4 Big Companies That Shot Themselves In The Foot
If books were first invented in the 21st century, there'd be one company, called Book, and 95 percent of us would get our reading material from it. Various competitors could publish stuff, since the concept of "books" would be too generic to patent, but still, for some reason, we'd all gravitate toward Book. Also, Book would probably demand that everyone write for free, and authors would happily do so in exchange for exposure, but our main point here is we've got this system now where single companies totally dominate markets.
And this single company who rules over all, it's rarely the inventor of some revolutionary technology. Time and again, one company pioneers the technology, and then some other company rises up and leaves that predecessor in the dust. And the old company, now boiling its worthless stock to make soup, hold its heads in its hands and cries in regret over how it came so close to owning it all.
While Zoom Zoomed, Skype Took A Dive
Zoom became the program everyone used in 2020 -- not just a program, actually, but a whole medium, replacing telephones, email, and erotic telegrams. It even replaced the concept of physical schools, to the point that an entire generation of youngsters are now known as "zoomers." Okay, that's not actually where zoomers got their name, but we promise you, future generations will assume that's the case, as assuredly as kids today assume that the 9-1-1 emergency number is a reference to 9/11.
Video chat was a thing long before Zoom. A few years ago, if you had to pick which chat program would take over the world during the inevitable pandemic, you'd probably have put your money on Skype. Skype 1) had become an actual verb, something not even Zoom has today managed, and 2) was run by Microsoft, who was sticking it on everyone's PC and pushing it on businesses. When they bought Skype in 2011, Microsoft actually already had their own perfectly fine video chat service, one much more popular than Skype, but they figured Skype was the future.
And Skype offered stuff besides video chat too, but you'd definitely think that it would become everyone's video chat program of choice. Just like Word became the preferred word processor or, um, Edge became the preferred browser, or Windows Media Player became the preferred music player or the Windows Store became the default games platform or ... all right, on second thought, Microsoft-backing doesn't really ensure success. Plus, unforgivably: The way Skype works now, if you forget your password, they make you choose a new one using complicated criteria, then they say you can't pick that because it was one of your previous passwords. So you ABANDON SKYPE FOREVER, and also flip the table over.
Other analysts have more serious points about where Skype went wrong. Instead of making the program ever more streamlined and easy to use -- something Zoom really has going for it -- Microsoft grabbed their skateboards and backward caps and tried to appeal to teens. They emulated Snapchat, asking users to record themselves and share pics, which wasn't what anyone wanted out of Skype. They introduced "mojis," which were like emojis but with a name that Microsoft believed was even cooler.
Zoom ended up surpassing Skype so totally that Microsoft has decided to kill the entire Skype for Business app, and just roll all its video chat stuff into other Microsoft products. This after paying $8.5 billion for Skype at the start of the decade. They could have bought the Star Wars franchise twice with that money, which they probably would have used to make some themed screensavers before writing the purchase off as a loss.
Pandora Lost The Streaming War To Spotify
When Pandora debuted, it promised a revolutionary technology called the Music Genome Project. It would analyze your music selections, boasted Pandora, and use them to introduce you to brand-new music you might like. Today, that sort of thing is what we call an "algorithm," which we don't associate so much with expanding people's horizons as we do with forcing everyone on the internet down dark, smelly corridors and somehow ruining all of society, but at the time, it sounded like a great idea.
Pandora did not, however, promise something much more basic and obvious: "Tune in to hear the songs you want online, anytime." Suppose you were in a bit of a sentimental mood and typed "Smell Yo Dick" into the Pandora search bar. Pandora would not play "Smell Yo Dick." It would instead play a song that resembled "Smell Yo Dick" in style or content. This feat was technologically more impressive than simply handing you the song you requested, and it helped Pandora ink easier licensing agreements with recording labels, but it turned out not to be what people wanted (unlike the dulcet tones of “Smell Yo Dick,” which all of America wanted).
So when Spotify popped up and let you just listen to specific songs, and build songs of your choosing into permanent playlists, people decided, hey, that's better than a virtual radio station. Which annoyed Pandora. They stuck by their guns for a while, saying they wanted to "nail the passive listening experience." Surely there were plenty of people who wanted to lean back and let a magnificent machine pick their songs for them, right? In the end, it turned out there weren't.
