After last week’s seriously heavy blog about Remembrance Day and WWI, we thought we’d lighten the load a little and talk about people doing stupid things.
First off, and if you didn’t already know, the business world is brutal.
Say yes to the wrong idea and you’re finished. Say no to the right idea and you’re finished. Never mind about the ‘mistakes are all part of the learning curve and they make the company stronger in the long run’ pony, make a catastrophic business decision and one of three things will happen. Not ‘may’ happen. Will happen.
- You will kill your reputation
- You will lose every penny you’ve got and go bust
- You will end up in schadenfreude articles like this
Over the years, there has been some stonkingly bad decisions made by household names who really should have known better…
Filed Under ‘Oh Dear, Did You Really Do That…?’
For those of a certain age, Excite was the pre-Google search engine. In 1999, Larry Page, (Google’s co-founder) offered to sell Google to Excite for $750,000 on the proviso Excite uses Google’s search tech. They turned the offer down. Excite went down the toilet, Google is worth somewhere north of $750 billion and has literally become a verb.
A year later, Reed Hastings, CEO of Netflix offered Blockbuster Video CEO John Antioco the business for $50 million. Back then it was a DVD mailing service and Antioco thought it was ‘a very small niche business’ and turned the offer down. Blockbuster disappeared from the high street overnight and Netflix has almost 140 million subscribers and a valuation of $160 billion.
Executives at Decca Records in the early 1960s were confident that the era of four-piece groups with guitars was over and after The Beatles auditioned for them, boss Dick Rowe said their sound was no good and instead signed a band called Brian Poole and The Tremeloes. Their biggest hit was a cover of Twist and Shout while John, Paul, George and Ringo went on to become the biggest-selling band of all time, ever.
Perhaps the most galling of all is the story of Ron Wayne, a name consigned to the ‘hindsight is a valuable gift’ department. In 1976 he co-founded Apple with Jobs (25) and Woz (21) to provide the company with ‘adult supervision’ in exchange for a 10% stake in the fledgling business. He drew up the roles and responsibilities for each of them but grew concerned that working with two young and broke tech geniuses would leave him to shoulder the business’s debts. After 12 days’ deliberation, he took his name off the contract and sold his shares back to the Two Steves for $800.
That 10% today is worth $95 billion. Wonder what his wife said?
Epic Giveaway Fails…
The list of bonkers business blunders is longer than the queues outside Argos on Black Friday but for us, the real winners (or losers) are the marketing executives and business owners who come up with what, at the time, seem like good ideas…only for them to backfire in the most unbelievably catastrophic way!
In 2011, Rachel Brown, owner of the Need a Cake Bakery in Reading thought Groupon would be a great way to promote her business and offered 12 cupcakes for £6.50 instead of £26, a 75% discount. She hoped for, at best, a few hundred local orders but instead 8,500 people signed up.
She ended up having to make 102,000 cupcakes, losing £3 on each dozen she sent out. It eventually cost her £12,500 and wiped out her profits for an entire year.
In July 2018, Build-a-Bear ran a promotion called Pay Your Age Day. The premise was that instead of £50+ for a stuffed toy, punters would pay the age of the child building the bear. Some excited kids queued up with their parents for over six hours and outside some stores, demure school mums were squaring up to each other and the police had to be called to restore order.
One disgruntled parent tweeted ‘Silverburn [in Glasgow] is like a war zone. Absolute scenes.’ The company apologised saying they didn’t expect such an ‘overwhelming response.’
Do You Want A Virus With That?
McDonald’s always seem to have a promotion on and usually, they do very well but in Japan in 2006, an MP3 giveaway went south.
Ten thousand MP3 players were given out as prizes and along with the 10 free pre-loaded songs it arrived with, it came with a Trojan virus that grabbed users’ passwords and personal information as soon as it was plugged into a computer. The burger behemoth apologised and sent out replacements…
Hoovering Up Flights
This one was a beauty, and may not be topped for pure insanity on the part of Michael Gilbey and Brian Webb, the two marketing executives at Hoover’s Merthyr Tydfil factory. It could have been the marketing coup of 1992 but it was certainly the most audacious buy-one-get-two-free offer ever.
The deal was simple. Buy a Hoover vacuum cleaner for at least £100 and receive two free flights to America or Europe. It couldn’t fail to boost sales they said. It would make their careers they said.
So said The Independent in August 1998: ‘Rule number one of promotions: never offer anything that is perceived to be worth more than the product it is promoting. It did not take rocket science to work out that the price of two flights to New York was worth the inconvenience of stuffing an unused vacuum cleaner under the stairs.’
The cheapest Hoover was the £119.99 Turbopower Total System and Hoover’s factories went full-on, seven days a week to fulfil orders, even shipping in temporary staff. Loot, the free ads paper reported a 30% rise in their Electrical Goods For Sale section.
Satisfying the demand for the free flights would have filled up over 500 jumbo jets but there were winners (**spoiler alert** it wasn’t Gilbey and Webb). BA happily supplied 20,000 seats, Virgin happily chipped in with the same amount and another 4,000 charter seats to Orlando were quickly negotiated and thanks to such a high volume of sales in such a short period of time, the VAT man happily walked away with an extra £4 million.
Hoover cashed in to the tune of £30 million in sales…but cashed out to the tune of £50 million worth of airline tickets. The resulting publicity was so devastating they never recovered and paid the ultimate price.
They suffered the ignominy of being taken over by a washing machine manufacturer called Candy.
What Have We Learned?
Well, a few things. First, if an offer appears too good to be true, it is. Second, if you work in marketing and you’re tasked with coming up with a promotion to boost sales, the end goal is to ensure the long-term projected profit from the promotion is greater than the cost of the giveaway, not to bankrupt the company.
Third, and perhaps most importantly, NO-ONE is immune from complete and utter stupidity.
Catch you soon.