Wrong Place Wrong Time

"It was the late 1990s, in the middle of the tech boom, in San Diego, one of the hearts of the tech boom. A 'small' consulting company had about 100 programmers contracted out to about a dozen companies.

The profits were HUGE, the company charged $200 an hour per person and paid the employee about $70 an hour - pocketing the rest. The only overhead was the small main office, a recruiter, a Human Resources person, and an accountant to handle all of that money and small expenses.

Then the company scored big, Microsoft HQ in Seattle wanted some of these people, contracting about a dozen of them to start. The profits were so huge the programmers were flown back to San Diego each weekend.

The deal was still per-hour, and Microsoft loved the people and asked them to work through weekends, saving the company the cost of airfare and bringing in a couple of extra million dollars.

So 2 months later, expense reports are getting kicked back - the company was refusing to pay large parking fees for the people who worked 7 days a week for 3 and 4 weeks. The company accountant said they, 'Should have taken a cab to the airport since they were gone for 3 weeks.' After reminding the accountant that they had not intended to stay that long, that they did so at company request, they were still refused reimbursement for parking.

5 of those contractors resigned due to the parking payment issue, and others slowly followed. The Microsoft deal collapsed because they kept losing people, and within the year the whole company folded.

Yes, this company folded DURING the tech boom, IN a boom city. Hundreds of millions of dollars lost because they wanted to screw over their most income-producing employees over maybe $2,000 in parking fees."

Wrong Place Wrong Time
Talk About Waiting Until The Last Minute

"Recently the closest I've ever seen a company come to the brink, and rebound was Market Basket in the North Eastern US.

There where two parties really involved: The CEO ( Arthur T. DeMoulas) who was loved by the employees and customers for running the business with a 'customers and employees first' attitude. His cousin (Arthur S. DeMoulas: ASD) controlled the majority of the shares and the Board of Directors.

Arthur T's side had lost control of the majority shareholders in the mid 90's after a court ruled in Arthur S's favor and awarded his family members 50.5% of the business. There where holdouts on Arthur S's side that didn't budge to family pressure to completely get rid of Arthur T, until last year when the holdout passed away leaving his wife the shares. She switched sides on the Board and they fired then CEO Arthur T and brought in two CEO's with notorious histories of gutting companies.

The employees seeing the writing on the wall that the then profitable company was slated to be sold off to the highest bidder, changing the corporate atmosphere and dynamics, started to rally in the streets and eventually walked off the job en-mass. Soon the customers followed, and the chain of grocery stores was left empty and bleeding money (I heard quotes of upwards of $1M a Week from a single store in the 72-store chain).

The battle raged for over a month, the employees refusing to work for anyone but Arthur T, and the Board and CEO's refusing to bring him back to the company. In the end, the shareholders sold their stock to Arthur T and resolved the issue, but not until they were supposedly on the brink of bankruptcy, being only days away from having no operating cash left."

Talk About Waiting Until The Last Minute
A Simple Click Is The Difference Between Profit And Bankruptcy

"I audited an air cargo company, and essentially a member of the legal department had shifted the terms and conditions on their lease contracts. Basically, they rearranged the terms and in the process of copy and pasting the information, they unintentionally cut the part out which pushed all the normal flying expenses back onto the client (fuel, landing fees, all the stuff a normal air cargo contract would come with).

The contract was for their biggest client, and for a while, the client signed the papers and paid as they normally have until the client got all new management. The new management at the client reviewed all contract terms and found they no longer had to pay these expenses they previously were.

So they didn't...for two years. When the company I audited found receivables aged greater than 2 years they began to flip out and demand payment. The customer basically said I have no obligation to pay, so we are not. The company I audited went back to the agreement where they pretty much said, 'Screw it.'

The receivable was not collectible, so they wrote it off, forcing them to take an enormous hit on their income statement, which in turn caused them to break a debt covenant, and all their long-term debt became current. Boom. Dead in the water all due to a copy and paste error."

