Let’s face it, decisions are hard to make. Decisions should be easier to make when you have a huge bank roll and lots of bright minds helping guide you toward the best possible outcome. Although companies have ample resources and people available to make the right choices, they still absolutely blow it sometimes. Here are the 5 worst business decisions ever made.
5Instagram Sold to Facebook for $1 Billion.
Kevin Systrom and Mike Krieger sold their 13 person company, Instagram, to Facebook on April 9, 2012. Facebook Bought the company for $300 million in cash and $700 million in Facebook stock. This is an enormous sum of money for what was at the time a startup that was only 18 months old. However, according to Bloomberg Intelligence, Instagram would be worth $100 billion if it was a stand alone company today. It’s certainly true that having access to Facebook users and promotion from Facebook added considerable growth and value faster than Instagram may have achieved on their own but with that said $99 billion is an enormous margin and Instagram usership continues to outperform Facebook in a number of key areas.
4Excite Declined to Purchase Google for Under $1 Million.
Excite.com was a search engine that was just behind Yahoo in search traffic. This put Excite in the #2 position for search volume. In 1999 the CEO of Excite, George Bell, was offered the opportunity to purchase Google for $750,000. George made the giant mistake of declining the offer. At the time of the offer, the Excite team ran side by side tests of Google’s technology and Excite’s and did not see much of a difference. And although George now likes to provide a number of reasons as to why Excite declined the offer, there is one fact that completely negates any excuse or rationale not to make the purchase: Google is currently worth $801 billion.
3Blockbuster Passes on Netflix. Thinks That VHS Will Somehow Win Against DVD’s and Streaming.
At Blockbuster’s peak, they were bringing in nearly $6 Billion dollars in revenue each year. Throughout the 1980’s and early 1990’s Blockbuster was king of movie rentals and profited (ironically) through the convenience of allowing people to watch movies in their own home. When Netflix came to Blockbuster, the sale price was a mere $50 million dollars, a tiny sum compared to the billions Blockbuster brought in every year. When Netflix pitched Blockbuster on the idea of convenience- mailing DVD’s to customers to watch at their own leisure- Blockbuster leadership practically laughed Netflix out of the room. “Fast Forward” to today and Netflix is worth over $150 billion dollars. Meanwhile Blockbuster filed for bankruptcy in 2010 and closed down their retail locations in 2013 after trying to start up a DVD mail service and generally copy Netflix at every turn. You can’t feel bad for Blockbuster – how could they possibly bet the farm on technology that requires the customer to rewind?
2Kodak Invents Digital Photography. Adopts Digital Photography After Everyone Else.
Kodak held an extremely strong brand in the photography world. As such, Kodak attracted some great talent to work for them. In 1975 one of those talented employees, Steve Sasson, was the engineer who invented the first digital camera and was arguably the father of photography. When Steve shared the invention with Kodak and Kodak evaluated the tech, they decided not to incorporate it into their product line and ordered Steve not to tell anyone about it. This is embarrassing because convenience and speed are two features of technology that generally lead to mass adoption. Polaroid was wildly popular especially in 1972 with their model SX-70. Polaroid was of course popular for their instant photography, particularly due to the instant nature of the photos they produced- a feature done quickly and inexpensively with digital photography. Adding insult to injury, Kodak later acknowledged the impact digital photography would have on the space, and still failed to develop a go to market strategy for years after they came to that conclusion.
1Western Union. Because, Western Union.
Western Union has been around for a long time. That isn’t a reason why they should be going away- many companies have extremely long, multi generational existences. It’s surprising Western Union is still around because of their tendency to shun new and innovative technology. When you think of remittances and transferring money, you think less and less about Western Union and more and more about Venmo, Square’s Cash App, Paypal and even Bitcoin! Western Union is not in the picture. However, their woes started long ago. Once an innovative and convenient technology, Western Union is now lagging behind as ‘old world’ inconvenient, slow and costly tech. Before Western Union was a money moving company, they had a telegram service and absolutely owned the fast communications space. Even with this expertise and clear understanding of the value of fast communication, they passed on the opportunity to be first to market with the telephone, when they sent Alexander Graham Bell away and refused to purchase his invention for $100,000. Things only got worse for Western Union after that as they tried to play catch up and hired Thomas Edison to invent a better telephone. Western Union was sued for that effort by Bell and Bell won the lawsuit. Bell went on to become the dominant telephone company in the United States and Western Union has suffered ever since.
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