- 7 weeks ago
From catastrophic decisions to outright fraud, one person can bring down an entire enterprise! Join us as we count down the most spectacular corporate collapses caused by individual hubris, greed, and incompetence. Our countdown includes Elizabeth Holmes, Sam Bankman-Fried, Gerald Ratner, and many more business disasters!
Category
🗞
NewsTranscript
00:00Eastern has a great franchise. Eastern is one of the original Grandfather Airlines.
00:04Welcome to WatchMojo, and today we're counting down our picks for the times a single person's
00:08bad decision-making had devastating consequences for a business.
00:12We're dealing with a lot of issues.
00:15Number 30, Robert E. Line Jr., Joseph Schlitz Brewing Company.
00:19Imagine if New Coke was so reviled that it essentially tanked Coca-Cola.
00:23For much of the first half of the 20th century, this Milwaukee-based business was one of the
00:26biggest names in beer, often vying with Anheuser-Busch for the crown.
00:35It even helped popularize the ubiquitous brown beer bottle.
00:38Things truly turned disastrous in 1967 when President and Chairman Robert E. Line Jr.
00:43introduced an efficiency initiative known as Accelerated Batch Fermentation.
00:47Doing this involved using an additional beer stabilizer, which reacted with another stabilizer,
00:51creating mucus-like flakes in revolting customers.
00:56It took Schlitz quite a while to recognize the fact.
01:00E. Line passed away from complications of leukemia in 1976, and Schlitz's fortunes continued to slide.
01:06Since 1999, the Schlitz brand has continued under the Pabst Brewing Company, with a reconstructed
01:10version of the classic formula.
01:12Number 29, John Antioco, Blockbuster.
01:15For decades, Blockbuster was the name in home video entertainment.
01:19There are over 9,000 ways to make tonight a Blockbuster night.
01:23John Antioco took over as CEO in 1997, taking the video rental giant public just two years
01:28later.
01:29However, there was a looming threat known as Netflix, a mail-order subscription DVD service.
01:33Go to Netflix.com, make a list of the movies you want to see, and in about one business
01:38day, you'll get three DVDs.
01:41Keep them as long as you want, without late fees.
01:43Antioco, to his credit, responded by creating new services to compete with Netflix, which saw
01:48some success, but Netflix's $50 million offer for Blockbuster to acquire them in the year
01:522000 was swiftly rejected.
01:54Antioco allegedly even laughed the founders out of the room.
01:57Ultimately, the joke was on him, as Blockbuster went bankrupt in 2010, and Netflix became a
02:01true entertainment powerhouse.
02:03They were too busy making money in their video stores to imagine a time when people would no
02:09longer want or need them.
02:11Number 28, Stephen Elop, Nokia Corporation.
02:14Elop successfully headed Microsoft's business division in the late 2000s, so making him
02:18CEO of telecom giant Nokia in 2010 surely seemed like a slam dunk.
02:23Nokia's hoping Elop can help the company regain some of the $60 billion in market value it's
02:28lost since Apple's iPhone became all the rage.
02:31Instead, it was more like an airball.
02:32In 2011, an internal memo known as Burning Platform was leaked.
02:35While intended to be motivational, it read more as demoralizing.
02:38That same year, Elop announced Nokia would be phasing out its previous operating systems in
02:42favor of Microsoft's Windows Phone system.
02:45Sales went into free fall, and more than 40,000 Nokia employees were laid off.
02:49The mobile giant said it will cut 170 jobs in logistics, production management, and production
02:54support.
02:55Nokia's stock value plummeted 85% following Elop's hiring.
02:59He announced he would be stepping down in 2013, the same day it was announced Microsoft
03:03would purchase Nokia's devices and services division.
03:06This soon became Microsoft Mobile.
03:08Number 27, Jerry Yang, Yahoo.
03:10At its peak, the web portal was valued at $125 billion, but competition from the likes
03:17of Google put a serious dent in its popularity.
03:20So, Microsoft's offer to purchase Yahoo for $44.6 billion in 2008 seems like a no-brainer.
03:25That's not how CEO Jerry Yang saw it.
03:27Negotiations went nowhere, and Yahoo's value eroded further.
03:30On the same day that Yahoo announced the end of talks with Microsoft, an advertising partnership
03:34with Google was announced, which was curtailed after a few months.
03:37Yang stepped down that November.
03:39The bottom line is that Yahoo has had misstep after misstep, mistake after mistake.
03:44In 2016, it was announced that Yahoo would be sold to Verizon in what Forbes called the
03:48saddest $5 billion deal in tech history.
03:51Number 26, Stockton Rush, OceanGate.
03:53In 2021, Rush's submersible company, OceanGate, began offering trips down to the wreckage of the
03:58Titanic via the Titan submersible.
04:00Concerns about the vessel's safety were expressed as early as 2018, but Rush seemed to give them
04:05no serious regard.
04:06The submersible community had become so distressed by Stockton Rush's apparent disregard for safety
04:13standards that three dozen industry experts wrote to OceanGate, warning, catastrophe was looming
04:21unless changes were made.
04:23In June 2023, Rush and four others were aboard Titan when contact with its mothership was lost.
04:28After four days, debris from the vessel was discovered 1,600 feet from the Titanic,
04:33with all five passengers declared dead, including Rush.
04:36The whole volume of the submersible collapses in about two milliseconds, and it takes 25
04:44milliseconds for the human brain to detect a threat.
04:47Multiple investigations and a $50 million lawsuit soon followed, along with OceanGate suspending
04:52business operations.
