Too many business leaders say they have a company strategy. Heavily armed with goals and slogans, it seems like they do have everything under control. But what if they don’t? What if they still make mistakes by implementing poor decisions that could easily end in disaster?
Well, today we’re diving into such instances to see how big and small businesses are no strangers to, basically, ruining themselves. And those who survived have a decision on their record that still makes their shareholders’ hair crawl and that they regret for the rest of their lives.
“What company bankrupted itself (or nearly bankrupted itself) through poorly thought-out and/or unnecessary decisions?” Redditor WolfgangCaesor asked people. The thread was upvoted 44.3k times, so it seems like many found it interesting. Below we rolled up some of the most illuminating cases that show how one bad step can ruin a whole marathon, even for the best runners.
This post may include affiliate links.
A bakery that sold cupcakes and cookies (no full-sized cakes) across the street from a liberal arts high school. The school is known for not only being VERY arts-centric but also for being very LGBT-friendly. If I had to guess, I'd say that a full 33% of the kids there are LGBT of some type. EVERY student is supportive of LGBT rights and has had protests in support (often, with the school's staff being supportive and helping to organize and have a safe area for them to protest in). The neighborhood is VERY artsy and LGBT-Friendly.
The kids would come in every morning before school, pop across the street at lunch, and stop by before heading home after school. The Bakery made BANK on these kids. The parents would buy from there for birthday parties and events all the time (like 6 doz. cupcakes for the birthday). So they were doing well.
Suddenly, "baker's rights" became a thing and refusing to make a gay wedding cake was all over Fox News. The owners of the shop were Fox News watchers and thought to themselves, "Yeah, why should we bake a gay cake?" They proceeded to put a sign in their window announcing to the world that they were Christians and wouldn't bake a gay wedding cake.
REMINDER: THEY DIDN'T DO WEDDING CAKES AT ALL!!! Furthermore, nobody had asked them to do one.
Strangely, they went under in just over four months. It's almost like advertising your prejudices against the people you depend on for your income isn't a good idea. Not only did the kids stop going, but they told their parents and their other friends' parents not to go there anymore because they're prejudiced. So their ENTIRE customer base stopped going. The houses on that street are, no joke, 50% owned by well-to-do LGBT couples. So they even lost their foot-traffic business.
By the time they figured out their mistake, it was too late. It was burned in the community's mind that this was NOT where you wanted to shop.
Of course, they screamed and ranted about how they were being persecuted by people not spending their money at their shop, how they were being "attacked" for their beliefs by the kids going to McDonald's instead of their shop.
IDIOTS! They had it made. But they had to open their traps and spew hate on their own customer base. They could have been in business for another 40 years! That school expanded a couple of years later to add another full building and a further 500 kids, merging with the city's public school system, which FURTHER would have increased their customer-base.
SMH.
JCPenney tried to stop bullsh**ting customers and it backfired. They said no more sales, they’re just going to price everything low, because pretty much all sales at department stores are lies anyway. You’re not really getting 70% off, the retail price was deliberately set stupid high to convince you it was a great deal. But the discount price is the actual value of it.
So yeah JCPenney’s heart was in the right place but ultimately it failed because customers are really that dumb and would rather be lied to.
Sears ended their catalog/mail order business in 1993. For over 100 years they had sold everything from hubcaps to houses via mail order and shipped them all over the country.
Amazon was founded in 1994.
Think of what they were positioned for and think about what they missed out on.
An A&W burger company tried to outsell McDonald's 1/4pounder with a 1/3pounder but Americans thought 1/3 was less than 1/4 so it failed really fast.
My hometowns shopping mall and movie theater made a rule that no one under 18 could enter after 3pm without a parent present. This included the week and weekend.
You know how malls survive without teenagers with disposable income? They don't.