People so preferred Spotify's "play the song I want" model that they were even willing to pay for it. That super annoyed Pandora. Early, on Pandora had tried an ad-free subscription model, and no one had gone for it, and so they later stuck to being ad-supported and free even as Spotify rolled out subscriptions and made bank doing so.
In the last couple years, each service has started copying the other more, so they pretty much offer the same thing now in terms of features and plans, but Pandora is stuck trailing behind. If it's any consolation, that means we can root for them as underdogs and shake our fists only at Spotify for being the evil corporation who lowballs artists out of royalties.
Twitter Let Vine Die, Ceded The Entire Market To TikTok
But Vine withered and died, while TikTok went on be worth $100 billion. The gimmick with Vines was that each was just six seconds long, which made the videos absolutely terrible at fulfilling their original intended function (friends casually filming each other) but really good at inspiring strange, constrained art. Twitter bought Vine in 2012 for $30 million, since Twitter was all about constraining people, what with the 140-character they had back then. It was just a matter of time though before Instagram introduced its own short videos that were 15 seconds long, and therefore nine seconds less constrictive each. Then they raised the limit on these to a full minute. Twitter stuck by its six-second limit for Vines, reasoning that the limit was the whole point, but it turned out that the wider market for every possible kind of video you can make lasting up to a minute was slightly more than for six-second masterpieces.
Then Vine celebs started to figure they weren't receiving enough support from Twitter, who thought "Um, the concept of 'Vine celebs' is pretty dumb, even for us." The Vine celebs wanted money, which rich Facebook-owned Instagram was willing to give to its stars. After some badgering, Twitter came up with a different kind of support: They bought a talent agency to train Vine stars. They spent $30 million on this agency, as much as they'd paid for Vine itself. The agency soon set itself toward training Vine users on how to migrate to Instagram.
In 2016, Twitter shuttered Vine, figuring it wasn't worth the trouble to keep it going. They actually tried selling it first but couldn't find any buyers. 2016, despite the fun antics offered by that year's election, was a tough time for Twitter, believe it or not -- they even sought a buyout for the entire company. That's something quite a few companies surprisingly do. For example ...
Netflix Wanted Blockbuster To Buy Them So Bad
Blockbuster once had the chance to buy Netflix, and their failure to act on that choice is one of the more famous classic business blunders, right up there with Yahoo failing to buy Google. But even if you've heard the basics of the story before, you might be interested to learn that this wasn't some vague possibility casually passed up on. This was a would-be sale fiercely fought for ... fought for by Netflix.
The year was 2000, and Netflix was in trouble. They were on track to lose $50 million that year on their DVDs-mailed-to-your-door service, making them bitterly regret refusing to sell out to Amazon two years earlier. They were now looking to be acquired by Blockbuster, and they'd been reaching out to the far more successful movie rental company for months. Then word came in: Blockbuster wanted to meet. In fact, Blockbuster set the meeting for the very next day. Only problem was, the meeting was in Dallas in the morning, the Netflix guys were in the California desert, and it was already the middle of the night.
Even if they made it to the airport by 5am, there wouldn't be a flight to do the trip nonstop. So Reed Hastings (Netflix's CEO today) suggested he and his business partner charter a private plane belonging to Vanna White. This cost $20,000, which they couldn't afford, but considering they would surely all be out of business without a buyout, maybe they couldn't afford not to do this. So they managed to make the meeting in Texas, where they pitched Netflix for its online expertise, while parent company Blockbuster could go on handling the physical retail side of things. The price they suggested for the sale: $50 million.
Now, we realize that $50 million sounds a lot to ask for a company that is losing, not making, $50 million this year. But companies are valued based on future returns, not this year's profit. Online rentals could make a lot of money in the future (even if no one at the time could predict Netflix's 2021 valuation of over $200 billion). And Blockbuster had the cash. They'd recently started offering stock and were swimming in money. But Blockbuster CEO John Antioco laughed at Netflix's pitch. "The dot-com hysteria is completely overblown," he said. Any online venture was sure to lose money.
Of all the times in history to be skeptical of dot-coms, 2000 probably made the most sense. It was the year of the dot-com crash, with a bunch of previously successful companies going bust. But in the decade to come, Blockbuster would see the value in doing stuff online, and for a while, they and Netflix were rivals in online home movie rentals. We think you know who lost that competition. If you don't, you can watch The Last Blockbuster, a documentary available on Netflix.