04:53Stockton Rush once said, if you're not breaking things, you're not innovative.
04:57Is there truth to that in your industry, or is that just reckless?
05:03Completely reckless.
05:04Number 25, Elon Musk, Twitter.
05:06For years, Musk had cultivated an image of himself as a business genius, leading innovative
05:10corporations like Tesla and SpaceX, and becoming the richest person in the world.
05:14What is it about you that seems to invite skepticism?
05:20Well, I think it's because we're doing these things that seem unlikely to succeed.
05:26However, his $44 billion 2022 purchase of social media platform Twitter was a series of terrible
05:32decisions.
05:33He changed the name to simply X, undoing years of familiar branding.
05:36Most consequentially, hate speech and disinformation increased substantially due to reduced moderation.
05:41Just over time, these things build up, and the site will become more abusive, more extreme,
05:48and less reliable over time.
05:50Unsurprisingly, both advertisers and users left in droves.
05:53Thousands of employees were laid off as well.
05:55Just two years after the acquisition, it was estimated that the company's value had been
05:58slashed nearly 80%.
06:00While X, formerly Twitter, has by no means gone away, its reputation, and that of its CEO,
06:05has diminished severely.
06:07Number 24, Rupert Murdoch, MySpace.
06:09When Australian mogul Rupert Murdoch's News Corp purchased MySpace in 2005 for $580 million,
06:16it was the most popular site on the globe, emphasis on was.
06:19We have well over 100 million users a month.
06:22A $900 million three-year advertising deal with Google resulted in a significantly worse
06:27user experience, with the site slowing considerably.
06:30Then there was the looming threat known as Facebook, which users fled MySpace for in droves.
06:34Facebook had no chance to win.
06:36We should not have won the market.
06:38The network effects at MySpace were so powerful.
06:40The only reason we won was because of the gross incompetence of MySpace systematically over
06:46a period of many years.
06:47Nearly 40% of the workforce was laid off in 2009.
06:50Two years later, it was sold to specific media for $35 million, or roughly 6% of what it had
06:55been purchased for.
06:56Murdoch would later refer to the purchase as a huge mistake.
06:58Number 23.
07:00Christopher Skays, Quintex Limited
07:02Under Christopher Skays' leadership, this Australian financial services company brews
07:06substantially.
07:07The incredible thing is just how much clout this guy has got on this island.
07:12Throughout the 80s, Skays and Quintex purchased numerous companies in the name of massive expansion.
07:16With this came massive debts, with the company going bankrupt and being liquidated in 1991.
07:21All the while, Skays had been stealing money from the company and hiding it overseas.
07:25The same year Quintex collapsed, he fled to Spain.
07:27Numerous attempts at extradition back to Australia to face legal action failed.
07:31He died of stomach cancer in 2001, with no real consequences for all of the damage he
07:35left in his wake.
07:36I think providing you know what you have to do to keep what you want to keep, we'll
07:41all be okay.
07:42Number 22.
07:43Carly Fiorina, Hewlett Packard
07:44Founders Bill Hewlett and David Packard implemented a management system known as the HP
07:49Way.
07:49For decades, this was a seven-point system that looked beyond profit as a means of measuring
07:53company's success.
07:54The example they have set is one that increasingly, I think, is being emulated by American companies,
08:02and it's one of the reasons why in high technology field after high technology field, we're regaining
08:09market share.
08:11This all but disappeared with the hiring of Carly Fiorina as CEO in 1999.
08:15Under her leadership, the company's culture and morale changed significantly.
08:18She gave employees an ultimatum to take a pay cut to help avoid layoffs, then proceeded
08:22to cut 6,000 jobs the following month.
08:25She also initiated an acquisition of Compaq, an unpopular decision that helped tank HP's
08:30value and reputation.
08:31Her business record, her record as an executive, is pretty bad.
08:35Upon news of her forced resignation in 2005, the value of HP had increased nearly 7%.
08:48You might not recognize the name, but it's hard to exaggerate Jack Welch's impact, not
08:52only on his company, but on the greater world.
08:54You could argue that we're the most competitive country in the world now.
08:58Well, it isn't all attributable to Jack, but I think he's done a lot of things that other
09:01people have emulated in businesses that gets us to that position.
09:05Welch served as General Electric chairman and CEO from 1981 to 2001.
09:09His tenure was focused on increasing shareholder value.
09:12This worked, but at the expense of his workforce, who were laid off by the thousands and the
09:16greater good of the businesses he oversaw.
09:18One of the things Welch did was not just go about downsizing with layoffs, but he embraced
09:25offshoring and outsourcing to the extreme.
09:28While this might not sound all that unusual now, Welch set the stage for other CEOs to
09:33copy his model of shareholder capitalism.
09:35His obsession with expansion was detrimental to the business even after he left.
09:39By 2008, GE was so in debt that Warren Buffett had to help bail it out.
09:43Number 20.
09:44John DeLorean.
09:45DeLorean Motor Company.
09:46A flying service in California's Mojave Desert, a posh motel in Newport Beach, a small bank
09:52south of San Francisco.
09:54All pieces of the intriguing puzzle of how John DeLorean became involved in a $24 million
10:00cocaine deal.
10:01The pieces are now beginning to fit together.
10:03Sure, the iconic vehicle that bore his name took us back to the future in 1985, but John
10:08DeLorean probably wished he could go back in time himself.
10:11The eccentric auto executive launched the DeLorean Motor Company with bold promises and
10:15a $200 million war chest, aiming to disrupt what he saw as a stagnant industry.