The mall might have gone out of business anyway. Many that let teens in still did. This mall might have been having a theft problem.
in my hometown, a group of coffee shops and other small businesses didnt like the loud noise and smoke from busses coming and going all day because the bus terminal was right around the corner from them. they complained about it, they moved the terminal somewhere else. not long after, they realized (too late) that most of their business came from people waiting for the bus or just stepping out the bus. the place is a wasteland now
One time Red Lobster offered an unlimited king crab leg deal, cause they brought the servings out slowly and were like 'nobody is gonna sit there for 6 hours and just eat king crab legs'.
Actually, lots of people did. So many they lost millions.
In 1998 Yahoo refused to buy Google for $1 million.
In 2002 Yahoo offered to buy Google for $3 billion, but Google wanted $5 billion. Yahoo refused the offer.
In 2006 Yahoo was to buy Facebook for $1.1 billion, but Yahoo's Ceo lowered it to $800 million and Facebook backed out.
In 2008 Microsoft offered to buy Yahoo for $44.6 billion, but Yahoo refused.
In 2016 Verizon bought Yahoo for $4.6 billion.
I hate things like this because it assumes that if yahoo bought Facebook, the trajectory of Facebook would still be what it is today. We look at the business now and think these companies are stupid for not buying them when small, neglecting the fact that everything might have changed with new owners... That being said, yahoo is bad at business
Circuit City. Major retail chain in the 1980s that collapsed under mismanagement. It’s arguably biggest blunder was firing all of their experienced, better paid workers for cheaper inexperienced ones. Apparently selling merchandise and keeping customers happy is important in the retail business. Who knew?
A real shame, so many retailers don’t get that their employees are key to customer satisfaction
Once worked in an organisation where the Marketing Manager (obnoxious a hole), described staff as a liability not an asset.
Load More Replies...
That's a classic management move. "Let's fire the people who are good at selling so we can hire unqualified people for less and save 15% on salaries. Just think of the bonus us managers will get!"
BUT WAIT!! THAT'S NOT ALL!!! Before they did that, they eliminated ALL major appliances from all their stores. I used to work there, and I can't tell you how many people came in for a new fridge or stove, and left with that plus a new big-screen or stereo system, or came for the new big TV and left with that and a washer/dryer or something... all because of the Circuit City Credit Card. Those big multi-department sales vanished overnight! Then, they yanked CDs and DVDs out of the store, just as those sales were heating up. And after all that missed revenue, they then wasted millions of dollars remodeling their stores to make them 'sorta-like' Best Buy, who they were (ironically) afraid was gonna clean their clock. New technology and poor economies killed some companies, but Circuit City died of self-inflicted injuries. And they did it when they were at the very top of their game.
I went in to buy a vcr and the sales dudes wouldn't help me, even though I was clearly looking. Finally one guy comes over and I asked him why they were ignoring me and he said we figured you were waiting for your husband.
The largest conundrum was why they thought replacing their associates could work. Their entire business model was having a couple come in the door who had no idea what they were doing and meeting a geek who knew every transistor in every device. They went to work because they got paid to do their hobby. They sent the associates to the Sony and Samsung factories to learn. If you want to sell a $4000 plasma TV vs a $1200 LCD vs a $299 CRT TV, you need to be able to explain why its better and how to use it. They were also the 2nd largest retailer of appliances because those same associates knew the difference between every washing machine agitator. No knowledge means no $4k TV and programmable washing machine sales.
Oh... hmm... firing experienced, higher paid employees so they can get cheap labour that can't or won't do the job well since the pay is terrible.... and *fake shock* it tanked the business!!! Yet... it still keeps happening... in soooo many companies... not even restricted to retail...
I miss good computer shops. I don't know if Frys is still in business but if it is it's not the same anymore...
Too many companies see their employees as cost centers to be cut. They love to tell you that "you are all family." When they start saying that, watch your back.
Another dub Circuit City move? In the late 90s, as DVD was barely dipping its toe into the consumer marketplace, they invested a quarter billion into DIVX. Not the video codec, but the OG DIVX, DVDs you'd buy for $4.49, but they'd only work for 48 hours. Had to have a DIVX account set up. DIVX players cost $100 more than DVD players. Promises that maybe you'd be able to pay $20 for unlimited plays...on your own player(s). And maybe some discs could be playable on any machine...that was a DIVX player. Discs could be "recycled" at Circuit CIty; they'd just re-rent them with your account info still on them. That Xmas when everyone was buying DVD players you couldn't give away a DIVX player, even though they also sold DVDs. DIVX was dead in less than a year and Circuit City not long after.
