5 of the Dumbest Business Decisions in Modern History
August 27, 2008 · Print This Article
Hindsight is 20/20, and many business decisions don’t begin to stand out as outrageously stupid until years down the road. It’s always hard for companies and investors to tell whether a product is going to go on to be successful, but in some cases, you know they’re kicking themselves for missing out on what could have been a huge break.
We’ve already heard about some unbelievably stupid business decisions that have taken place in the last century, including turning down the Beatles, selling M*A*S*H for peanuts and making snot beer – but those are old news. Here are 5 of the dumbest business decisions made in the last 30 years.
8 publishers turn down the first Harry Potter book
A single mom named Joanne Rowling had completed her first manuscript in 1995, and began shopping it around to publishing houses. For a year, one publishing company after the other rejected the book, Harry Potter and the Philosopher’s Stone, telling her that it was too long and they didn’t think it would sell. Finally, after getting a new agent, Rowling’s manuscript was picked up by Bloomsbury Press. The book became an overnight sensation, breaking numerous records and making Rowling the third richest woman in the world.
Xerox fails to capitalize on its GUI and mouse
Xerox began as a paper and paper equipment company way back in 1906, achieving success in the ‘60s and ‘70s with their copiers. After opening a research facility in 1970, the company developed a minicomputer called the ‘Alto’. It was the first computer to use the desktop metaphor and graphical user interface (GUI), and Xerox also developed a mouse to be used along with it. Xerox itself failed to see a commercial application for the Alto, and a visit by Steve Jobs to the Xerox research center would later spawn Apple copycats, which helped Apple to become the computer giant it is today.
IBM allows Microsoft to retain rights to MS-DOS operating system
IBM began seeking an operating system for its new personal computer in 1980, and it turned to Microsoft for help. At the time, Bill Gates didn’t have an OS to sell, but he accepted anyway, and promptly bought another operating system, QDOS (Quick and Dirty Operating System) which he renamed MS-DOS and sold to IBM. Now, Bill Gates didn’t become the billionaire businessman he is now by being stupid – he convinced IBM to allow Microsoft to retain the rights to MS-DOS, which secured Microsoft’s future as the tyrannical leader of the PC industry. Dumb business decision by IBM, but a brilliant one on behalf of Bill Gates.
GM scraps the EV1 electric car
Here we are in 2008 in the midst of an energy crisis, when hybrid cars are so in demand there’s a year-long waiting list and everyone’s waiting for the next big thing in clean, green vehicles. GM could have gotten a major head start instead of being in their current position, struggling to stay above water due to a major drop in sales revenue. In 1996, the auto giant debuted the first purpose-built electric car, the EV1, which was only briefly available for lease in California and Arizona only. It was never available for sale, and was discontinued in 1999. In 2003, despite a lengthy waiting list and a lot of interest from consumers, GM scrapped the EV1 and removed the EV1s from the road for complex and mysterious reasons that many believe stem from corporate corruption (see the documentary, Who Killed the Electric Car?). Most of the vehicles were disposed of by GM in December 2003.
Martha Stewart’s insider trading costs her an empire
Shortly before it was announced that ImClone Systems’ drug Erbitux failed to get the expected FDA approval, ImClone founder Samuel K. Waksal informed family and friends that they should sell their stock, and attempted to sell his own. The news got to Martha Stewart, who sold her own ImClone shares for $230,000. Waksal went to jail for insider trading, and Martha Stewart soon followed after being found guilty of lying about a stock sale, conspiracy and obstruction of justice. In the aftermath of the scandal, Martha saw her empire, Martha Stewart Living Omnimedia, begin its fall from grace. Her show, Martha Stewart Living, was put on hiatus with no announced date of return, and she resigned from the board of Martha Stewart Living Omnimedia. Though Martha is still very rich and successful, she’ll never know what the ImClone saga ultimately cost her.
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