10:19Last year at the Geneva Motor Show, Mr. DeLorean was already answering critics.
10:24Every cent we got from the British government was spent in England in addition to $20 million
10:29we raised in the United States.
10:31So that when you put that all together, we actually contributed to the British economy
10:36much more than we took out of it.
10:37But it wasn't long before his ambition outpaced his execution.
10:40Production delays, ballooning costs, and underwhelming reviews of the DMC-12 signal trouble.
10:45The allegations are that there could have been an abuse of, and continue to be an abuse
10:50of, and misuse of public funds.
10:53By any specific person?
10:54Not by any specific person.
10:56The allegations relate to the company as a whole, although inevitably the senior executives
11:01and directors of the company must be held responsible for any such alleged abuse or misuse
11:07of public resources and funds.
11:09His decision to base manufacturing in Northern Ireland during the height of the Troubles only made
11:13things worse.
11:14When the company went belly up, DeLorean's fate was sealed by a sensational cocaine trafficking
11:18charge in 1982, a desperate move he claimed to save his dying dream.
11:22Finally, this week, the end.
11:24The closing of the company, the arrest on drug charges.
11:28Ironically, it is now, during DeLorean's nightmare, that his dream may finally come true.
11:33In the last two days, DeLorean's sales have boomed and prices have jumped, spurred by hopes
11:38that the car will be a collector's item.
11:40Number 19.
11:41Albert Dunlap, Sunbeam Products.
11:43Al Dunlap has restructured lots of companies.
11:46Scott Paper was where he earned his fame, firing 11,000 workers, boosting Scott's stock
11:51by 225%, arranging for the sale of the company to its biggest rival, Kimberly Clark, and collecting
11:58a nice paycheck for himself in the meantime.
12:01$100 million.
12:03Sunbeam Products had already weathered a rough collapse in the late 1980s, capped by bankruptcy
12:08and a hostile takeover.
12:09By the mid-90s, it looked like the worst was behind them, until Chainsaw AI revved his
12:13engine.
12:13Hired in 1996 to revive the company, CEO Albert Dunlap, infamous for gutting workforces to
12:19goose short-term profits, promised a rapid turnaround.
12:21And if someone like me had not come in, 100% of the people would have lost their job, and
12:26I think that is not corporate responsibility.
12:29For all of those people to lose the jobs, and for the corporation to go under.
12:33I think it's much more important that someone comes in, makes the tough decisions.
12:37I didn't create the problem.
12:39I inherited the problem.
12:40I fixed the problem.
12:41But when barbecue grill sales inexplicably spiked in late 1997, shareholders took notice.
12:46The truth, Dunlap had massively oversold to retailers, booking phony revenue to prop up
12:51the stock.
12:51When the fraud unraveled, Sunbeam took a $60 million hit.
12:55Dunlap was fired, and the company once again slid into bankruptcy, this time with his fingerprints
12:59all over the crime scene.
13:00Do you buy the argument that employees are assets for a corporation?
13:03Of course employees are assets.
13:05But they're assets in a different fashion than shareholders.
13:08Again, the shareholders own the corporation.
13:11They take all the risks.
13:12You pay the employees every day, and the chief executives who don't watch out for shareholder
13:17value ultimately cause the whole corporation to fail.
13:20Number 18, Mitch Lowe, MoviePass.
13:23Movie theater subscription service MoviePass is hoping to provide a big jolt to the Hollywood
13:28box office.
13:29With MoviePass, moviegoers can see a movie a day for $10 a month, excluding IMAX and 3D
13:35screens.
13:36Joining us now, the founder and CEO of MoviePass, Mitch Lowe, a co-founder of Netflix and former
13:41president of Redbox.
13:42Stop us if this pitch sounds too good to be true.
13:45For a flat monthly fee, MoviePass subscribers could see as many movies in theaters as they
13:49wanted.
13:49No catch, no blackout dates, just unlimited access.
13:52And for a brief moment, that fantasy became reality.
13:54You lose money when I see one movie.
13:57How does this business model work out for you in the end?
13:59I always find it interesting to get that question because, you know, Netflix has to borrow billions
14:05of dollars a year to stay in business to create the content that they don't earn enough money
14:11to pay for.
14:12But behind the scenes, CEO Mitch Lowe is bleeding the company dry, chasing growth at any and
14:17all costs and ignoring basic financial logic.
14:19As losses piled up, prices fluctuated wildly and Lowe resorted to desperate tactics like
14:24secretly resetting user passwords and blacking out popular titles like Mission Impossible
14:28Fallout to stem the bleeding.
14:29The deception didn't save the company.
14:31MoviePass collapsed, dragging parent firm Helios and Matheson Analytics into, you guessed
14:36it, bankruptcy.
14:37And you have since reacquired the company and plan to relaunch the service.
14:41We relaunched.
14:41You've already relaunched.
14:42So give us a sense of people can start going now.
14:45Yeah, it's live.
14:46And we ended 2023 profitable, the first time in the history of the company.
14:52Number 17, Angelo Mozilla, Countrywide Financial.
14:55Federal regulators yesterday charged Mozilla and two former deputies with fraud.
15:00They say Mozilla dumped nearly $140 million in countrywide stock using inside information about
15:06the dangers the company faced by underwriting high-risk mortgages.
15:09At first, the rise of Angelo Mozilla in countrywide financial reads like a classic American success
15:14story.
15:14Founded in 1969 by Mozilla and his mentor David Loeb, the mortgage lender grew from modest
15:19roots into a financial behemoth.