Yessss I never feel comfortable talking to the "experts" at best buy when buying electronics. Like I don't want to be ageist but having an 18 year old upsell me on something feels more like a commission move and less like expert advice.
I dread going to Best Buy but there are certain kinds of products that I have to be able to look at in person. I can't buy E V E R Y T H I N G online. How depressing. I don't even like to shop, but it's good to get off one's a** every now and then and go out into the world for a bit and relate to other human beings.
Load More Replies...
They didn't "Fire them" like this comment suggested. What they did, was get rid of commissions with a lower pay as a result, thus most skilled employees jumped ship.
My husband and I went to buy a washing machine. The lad who sold us our machine - around 9 years ago, it's still working perfectly, knew everything about every single washing machine in the store and told us which ones were best and why. He didn't try to steer us to machines that were out of our price range either! We loved him :)
Man power is the real asset of every business. What's worth a super multimillion machine without the right hands to operate it?...just a useless pile of iron.
Do you even bother with research? They stopped carrying top brands and appliances. Then it stopped paying commissions - that's why much of the experienced sales staff left. They lost their best management when they spun off Carmax. Then they expanded way too fast - the same mistake way too many companies make.
I bought my last tube TV there when they were closing in 2005 - 6. $198.00 for a 32 incher.
The fastest way to figure out what an employee is doing is to fire him and see what problems pop up. Firering the expensive employees and replacing them with someone less competent is a classic, and a lot of firms have learned a thing about outsourcing the hard way.
Same with Fry's. Shutdown hit them HARD because, oddly, they had nearly no online presence. Plus people couldn't trust if they were getting a previously used item, that was also a large part of it!
Mount_Drew...So close to my favorite soft drink, which I think is what I imagine toxic waste must look like!
Those gargantuan “electronic plugs” that was the building for Circuit City was a hideous design flaw. We bought a refrigerator from them once. Once, being operative word. Total lemon.
There was a donut shop by my high school. Opened at 6am and closed at 5pm so students would be there every day before school started at 7:30 and after school ended at 2:15. They changed their hours to 8am-3pm and couldn’t make anymore money. They shut down a few months after the change.
Steve Ballmer nearly killed Microsoft. He thought smart phones were stupid. Thought the cloud was dumb. And did a few more things that were just egregiously stupid and took on a lot of debt. Their new CEO is doing a great job though.
The cloud kind of is dumb as people don't realize their data isn't just magically stored... its on a centralized server... if that goes tits up, everyone loses their data... its just a way to charge you monthly for storage as a service... clever for the companies, not so much for the users...
I don’t know if they’re gone but SKYPE sh*t their pants during the race they had market lead and ten years of practice in.
Then covid hit and everyone was stuck in doors but wanted to still talk face to face zoom popped up while Skype was cleaning up in the bathroom.
I think this was pretty much Microsoft's fault. Skype went downhill after MS bought them. Now they're pushing that cursed MS Teams app in its' place.
They didn't bankrupt themselves but they made a major competitor...
Sony built a disk drive console prototype for Nintendo... But nintendo didn't see the point in having disc media.. So sony created playstation, since they already invented the technology.
I remember that. I bought one of the first playstations to roll out and into shops. I also had a super nintendo which had an expansion slot in the back ready for CD rom games that never got used
My Pillow's CEO is quickly running his company into the ground as we speak...
I got a fun one. You know how on shark tank they always introduce Kevin O'Leary as having made his fortune selling a educational games company?
He single handedly killed the learning games industry (those Carmen san Diego type games that were real popular in the early 00's) by forcing the devs to churn them out faster and cheaper at the cost of quality, slowly killing the market, and he also nearly bankrupted Mattel when they acquired his company.
