6 Companies That Accidentally Created Their Own Enemies
One popular storytelling trope is the villain who sows the seeds of their own destruction. Oddly enough, this cliche also appears in another realm of lies: Corporate America. Many a big business has been brought to their knees by the very competition they unwittingly brought into the world. For example ...
Excite Passed On Buying Google Because Their Engine Was Too Good
Internet search engines have been around since we still used the words "fresh" and "wack" unironically. But back then, they were so terrible. Your typical mid-'90s questions about Hootie & the Blowfish would only land you on fugu recipe sites and some very unsettling aquatic porn.
But that all changed in 1996, when Stanford University student Larry Page came up with a revolutionary new search engine, Google. Well, back then it was still called BackRub (an appropriate name, given how much it now loves to invade your personal space). But Page wasn't interested in starting his own company, so instead he tried to sell tried to sell BackRub to existing web portal page Excite. And they would've given this fresh-faced student $750,000 for the software, but there was one problem: BackRub was just too efficient.
Excite CEO George Bell informed Page that BackRub's incredible search algorithms were downright bad for Excite's "stickiness" -- i.e. it didn't force users to wade through one ad-filled page after another before finding the results they were actually after. In fact, Bell wanted a search engine that was at most "80 percent as good as the other search engines" out there. It sounds stupidly shortsighted now, but this was at the beginning of the dot-com bubble, when "stupid shortsightedness" was the theme of every internet startup's Christmas party.
The deal fell through, and a disillusioned Page decided to hang onto his cherished software and start his own company, which went on to become the Google we all know and love and kind of fear today. The company is currently worth around $120.9 billion, which mathematicians tell us is probably more than $750,000. Excite, meanwhile, is best known as #4 on every list of 10 Things Only '90s Kids Will Remember. That's what giving 80 percent in Silicon Valley gets you.
Blockbuster Could've Bought Netflix For Chump Change
Sometimes, all you have to do to make a billion dollars is take an old concept (like renting movies) and provide a small tweak (adding the internet). Like Netflix did. And sometimes, all you have to do to make a billion dollars is buy a company like Netflix when they're young, dumb, and cheap. Like Blockbuster didn't.
If you were looking to Netflix and chill at the beginning of the new millennium, waiting for mail-order DVDs to arrive gave you a hell of a lot more time to chill than to Netflix. This, the limited selection, and a lot of late fees meant that Netflix hadn't made a single dollar since its founding in 1997. The company was just too far ahead of its time, unlike traditional rental giant Blockbuster, which hadn't changed its business model since Teen Wolf was released on VHS.
Teetering on the brink of bankruptcy, Netflix made Blockbuster a proposal: Buy them for $50 million. This was a sum Blockbuster could scrounge up out of nothing but Star Trek II: The Wrath Of Khan late fees, and they'd give themselves a much-needed online presence on the cheap. Blockbuster rejected the idea. After all, why partner with a failing company like Netflix when they could partner with one that would surely be around for centuries to come? You know, like Enron or Circuit City?
Netflix would spend much of the early 2000s begging Blockbuster to reconsider their offer, but to no avail. With no one to buy them, Netflix continued to expand their DVD-by-mail business on their own, barely surviving a desperate and belated attempt by Blockbuster to enter the market. Then, in 2007, the internet was finally ready for a movie streaming service, and so was Netflix. Today Netflix is worth 3,000 times what Blockbuster could've bought them for in 2000. Meanwhile, the last Blockbuster in the world is dying a slow death in Oregon after losing all of its customers to streaming sites like Netflix. Like they've always said since time immemorial, never look a gift BoJack Horseman in the mouth.
The American Wrestling Association Crumbled Because They Didn't Let Hulk Hogan Win
Second only to Pac-Man Fever, Hulkamania was one of the most widespread epidemics of the '80s. There wasn't a bigger wrestling star than Hulk Hogan, so whatever wrestling company had him on the ticket was headed for massive success. And that worldwide wrestling federation was ... AWA?
Yes, Hulk Hogan's rise to SmackDown legend happened at the American Wrestling Association, the then-biggest wrestling promoter in America. But Hogan had a small problem with the AWA: Its owner, Verne Gagne, thought he was a terrible wrestler. Gagne was the kind of wrestling purist who hated Hogan's flashy demeanor and lack of wrestling background. At first he didn't even let Hogan be anything but a heel (villain), only switching him to a face (hero) because the fans wouldn't quit cheering for him.
But that was as far as Gagne was willing to budge. Audiences (and Hogan) wanted to see the mustachioed maniac win the AWA World Heavyweight Championship, but Gagne, who decided all the match outcomes, felt the title should be held by somebody who had a legitimate amateur wrestling background, like Gagne himself. Incidentally, Gagne won his own world championship ten times.
Luckily for Hogan, a young go-getter named Vince McMahon was trying to expand his small-time World Wrestling Federation from coast to coast (his very own McMahonifest Destiny). He heard that Hogan was frustrated with his position in the AWA and offered him a deal that included a run as WWF World Heavyweight Champion. With the Hulkster as the WWF's marquee attraction, McMahon's company started its rise, evolving into the top wrestling promotion in the world. Today, McMahon's renamed WWE is a multi-billion-dollar company, while the AWA floundered in the '80s and closed for good in 1990, definitively answering the question of what happens when you don't let Hulkamania run wild.
Atari's Treatment Of Programmers Led To The Creation Of Activision
Today, making a video game requires more planning and a larger team than most NASA missions. But back in the day when dinosaurs like Atari and Midway still roamed the Earth, most games were produced by a single person who was solely responsible for coding, writing, and putting in the all the subliminal Satanic messages. And unlike the guy whose job it was to fine-tune the nipple physics in GTA, many of those early programmers never got the credit or compensation they deserved.
