5 Worst Company Disasters and Blunders

There are many companies in the world that achieved immense success and fame in business while there are also some which missed some great opportunities that in turn, brought them to ruin and utter disasters. Here are five such stories.

 

1. XEROX

xeroxXerox, the printer company handed over one of the greatest inventions in computing history to Apple.

         Imagine having one of the greatest inventions of the 20th century in your hands and giving it away because you didn’t understand what you are holding. Xerox did just that with the Xerox Alto. The Xerox Alto was an experimental computer from 1973, created at Xerox’s Research Center. The Alto was way ahead of its time. It was the first modern desktop PC, as we recognize them today. It had a mouse, windows, file managers, and it can copy and paste, delete and move files. It had icons, menus, graphics and even a Local Area Network, that connected all the computers together. The idea was to mimic an office desk, but on a screen, a paperless office of the future, absolutely revolutionary for 1973. The Xerox Alto was also embedded with the first Graphical User Interface, GUI feature in a desktop computer. Before GUI to do absolutely anything to a computer, you needed to type commands in lines of text. If you mistyped anything, the computer would just spit out an error, saying that it didn’t understand. Pointing and clicking on a graphical object was a foreign idea.

xerox-alto-desktop-computer

        Thousands of Xerox Altos were built at the Research Center but never sold. They were only used heavily in Xerox’s offices and at a few universities. The Xerox Company’s upper Management did not understand what they had and just couldn’t see the vision of what the computer of the future will be. But, a man named Steve Jobs did know what the future of the computer could be and Xerox handed it straight to him. Here’s how it went down:-

         Xerox at the time, needed a way to make their experimental technologies (like Xerox Alto) cheaper. They saw Apple pumping out their Apple II’s for a cheap price. So, in 1979 they invited Steve Jobs over to their research institute, to see if he could help to reduce the cost of production. The deal saw Xerox gain a million shares of Apple’s stock in exchange for Steve Jobs was getting the inside information for everything cool and revolutionary that was going on at the PARC Center. Nobody actually checked with the guys at the research center, but the Apple Business Development Team signed off the deal anyway. The following is from Larry Lester, a Xerox Research Center scientist, and an eyewitness to when Steve Jobs was handed everything.

Lester: So, during that demo… uh, Steve again got very excited, he was pacing around the room and occasionally looked at the screen. He was mostly just looking and then reacting, and taking it all in and trying to process it. And at one point, he said you still not showing us everything. And the meeting paused, and there were some phone calls, and okay, we gonna show you more. But, Jobs was there going: What is going on here? You’re sitting on a goldmine! Why aren’t you doing something with this technology? You could change the world! And, there were his buddies, who would be trying to arrange a negotiation of some kind. We’re trying to quiet him down. Don’t be so excited. But he was, he was really clear to him that we were never really gonna do anything with this. Ah, the irony was when they left, we’d still showed them like 1% of what PARC was doing. But it was enough, that it got really excited and decided that they were gonna retarget the LISA to be something like what they have seen in terms of GUI, they fell in love with the mouse, and uh, that changed everything. And 7 months after that, I was working at Apple.

         The graphical approach to the computer appealed to the human mind because commands were now replaced with movements and objects. So, it felt natural, typing lines of text was now a thing of the past. The ideas from the Alto would heavily influence the Apple LISA, whose technology trickles down to the Macintosh, which influenced Microsoft Windows. Both of which, were the eventual ancestors to the manner in which our phones operate today. And the sad thing is Xerox never gets a mention for any of this.

 

2. BLOCKBUSTER

blockbuster

 

Blockbuster Video turns down the opportunity to buy Netflix.

         In the mid-80s to late 90s, where when VHS was king. The problem back then was that VHS tapes would cost up to $97 per movie. For this reason, video rental stores, like Blockbuster came in to fill that gap. They were the perfect solution and became a regular part of weekend plans for hundreds of millions around the globe. Eventually, online video streaming services, like Netflix, Hulu, and even Putlocker destroyed the old video rental, business model.