Quiznos.
Corporate office decided to buy the vendors, and then contract all of the franchises to only buy materials from Corporate with a price hike.
The margins got way too high and all of the stores went out of business. They shot themselves straight in the foot.
Nokia. Never made the transition to smartphone, now it's as good as dead.
Yahoo bought Tumblr for $1.1 billion and sold it for $3 million 6 years later
Barnes and Noble. They just kept making bigger stores with less and less books.
I hate that. Bookstores has to be filled with books in every corner of the shop. Maybe its just me, but i see bookstores as a darker but comfy place to spend hours in it, searching for new stuff to read.
Toys R Us. Toys R Us was actually doing fine. It was venture capitalists going in and loading TRU with debt to make it look like it was losing money. Victim of the game.
Kodak completely went under when they chose not to adopt digital photography. They eventually came back several years later, somehow.
Ironic when you take into account that the first digital camera actually was invented by a Kodak engineer, and Kodak also were the first to ever build a digital SLR camera in 1987. So they really were the main contributors to the development (pardon the pun) that shoot them in the foot.
I haven't seen Theranos mentioned, but holy hell that was one bad decision after another.
It all stemmed from the founder and CEO Elizabeth Holmes who had the honestly admirable goal of wanting to run a bunch of blood tests using a single drop of blood.
Unfortunately, reality got in the way and they learned that it turns out you need well over a drop of blood for any blood test to be accurate.
Holmes (she's comes across as a complete narcissist) refused to budge on the requirement and basically fired anyone who told her that what she wanted was impossible.
Despite being once valued at over $1B, the company never once produced a reliable product, is now competent defunct, and the founder is facing criminal charges of conspiracy to commit wire fraud as well as a class action civil suit.
Hoover UK free airline ticket disaster.
I remember this at the time. They tried to make it as difficult as possible to claim the flights, the idea being people would likely buy an expensive Hoover, not fulfil the criteria properly (or just never take the flight) and they'd be in profit. They underestimated how focussed British people will be to get free stuff. People would buy the cheapest thing they could to qualify, send all the forms off perfectly, then try to take legal action when the free flights didn't happen.
And Hoover then hired a company to stop people claiming their flights by offering you a flight from an airport least accessable by you to an airport hours from the hotel. They were caught on video doing it but the goverment refused to act on what was a clear case of consumer fraud. Those political party donations do work...
Cracked. Basically they fired all of their writers at once. The site also became practically unusable towards the ends as well. I could barely get it to load long enough to read the article.
I really loved cracked they actually had articles back in the day good articles
Ayds diet candy.
They didn’t change their name after the emergence of the AIDS virus.
In 2012, after a three-year hiatus in the sport, F1 team Lotus signed driver Kimi Raikkonen for the 2012 season.
His contract included a clause that stated that Raikonnen would earn 50,000 euros for every point he scored in the two seasons of his contract.
Raikonnen then went on to finish third in the 2012 championship, and 5th in the 2013 season, which was exceptionally impressive for Lotus.
In doing this, he got 390 points in two seasons, and Lotus had to pay him 50,000 euros for each point, so he earned 19.5 million euros off of that bonus alone, which lead to Lotus almost filing for bankruptcy.
Photobucket changing its tos back in 2017 to require a yearly fee for all those images you previously posted on it for free.
It did not bankrupt them by any stretch, but 30 years ago McDonalds started selling pizza. They invested millions and it crashed and burned spectacularly.
The reason McDonalds started selling fresh-baked muffins is they had to do something with the pizza ovens.
Schlitz. Throughout the '60s they were one of America's biggest national beers, a tough competitor to Budweiser and Pabst. They hired a new CEO, from within, in about 1974 or so who was greatly enamored of a study which showed that about 30% or so of beer drinkers couldn't distinguish their putatively favorite beer from other brands in taste test ... so why, he asked, are we spending so much money making our beer so distinctive when it doesn't matter to our customers? He oversaw the introduction of a slimmer brewing process that included replacing barley with corn syrup and using silica gel as a preservative during the brewing process that they would then filter out afterwards, i.e. they wouldn't have to disclose it as an ingredient. What they got was a beer that spoiled faster, grew cloudy on racks, didn't produce a nice frothy head when poured, was perceived as flavorless and eventually required that they recall about 10 million bottles.