15:21But the next chapter is all too familiar.
15:23While hiding their own hand from investors, Mozilla was actively taking his own chips off the
15:28table.
15:30We allege that Mozilla engaged in insider trading by establishing four stock sales plans while
15:35he was aware of the company's increasing credit risk and the expected poor performance of
15:41countrywide-originated loans.
15:43After once denouncing subprime lenders as crooks, Mozilla led Countrywide straight into the heart
15:48of the housing bubble, embracing risky loans and deceptive practices that would trigger the
15:522008 financial crisis.
15:54Take us back a little bit, walk us through this.
15:56What exactly was Mr. Mozilla accused of?
15:59He was accused of misleading countrywide investors about the kind of mortgages the company had
16:05been issuing over the last couple of years, from about early 2005 to the middle of 2007.
16:12When the dust settled, Mozilla was branded the face of predatory lending.
16:16Countrywide collapsed and was offloaded to Bank of America, saddled with toxic debt and
16:20scandal.
16:21Mozilla, meanwhile, faced charges of insider trading and securities fraud and became a lasting symbol
16:26of Wall Street greed run amok.
16:27The SEC said he told investors that the mortgages they were issuing were all proper and there was
16:36no significant risk to them.
16:38In fact, the SEC said they were letting their underwriting standards slide to met any competitor
16:44just in order to be able to sell F3 markets onto the secondary market.
16:49Number 16, Ron Johnson, JCPenney.
16:52Johnson, a former Apple executive, has been under pressure for failing to turn around the fortunes
16:56of the struggling retailer.
16:58JCPenney's sales dropped 25% in Johnson's first year at the helm.
17:02By the early 2010s, JCPenney was already in trouble, and a 2011 scandal involving manipulated
17:07Google search results didn't help.
17:09Enter Ron Johnson, the retail mastermind behind Apple's wildly successful stores, hired a CEO
17:14to stage a turnaround.
17:15Expectations were high, but what worked in Silicon Valley didn't translate to the department
17:19store floor.
17:20Well, at Apple, of course, he created an $18 billion business, but we have said on this
17:24show in other contexts, there will never be another Steve Jobs.
17:28And maybe his success, Ron Johnson's success, was being at Apple, not being Ron Johnson.
17:34Johnson scrapped coupons and longstanding promotions in favor of sleek branding and everyday low
17:39pricing, a move that alienated loyal customers almost overnight.
17:42Rather than course-correct, Johnson plugged his ears and doubled down, blaming shoppers for
17:46not getting it.
17:46Sales plummeted, losses mounted, and by 2013, the board had seen enough.
17:50Johnson was out, and JCPenney was left in even worse shape than he found it.
17:54JCPenney, fixable, no matter who's the CEO.
17:56What's your sense on that?
17:59You know, Susie, I think that it is fixable.
18:01I think the big question is how and how long it will take.
18:05Number 15, Dennis Kozlowski, Tyco.
18:08In my wildest imagination, when I would project myself into my late 50s and early 60s, where
18:13I would be or what I would be doing, if I make a list of 100 different places or 100
18:18different
18:18things, here we'd never make that list.
18:20He now earns a dollar a day, mopping floors and slinging hash to his fellow inmates.
18:26Unfortunately for this security systems manufacturer, the call really was coming from inside the house.
18:31CEO Dennis Kozlowski, who took the reins in 1992, appeared to be steering Tyco toward prosperity,
18:36orchestrating high-profile acquisitions and building reputation for trust and reliability.
18:40What's it like to earn that kind of money?
18:43It's a way of keeping score, I guess.
18:45Keeping score meant keeping up with the masters of the universe.
18:49$30 million to build a mansion in Boca Raton.
18:53Acquiring homes in Nantucket and Colorado.
18:57And just loose change, $16 million for Endeavor, a vintage yard.
19:02But behind the boardroom doors, Kozlowski was treating the company like his personal ATM.
19:07He used corporate funds to finance a wildly extravagant lifestyle, including a $2 million
19:11birthday party for his wife and millions more in unauthorized bonuses and forgiven loans,
19:16totaling roughly $150 million in all.
19:18In 2005, he was sentenced to prison for fraud, and Tyco's credibility was left in tatters.
19:23The company never fully recovered, ultimately merging with Johnson Controls in 2016.
19:27This week, manufacturers Johnson Controls and Tyco announced a mega merger.
19:32They say the deal will speed up innovation in the field of smart technology.
19:35Johnson Controls makes ventilation systems, car batteries, and auto seating.
19:39Meanwhile, Tyco makes fire suppression systems.
19:42Together, they're worth about $36 billion.
19:45Number 14, Eddie Lampert, Sears.
19:47That's right.
19:48For the better part of a decade, Eddie Lampert's name has been inextricably tied with Sears.
19:52But at this stage, it's really unclear whether his hedge fund ESL investments generated
19:58returns or losses from this very long investment.
20:02Touting himself as a visionary, Chief Executive and Chairman Lampert sold Sears to Kmart in
20:062005 and set out to reinvent the company.
20:09And not through revitalized stores or improved customer service, but aggressive cost-cutting
20:13and financial engineering.
20:14He slashed budgets, pitted departments against each other, and sold off valuable assets like
20:19craftsmen and Land's End, often to entities that were controlled by none other than Eddie
20:23Lampert.
20:23At first glance, it appears as though a bankrupt Sears would be detrimental for Lampert.
20:28He personally holds a 31% stake, his hedge fund owns an additional 18.9%, and he owns
20:35a significant amount of Sears debt.