         Ironically, in the year 2000, Netflix proposed that it would handle Blockbuster’s online component and Blockbuster could host Netflix as an in-store component, thus eliminating the need to mail DVDs, which was Netflix’s business model at the time. According to an interview with former Netflix CEO, Barry McCarthy, Blockbuster just laughed at Netflix out of their office. But, that’s not the end of their story. By 2007, Blockbuster was well on the right track. They had an internet movie component that was steamrolling over Netflix. Netflix was struggling and their upper management wanted to sell the company to blockbuster to save face. Blockbuster’s growth was very strong at the time, so they turned down the offer. In a strange twist later that year, there was a boardroom dispute over Blockbuster, that saw a change of CEO.

blockbuster-downfall-graph-in-2010

         The new CEO was James Keyes (formerly of Seven-Eleven). He came in with the wrong mindset and thought that Blockbuster should be a retail business instead of an entertainment one. Because of this, he didn’t see the value of an online component which was his huge mistake. Within eighteen months, the new CEO had lost Blockbuster 85% of the company’s value and within three years, Blockbuster was filing for bankruptcy. Blockbuster went belly-up, and Netflix went on to thrive. Since then, Netflix is behind such original shows such as The Witcher, Stranger Things, The Umbrella Academy, etc. With 167 million subscriptions worldwide, Netflix has altered the way many view the entertainment.

 

3. EXCITE

excite-search-engine

Excite could have bought Google for less than one million dollars.

         The year is1999, Excite was the second popular search engine, behind Yahoo. Google back then was a nobody, just a new kid on the block. It was in this setting, back in ’99 that Larry Page offered to sell Google to Excite for $750,000. According to Excite’s CEO at the time, George Bell, the $750,000 deal was just 1% of Excite’s worth, so financing wasn’t an issue but the hiccup came when Larry insisted that if the sale went ahead, Excite have to replace all of its search technology with Google’s. He thought that this was too much, and refused the offer.

ask-jeeves-or-ask.com

         Excite was eventually bought by Ask Jeeves (now Ask.com) in 2004. At that time, Ask had less than 2% search market share. Google, currently now known as Alphabet, processes more than 6 billion search results every day. They currently have around $276 billion in assets, which is more than 368,000 times what Excite would have paid for them.

 

4. KODAKkodak

Kodak had the first digital camera back in 1977 but failed to continue it.

         Whenever technology changes the landscape of an industry, there are some businesses that adapt and thrive, and others that continue doing the same old thing, until it’s too late. For Kodak, who fell behind, due to the advent of the digital camera, the situation was a little different. Kodak actually patented the first digital camera back in 1977. It was one that used magnetic cassettes to store images of about 100 kilobytes. However, over the coming years, Kodak made so much money off of the films that they let the new technology gather dust, not realizing its potential. The company continued to focus on traditional film cameras, even it was clear that the market was moving towards digital. When Kodak finally went to the digital market, they were selling cameras at a loss and still couldn’t make up enough sales to catch up to those competitors, which have seen the potential of digital cameras early on. Currently, Kodak is losing over three hundred million dollars a year.

The lesson learned: In the world of business, always keep an eye on the market and be responsive to future trends. If not, it cost you everything.

 

5. NASA

nasa

A basic school math error cost NASA $125 million.

         Before the advent of Google, did you ever get frustrated with the conversions from feet to meters? Inches to centimeters? Did you find it difficult? Well, you’re in good company. As it turns out, a similar math problem hindered some of the greatest minds in the western world. In 1999, a Mars Orbiter, the Lockheed-Martin designed for NASA was lost in space due to a simple math error, where the engineers at Lockheed used Imperial measurements while the NASA employees used metric ones.

nasa-mars-failure

         The mismatch led to the thrusters not receiving vital navigation information, which caused the $125 million spacecraft to malfunction. The probe was forever lost while trying to get into orbit around Mars after a 286-day journey. There were numerous occasions where the errors should have been caught, but it wasn’t.

 

So, these were 5 huge blunders by some top companies about which only a few people know.

HARISH DANU

Harish Danu is an Engineer and a passionate Blogger. When not blogging, he's out in the garden teaching himself about permaculture and self-sustainability. Likes burger and beer.

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