Oh, and then they didn't realize that light beer was going to become a thing, so they got their clock cleaned by Bud and Miller in that segment. And they ran an ad campaign in which some belligerent-sounding guy only half-jokingly (it seemed) threatened to kill the guy talking to him off-camera if he took his Schlitz away.
By the early 1980s they went back to how they had once brewed their beer, but the damage was done and they had to sell out to Stroh's. I barely see much of that one around and it's been years since I saw any Schlitz on the racks.
YouTube's choice to require Google+ to comment at one point was a really bad time for them.
YouTube's latest ideas will give them bad times again, like removing the dislike button (fixed with add-ons), playing two unskippable ads with 15 seconds each one after another (fixed with add-ons) and the requirement to send full legal documents to verify the age for users from the EU (the EU's fault not theirs).
Note: this post originally had 66 images. It’s been shortened to the top 30 images based on user votes.
At one point, the good people at M&Ms were approached by a film company about a cross marketing suggestion; You advertise our movie on your product, we feature M&Ms in a key sequence of our movie...win/win! M&Ms weren't convinced that the film would do well, and declined being connected to the project. Shorty thereafter, when Reese's was approached with the same offer, they said "Sure, we've got these new things called Reese's Pieces we want to get some attention for, let's do this." If you haven't figured it out by now, that film was a little known movie called E.T.
Phillip Green, an absolutely horror show, deliberately ran British Home Stores into the ground so he, his family, and his cronies, could all extract as much money from the chain as possible and just left the ordinary employees, and particular everyone owed a pension, out to dry. I miss that chain. It was a great place when you needed a straight forward thing, without it being trendy or fancy. A frying pan, a plain green tee shirt, black plimsoles for your kids, all decent quality and a good price. He has also wrecked Topshop, which used to be a highly regarded chain for fashion conscious youngsters, with clothes at affordable prices. He just got greedy and thought he could put all the prices up and people would still shop there just the same because of its reputation. Guess what. They haven't. A failure to react to competition from the likes of Asos and BooHoo have also taken their toll. I don't even understand how he's making millions from the collapse of Topshop, but he is.
Green only wanted to help one person, himself, he succeeded. He’s a scumbag. I too miss BHS, not fancy, good quality and reliable, not the cheapest but we should value those who are a step or ten above Primark and accept that quality costs a little more.
Load More Replies...
No one brought up the Woolworth stores. I miss them. One of the largest was in downtown Boston and you could get just about anything there.
I really miss Woolworths. We used to call it the five and dime, like the other little shops there used to me. The one in my mall had a lunch counter and Mom and me were so often at the same time that the waitress remembered what we ordered every time.
Load More Replies...
I confess to not having heard of about half these companies in the first place.
That's why most stories are explained quite detailed. To paint you a picture. You don't have to know about a company to appreciate how stupid things were.
Load More Replies...
Here's the ultimate scam: almost single CEO responsible for these fiascos walked away from the wreckage with golden parachutes worth hundreds of millions of dollars.
South Africa... Brain drain and affirmative action has killed off everything that used to work like Eskom, roads, the police, every government department, hospitals....
I remember this one: Back in the early 80's, Apple computer made a terrible mistake and invested heavily in a machine they designed, called the Lisa (this was before they came out with the first Mac). It was an amazing machine but it was too much computer for the time (with a $10,000 price tag no less). It bombed and nearly tanked the company. But from the ashes rose the first Mac...
List fails without mentioning OnlyFans banning explicit content. Content creators fled the site in droves, subscribership dropped like a stone. OF quickly did an about-face on that decision, but they haven't quite recovered. Not a good idea to completely forget what your entire business model is.