20:37Not to mention the reputational damage that comes from overseeing a master plan that disintegrated
20:42over the course of a decade.
20:44As stores crumbled and customers fled, Lampert was accused by Sears creditors of intentionally
20:48stripping the company for parts.
20:49By the time Sears filed for bankruptcy in 2018, the only thing Lampert had successfully preserved
20:54was his own stake in the wreckage.
20:56We just don't know exactly how much cash money was put up to buy Kmart out of bankruptcy,
21:01then it was the Sears transaction.
21:04I actually think that it was going in this direction no matter what.
21:08It was a bad capital structure for a company, though, with a lot of bad locations.
21:11Number 13, Sam Bankman-Fried, FTX.
21:14A lot of people look at you and see Bernie Madoff.
21:17Yeah.
21:18I mean, I don't think that's who I am at all, but I understand why they're saying that.
21:25People lost money, and people lost a lot of money.
21:28And, I mean, at the end of the day, look, there's a question of what happened and why.
21:35For a while, Sam Bankman-Fried looked like crypto's golden boy, a disheveled genius who
21:39promised to tame the digital finance frontier.
21:41His cryptocurrency exchange, FTX, exploded in popularity thanks to sleek marketing and
21:46celebrity endorsements.
21:47But behind the scenes, Bankman-Fried was orchestrating one of the largest ever financial frauds.
21:51FTX deposits were used to pay Alameda's creditors.
21:56Carolyn Ellison said you knew about that.
21:58Is that true?
21:59You know, best I can tell, Alameda did have a big position open on FTX.
22:05Um, that position, uh, I think was, you know, very over-collateralized.
22:11He quietly funneled billions in customer funds to his hedge fund, Alameda Research, and then
22:16used the money to make risky bets, buy real estate, and donate to political campaigns.
22:20When the House of Cards collapsed in 2022, over $8 billion had vanished.
22:24Found guilty on seven counts of fraud and conspiracy, Bankman-Fried was sentenced to 25 years in prison.
22:29What we know right now is that a sentence of 25 years has been handed down by the judge,
22:33including some years of supervisory release, three to be sure.
22:36And part of what the judge said amounted to that sentence was losses, he said, that totaled more than $11
22:41billion.
22:43Number 12, Elizabeth Holmes, Theranos.
22:45This Theranos blood test put my cholesterol at 170.
22:49My own doctor found it to be 169 just the week before.
22:53Holmes says she wants to make this sort of testing available anywhere, anytime.
22:57There's no reason why these can't be distributed in very, very decentralized locations.
23:05Your home?
23:06Yeah.
23:06Clad in a black turtleneck and channeling Steve Jobs, the Theranos founder captivated investors
23:11and the media with a machine she claimed could run hundreds of sophisticated tests from a finger prick.
23:16There was just one problem, it didn't work.
23:18Like, at all.
23:19Holmes built Theranos into a $9 billion illusion propped up by manipulated data, aggressive secrecy,
23:24and flat-out lies.
23:25I'm not the lab director, and so...
23:28I know, but you're the CEO and founder of the company.
23:30I mean, this is as serious as it gets.
23:32What I know is that I've put the best people in place to be able to investigate every aspect
23:39of this and ensure that we meet the quality standards that we hold ourselves to, and I
23:44know they're doing that.
23:45At one point, she even used commercial lab equipment while passing off the results as Theranos made.
23:49When whistleblowers and journalists exposed the truth, the company collapsed.
23:52Holmes was convicted of fraud in 2022 and sentenced to just over 11 years in prison.
23:56A spectacular fall for a woman once hailed as the next great Silicon Valley visionary.
24:01Well, she is one of 655 inmates at this so-called club fed, about 100 miles outside of Houston
24:08where she grew up.
24:09She'll have absolutely no privacy.
24:11She'll be wearing a khaki uniform.
24:14She will spend her first 90 days working in the kitchen, as we mentioned, making 12 to
24:1840 cents an hour.
24:19After that, she will work as a groundskeeper or a janitor at the facility.
24:23Number 11, Richard S. Fold Jr., Lehman Brothers
24:27We could not stem the tide of the uncontrollable, and that's why I talked about it, of the uncontrollable
24:33market forces and the false rumors that swirled around the firm.
24:38As longtime CEO of the esteemed financial services firm, Fold had a front-row seat to
24:43the subprime mortgage boom and couldn't resist going all-in.
24:46Under his leadership, Lehman took on risky mortgage-backed securities and toxic assets,
24:50even as red flags mounted across the industry.
24:53Fold dismissed the warnings, doubled down on leverage, and refused to sell or merge when
24:58lifelines were still on the table.
24:59Lehman Brothers is going bankrupt, and financial markets from Asia to Europe are doing their
25:05utmost to prevent Monday from turning from dark to black.
25:09Employees of America's fourth-largest investment bank saw the writing on the wall late Sunday
25:14after talks to pull them back from the abyss collapsed.
25:17When the bubble burst, Lehman imploded with $600 billion in assets, the largest bankruptcy
25:22in U.S. history, which sent global markets into a tailspin and helped ignite the Great
25:26Recession.
25:27Fold walked away disgraced, his legacy forever tied to one of the most avoidable collapses
25:32in Wall Street history.
25:33I don't see why you thought he was contrite.
25:35I thought he was shameless.
25:37I thought it was appalling.
25:38He blamed everyone.
25:39He blamed, as you say, naked short sellers over and over in case we didn't get the point,
25:43when in fact hedge funds like Harbinger had money locked up in Lehman and were shorting
25:47it to try and make the most of the money that they already had.
