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Crash and Burn

Discussion in 'General Discussion' started by Juice, May 24, 2016.

  1. Juice

    Juice
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    For a while I've been following what Theranos has been doing. They were launched by a young Stanford grad, Elizabeth Holmes, a few years ago as a revolutionary blood testing company. For the past year or so, they have been on a steady decline because of dubious results with their testing equipment and apparent mismanagement by the CEO. Well on Friday, they announced that the previous two years-worth of testing results are void. This might be the nail in the coffin of this company.

    Focus: Macro or micro, what are some of the biggest corporate crashes and burns you've seen in your careers? (Aside from economy-impacting ones like the 2008 housing crash, Enron, etc.).

    Alt Focus: What company deserves to crash and burn due to poor ethics, products, etc?
     
    #1 Juice, May 24, 2016
    Last edited: May 24, 2016
  2. CharlesJohnson

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    Does Theranos' CEO know she's full of shit? Or are her methods just suspect? How did the company get valued in the billions so quickly with nobody asking questions before the investigation.

    HP springs to mind. They lost like 70% of their value. Dell. GM before the bailout; that was a "Daaayyyum" moment. Sports Authority just declared bankruptcy. You mean people don't want to spend $40 on a soccer ball? But it has the official LOGO.

    Sun Edison, a solar power company, is the latest that took A LOT of people, professionals and otherwise, by surprise. They lost a ton of value, declared they were good to go, then within like 3 weeks basically disintegrated on news they were leveraged in the billions because of stupid deals.

    IBM is another. While IBM is a huge company and still making a lot of money, if they don't do something in the next couple years they're toast. They just laid off 14,000 people (most likely replacing them with lower wage workers) and have been making significant labor cuts the past few years. Everything in their pipeline seems too little too late.

    Alt. Focus: I'd love to see Walmart go. Corporate welfare, shit Chinese products, treat the workers like shit, property tax breaks, refuses to innovate, uses meat from abusive farms. Fuck 'em. They are everything disgusting about capitalism. Yeah, they employ a lot of people, low income families get cheap meat. Ehhhhh. There's another solution. This company is a parasite.

    While I don't believe these companies need to crash and burn, I ask why the fuck they are publicly traded. GoPro, Fitbit, Pollo Loco, Twitter, Ferrari. Like, really? You have one niche product and now you're expected to make double digit gains every 3 months. We've had this discussion before.
     
  3. JWags

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    Theranos always seemed to be smoke and mirrors to me. A cool idea, but with a complete lack of results/proof of concept to justify this INSANE valuation that made Holmes a multi-billionaire, at least on paper. I wasn't entirely suprised by the outcome, though I was at the extent of it. She always has one of the most surprisingly low female voices Ive ever heard when you see her interview. Thats the other thing I always think of with Theranos.

    Alt-Focus:
    You're kind of all over here. Twittter is the classic "public cause we're a tech start up with no great monetization strategy so we still need cash" and the investors push for them to get that payout. GoPro and Fitbit are good points, but I think both of those are companies that had no good product expansion plan. Especially GoPro, massive success with no idea how to continue to grow once they saturated the market.

    El Pollo Loco is rapidly expanding fast-casual, no different than Chipotle or other companies of that nature who are public. I don't think its crazy for them to be publicly traded.

    Ferrari is interesting. I think its completely cause Fiat spun them off and nobody immediately wanted to take them private, so it became a new public entity. I wouldn't be surprised to see them be taken back private or acquired by another large auto manufacturer in the next 5 years.
     
  4. Nettdata

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    She's basically networked herself silly with some very rich and egotistical people and has set herself up to look like a young, female Steve Jobs who's shit doesn't stink. Even with all that valuation and investment, she still maintains voting control. That takes some fucking doing.

    Silicon Valley has its own culture around venture capital, and it's more cult of personality than most people realize. For the last few years it has really undergone a bit of a shift from the typical "start up in the garage in your sweatpants" to a corporate structure engineered for success, with high valuations and monster raises replacing the lean and mean mentality. Some of those investors see powering through it as the only end game, because they have too much into the game to bail.

    Along those lines they threw their lead scientist under the bus last week in the hopes of surviving. On top of that, they're still expanding as of last week, hoping these issues blow over.

    Their board is also stacked with non-scientists who have huge contacts in the military, so that speaks to their end-game... lucrative government/military contracts.

    But their biggest failing and something that I think will be their ultimate downfall is the fact that they're trying to apply the typical software startup mentality of "fail hard, fail fast" to something that affects people's lives. I have no doubt that these huge numbers of failed tests have resulted in people fucking their life up based on bad information, and with Walgreens (I think it was them) as their "go to market" partner, the lawsuits are going to be coming fast and furious.
     