A Simple Click Is The Difference Between Profit And Bankruptcy
The Mistake That Almost Erased Netflix

"A few years back, Netflix announced that it was dividing its services into two different companies. All of the instant streaming would be handled by Netflix while the physical DVDs would be under a new service called Qwikster. It was universally hated by the Internet as a whole because back then about 12 million users had joint streaming and DVD packages. The change basically forced them to reconfigure their Netflix subscription to streaming only and then sign up for a Qwikster account to get the DVDs. It basically required two accounts for users to get what they were previously getting from one account. The Qwikster idea was canceled within a month.

Part of the reason everyone was so upset over the introduction of Qwikster is that the price also changed dramatically. At the time, a Netflix plan that included streaming plus the option to have 2 DVDs out a time cost around $10 per month. When Qwikster was announced, the new pricing scheme cost $7.99 per month for Netflix (streaming only) and $7.99 per month for Qwikster (DVDs only.) That means what previously cost a user about $10 per month on one account would now cost them about $16 and required the use of two separate accounts. This added to the outrage."

The Mistake That Almost Erased Netflix
A Roller Coaster Ride Of A Career

"I remember before the Segway was unveiled, it was billed by its creator, Dean Kamen, as a product that would 'Revolutionize the way cities are built.' This quote still sticks in my head after all these years. It was also quoted as being 'as big a deal as the PC' and possibly 'more important than the Internet'. But the product and company would prove to be a major disaster.

The Segway debuted in November 2002 on Amazon for $5,000.

In June 2003, President Bush made headlines for falling off a Segway during a test drive. This event alone probably killed the future of the company.

In September 2003, the company recalled all units due to injuries sustained by customers when the battery died.

Fast forward to 2009, Segway is acquired by UK businessman James Heselden.

In a shocking turn of events, Heselden dies when he rides his Segway over a 30-foot cliff and falls into the river below.

Today, as we know, the Segway lives on in a world of underachievement, the fodder of mall cops and tourism packages, not revolutionizing anything. It did, however, appear on an episode of Duck Dynasty."

A Roller Coaster Ride Of A Career
The Dairy Product Formerly Known As Ice Cream

"Breyers Ice Cream was the brand with simple ingredients listed on the back and built a name bragging about how real they were. You might remember the commercials of little kids reading 'milk, sugar, vanilla...' back in the 90s. Bought out by Unilever, the ingredients now are so artificial they cant legally be known as ice cream anymore and is called 'frozen dairy dessert'. Consumers confused why their favorite flavor doesn't melt and has the consistency of marshmallow have complained about it on the brand's social media accounts."

The Dairy Product Formerly Known As Ice Cream

Anonymous

Flavor Is Kind Of What It's All About

"Schlitz was the number one drink of it's kind in America by far in the late 60s/early 70s when some genius at the head office decided to change the recipe to save money on ingredients. Sales fell off a cliff. Almost immediately, they changed back to the old recipe. But it was already too late. The old Schlitz drinkers stayed away in droves. The company remains up Schlitz creek without a paddle."

Flavor Is Kind Of What It's All About
Almost Breaks Your Heart

"In 2008, speculators were driving the price of oil to unsustainable levels. Even back when the economy was healthy, those prices made no economic sense at all. Enter Semgroup - a pipeline company that moved oil and traded energy futures on the side.

In 2008, they decided to go short on oil. That is to say, they bet that oil prices would go down. For the month or two that followed, oil kept pushing higher and higher, and they kept averaging up their position. The problem here was Semgroup's management was so certain that prices would fall, they shorted oil on margin, meaning, they started borrowing money from their broker to short oil more.

Eventually, the clearinghouse of the brokerage with whom Semgroup assumed this large short position decided that this is too much. Semgroup is losing too much money and they might go bankrupt, and because Semgroup owed them money on margin, there's a risk they will lose that money. So they (the clearinghouse) forced Semgroup to unwind their entire position to Barclays.

Semgroup eventually went bankrupt.

Literally a week later, oil crashed SPECTACULARLY. Over a month or so, it fell nearly 80%. Semgroup missed out on $5 billion profit."