25:50He blamed everybody but himself.
25:52Number 10, Gerald Ratner, Ratner Group.
25:55We sell gifts as well as jewelry, things like a teapot for two quid, or we've got this imitation
26:01book that you lay on your coffee table.
26:04Pages don't actually open, but they're beautiful curled up corners with imitation antique dust.
26:11Gerald Ratner grew his family's modest jewelry brand into an empire on the philosophy that
26:15the loudest voice commands the most business.
26:17He learned the hard way that it's sometimes best to shut up.
26:20While speaking at a convention in 1991, the Ratner Group's CEO joked about his company's
26:24cost-effective mass production.
26:26He said the jewelry is so affordable because it's total crap.
26:28I know it's, you might say it's not in the best possible taste, but we sold a quarter
26:33of a million of them last year.
26:35His company's stock plummeted as insulted customers lost faith in the quality of Ratner
26:39products.
26:40The company won them back after the CEO's resignation and a rebrand.
26:43Today's Signet Jewelers is one of the biggest names in the industry.
26:46As for their old one, the consequence of a business rep getting too candid is called
26:50the Ratner Effect.
26:51It was only when you read the tabloids the next day that it did look terrible.
26:56But I mean, as I left the Albert Hall, I didn't think anything was untoward.
27:00And I don't blame the press because the press, you know, always do that.
27:05They're disingenuous and, you know, good luck to them.
27:08That's what people want to read about.
27:09You know, they want a story that's exaggerated somewhat.
27:12Number nine, Ike Batista, OGX Petrolio.
27:15I think one of the reasons of our success is that all our projects, they start from the
27:21beginning by sharing.
27:23See, when you develop billion dollar projects, new businessmen developing projects should
27:29take care of the surrounding environment because I will affect several communities.
27:34Energy industrialist Ike Batista quickly went from being one of the world's richest men
27:38to a negative network.
27:39As hard as his companies were hit by his gambles, OGX Petrolio was particularly devastated.
27:44Batista got lucky when the company discovered major crude oil reserves.
27:48The parent company, EBX Group, spent the next few years driving Brazil's infrastructure and
27:52energy before finally going bust in 2012.
27:54Thousands of jobs would come to this area of Rio de Janeiro and this whole area around me
27:59was to be developed into a new massive business park.
28:03But with so much uncertainty about the empire, indeed about Ike Batista's own personal wealth,
28:09many of the big assets are now being sold off, including the port here at ASU.
28:14Batista over-promised, under-delivered and over-spent on other ventures and an extravagant lifestyle.
28:19OGX then filed for the biggest bankruptcy in the history of Latin America.
28:23Under new leadership, it rebranded as Domo Energia in 2017 and was sold to Petro Rio in
28:282022.
28:29Meanwhile, the ever-reckless Batista was sentenced to 30 years in prison for corruption.
28:33Brazilian oil and mining magnate Ike Batista has left prison for house arrest ahead of a
28:38trial on corruption charges.
28:40He's accused of bribery and hiding illegal funds offshore, but denies any wrongdoing.
28:45He was arrested last year after spending four days in New York as a fugitive.
28:49Number eight, Martin Shkreli, Turing Pharmaceuticals.
28:52Now, you guys have said that the reason you increased this price so much after acquiring
28:55the drug was in order to do the research and development to develop a better version of
28:59Daraprim.
29:00I just got off the phone with an HIV doctor who told me they don't need a better version
29:04of this drug.
29:04What are you doing here?
29:06Yeah, that's not true.
29:07There's a recent paper that suggests that two patients died due to autoimmune encephalitis
29:14from toxoplasmosis.
29:16Turing Pharmaceuticals broke out in 2015 with several major manufacturing licenses.
29:21Then, Martin Shkreli raised the price for Daraprim, an anti-parasitic use to treat HIV,
29:25from $13.50 per pill to $750.
29:29This reprehensible price hike made the so-called pharma bro a pariah.
29:32The company's reputation was further damaged by his callous social media presence and dubious
29:37pledges to make treatment more affordable.
29:38What do you say to that single pregnant woman who might have AIDS, no income, and she needs
29:47Daraprim in order to survive.
29:49What do you say to her when she has to make that choice?
29:53What do you say to her?
29:54On the advice of counsel, I invoke my Fifth Amendment privilege against self-incrimination
29:59and respectfully decline to answer your question.
30:01Shkreli claims the controversy prompted investigations into a potential Ponzi scheme and misappropriation
30:06of funds for his company, Retrophin.
30:08He was ultimately convicted on securities fraud and conspiracy in 2017.
30:12Turing maintained ties after rebranding as Vieira Pharmaceuticals that year.
30:16But with Shkreli's audacity leaving the company in a financial and legal mess,
30:20Vieira filed for bankruptcy in 2023.
30:22To sort of engage in that kind of conduct while you're in a criminal trial is a bad idea
30:29because once you get to sentencing, you basically have an audience of one, the judge.
30:34And the judge is going to be looking at him and trying to evaluate what kind of person he is.
30:38Number seven, John Merriweather, Long-Term Capital Management.
30:41John Merriweather is best known or rather notoriously known for his hedge fund long-term capital,
30:47which back in 1998 lost more than 90% of its assets.
30:52They were valued at about $4.8 billion.
30:55And this all took place in the weeks following Russia's currency devaluation and bond default.
31:00Scientific strategy and secrecy made long-term capital management an anomaly on Wall Street.
31:05For all of John Merriweather's brilliance, his leadership methods were not a long-term investment.
