From corporate giants to startup sensations, watch how these once-mighty businesses crumbled under mismanagement, fraud, and poor decision-making. We'll explore shocking scandals, missed opportunities, and leadership failures that led to some of the most spectacular corporate downfalls in business history.
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00:00Do you have all the money you need to get through this tough period?
00:03Absolutely.
00:04Welcome to WatchMojo.
00:06And today, we're looking at companies that fell from grace due to leaders who failed to adapt,
00:11made misguided business mistakes, or tarnished the brand with scandals.
00:15Carly Fiorina deciding to go after Compaq, that was a very controversial strategy.
00:21Number 10. Toys R Us.
00:23A kid in a candy store is one thing.
00:25A kid in Toys R Us was Nirvana.
00:27More games, more toys.
00:29Oh, boy!
00:30You're coming to be a Toys R Us kid.
00:33Everyone's childhood died a little in 2017, when the retailer first filed for bankruptcy,
00:39eventually closing all U.S. locations and many international sites.
00:44Although the brand has staged a minor comeback, it's far from the toy dynasty it once was.
00:49After years of battling declining sales and competitors gobbling up market share.
00:54But competition wasn't the company's biggest problem.
00:57Aside from struggling to compete with online retailers like Amazon, a former business partner,
01:03Toys R Us entered a $6.6 billion leveraged buyout in 2005.
01:09This came with an annual $400 million interest payment, accumulating nearly $5 billion in debt.
01:16Although this was the straw that broke Jeffrey the giraffe's back, management made other costly ventures like a Times Square location that closed after roughly 15 years.
01:27A disappointing end to what was once the world's biggest toy store.
01:32Number 9. Telltale Games.
01:34Following games featuring characters from Back to the Future, Sam & Max, and Homestar Runner,
01:40Telltale produced a monster hit with 2012's The Walking Dead.
01:44This is about survival.
01:46Do you guys not see what's happening?
01:48What seemed like the pinnacle of success was the beginning of the end.
01:51While Telltale leapt at the opportunity to produce more IP-driven games, this led to increased crunch time.
01:58The long hours negatively impacted employees, many of whom felt the games had grown formulaic under Kevin Bruner's allegedly toxic leadership.
02:07Not only from a production and execution point of view, but from a design point of view, it's a different medium.
02:13I think it's just as hard to make an episode as it is to make a big epic game or to make a series.
02:18Even after Pete Hawley replaced Bruner, a quarter of Telltale's workforce was laid off.
02:24By the next year, 90% was gone amid a majority studio closure.
02:29With most of its assets going to LCG Entertainment, Telltale's reversal of fortune sums up the phrase,
02:36a flame burns brightest before going out.
02:38These are the skills you need to succeed when the whole ecosystem is upheaving.
02:44So I give us a good chance of coming out of the other end of the upheaval in a good place.
02:49Number 8. Bed Bath & Beyond.
02:51Bed Bath & Beyond suffered the same fate as several other retailers that fell behind the times.
02:57I mean, that's a real dog bites man story.
03:00This company spent the last five years trying and failing to get its act together.
03:04As more consumers embraced the convenience of online shopping,
03:07CEO Stephen Tamaris' business model was seen as old school.
03:12After nearly a decade and a half, Tamaris was pressured to resign in 2019.
03:17The company still struggled to catch up with the competition under the leadership of Mark Tritton,
03:23who started replacing popular brands with private label ones.
03:26We actually had the physical data of customers coming to us in-store and online,
03:31and we not being able to meet them.
03:32Cutting back on coupons also alienated loyal patrons.
03:36Amid other financial missteps, not to mention the pandemic,
03:40Tritton exited in 2022.
03:43Sue Gove filled the position shortly before the chain filed for bankruptcy the following year.
03:48The Bed Bath & Beyond name fell under the ownership of Overstock.com,
03:52which rebranded as Beyond Incorporated.
03:56Bed Bath & Beyond.com is back.
03:58Overstock bought the name from Bed Bath & Beyond when they went out of business for $21 million.
04:04Number 7. WorldCom
04:06At its peak, WorldCom rivaled only AT&T in the long-distance telecommunication business.
04:13WorldCom, the leader in globally managed VPN solutions on the world's most scalable global IP network.
04:21WorldCom.