Almost Breaks Your Heart

Anonymous

Games Workshop Is Just A Big Bully

"Games Workshop has made some very terrible business decisions. They aren't dead yet, but they were so low on profits last year they are firing their CEO.

They banned anyone from selling their product with pictures on the internet but themselves.

They banned the selling of their products with a 'shopping cart' system online completely.

They tried to tell eBay that selling Games Workshop stuff on their site was illegal (they also went after Craigslist).

They restricted buying their products across country borders (because they micromanage prices in different countries, so it used to be cheaper to buy from other countries... now it is illegal).

They refuse to do any kind of hype marketing for new products and actively sued the pants off anyone leaking rumors.

They have never, ever once in the entirety of my decade plus playing their games had a sale of any kind. They do 'bundle deals' that save you a couple of extra bucks, but they never do discounts on their lower priced stuff to mass sell.

I could go on, but those are the biggest ones that stick out in my mind."

Games Workshop Is Just A Big Bully
A Good Boss Is Hard To Find

"Malden Mills was the original producer of the polar fleece material. CEO Aaron Feuerstein decided not to patent it, which made it an 'open source textile' able to be produced cheaply and widely. This wasn't the decision that killed the business, though. In 1995, Malden Mills burned down. At a time when manufacturers were relocating their operations overseas to cut costs, Feuerstein rebuilt the factory at the same location. He also continued to pay the salaries and benefits of all his employees during the rebuilding. Said Feuerstein, 'I have a responsibility to the worker, both blue-collar and white-collar. I have an equal responsibility to the community. It would have been unconscionable to put 3,000 people on the streets and deliver a deathblow to the cities of Lawrence and Methuen. Maybe on paper our company is worthless to Wall Street, but I can tell you it's worth more.'

Sadly, the company never recovered, Feuerstein was eventually ousted, Malden Mills declared bankruptcy, and its assets were sold off or spun off to new companies."

A Good Boss Is Hard To Find
Everything Must Go!

"My father was on the cutting edge of Kodak, working in research and development. There are literally so many times Kodak sold off patents on products that were ridiculously expensive to produce.

My favorite example: Remember when CD players were ridiculously expensive? It was because of the lens. It cost a ton to produce. Remember when the price dropped? Yeah, Kodak did the patent, to sony. For fifty thousand dollars.

There was an employee who worked at Kodak who developed this specialized process. For doing something... I can't remember exactly what. Kodak didn't want it. They sold that employee the patent for ten thousand. He's a millionaire now.

It makes me so angry because it was basically the nail in the coffin for Rochester, NY, and as a side effect, the whole region. Our biggest employer now? A hospital and a grocery store."

Everything Must Go!
Knowing Your Demographic Helps

"Harland Clarke print Avon Catalogues, checks, scantron forms etc. Their business is dying because they leveraged everything on check printing. They do something like 98% of checks in the US. If you have a checkbook, I bet $10 it's a Harland Clarke check.

So anyway, They spun up a company called Fiddipidi. A 100 million investment. Super custom stationery printing. They organized call centers, setup hundred-line VoIP systems in anticipation of the millions of orders they were going to get. Dozens of graphic artists recruited.

No one bothered to tell them that the advertising platform they'd already blown $40 million on 1) Didn't work, and 2) Targetted an audience that had very little interest in old school stationary, or even one-off custom cards.

Advertising platform chose: Facebook. Total orders taken: 13."

Knowing Your Demographic Helps
Debt Never Helped Win Wars

"K-Mart took out a whole bunch of debt to buy back their shares, looking to raise their share price. When news of this came out, Walmart (which had basically no debt at the time) decided that it would be a good time to start a price war. K-Mart had to pay off interest, whereas Walmart had little to no interest payments to make. So by lowering the profit margin to a point where K-Mart had to cut back on their internal investment, Walmart surged ahead while K-Mart lagged behind. The biggest cut K-Mart made, I believe, was CAPEX (capital expenditures - things like making new stores and upkeeping current ones). And that's a major reason why Walmart is so popular and booming whereas K-Mart has always just seemed a little... off."

