- 6 weeks ago
From fraudulent blood testing to diesel emissions cheating, these business leaders drove their empires straight into the ground! Join us as we examine the executives whose poor decisions, ethical lapses, and outright fraud transformed thriving companies into cautionary tales. Which corporate collapse shocked you the most?
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00:00You know, Adam did build something, so let's not lose sight of that, and there is demand for the
00:05WeWork space. Welcome to WatchMojo, and today we're counting down our picks for the business
00:10leaders whose ill-advised decisions, dubious ethics, or sheer incompetence didn't just
00:15rattle their companies, they actively steered them onto the rocks. Congressman, I can just say it
00:21again. On the date I left, I absolutely unequivocally thought the company was in good
00:27shape. Number 10, Carly Fiorina, Hewlett-Packard. I led Hewlett-Packard through a very difficult
00:33time, the worst technology recession in 25 years. Good morning, everybody. Then she launched a single
00:40massive deal, and she's been playing defense ever since. It was a terrible deal, and it really led
00:47to the destruction of the company. So what was this deal? Fiorina's aggressive pursuit of a bold vision
00:53arguably eroded the very foundations of a tech giant. Her tenure at IT behemoth Hewlett-Packard
00:59from 1999 to 2005 was defined by her controversial acquisition of Compaq, a move she championed as
01:06essential for HP's future relevance. Despite fierce internal and external opposition, the deal went
01:12through, but the promised synergies and market dominance largely failed to materialize.
01:17Profits plummeted, and even when they started rising again, they lagged well behind competitors.
01:22HP's stock value dropped by half. 30,000 workers were laid off, and less than six years after she
01:29took control, Fiorina was fired. Wall Street had so little faith in her that on news of her dismissal,
01:36HP's stock jumped up 7%. Instead, the merger proved deeply unpopular, led to widespread layoffs,
01:43and created significant cultural friction, ultimately diluting HP's competitive edge,
01:48and resulting in a period of underperformance that culminated in her forced resignation.
01:53Two facts here. Why did HP's board fire you, and why on the day that they did,
01:59the stock went up nearly 7%?
02:01Well, they did fire me. I've been very open about that. I was fired in a boardroom brawl. We had
02:06board members who were leaking information out of the boardroom. You know, the truth is this. It is a
02:11leader's job to challenge the status quo.
02:14Number 9. Fred Goodwin, Royal Bank of Scotland.
02:16He was known as Fred the Shred as he led the Royal Bank of Scotland through acquisitions and job cuts
02:21to the brink of disaster. This evening, the knighthood he was awarded for services to banking
02:26was unceremoniously withdrawn by a previously obscure body known as the Forfeiture Committee.
02:31Across the pond in the world of high finance, Fred Goodwin took the Royal Bank of Scotland on what
02:36could only be described as a ride off a cliff. Goodwin's aggressive expansion spree, especially
02:42during his disastrous acquisition of ABN AMRO at the peak of the 2008 bubble, left RBS reeling with
02:49debt and overexposure right as the global financial crisis hit.
02:53Fred Goodwin compounded his sins in the public eye
02:55by fighting for a time to hold on to ÂŁ8 million in pension payouts.
03:00My pension is the same as everyone else in the bank.
03:03Losing his knighthood is the final insult for a man who used to have the ear of prime ministers
03:08and for years basked in the praise of politicians, even royalty.
03:12The fallout was so devastating, it required a government bailout and saw RBS post the largest
03:18loss in UK corporate history. He was even stripped of his knighthood, a rare and public shaming for a
03:24failed banking boss.
03:25Well, this has been an independent decision by an important committee of civil servants and
03:32obviously signed off by the Queen. But RBS came to symbolize everything that went wrong in the
03:37British economy over the last decade. And under Fred Goodwin, that's when it happened. And I think
03:43it's appropriate, therefore, that he loses his knighthood.
03:46Number eight, Marissa Meyer, Yahoo.
03:48Big news in the tech world today, Google's Marissa Meyer defecting to take the top spot at
03:54Yahoo, the CEO job. It surprised a lot of people, pretty much everybody, because Meyer was very
03:59big at Google. She was the 20th employee there and she was its first female engineer.