04:22After merging with MCI in 1997 for a then-unprecedented $37 billion,
04:28the brand might have seemed too big to fail.
04:30The illusion of success started to unravel in 1999.
04:34Not only did a Sprint merger fall through on Bernard Ebers' watch,
04:39but the co-founder and CEO committed fraud to preserve the company's stock price.
04:44WorldCom, a telecom giant destroyed by a massive accounting fraud.
04:48Over the next three years, an internal audit revealed $3.8 billion that hadn't been properly booked.
04:56That number eventually grew to $11 billion.
04:58Ebers was found guilty of fraud and conspiracy, earning a 25-year sentence.
05:05Ebers died shortly after being released from prison.
05:08Ebers was released from prison in late December after serving 13 years of a sentence for a massive accounting fraud.
05:15Meanwhile, WorldCom filed for bankruptcy before being acquired by Verizon.
05:20Number 6. Hewlett-Packard
05:23Long before Apple or Microsoft, there were two engineers in a garage named Bill Hewlett and David Packard.
05:30The duo laid the groundwork for a tech company that would endure for more than 80 years.
05:35It's a great mix of humanity and AI all in one to unlock new potential.
05:41Hewlett-Packard's downward spiral arguably began toward the turn of the century.
05:46With the company already on shaky ground, newly named CEO Carly Fiorina sought a merger with Compaq.
05:54Really, when you go back all the way to Carly Fiorina and the decision for HP to merge with Compaq,
06:01that was one of those mega mergers that really didn't pan out that well.
06:05Although Hewlett-Packard emerged as the largest personal computer company, the merger wasn't as profitable as hoped,
06:13culminating in Fiorina's forced resignation in 2005.
06:17Over the next decade, Hewlett-Packard lacked a clear vision, which was reflected in its revolving door of CEOs.
06:24After years of mismanagement, the company ultimately split in two,
06:28with Hewlett-Packard Enterprise and HP Incorporated founded in 2015.
06:33Hewlett-Packard announced job cuts of up to 30,000 today.
06:37The cuts will come from the Enterprise business,
06:40which is being created as a spinoff from Hewlett-Packard in November.
06:44After that, HP Inc. will handle the printer and PC side of the company.
06:49Hewlett-Packard Enterprise will focus on business software and services.
06:54Number 5. BlackBerry
06:56In the blink of an eye, what was once seen as revolutionary can become obsolete.
07:00Entering the 21st century, BlackBerry established itself as the smartphone.
07:06For much of the mid-to-late 2000s, Research in Motion's BlackBerry was the most popular smartphone brand in the U.S., and it wasn't close.
07:13The device stood out thanks to its slick keyboard, sucking users in with every click.
07:18Although the keyboard was initially a selling point, it also marked BlackBerry's downfall as Apple unveiled the iPhone.
07:25Apple cut out the physical keyboard with a touchscreen, an innovation that BlackBerry co-founder Mike Lazaridis was slow to welcome.
07:33But the iPhone didn't kill BlackBerry immediately. It just signed its death warrant.
07:38Even after finally jumping on the touchscreen bandwagon, BlackBerry's products were generally seen as dated compared to rivals like Apple and Android.
07:46While those two titans continued to push forward, BlackBerry always remained a step behind before inevitably going defunct in 2022.
07:55In the fact, we supported our devices for many years after we announced the exit of us manufacturing and designing our own smartphones.
08:04And now, over the last number of years, have fully transitioned into the enterprise and the foundational IoT software space.
08:11Number 4. Blockbuster
08:13For decades, it was hard to imagine a world without Blockbuster. Or video stores, for that matter.
08:19Blockbuster Video! Wow, what a difference!
08:23With the rise of streaming, though, Blockbuster was destined to either adapt or die.
08:28Blockbuster attempted to evolve with online DVD rentals and a streaming service.
08:33By this point, Netflix had firmly established itself as the streaming king.
08:38That said, Blockbuster sealed its fate back in 2000, when then-CEO John Antioco turned down a $50 million offer to purchase Netflix.
08:48Having passed on an opportunity to buy Netflix for $50 million, Blockbuster teamed up with Enron to create a video-on-demand service.
08:58Under the leadership of Antioco's successor, James Keyes, Blockbuster filed for bankruptcy.