31:10His hedge fund saw three years of unrivaled profit before taking a hit from the 1997 financial crisis in Asia.
31:16After Russia defaulted on its debts the following year, LTCM lost billions in months.
31:21And turns out that his next venture after that, JWM Partners, is not faring much better.
31:26That's according to people familiar with the matter, although the decline there did play out over months.
31:32Its main fund lost 44% from September 2007 to February 2009.
31:38The decision to publicize some closely guarded trading methods further shook potential investors' faith.
31:43The next closed-door deal was for a bailout, but LTCM dissolved in 2000.
31:47Experts blame Merriweather's very foundation of a fund that trusted the numbers and subverted trends, thus alienating potential partners.
31:54It would unfortunately not be the last time market volatility bested Merriweather's rationalist strategies.
32:00Bloomberg News has learned that JWM Partners is shutting down its Relative Value Opportunity Second Fund.
32:06Now, the fund lost 44% of its value from September of 2007 to February of this year.
32:12Since the fund opened in 1999, it has returned an average of less than 1.5% a year.
32:21The young CEOs of today are afraid of going public.
32:24I think two things change.
32:25One, there's never been access to private capital like this.
32:28So I'm not sure if we would see some of the largest companies in the world today, if they were
32:31starting today.
32:32I'm not sure you would see them going public as soon as they did.
32:34They had no other choice.
32:35The workspace design company WeWork was ironically felled by unprofessional leadership.
32:40Publicly, CEO Adam Neumann's eccentric image and excessive office culture undermined the company's credibility.
32:45Privately, he overindulged in illicit substances.
32:48He also directly manipulated business ties to serve his personal life and lofty ambitions for WeWork.
32:53Most companies in the world run their company with quarterly earning reports.
32:57And when I'm going to make a decision, this is true about life and true about a business.
33:00When I'm going to make a decision based on three months forward, I'm not going to make the right decision.
33:05Massey is very famous for making a 300-year plan.
33:07If you want to start thinking forward, you really have to think really far away.
33:10Finally, in 2019, controversy over the business model and Neumann himself prompted him to delay
33:15the IPO launch.
33:16The CEO then voted himself out as the company became a laughingstock.
33:20WeWork is now considered a cautionary tale about giving too much power and agency to the head of an office.
33:25Even after COVID-19's impact on workspaces led to bankruptcy in 2023,
33:30WeWork continues to reject Neumann's efforts to buy it back.
33:32Remarkable to see Adam Neumann back at the table, of course.
33:36Has the backing, his firm flow has the backing of Andreessen Horowitz,
33:41who put in $350 million into that.
33:42And now it appears that he's teaming up with Dan Loeb as well.
33:46So far, it appears that the advisors to WeWork are giving him the Heisman.
33:52We will see whether, now that some of this is public, whether that changes.
33:55Number five, Aubrey McClendon, Chesapeake Energy.
33:58Community and the land we love.
34:01The work we do every day matters.
34:04It's not a question, it's a fact.
34:06We're raising the bar and fueling lives all around us.
34:10The future and opportunity for our country starts with our drill bit.
34:15Innovations like fracking turned Chesapeake Energy into one of America's most powerful natural gas companies
34:20going into the 2010s.
34:21But CEO Aubrey McClendon's own prosperity was partly based on financial creativity.
34:26In 2012, it came out that he was financing operations with personal loans from his company's own lenders.
34:31After his dismissal, McClendon was sued by his old company for selling data,
34:35then investigated for market manipulation.
34:37Aubrey McClendon, one of the best-known architects of the U.S. shale boom,
34:42indicted by a federal grand jury Tuesday on conspiracy charges
34:45linked to rigging the price of oil and gas leases in Oklahoma.
34:49Mr. McClendon is the only person named in the indictment for activities which date from 2007
34:54through 2012 when he was chief executive of Chesapeake Energy Corporation.
34:59Forbes wasn't kidding when it dubbed him America's most reckless billionaire.
35:02Before these revelations, McClendon's schemes and downfalls severely damaged Chesapeake's value.
35:07They experienced years of financial volatility before rebranding as Expand Energy Corporation
35:12following a merger in 2024.
35:14The day after he was indicted in 2016, McClendon died in a car wreck.
35:18Yeah, police telling us that he was northbound here on Midwest Boulevard.
35:22You could actually see the tire marks that lead right into the crash site.
35:25You can see the blackened out area from the fire.
35:28You can also see a memorial there starting to form.
35:32Once firefighters put out the fire, they found a mangle 2013 Chevy Tahoe
35:37and the driver, Aubrey McClendon, dead.
35:39Number four, Mike Lazaridis, research in motion.
35:42Smarter and sleeker.
35:44Now with real-time turn-by-turn GPS navigation.
35:48It has the intelligence you require with the beauty you desire.
35:52The all-new BlackBerry Curve from AT&T.
35:54The world's leading provider of BlackBerry service.
35:57In new colors, titanium and red.
35:59AT&T.
36:00Your world delivered.
36:01Mike Lazaridis and initial partner Doug Fregan
36:04essentially reinvented the cell phone with the multi-purpose device BlackBerry.
36:08Unfortunately, he was less smart about business.
36:10That is where Research in Motion co-CEO Jim Balsillie came in.
36:14But he too downplayed the introduction of the iPhone in 2007.
36:17Despite the BlackBerry's superior engineering,
36:20other smartphones marketing and technical innovations convinced RIM to adapt.
36:24We've got a lot of listeners and viewers in the Middle East and in India.
