconvenient locations (compared to places like Wal-Mart)
and they stopped selling appliances.
In the 1800s, Western Union turned down Alexander Graham Bell’s $100,000 offer for the telephone’s
patent. The company’s president called it a “toy.” Within two years, he realized
his mistake and said $25 million would have been a bargain. But it was too late.
Blockbuster could have bought Netflix in the early 2000s for just $50 million. They were
actually given multiple offers throughout the decade, but turned them down each time.
Now, Blockbuster is no longer around and Netflix is worth around $20 billion.
In 1979, Ross Perot turned down an offer to buy Microsoft Corp. for $40-60 million (although
Bill Gates claims it was more like $6-15 million). Perot has said, “I consider it one of the
biggest business mistakes I’ve ever made.”
To cut costs on Stars Wars in 1977, 20th Century Fox gave George Lucas all licensing and merchandising
rights so they could save $500,000 on his paycheck. Those rights have made Lucas a billionaire.
You’re welcome for our contribution to your billions, George.
In 1999, Google founders Larry Page and Sergey Brin offered to sell Google for $1 million
to Excite (which you’ll know now as Ask.com). They even lowered the amount to $750,000,
but were rejected. Google is now worth around $395 billion.
Pets.com spent a lot of money on advertising between 1998 and 2000 -- with a Super Bowl
commercial and Macy’s Thanksgiving Day Parade balloon. But the online pet store ended up
losing $147 million in 2000. The problem was probably that people just didn’t want to
buy pet supplies online.
This was also the time of Flooz.com, which lasted from 1999 to 2001. At the website,
you could buy an online currency that certain websites would accept, in place of credit
cards. They had $35 million from investors. But it’s hard to invent a currency and even
commercials with Whoopi Goldberg couldn’t save Flooz.
In 1962, the Beatles auditioned for Decca Records. Executive Dick Rowe claimed that
"guitar groups are on the way out" and the company signed the band Brian Poole and the
Tremeloes instead. That year, The Beatles had their first hit, “Love Me Do,” with
Parlophone Records.
JC Penney got rid of coupons in 2012, claiming it would be the end of “fake prices.”
That meant things wouldn’t be labeled as more costly for the sake of mark-downs and
coupons. It turns out that customers liked fake prices and the company apologized for
its honesty one year later.
In 1975, Kodak engineer Steve Sasson invented the digital camera. According to Sasson, “It
was filmless photography, so management’s reaction was, ‘That’s cute—but don’t
tell anyone about it.’” Kodak refused to adapt to digital and applied for bankruptcy
protection in 2012.
Joseph Schlitz Brewing Company, founded in 1856, was the top brewer of beer in the U.S.
before Prohibition and after. It lost its status in 1957, but was still number two.
The company started really going downhill in the seventies when the president replaced
some barley in the recipe with corn syrup and a silica gel.
In 2005, Sprint bought Nextel for $35 billion. One of the major problems: the two companies
used totally separate technologies, which meant that they had to add radios to both
companies’ existing towers. In 2013, Nextel was finally shut down for good.
Finally, I return to the salon to tell you that in 2000, America Online acquired Time
Warner. In a deal worth $350 billion, AOL ended up owning 55% and Time Warner owned
45%, but the new board had an equal number of directors from each group. It was supposed
to bring Time Warner up to speed with AOL and the Internet. But, the dot-com bubble
burst in 2001 and AOL Time Warner had a $99 billion loss in 2002.
Thanks for watching Mental Floss on YouTube, which is made with the help of all these nice
people. Again, I’m Paige and if you want to check out my channel you can find it here.
Don't forget to be awesome!