09:03Dish Network purchased the floundering company with Michael Kelly being named CEO, but the investment wouldn't pay off.
09:11If Blockbuster was a sinking ship, then we guess the sole location in Oregon is the Life Preserver.
09:17In downtown Bend, Oregon, you can find the last Blockbuster on Earth.
09:22Number 3. The Weinstein Company
09:24The Weinstein name was once synonymous with prestige cinema.
09:28Weinstein, the studio head behind Pulp Fiction, Good Will Hunting, and Shakespeare in Love, considered a star maker.
09:35Meryl Streep highlighting his reputation at the 2012 Golden Globe.
09:39Brothers Harvey and Bob Weinstein established themselves as major Oscar players at Miramax before founding their eponymous company in 2005.
09:49Harvey in particular was among the most respected moguls in Hollywood.
09:53He was also one of the most feared.
09:55The masses wouldn't learn why until 2017, as numerous women, some former employees, spoke out about Weinstein's years of sexual misconduct allegations.
10:06Everything he did, everything that drove him, was about dominance with men and women.
10:12He put an enormous amount of energy into humiliating men and an enormous amount of energy into getting women to submit.
10:22The Weinstein Company was quick to sever ties with its co-founder, but Harvey left a storm cloud over the studio that never went away.
10:30As Weinstein entered a legal battle, ultimately being found guilty, the company he built endured bankruptcy.
10:37Lantern Capital acquired the company's assets, while the Weinstein name is forever shrouded in infamy.
10:43The Weinstein Company, they filed for bankruptcy as part of an asset sale to an investment firm, which is Dallas-based Lantern Capital.
10:51Number two, Theranos.
10:54Elizabeth Holmes seemed like an entrepreneur who was bound to change the world.
10:58There's no reason why these can't be distributed in very, very decentralized locations.
11:05Your home?
11:06Yeah.
11:07You think people's homes should have these, essentially a clinical laboratory in their own house?
11:11I think that's a very interesting space.
11:13Once valued at $9 billion, with over $400 million raised, her company Theranos introduced game-changing blood tests that could deliver quick, accurate results with just a drip of blood.
11:26At least, that's what Holmes and colleagues like Sunny Balwani had everyone believing.
11:31In reality, Theranos was a colossal lie that defrauded investors and gave countless people false hope.
11:38But no matter how many tests they ran, the machine failed to deliver reliable results.
11:46Inconceivably, that did not stop Elizabeth Holmes from spruiking it to the world.
11:52It's mind-boggling that Holmes and Balwani got away with the scam for as long as they did.
11:56Once the whistle was blown, it was only a matter of time until Theranos went down the tubes along with its founder.
12:03You can't always blame a company's failure on one person, but Elizabeth Holmes was Theranos.
12:09It's a bit of a heartbreaking tale, right?
12:12Because there was so much potential.
12:14There was so many possibilities of what could have come out of this.
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12:33Number 1. Enron
12:35Even almost two decades later, Enron immediately comes to mind when people think of fallen corporate giants.
12:42At the peak of its success, the company's shares were worth more than $90 each.
12:48But just before Enron filed for Chapter 11, they traded at $0.26.
12:52If anything, the fall of Enron left such a lasting imprint that it's hard to remember anything about the rise.
12:59Maybe that's because this energy company wasn't nearly as successful as executives led investors to believe.
13:05Through accounting loopholes, off-balance sheet partnerships, and other deceitful tactics, Enron managed to hide billions in debt before this volcano of lies finally erupted.
13:16And almost five years of earnings had to be restated, exposing a company that was, well, not as flush and financially sound as investors had thought.
13:24Kenneth Lay, Jeffrey Skilling, and Andrew Fastow are just some of the leaders who guided the disgraced company to bankruptcy in 2001.
13:33The aforementioned names all faced legal action, while Enron officially died in 2007.
13:40What's very rare to see, especially in established large companies like Enron, is a fraud that's driven from the top of the company.
13:47Enron lives on as a punchline. Go visit Enron.com and you'll see how.
13:53Can you think of any other companies that failed due to bad leadership? Let us know in the comments.
13:58You were approximately $100 million in lost sales.
14:01I mean, that must just, I know what, that must have just been painful.
14:05How'd that happen?
14:07Yeah, look, I mean, as I talked about, the two influences there is really around mostly supply chain and inventory availability.
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