I recently got into a conversation with a group of colleagues about what we thought were the worst business decisions ever made in the history of commerce. The open ended conversation eventually dwindled down to a list of well known usual suspects, like Coca-Cola’s introduction of the new Coke, a horribly reformulated version of its most iconic beverage. Or, Time Warner’s dot-com mania induced merger with AOL in 2000, now widely regarded as the worst merger in the history of all mergers. These notorious examples are well known, so I decided to do a little digging for some of the more obscure business fumbles ever made. In no particular order, here is my top 5 list:
1. Ross Perot blows the chance to buy Microsoft
In 1979, Ross Perot, the founder of Electronic Data Systems (now owned by Hewlett-Packard) and future presidential candidate, had his eyes set on purchasing Microsoft Corp. a then fledgling 30-employee start-up, who’s death star grip around the PC software market was just starting to grow. Ross Perot viewed the deal as a nice way to provide his clients with the type of corporate software they were asking for. However, a deal was never sealed because:
2. Apple fires Steve Jobs
In early 1983, Apple co-founder Steve Jobs went out of his way to hire John Sculley, then president of PepsiCo (PEP). Steve was looking for a CEO who could manage Apple’s rapid expansion. Friction between the two men started almost immediately with Steve getting taken off the development of the Lisa computer project, and instead being assigned to a project that ultimately produced the Macintosh.
The Mac launched in 1984 to a lukewarm response, and in 1985 the company posted its first ever quarterly loss and laid off 20% of its work force. In that year, John Sculley went before Apple’s board of directors and announced that he was:
Well, thankfully Steve’s back, and neither Sculley nor the board have scarcely been heard from since!
3. Inventor of the oil drill neglects to patent it
In 1858, Edwin Drake, a one-time train conductor, was hired by Seneca Oil to explore ways to extract oil from below the Earth’s surface. The company agreed to finance the project, despite deep skepticism, and sent Drake to Titusville, Pennsylvania where oil deposits were believed to reside. After investing $2,000 in the project, Seneca Oil grew weary of its prospects and pulled the plug, sending Drake off with his unproven ideas. He approached salt drill operators with the technology he had developed thus far, while he continued working to improve it.
Eventually a workable prototype was developed, which eventually became the basis of the modern oil drill. However, Edwin Drake did not see much value in patenting the idea, which allowed other entrepreneurs to freely copy his prototype... Oops!
4. Excite passes up opportunity to buy Google for $750,000
In 1999, Larry Page and Sergey Brin, the founders of Google, came to the conclusion that their search engine project was overly interfering with their studies. They attempted to offload it by putting it up for sale to a slew of companies. Both Alta Vista and Yahoo passed on the offer, believing their superior technology would prevail. Google was finally offered to Excite’s CEO, George Bell, who deemed the asking price of $1 million too high. Vinod Khosla of Kleiner Perkins, an early venture capital investor in Google, went back for another attempt -- this time for $750,000 -- and was thrown out of Bell’s office.
Its worth noting that Excite’s market cap at the time was valued at $35 billion. The company went on to pay $425 million for iMall, $780 million for online greeting-card company Blue Mountain Arts, and sponsored Indy car driver Eddie Cheever Jr. for an undisclosed sum... Google’s market cap today is valued at $197 billion, while Excite is fully owned by IAC/InterActiveCorp, a company who’s market cap is less than $4 billion!
5. Western Union passes up on telephone patent
In 1876, Alexander Graham Bell and his partners offered to sell their patent on the telephone to Western Union for $100,000. Bell’s patent was hard won after a rather dramatic period of experimentation and development, including a morning race to the patent office against Elisha Gray who was working on acoustic telegraphy using a water transmitter. Bell's patent number 174,465, was issued in 1876 followed by a series of public demonstrations to show off the telephone’s potential.
Western Union’s CEO, William Orton, refused to purchase the patent claiming that his company had no use for Bell’s electrical toy. A short two years later, he told colleagues that if he could get the patent for $25 million he would consider it a bargain. Needless to say, Alexander Bell was no-longer interested in selling the patent. Western Union and the Bell Company dived into a years-long patent battle that eventually saw Bell emerge as victorious.
