Business Mistakes in History
Generally, People make mistakes.Whenever we face a big screwup wehaveve made or dealing with the repercussions of another’s error, it’s easy to forget that mistakes are a part of life. Fortunately, for most people, our greatest mistakes on the job are minuscule compared to some of the biggest blunders in business history. It’s even comforting to know that some of the richest people in the world have made costly errors but went on to accomplish great things. Here are eight of the biggest and costliest mistakes in business history.
- Excite could have bought Google for less than $1 million.-Back in 1999, Excite was the No. 2 search engine and Google was the new kid on the block. Larry Page offered to sell Google to Excite for $750,000 (though with the stipulation that Excite would replace their technology with Google Search tech). There are several possible explanations for why Excite made this choice, but the end result is clear. Excite was eventually bought by Ask.com, which has a less than 2 percent share of the search market. Google has more than 60 percent of the U.S. search market share and much larger share worldwide. And Google has more than $130 billion in assets, so it’s worth more than 173,333 times what Excite would have paid for it.
- Daimler-Benz loses $20 billion on Chrysler. –Though Chrysler has always been one of the big three automakers in the U.S., it has had trouble establishing an international presence. Daimler-Benz (i.e. Mercedes) saw an opportunity here and merged with Chrysler at a cost of $30.7 billion in 1998. This didn’t work out as planned. Though it was a theoretical 50/50 split, Chrysler sales made up less than a third of revenue for the merged company in 2006. In the end, Daimler-Benz decided it was better off without Chrysler and sold 80 percent of its stake in 2007 for $7.4 billion. This unhappy trip down merger lane cost Daimler-Benz over $20 billion.
- Kodak has the first digital camera back in 1977. –Whenever technology changes the landscape of an industry, there are some businesses that adapt and thrive and others that continue doing the old thing until it’s too late. For Kodak, who fell from grace due to the advent of digital camera, the situation is a little different. Kodak filed a patent for one of the first digital cameras (one that used a magnetic cassette to store images of about 100kb) back in 1977. However, Kodak made so much money on film, it didn’t introduce the technology at the time to the public. Kodak continued its focus on traditional film cameras even when it was clear the market was moving to digital. When it finally got into the digital market, Kodak was selling cameras at a loss and still couldn’t make strong gains against other manufacturers who had been producing digitals for years.
- News Corp has a Myspace meltdown. – In a world dominated by social media, it’s strange that Myspace, one of the grandaddies of all social media sites, is hardly on the radar. To just say that it got beat by Facebook is oversimplifying the issue, since many platforms currently co-exist with Facebook. While MySpace was still on the rise, in 2005, News Corp bought it, paying $580 million for the social media site. But News Corp managed it badly. The first few years were good and the value of Myspace was estimated at $12 billion in 2008. Three years later, Myspace declined dramatically. It failed to adapt and change with the times and people passed it by for other social networking experiences. In 2011, News Corp sold MySpace for just $35 million, according to some estimates.
- Blockbuster turns down multiple offers to buy Netflix- It can be hard for some to imagine now, but there was a time when video rental stores like Blockbuster Video were a regular part of your weekend plans. Online video streaming services like Netflix and small kiosk-based rental systems like Redbox destroyed the old video rental business model. Blockbuster came to the party late, even though it got an early invite. In 2000, Netflix proposed that it would handle Blockbuster’s online component for it, and Blockbuster could host its in-store component (thus eliminating the need for mailed DVDs). According to an interview with former Netflix CFO Barry McCarthy, “They just about laughed us out of their office.” Blockbuster went belly up and Netflix went on to thrive. And since Netflix is behind such shows as House of Cards, Orange is the New Black, and Daredevil, I’d argue the world is a better place because of Blockbuster’s blunder.