36:28You can confidently tell them they're going to have no problems
36:31with being able to use their BlackBerrys
36:33and you being able to give them assurance that everything they give is secure.
36:38That's over.
36:38Interview's over.
36:39We're off on time.
36:40Please, you can't use that, Rory.
36:42That's just not fair.
36:43It was too late, and the two CEOs resigned shortly before the company was renamed BlackBerry
36:47Limited in 2013.
36:48They would both become cautionary figures for failing to recognize market trajectory.
36:52However, Balsillie and Lazaridis himself later acknowledged that it was the latter
36:56who fought the principles of restructuring.
36:59The struggling BlackBerry Limited discontinued its namesake product in 2022.
37:03This isn't a shock because they let everyone know in 2020 that this was coming.
37:08In 2022, these services were going to be shut down.
37:11So things like texting won't work.
37:14Data won't work.
37:15You can't call 911.
37:16Nothing will reliably still be working on these phones.
37:19So we're going to have to put them to bed and have little funerals for our BlackBerrys if you're still
37:23using them.
37:24Number three, Frank Lorenzo, Eastern Airlines.
37:27Eastern's management has made preparations that if there isn't an agreement and if there is a strike,
37:32has made preparations to be able to operate the airline in that event.
37:37But naturally, the company needs to have its pilots, needs to have its flight attendants,
37:42needs to have its non-contract employees come to work.
37:46An industry staple for almost seven decades,
37:48Eastern Airlines struggled to adapt to that industry's deregulation in the 80s.
37:52Powerhouse manager Frank Lorenzo of Texas Air was poised to revive the company.
37:56The first order of business was a labor dispute,
37:58which Lorenzo actually made worse with harsh policies and deals.
38:01Pilots and flight attendants joined the labor strike and the FAA issued a massive fine over safety violations.
38:07Ultimate stability and no furloughs, etc. is profitability and a vibrant company.
38:13That's the only ultimate guarantee because as we all know, there ain't no Santa Claus.
38:18Three years ago when we proudly announced the acquisition of Eastern Airlines at a press conference,
38:26I never believed that we'd be here today.
38:28By 1991, Eastern was completely out of money.
38:31Lorenzo's folly would go down as a tragedy of aggressive management.
38:34The punchline is that he bounced back after selling off Eastern's assets to his other companies.
38:39Revivals of the airline have since failed to get off the ground.
38:41Official word from Eastern Airlines public relations wire is that the airline will officially discontinue
38:48all scheduled operations beginning at midnight tonight.
38:51Number 2.
38:52Nick Leeson, Barings Bank
38:54It took Barings Bank 233 years to become one of the world's leading merchant banks.
38:58It took Nick Leeson three years to tear it down.
39:01The derivatives trader was transferred to the company's Singapore office after he was denied a UK broker's license
39:06for failing to report a legal issue on his application.
39:09In 1992, he invested Barings' own money in futures without authorization, hiding shortfalls in an error account.
39:15Finally, the 1995 Kobe earthquake destabilized Asian markets and led to the discovery of Leeson's no longer lucrative corruption.
39:22He ultimately cost Barings almost £1 billion, before the ING group bought the company in 1995 for a single quid.
39:30Meanwhile, Leeson got four years in prison.
39:32His banking career killed alongside a centuries-old financial institution.
39:35I hate to use the word business advice, you know.
39:39Unfortunately, I'll be remembered for the loss of £862 million and the collapse of Barings Bank.
39:44So, you know, trying to give business advice is a little bit fraudulent as far as I'm concerned.
39:49Before we continue, be sure to subscribe to our channel and ring the bell to get notified about our latest
39:54videos.
39:55You have the option to be notified for occasional videos or all of them.
39:59If you're on your phone, make sure you go into your settings and switch on notifications.
40:05Number one, Bernard Ebers, WorldCom.
40:08Global network access, good.
40:12Massive security breach, bad.
40:15Preventing the former from becoming the latter.
40:18WorldCom.
40:19Want confidence?
40:20You'll find the path very clearly marked.
40:23WorldCom.
40:24The leader in globally managed VPN solutions on the world's most scalable global IP network.
40:30Telecom cowboy Bernard Ebers' company was one of the biggest in its industry.
40:34It turns out this was not accomplished honestly.
40:36WorldCom filed for bankruptcy in 2002 after Cynthia Cooper's internal audit revealed extensive accounting fraud to bolster the company's stock.
40:44Up to $11 billion in overstatements were ultimately reported.
40:48Ebers ousted his fellow executives, but investigations and convictions framed him as the mastermind.
40:53The Wall Street Journal is reporting that telecommunications giant WorldCom may declare bankruptcy tonight.
41:00The company's board of directors has been meeting all day.
41:04It would be the biggest bankruptcy filing in history.
41:07The company is more than $30 billion in debt and is reeling from an accounting scandal.
41:13He had already fallen out of favor with the company over his lack of strategy following a failed merger with
41:17Sprint.
41:18The disgraced, financially devastated WorldCom would eventually be sold to Verizon in 2006 under the name MCI Inc.
41:24And in the years since his downfall, the once-renowned Ebers is synonymous with executive incompetence and corruption.
41:30The former bouncer has withered to 160 pounds, these court filings say, and 13 years into his sentence, his daughter
41:37is appealing for his release.
41:38Joy Ebers-Borne telling the court that it is evident to her that her dad's days on Earth are short
41:43and she fears he may only have weeks to live.
41:46Did we miss a company ruined by one person?
41:49Let us know in the comments.
Comments