But then, in 1979, Atari forever changed the industry with a single memo. When their marketing department proudly released a company-wide message showing exactly how much money the company had made the previous year, they had added which percentage of that each individual game had earned them. So of course, it didn't take long for a bunch of programmers with engineering degrees to do the math on how hard Atari was screwing them over.
One worker, for instance, figured out that he had singlehandedly made Atari $20 million, and in exchange was only paid $20,000 a year and wasn't credited for any of his work. And when four programmers went to Atari CEO Ray Kassar to ask for better pay and to receive credit for the titles they produced. Kassar, famed for his tact and diplomacy, told the four, "You are no more important to Atari than the person on the assembly line who puts the cartridges in the box."
Atari probably felt they could get away with this because nobody designed games for the Atari 2600 console but Atari. So if you were tired of working for the company, it's not like you could take your very specific skill set to the competitors. Atari was literally the only game in town. But what the company didn't count on was gamers' extraordinary ability to carry a grudge.
The "Gang of Four" was so pissed at their boss that they did the one thing Atari never expected: They quit Atari, but still kept making Atari games. The quartet formed a little startup known as Activision, becoming the first ever third-party developers for the Atari 2600. And once Activision proved it could be done (Atari sued to stop them and lost), every company from 20th Century Fox to Quaker fucking Oats hastily jumped on the bandwagon to produce Atari cartridges.
Atari quickly saw its market share plummet, and it was eventually sold off by parent company Warner Communications. Meanwhile, Activision has gone on to become a mega-publisher responsible for half of every gamer's Top Ten list. Sadly, there's no information on the cartridge packers' continued success in the industry.
Schwinn Taught Giant How To Make Bikes (And Then Giant Killed Them)
In 1971, a Taiwanese engineer started making bikes because a typhoon killed all his eels. No, you're not having an aneurysm, that's the actual story of King Liu, founder of Giant Manufacturing. While that's quite a shift in gears, before King had to backpedal, he found a way to work in tandem with some of the biggest cycling experts in the world ... before taking a bicycle chain to their balls and chasing them out of Japan.
Back then, the biggest name in urban bicycles was Schwinn, the preferred secondhand bike brand of school bullies everywhere. The company had gotten so big worldwide that it needed to outsource some of its manufacturing to third-party Asian firms. Giant put in a bid, and Schwinn decided to take a chance on this ironically named small-timer. They thought so little of Giant's business prowess that they didn't even bother taking equity in the firm. And to be as efficient as possible, Schwinn provided them with all of the manufacturing and distribution techniques the big company had spent decades developing. All that was missing was Schwinn offering to sharpen Giant's knives for them.
Within a decade, Giant was making more Schwinn bicycles than Schwinn themselves. At one point, 80 percent of their manufacturing was being handled by Giant. You could almost say that Giant had gotten better at being Schwinn than Schwinn was. At least, that's what Giant thought. So in 1986, Giant began producing bikes under their own brand name, totally independent of -- and competing with -- their former partners.
Schwinn didn't stand a chance. Not only did they suddenly have a competitor who knew all of their trade secrets and produced similar-quality bikes for less money, but they also simultaneously lost their biggest distributor. The company couldn't stay competitive, and by 1992 had to declare bankruptcy to cover its $75 million debt. The moral of this story is apparently that you shouldn't ever teach anybody anything, because of course corporate fables have the worst morals.
William Boeing Started Making Planes Because His Own Plane Broke Down
Out of the many things people lose when they become extravagantly rich (their soul, their friends, their skin's ability to tolerate gold with fewer than 24 carats), their patience is always the first to go. So never keep a rich person waiting for even a second. Especially not a self-made one, because that's all they need to figure how to do your job better and take your business.
Before he even turned 30, William E. Boeing was the personification of the American dream. He was a young immigrant who came to America with nothing but his wits and determination, and he made a fortune exploiting the land. As a tycoon, he was also fascinated by this newfangled American invention called the "airomoplanebile" or simply "plane." So in 1915, to celebrate being filthy rich, Boeing bought his own personal Martin S seaplane from the Glenn L. Martin Company. Because what's the point of being one of the first people in the world to conquer the skies if you can't then also land on the ocean to show it who's boss?
Naturally, Boeing's Martin S, which looked like it was held together with nothing more than toothpicks and a belief in the Monroe Doctrine, was damaged in a crash. But when the millionaire inquired about ordering replacement parts, he was told it would be months before they arrived. Boeing's response to this news was to announce that he could probably build a better plane than Martin's in that time. And then he did, because being a millionaire tycoon means never having to say you were being sarcastic.
Boeing called his Navy engineer buddy George Conrad Westervelt (best '80s frat house villain name ever), and the two decided to go ahead start their own airplane company. Boeing and Westervelt built their first plane together in June 1916, and Boeing formed the Pacific Aero Products Company a month later. He would later rename it the Boeing Airplane Company, because by now you may have noticed that the man has a bit of an ego problem.
Conveniently, World War I broke out around this time, and through Westervelt, Boeing managed to snatch up a military contract. This put them in direct competition with the Glenn L. Martin Company, whose slow-ass customer service was the reason Boeing got into the business in the first place. Today, Lockheed Martin and Boeing are still the two biggest names and bitterest of rivals in the aerospace industry. All because Martin wouldn't overnight a new lantern crank (or whatever parts an airplane had back then).
Jeff Silvers is a freelance writer who has spent years watching Hulk Hogan matches and Netflix in preparation for this article. He has a website at jeffsilvers.com.
You just never want to be a Public Enemy.
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