04:05When it comes to tech icons, Yahoo was once a titan until Marissa Meyer hopped into the driver's
04:10seat. Hired as a turnaround CEO, Meyer's tenure was marked by expensive acquisitions like the $1.1
04:17billion purchase of Tumblr, which failed to deliver anything close to the expected return.
04:22She also invested heavily in redesigns and new features that failed to recapture the magic of
04:27Yahoo's glory days.
04:29I think that, you know, it's very important for us to look at what generates the most value
04:33and the most opportunity for the company. And when you look at this transaction that Verizon's
04:40proposed, it recognizes a huge amount of value. And that's what our process was really designed
04:46to recognize.
04:47The company struggled to innovate, couldn't adapt quickly enough to the mobile revolution,
04:51and continued to see its core advertising business erode, eventually leading to the sale
04:56of its core internet operations to Verizon for a fraction of its former valuation.
05:01Yahoo announcing CEO Marissa Meyer will step down from the board once the Verizon deal is completed.
05:06Five other directors, including co-founder David Filo, will also step down. Following the nearly
05:12$5 billion sale of its core internet business, Yahoo will change its name to Altaba, which
05:18is a combination of the words alternate and Alibaba.
05:21Number seven, Eddie Lampert, Sears Holdings.
05:23Big bankruptcy news of the morning. Sears Holdings, parent company of Sears and Kmart,
05:28filing for Chapter 11 earlier this morning, succumbing to a mountain of debt and failure
05:33to adapt to a changing retail landscape. Sears faced a $134 million debt payment that was supposed
05:38to be due today. The company reached to deal with its creditors to keep most of its operations
05:42running. That's for now.
05:44Sears was once America's go-to department store, so its slow-motion collapse is nothing short of
05:49tragic, largely thanks to the leadership philosophy of Eddie Lampert. Lampert's control of Sears and
05:55Kmart from 2005 onward saw him prioritize cost-cutting and asset sales over investment in the stores
06:02themselves. Instead of modernizing aging infrastructure or adapting to the rise of e-commerce,
06:07Lampert treated the companies as a portfolio of assets to be stripped, selling off valuable
06:12real estate and brands like Craftsman. This systematic underinvestment alienated customers,
06:18demoralized employees, and left the stores increasingly irrelevant, leading to decades
06:22of decline and ultimately the bankruptcy and near-total disappearance of both once-beloved brands.
06:28I remember when Eddie Lampert was A on the cover of Business Week magazine as the next Warren
06:33Buffett, I remember going to meet with him when Sears merged with Kmart, the morning that Sears
06:39merged with Kmart, and we all thought this was, or that he was a genius, he had some plan. No,
06:44but this is what, at the time, you should go back and look at the stories, the headlines,
06:48it was extraordinary.
06:49Number six, Bernard Ebers, WorldCom.
06:51Hi, David. As you well know, in his prime, Bernie Ebers was known as the Telecom Cowboy,
06:57a former high school basketball coach who cobbled together a company that ultimately helped lay the
07:03foundation for the internet as we know it, but it was all built on a massive brazen fraud.
07:09Ebers presided over one of the most jaw-dropping downfalls in corporate history. The charismatic
07:14CEO of WorldCom spearheaded the rapid expansion of the telecommunications giant through aggressive
07:19acquisitions throughout the 1990s. However, when the tech bubble burst and growth stalled,
07:25Ebers and his executives resorted to a massive scheme to falsely inflate company assets by nearly
07:30$11 billion. This elaborate deception masked the company's financial struggles, artificially
07:37boosting its stock price and deceiving investors.
07:39Misleading regulators as well as investors on the health of the company and overinflated a lot of
07:48the company's numbers and profits and that sort of thing, and he was caught.
07:52Despite being only halfway through his sentence, Ebers' family and their attorneys argued now at
07:56age 78, being in prison had taken major tolls on the man's health.