Debt Never Helped Win Wars
Well Don't You Look Silly Now?

"Many people probably aren't aware of this, but when the iPod first launched it was an Apple only product. At the time I was a Sales Manager in a computer store chain and we had people practically begging for the iPod on a PC. The Apple account reps basically told us in so many words that it was not happening and Apple had no interest in making their product connect to a PC.

I would say it was at least a year before Apple released PC versions and there was no amount of stock we could bring in that wouldn't instantly sell out. I'm not sure why they changed their stance but it's a good thing they did."

Well Don't You Look Silly Now?
Tip #1 In Running A Business: Pay Your Bills

"This year, POWDR, a group that ran Park City Mountain Resort, the number three family ski resort in the country, got absorbed by Vail, its competition, and removed from ownership of its resort. Why? Because after twenty years of having the greatest lease in history (about 150,000 a year for a resort that grosses millions and millions) the end of the lease time rolled around and they forgot to renew it. Literally, that's it. Someone didn't take down a note, and they turned their paperwork in three days late, got sued, and lost everything. Do your paperwork."

Tip #1 In Running A Business: Pay Your Bills
Digg-ing Themselves Into A Hole

"Originally, Digg was basically a news/entertainment site where the top stories were voted up by users. They changed it round so that there was a much heavier emphasis on connecting to people and organizations, so you had your own personal front page influenced by which people you followed (a bit more like Twitter).

People were already annoyed by the influence of the heaviest users at the time, and the change made it way worse. It was like they took one thing about the site that annoyed people and made it the main feature."

Digg-ing Themselves Into A Hole
Greed Ruins Everything

"Prodigy online service had a great message board system, which was included in the monthly rate. They got greedy, and for no reason other than wanting to make more money, started charging people to use the board, per message. Beyond idiotic, and at the time, so many of us users were like, 'Okay, we're done with Prodigy then.' Within one year, they lost almost complete market share to Compuserve and AOL and were all but non-existent shortly thereafter. All because they got extra greedy."

Greed Ruins Everything
Yeah, Lets Get Rid Of The Thing Bringing In The Customers

"There's a restaurant in Austin that has really great chicken wings. At one point a few years back the wings were taken off the menu because they were 'too popular' and 'slowing down the kitchen'. That lasted about a month before someone realized it was a better idea to put some time and effort into improving the kitchen rather than kill off their best selling item."

Yeah, Lets Get Rid Of The Thing Bringing In The Customers
You Created One Good Idea, I'm Sure You've Got More Million Dollar Ideas In There

"Groupon isn't dead yet, but Google offered to buy them - then a two-year-old local e-commerce startup - for $5.75 billion in the fall of 2010. Groupon didn't accept the offer, and now there are countless Google Groupon alternatives. When someone offers you $6 billion for something you just created, I say you accept it. Take the money and invent something else."

You Created One Good Idea, I'm Sure You've Got More Million Dollar Ideas In There
No One Needs Big Appliances Right?

"Circuit City making the decision to no longer sell appliances. No matter how bad the economy is, people will still buy refrigerators, washers, vacuums, etc. but they will wait on TVs and video games."

No One Needs Big Appliances Right?
Always Double Check Your Numbers

"Milwaukee abandoned half of their main line because they thought it was losing money despite having heavy traffic. Several years after they had torn up the line they realized there had been an accounting error, and that was actually the only part of the system that was making money. They sold off some of their rolling stock to generate some short-term cash and then leased it back.

When the lease price increased they could not afford to repair their own equipment, so they sold off more to the leasers. Rinse, repeat. Instead of completing their electrification and buying new electric locomotives (which GE was willing to give them a deal on) they decided to remove the electrification and sell it for scrap. When they did this scrap prices fell and it ended up being more expensive to dieselize than it would have been to finish their electrification. Needless to say, things did not go well for them."

Always Double Check Your Numbers

Source

Points have been edited for clarity

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