23 Companies and Their Bone-Headed Decisions that Went Bad
Building a business from the ground up is incredibly difficult. But sometimes a company shoots itself in the foot.
Published 2 years ago in Facepalm
Building a business from the ground up is incredibly difficult. But sometimes a company shoots itself in the foot.
Here are some of the most detrimental business moves that we've ever seen.
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JCPenney tried to stop BSing customers and it backfired. They said no more sales, they’re just going to price everything low, because pretty much all sales at department stores are lies anyway. You’re not really getting 70% off, the retail price was deliberately set stupid high to convince you it was a great deal. But the discount price is the actual value of it.
So yeah JCPenney’s heart was in the right place but ultimately it failed because customers are really that dumb and would rather be lied to.5
In 1998 Yahoo refused to buy Google for $1 million.
In 2002 Yahoo offered to buy Google for $3 billion, but Google wanted $5 billion. Yahoo refused the offer.
In 2006 Yahoo was to buy Facebook for $1.1 billion, but Yahoo's CEO lowered it to $800 million and Facebook backed out.
In 2008 Microsoft offered to buy Yahoo for $44.6 billion, but Yahoo refused.
In 2016 Verizon bought Yahoo for $4.6 billion.6
A bakery that sold cupcakes and cookies (no full-sized cakes) across the street from a liberal arts high school. The school is known for not only being VERY arts-centric but also for being very LGBT-friendly. If I had to guess, I'd say that a full 33% of the kids there are LGBT of some type. EVERY student is supportive of LGBT rights and has had protests in support (often, with the school's staff being supportive and helping to organize and have a safe area for them to protest in). The neighborhood is VERY artsy and LGBT-Friendly. The kids would come in every morning before school, pop across the street at lunch, and stop by before heading home after school. The Bakery made BANK on these kids. The parents would buy from there for birthday parties and events all the time (like 6 doz. cupcakes for the birthday). So they were doing well. Suddenly, "baker's rights" became a thing and refusing to make a gay wedding cake was all over Fox News. The owners of the shop were Fox News watchers and thought to themselves, "Yeah, why should we bake a gay cake?" They proceeded to put a sign in their window announcing to the world that they were Christians and wouldn't bake a gay wedding cake. REMINDER: THEY DIDN'T DO WEDDING CAKES AT ALL!!! Furthermore, nobody had asked them to do one. Strangely, they went under in just over four months. It's almost like advertising your prejudices against the people you depend on for your income isn't a good idea. Not only did the kids stop going, but they told their parents and their other friends' parents not to go there anymore because they're prejudiced. So their ENTIRE customer base stopped going. The houses on that street are, no joke, 50% owned by well-to-do LGBT couples. So they even lost their foot-traffic business. By the time they figured out their mistake, it was too late. It was burned in the community's mind that this was NOT where you wanted to shop. Of course, they screamed and ranted about how they were being persecuted by people not spending their money at their shop, how they were being "attacked" for their beliefs by the kids going to McDonald's instead of their shop. IDIOTS! They had it made. But they had to open their traps and spew hate on their own customer base. They could have been in business for another 40 years! That school expanded a couple of years later to add another full building and a further 500 kids, merging with the city's public school system, which FURTHER would have increased their customer-base. SMH.
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MoviePass was a weird one. Their model was too good to be true. They lost money on every subscriber who was seeing more than 2 movies a month which was almost all of their subscribers.
That on top of the local movie theater offering infinite refill year long popcorn buckets for like 60 bucks and we abused both to the max. Easily spent the cost 50x over. We saw like every movie that came out in like groups of 7-8 people off of 2 cards and 1 bucket. It was a wild time.20
Not a company, but a country. the Northern Ireland renewable heat incentive. Basically, they came up with the bright idea of encouraging people to use renewable power by paying people to do so. Except you got more back per unit than the cost per unit. So people would buy an electric heater, put it on 24/7, get the money, use the extra money to buy another heater, plug that in for 24/7, get more money, buy another heater and so on. £500 million later they realized it wasn't such a good idea, the government collapsed and didn't reform again for 3 years.
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In 2012, after a three-year hiatus in the sport, F1 team Lotus signed driver Kimi Raikkonen for the 2012 season.
His contract included a clause that stated that Raikonnen would earn 50,000 euros for every point he scored in the two seasons of his contract.
Raikonnen then went on to finish third in the 2012 championship, and 5th in the 2013 season, which was exceptionally impressive for Lotus.
In doing this, he got 390 points in two seasons, and Lotus had to pay him 50,000 euros for each point, so he earned 19.5 million euros off of that bonus alone, which lead to Lotus almost filing for bankruptcy.22
Borders Books. It had a chance to be Amazon and turned it down.
Amazon Books, as it was then called, was a small online bookseller. It had a rather incompetent search engine, titles were misclassified, and it dabbled in office supplies. It was one early "e-tailer" among many. Amazon's pitch was that it was trying to be an online version of the retail giant Staples and it could ship quickly.
Then a conversation happened with the giant Borders Books. This Internet thing was starting to look like it would harm retail sales, so Borders contacted Amazon, and asked them to build some online inventory, a web-storefront and a sales management system.
Because of the dot-com bust, Borders got spooked. The Internet was a passing fad. Amazon could keep the system, Borders wanted out. By 2007, Borders ended its marketing alliance with Amazon, but Amazon had began using the system it built for Borders: Amazon did keep the system. It was a much, much better system than Amazon was using itself.23
I used to work at Kmart. They never bothered to update any of the store layouts, and they were more concerned with signing people up for their rewards card and/or credit cards, which led to longer lines, which led to more complaints...you get the idea. Also, the merger with Sears was the final nail in the coffin. Now, all the Kmarts in the area are closed.
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Yik Yak was completely anonymous message posting at first.
I actually talked to the original founders at a start up intern fair in Atlanta back in Nov 2013. And they said their app was supposed to be some online localized public bulletin board where people can post about events or parties or study groups. Obviously it became like a fun anonymous messaging app.
They then obviously started to make it less anonymous by introducing usernames. While they can still be throwaway names like we use on Reddit, it certainly made people lose favor of the app. They eventually shutdown and I think Square acquired their employees for some amount of money. I think between $1-3 mil.
Crazy to think they were at one point valued at $350 mil..
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