23 Bad Business Moves - mental_floss on YouTube - List Show (250)

Hi, I'm Paige

Welcome to The Salon. This is Mental Floss on YouTube. And did you know that in 1991, the jewelry company Ratner's Group lost 500 million pounds

in value? This was all because the CEO Gerald Ratner made a speech in which he said

We also do cut glass cherry 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 identity theft

His identity was then stolen 13 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. They may have looked fancy, but the cars only had 130 horsepower, the floor mats 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 the 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 cell phone 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 Razor 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, Powder 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 Corporation, 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 said 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 Walmart

And they stopped selling appliances. In the 1800s, Western Union turned down Alexander Graham Bell's $100,000 offer for the telephone's patent

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 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 about 20 billion dollars

In 1979, Ross Perot turned down an offer to buy Microsoft Corp for 40 to 60 million dollars

although Bill Gates claims it was more like 6 to 15 million. Perot has said

I consider it one of the biggest business mistakes I've ever made. To cut costs on Star 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 a million

dollars to Excite, which you'll now know 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 a 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 Tremelos instead

That year the Beatles had their first hit Love Me Do with Parlophone Records JCPenney got rid of coupons in 2012 claiming it would be the end of fake prices That meant things wouldn be labeled as more costly for the sake of markdowns 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 Sassen invented the digital camera

According to Sassen, 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 US

before prohibition and after. It lost its status in 1957, but was still number two

The company started really going downhill in the 70s when the president replaced some

barley in their recipe with corn syrup and 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