I miss the old Cracked. The only reason I go there these days (sporadically) is to read old articles. And yes, they often don't load for hours.
No mention of New Coke. It is an interesting story and an insight into the nature of expectations and perceptions. Coke frustrated that Pepsi would consistently beat them in blind taste test (this was because Pepsi is sweeter) So they tried upping the sugar in Coke and created New Coke once Coke fans tried it they hated it, because they expect coke to taste a certain way. The Pepsi folks did not switch because they were happy with what they already had and saw New Coke as bad imitation, fail all the way around.
Surprised no one mentioned Disney firing Johnny Depp...they could have done without the negativity and a dent in the image.
At one point, the good people at M&Ms were approached by a film company about a cross marketing suggestion; You advertise our movie on your product, we feature M&Ms in a key sequence of our movie...win/win! M&Ms weren't convinced that the film would do well, and declined being connected to the project. Shorty thereafter, when Reese's was approached with the same offer, they said "Sure, we've got these new things called Reese's Pieces we want to get some attention for, let's do this." If you haven't figured it out by now, that film was a little known movie called E.T.
Phillip Green, an absolutely horror show, deliberately ran British Home Stores into the ground so he, his family, and his cronies, could all extract as much money from the chain as possible and just left the ordinary employees, and particular everyone owed a pension, out to dry. I miss that chain. It was a great place when you needed a straight forward thing, without it being trendy or fancy. A frying pan, a plain green tee shirt, black plimsoles for your kids, all decent quality and a good price. He has also wrecked Topshop, which used to be a highly regarded chain for fashion conscious youngsters, with clothes at affordable prices. He just got greedy and thought he could put all the prices up and people would still shop there just the same because of its reputation. Guess what. They haven't. A failure to react to competition from the likes of Asos and BooHoo have also taken their toll. I don't even understand how he's making millions from the collapse of Topshop, but he is.
Green only wanted to help one person, himself, he succeeded. He’s a scumbag. I too miss BHS, not fancy, good quality and reliable, not the cheapest but we should value those who are a step or ten above Primark and accept that quality costs a little more.
Load More Replies... No one brought up the Woolworth stores. I miss them. One of the largest was in downtown Boston and you could get just about anything there.
I really miss Woolworths. We used to call it the five and dime, like the other little shops there used to me. The one in my mall had a lunch counter and Mom and me were so often at the same time that the waitress remembered what we ordered every time.
Load More Replies... I confess to not having heard of about half these companies in the first place.
That's why most stories are explained quite detailed. To paint you a picture. You don't have to know about a company to appreciate how stupid things were.
Load More Replies... Here's the ultimate scam: almost single CEO responsible for these fiascos walked away from the wreckage with golden parachutes worth hundreds of millions of dollars.
South Africa... Brain drain and affirmative action has killed off everything that used to work like Eskom, roads, the police, every government department, hospitals....
I remember this one: Back in the early 80's, Apple computer made a terrible mistake and invested heavily in a machine they designed, called the Lisa (this was before they came out with the first Mac). It was an amazing machine but it was too much computer for the time (with a $10,000 price tag no less). It bombed and nearly tanked the company. But from the ashes rose the first Mac...
List fails without mentioning OnlyFans banning explicit content. Content creators fled the site in droves, subscribership dropped like a stone. OF quickly did an about-face on that decision, but they haven't quite recovered. Not a good idea to completely forget what your entire business model is.
I miss the old Cracked. The only reason I go there these days (sporadically) is to read old articles. And yes, they often don't load for hours.
No mention of New Coke. It is an interesting story and an insight into the nature of expectations and perceptions. Coke frustrated that Pepsi would consistently beat them in blind taste test (this was because Pepsi is sweeter) So they tried upping the sugar in Coke and created New Coke once Coke fans tried it they hated it, because they expect coke to taste a certain way. The Pepsi folks did not switch because they were happy with what they already had and saw New Coke as bad imitation, fail all the way around.
Surprised no one mentioned Disney firing Johnny Depp...they could have done without the negativity and a dent in the image.
