Top 10 Worst Business Decisions Ever
Over the centuries, there have been some crackers when it comes to bad business decisions. Craig Donaldson lists 10 of the classic additions to the hall of bad business decisions fame.
- Napoleon wasn’t a gifted realtor
In 1803, Bonaparte acquired the Louisiana territory – roughly half of the land that became the US – after France made a treaty with Spain. Just 20 days later, just as the US was about to offer US$10 million alone for New Orleans, Bonaparte gave the whole shebang up for US$15 million, or about 7 cents per hectare .
- “Drill for oil? … You’re crazy!”
In 1859, when shovels and picks were the tools of the oil-digging trade, retired railroad conductor Edwin Laurentine Drake tried to enlist the help of salt-well drillers in drilling for oil. Their response was: “Drill for oil? You mean drill into the ground to try to find oil? You’re crazy.” Together with his blacksmith uncle, Drake developed the first oil-drilling apparatus. Unfortunately, Drake did not patent his invention, and while others rushed in and became overnight millionaires, he died in poverty.
- “What use could this company make of an electrical toy?”
In 1876, the Western Union Telegraph Company was offered the patent for the telephone at an asking price of US$100,000. In knocking back the single most valuable patent in history, its then president wrote: “We have come to the conclusion that it has no commercial possibilities … What use could this company make of an electrical toy?”
- Decca Records’ decision to turn away the Beatles
Two Decca executives invited the Beatles to audition in 1962, but after two weeks they told the band’s manager that the label wasn’t interested: “We don’t like your boys’ sound. Groups are out; four-piece groups with guitars particularly are finished.” The Beatles instead signed with EMI Records.
- “$15 million – take it or leave it!”
Texas businessman and two-time US presidential runner Ross Perot offered to buy Microsoft (NASDAQ:MSFT) in 1979 for US$15 million. Gates wanted US$60 million. Perot walked away empty-handed and Microsoft today has a market value of US$265 billion.
- The man who could have been Bill Gates
In 1980, IBM (NYSE:IBM) was looking for a company to supply an operating system for its brand-spanking-new invention: the personal computer. IBM was keen to discuss this opportunity with a software guru called Gary Kildall, who skipped the meeting with IBM and instead indulged in his favourite pastime: flying his plane. A frustrated IBM instead turned to Bill Gates and Microsoft (see point five for market worth).
- Why we use Apple computers and not Ataris
Apple Computer (NASDAQ:AAPL) cofounder Steve Jobs comments on his attempts to drum up interest in the computer that he and Steve Wozniak invented: “So we went to Atari and said, ‘Hey we’ve got this amazing thing, even built with some of your parts, what do you think about funding us? Or we’ll give it to you. We just want to do it. Pay our salary, we’ll come work for you.’ And they said, ‘No.’ So, then we went to Hewlett-Packard and they said, ‘Hey, we don’t need you; you haven’t even got through college yet’.” Apple today has a market capitalisation of US$184 billion.
- Not excited about Google
In 1999, former Excite CEO George Bell had the opportunity to buy Google (NASDAQ:GOOG) for US$1 million – but passed on the opportunity. Google now has a market value of US$163 billion.
- The collapse of Enron: financial chicanery and fraud
Once the seventh-largest company in the US, with revenues in excess of US$100 billion, Enron hit new corporate fraud and corruption highs (or lows) in 2001, after it was revealed that it had engaged in widespread accounting fraud. The Enron scandal was the largest bankruptcy in American history at the time.
- Lehman Brothers fights fire by burning cash
Investment firm Lehman Brothers’ main holdings were in real estate and subprime mortgages. When the subprime mortgage crisis first sparked in 2006-07, the firm took out enormous loans based on their liquid assets instead of selling off their huge shares of failing mortgage propriety. Debt ate up the company and, in 2008, it eclipsed Enron as the biggest bankruptcy in US history.
Ross Perot was probably the worst one. What do you think?