08:01When the fraud was uncovered in 2002, WorldCom promptly collapsed into bankruptcy, costing
08:06shareholders billions and thousands of employees their jobs and pensions. The scandal cemented
08:11Ebers' legacy as a CEO who played fast and loose with the truth.
08:15More on that breaking news. We force reported at 10 o'clock tonight, former WorldCom CEO Bernie
08:21Ebers has died. A family attorney confirmed that with 16 WAPT tonight, his family releasing a statement
08:28detailing his passing and thanking supporters. He was released from prison last year in December,
08:34having served 13 years of a 25-year sentence.
08:37Number 5. John Scully, Apple Inc.
08:39He's the man who was supposed to be better than Steve Jobs. Now, more than 25 years after taking
08:45the helmet Apple, John Scully is saying it was all a big mistake that Jobs would have saved Apple
08:52from a near-death experience. Scully's case is perhaps one of the most infamous examples of a CEO
08:58leading a company astray immediately after its visionary founder's departure. Scully, brought in from
09:04PepsiCo by Steve Jobs himself, famously ousted Jobs from Apple in 1985.
09:09They said, Steve, we want your assurance that you're not going to leave Apple and take other
09:13people with us. We've heard rumors of that. And he said, no, absolutely not. And then the next day,
09:18Steve took five key managers and the board fired him.
09:23What followed was a decade where Apple, despite some innovative products, lost its way. The company
09:28suffered from bloated product lines, high prices, a confusing brand identity, and a failure to
09:33license its operating system effectively, allowing Microsoft to dominate the burgeoning PC market.
09:39By the 1990s, Apple was teetering on the brink of bankruptcy, bleeding market share and relevance
09:44until Jobs' triumphant return in 1997 pulled it back from the abyss.
09:49I think they made the wrong choice. They should have chosen Steve. The talent that Steve has
09:55is so extraordinary. We should have figured out how to work with it.
09:59If Jobs had come back even six months later, Scully says Apple would have been gone. Quote,
10:05absolutely gone. He also says Jobs won't talk to him anymore.
10:10Number four, Martin Winterkorn, Volkswagen.
10:13Please welcome chairman of the board, Volkswagen Group, Professor Dr. Martin Winterkorn.
10:19Not any longer, Martin Winterkorn has quit as CEO of German carmaker Volkswagen amid the spiraling
10:27scandal over its rigging of diesel car emissions tests in the United States.
10:32Few corporate scandals have shifted global conversations like the Volkswagen emissions
10:37scandal, and much of the fallout falls at the feet of Martin Winterkorn. Winterkorn,
10:42the long-serving chairman of Volkswagen, was at the helm when the Dieselgate scandal erupted in 2015.
10:47The supervisory board said we'd like to clearly state that Mr. Winterkorn was not aware of the
10:53manipulation of emissions, and that we have the greatest respect for his willingness to send a
10:57very clear signal and take responsibility in this difficult situation for Volkswagen.
11:03It was revealed that VW had deliberately installed defeat devices in millions of its diesel vehicles
11:09to cheat on emissions tests, making them appear far cleaner than they actually were.
11:13This systemic deception, driven by a corporate culture that prioritized market dominance above
11:18all else, led to Winterkorn's resignation, massive fines exceeding tens of billions of
11:23dollars, and a profound erosion of trust in the brand that continues to reverberate across
11:28the automotive industry.
11:29He denied any involvement in decisions to install the so-called defeat devices that made harmful
11:35diesel emissions seem cleaner than they were.
11:38Winterkorn faces a fine or a custodial sentence if found guilty.
11:42Number three, Adam Neumann, WeWork.
11:45Even though WeWork is 50 square foot per person, a third of all WeWork spaces are actually open
11:50common spaces that give access to everybody that we don't measure as seats.
11:54So there's a lot more room there.
11:56So the way we do it is people think that WeWork is all open.
11:59It's not true.
12:0090% of WeWork space is actually office.
12:0210% is only open space.
12:04But we create a lot of common space for everybody.
12:06A flamboyant founder whose unchecked ambition and chaotic leadership style nearly imploded
12:12a multi-billion dollar startup, Neumann co-founded WeWork with a vision to revolutionize office
12:17spaces.