1. Ross Perot blows the chance to buy Microsoft
In 1979, Ross Perot, the founder of Electronic Data Systems (now owned by Hewlett-Packard) and future presidential candidate, had his eyes set on purchasing Microsoft Corp. a then fledgling 30-employee start-up, who’s death star grip around the PC software market was just starting to grow. Ross Perot viewed the deal as a nice way to provide his clients with the type of corporate software they were asking for. However, a deal was never sealed because:
“Perot recalls Gates’ asking price as somewhere between $40 million and $60 million, which Perot found too high. When asked about the events, however, Gates says he put Microsoft on the block for $6 million to $15 million. In any case, neither party attempted to counter, and no agreement was reached.”
2. Apple fires Steve Jobs
In early 1983, Apple co-founder Steve Jobs went out of his way to hire John Sculley, then president of PepsiCo (PEP). Steve was looking for a CEO who could manage Apple’s rapid expansion. Friction between the two men started almost immediately with Steve getting taken off the development of the Lisa computer project, and instead being assigned to a project that ultimately produced the Macintosh.
The Mac launched in 1984 to a lukewarm response, and in 1985 the company posted its first ever quarterly loss and laid off 20% of its work force. In that year, John Sculley went before Apple’s board of directors and announced that he was:
“asking Steve to step down and you can back me on it and then I take responsibility for running the company, or we can do nothing and you’re going to find yourselves a new CEO.”
Well, thankfully Steve’s back, and neither Sculley nor the board have scarcely been heard from since!
3. Inventor of the oil drill neglects to patent it
In 1858, Edwin Drake, a one-time train conductor, was hired by Seneca Oil to explore ways to extract oil from below the Earth’s surface. The company agreed to finance the project, despite deep skepticism, and sent Drake to Titusville, Pennsylvania where oil deposits were believed to reside. After investing $2,000 in the project, Seneca Oil grew weary of its prospects and pulled the plug, sending Drake off with his unproven ideas. He approached salt drill operators with the technology he had developed thus far, while he continued working to improve it.
Eventually a workable prototype was developed, which eventually became the basis of the modern oil drill. However, Edwin Drake did not see much value in patenting the idea, which allowed other entrepreneurs to freely copy his prototype... Oops!
4. Excite passes up opportunity to buy Google for $750,000
In 1999, Larry Page and Sergey Brin, the founders of Google, came to the conclusion that their search engine project was overly interfering with their studies. They attempted to offload it by putting it up for sale to a slew of companies. Both Alta Vista and Yahoo passed on the offer, believing their superior technology would prevail. Google was finally offered to Excite’s CEO, George Bell, who deemed the asking price of $1 million too high. Vinod Khosla of Kleiner Perkins, an early venture capital investor in Google, went back for another attempt -- this time for $750,000 -- and was thrown out of Bell’s office.
Its worth noting that Excite’s market cap at the time was valued at $35 billion. The company went on to pay $425 million for iMall, $780 million for online greeting-card company Blue Mountain Arts, and sponsored Indy car driver Eddie Cheever Jr. for an undisclosed sum... Google’s market cap today is valued at $197 billion, while Excite is fully owned by IAC/InterActiveCorp, a company who’s market cap is less than $4 billion!
5. Western Union passes up on telephone patent
In 1876, Alexander Graham Bell and his partners offered to sell their patent on the telephone to Western Union for $100,000. Bell’s patent was hard won after a rather dramatic period of experimentation and development, including a morning race to the patent office against Elisha Gray who was working on acoustic telegraphy using a water transmitter. Bell's patent number 174,465, was issued in 1876 followed by a series of public demonstrations to show off the telephone’s potential.
Western Union’s CEO, William Orton, refused to purchase the patent claiming that his company had no use for Bell’s electrical toy. A short two years later, he told colleagues that if he could get the patent for $25 million he would consider it a bargain. Needless to say, Alexander Bell was no-longer interested in selling the patent. Western Union and the Bell Company dived into a years-long patent battle that eventually saw Bell emerge as victorious.
No comments:
Post a Comment