THE WORLD’S WORST
BUSINESS DECISIONS

To succeed in business, you need to make the right choices. These companies did not.

 

FOX GIVES AWAY A GOLDEN GOOSE

The movie business was a lot different before Star Wars came along in 1977 and changed everything, so you can’t fault Fox for not knowing that the film would spawn one of the biggest cultural phenomena of all time. But they truly blew it when they accepted George Lucas’s offer to lower his directing fee in exchange for merchandising and sequel rights for Star Wars. This deal, which gave George Lucas monetary rights to the seemingly infinite volume of Star Wars merchandise sold over the years, was the single reason Lucas became a billionaire. And that was before Disney handed him $4.05 billion for the franchise in 2012. Lucas made so much money from merchandising rights that his five other Star Wars films, while distributed by Fox, were technically independent films since he financed them himself and maintained full creative control. (Ironically, as of 2019, Disney now owns both Star Wars and Fox.)

 

MOTOROLA ARRIVES LATE

In the mid-2000s, Motorola was on top of the cell phone world. Their popular, super-thin Razr held 22 percent of the market by itself. But they were slow to recognize the impact that the revolutionary Apple iPhone would have when it was released in 2007. And by the time they released their own touchscreen smartphone in 2009, it was too late. The company’s shares had plummeted from its pre-iPhone high of $72 to just $12. In 2012 the mobile phone pioneer was bought by Google, only to be sold (again) to Lenovo in 2014.

 

ROSS PEROT BALKS…AND MISSES

The swaggering Texan businessman and would-be politician Ross Perot gives the impression that he made his fortune as an oilman, but the former IBM salesman was one of the first computer electronics billionaires. And he’d be even richer if he’d pulled the trigger on a deal to purchase Microsoft during its early days. In 1979 Perot entered negotiations with 23-year-old Bill Gates to acquire the $2 million company. But Perot, who wanted to acquire smaller computer companies to help out his Electronic Data Systems behemoth, balked at Gates’s asking price of $40–60 million. Perot later said in a Gates biography that he blew his chance to “buy a ringside seat” and that he should’ve just said, “Now Bill, you set the price and I’ll take it.” Gates remembers it differently and has said that his price was closer to $15 million…and that he wasn’t really interested in selling. When Steve Jobs was forced out of Apple in 1985, Perot didn’t want to miss out on another Next Big Thing, so he invested $20 million in Jobs’s next company, NeXT.

“Mushroom” and “cheese” are two types of screws.

 

OPPORTUNITY KNOCKS; EXCITE DOESN’T ANSWER

During the internet’s first boom, Yahoo’s biggest competitor in the search engine business was Excite. It was such a threat that Yahoo considered buying it for around $5 billion in 1998. But it was a different near-acquisition that’s given Excite executives headaches for decades. In 1999 the upstart search engine Google was steadily gaining users who liked its simple interface, but co-founders Sergey Brin and Larry Page, still grad students at Stanford, wanted to sell. They offered it to Excite for $1 million, but CEO George Bell turned them down. One of Excite’s financial backers, Vonod Khosla, got them to lower their offer to $750,000, but in one of the dumbest business decisions of all time, when Excite was offered a chance to get the fastest and most accurate search engine technology that’s ever existed, Bell turned down Brin and Page again. In a 2015 interview, Bell explained that Brin and Page had wanted them to “rip out all of the Excite search technology and replace it with Google”…which probably would have been a good idea. Google is currently worth about $730 billion.

 

KODAK SELF-DESTRUCTS

Kodak was once so dominant in amateur and professional photography that the term “Kodak moment,” meaning the perfect moment to take a picture, became part of the English lexicon. But by 2012, the advent of digital photography had demolished Kodak’s business, forcing the company into bankruptcy. And it was nobody’s fault but Kodak’s…considering the fact that they actually invented the digital camera. In 1975 a Kodak engineer named Steve Sasson developed the world’s first electronic camera. But Kodak sat on it, afraid that it would cannibalize the company’s financially successful film department. Kodak eventually debuted the DC40, one of the world’s first consumer digital cameras, in 1995, but did little to market it compared to their other products. And that led to the company’s brand becoming essentially unknown to anyone under 25 today. Kodak ended up being right: digital cameras did cannibalize their film department. But they had a two-decade head start to make sure it was an internal feast, not the death of the company.

A newborn baby octopus is about the size of a flea.