12:18However, his tenure became synonymous with extravagant spending, questionable self-dealings,
12:23and a cult-like corporate culture.
12:24There was an interesting piece in the New York Times over the weekend titled Adam Neumann and
12:28the Art of Failing Up.
12:30The report detailed how Adam Neumann was able to create and build WeWork, fail spectacularly
12:35at an attempt to go public, and still walk away with a potential billion-dollar payday.
12:40It cites his ability to read people, his persuasive charisma, and his taste for risk.
12:45From lavish parties to personal use of company jets and selling trademark rights to WeWork
12:50itself, Neumann's financial impropriety and erratic management were legendary.
12:54The culmination was a disastrous attempt at an IPO in 2019, which exposed the company's
13:00massive losses and unsustainable business model, sending its valuation plummeting from
13:05$47 billion to under $10 billion in weeks, and nearly bankrupting the entire enterprise.
13:11What would it take for Mark to buy this IPO?
13:14I'm not buying it, no way.
13:15So I've got an issue with the business model in general, right?
13:19So you've got a company that's signing all of these long-term leases, and then they're
13:23subleasing to little, you know, small businesses, maybe one-employee kind of companies on very
13:30short-term leases.
13:31Number two, Jeffrey Skilling, Enron.
13:34Developing right now, the former CEO of Enron has just been released from federal custody.
13:39Jeff Skilling, now 65 years old, was released after spending 12 years in prison for his role
13:44in one of the most high-profile corporate and financial fraud cases in American history.
13:49While Skilling was the CEO in charge, the most infamous corporate scandal of the early
13:5421st century was engineered by two men at the pinnacle of power.
13:58Skilling and Kenneth Lay, the founder and chairman, spearheaded Enron's transformation into a massive
14:03energy trading and services company.
14:06However, beneath the veneer of innovation lay a complex web of elaborate accounting fraud,
14:11including the use of special-purpose entities to hide massive debts and inflate earnings.
14:16You're the only financial institution that can't produce a balance sheet or a cash flow
14:20statement with their earnings.
14:23Well, thank you very much.
14:27We appreciate it.
14:27Appreciate it.
14:28Their deceptive practices created a false perception of profitability, attracting vast investments.
14:34When the House of Cards inevitably collapsed in late 2001, Enron filed for bankruptcy, erasing
14:39billions in shareholder value, destroying thousands of jobs, and sparking a national crisis of corporate
14:45governance.
14:45Jeff Skilling was the poster boy for all that was wrong with big corporations and corporate greed.
14:51Brian Weiss is Channel 2's legal analyst and covered Skilling's trial.
14:55Putting Jeff Skilling in the penitentiary for as long as we did didn't bring back any of the funds
15:01that these people lost, and they were never really made whole.
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15:17The story of this health tech corporation is one of audacious fraud, built on the promise of
15:23revolutionary technology that never existed.
15:28Elizabeth Holmes, the company's charismatic founder, captivated investors and the public, with claims that her company could perform hundreds of medical
15:34tests.
15:34from just a few drops of blood, using a proprietary device called the Edison.
15:40She amassed billions in funding, built a powerful board, and was hailed as a Silicon Valley prodigy.
15:47There's this man, who goes by the initials RC right now in Arizona, who is suggesting that the laboratory
15:54and the company could perform hundreds of medical tests, and the company could perform hundreds of medical tests.
15:59Her elaborate deception unraveled spectacularly, leading to the complete dissolution of Theranos and her subsequent conviction for criminal
16:06harm.
16:07Marking one of the most stunning corporate downfalls in modern history.
16:14Well, she is one of 655 inmates at this so-called club fed about 100 miles outside of Houston, where she grew up.
16:29She'll have absolutely no privacy.
16:31She'll be wearing a khaki uniform.
16:33She will spend her first 90 days working in the kitchen, as we mentioned, making 12 to 40 cents an hour. After that, she will work as a groundskeeper or a janitor at the facility.
16:55Did we miss any other corporate captains who sank their own ships? Let us know in the comments below.
17:00Let us know in the comments below.
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