  5. Nettdata

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    It's exactly the opposite right now.

    We were just written up in the WSJ and NYT because we managed to get financing in an environment where the wallets are slamming shut and established companies that have been well funded but not making any revenue are starting to lay people off. Nothing ends a company quite as fast as a down round.

    Unemployment in Silicon Valley is climbing very, very fast (three times what it was this time last year), and the startup model of "get eyeballs not revenue then sell out" is just about gone, as the vast majority of VC's are switching to a more typical "build a business, get revenue" model.
     
  6. Juice

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    And from a business aspect, its absolutely insane and will likely be the last time anything like this happens for a long time. Shes basically Silicon Valley's overreacted response to the headline 'Theres No Women in Tech.'

    "Oh yes there are! Heres a genius start-up founder with a billion dollar idea! And she wears a black turtle neck and blazer, kind of like Steve."

    Then they went and gave her that billion dollars before realizing she doesnt have an MVP as described.

    Also, to the person who repped me that "these political threads need to stop." Huh?
     
  7. Dcc001

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    This is more of a near-miss, but Ashley Madison. Morality aside, that company was *this* close to going public. I found it really creepy that when the story blew up that there were literally no women using the site, more focus was not spent on the fact that this was very nearly a billion dollar debacle. Prior to the data of the users getting leaked, it was projected to be a very lucrative IPO. Had it gone public, the entire company would have essentially been a fraud/Ponzi scheme. The media noted it a bit, but never ran with the, "what-if?" part of it. Makes you wonder how many other companies are just smoke and mirrors.
     
  8. JWags

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    I wouldn't go that far. It was like a 85/15 split. The fake users are one thing, but otherwise its no difference than "ladies night" at a bar where WAY more dudes show up. Or guys that pay money to "legit" sites like Match or OKCupid to send messages and whatnot, but when you ask any attractive women on those sites, they are overwhelmed by the number of messages and contact requests, that they don't see most of them. The website was just like a shiny toy a kid got for Christmas that didn't work as well as it did in flashy commercials.
     
  9. Nettdata

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    Quite honestly, the best tech at Ashley Madison was their AI that did those bots. I have no doubt that they could (or maybe are) pivoting and licensing that technology, as it really was impressive.

    Machine learning is all the rage right now, and they were, more than anything, a developer of machine learning technology that powered their auto-chat-bots.
     
  10. Misanthropic

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    Crazy Eddies: This chain of electronics stores was huge in NY/NJ in the 70s and 80s, known mainly for their wacky commercials. Owned by "Crazy Eddie" Antar, they were shit down in the late 80s due to fraudulent business practices, which included selling electronics that had bee left out in the rain, then refusing to take back the inevitable returns.



    A&P: Also known as the Great Atlantic & Pacific Tea Company, this company lasted for 150 years, and was, at one time, the largest grocery chain in the United States. There were dozens of them here in New Jersey and New York. The company was slow to keep up with discount stores like Costco and Sams Club in terms of prices and sales approach, and most of its stores were small and outdated. The competition, meanwhile, was building "super stores' that had florists, pharmacies, liquor stores, etc. included. They filed for bankruptcy only a couple of years ago.

    Alt focus: Why CVS, of course
     
    #10 Misanthropic, May 24, 2016
    Last edited: May 24, 2016
  11. Tim

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    Blockbuster. Netflix fucked them in the ass and made them felch themselves.

    I don't know if this is just a regional thing but there's a video rental/sales franchise here called Family Video. The other day their marquee said "We buy used cell phones." That can't be good.
     
  12. Revengeofthenerds

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  13. GTE

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    Google+

    Gained 25 million users in one month and then topped out around 540 million users. And now, virtually no one uses it.
     
  14. Dcc001

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  15. Misanthropic

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    These don't exactly count as negatives in my book:

    "Religious welfare groups, such as the Catholic League, have spoken out against the release of material which they and others found offensive, including vehement protests of the Miramax Films features Priest (1994) and Dogma (1999).[3] Disney pushed back the release date for Dogma due to the controversy surrounding the movie, and eventually sold the distribution rights to Lions Gate Films. The ABC show Nothing Sacred, about a Jesuit priest, a book called Growing Up Gay (published by Disney-owned Hyperion Press), the (unofficial) annual Gay and Lesbian Days at Disney theme parks, and similar issues spurred boycotts of Disney and its advertisers by the Catholic League, the Assemblies of God, and other conservative Christian groups.[3][4][5]
     
  16. Crown Royal

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    Tower Records. The only "chain" music store that I liked, because it essentially was "your neighbourhood record store commercialized". Each store was unique and to its own, designed and decorated exclusively by the employees who worked at that particular store. It had down-to-earth founders who cared about every single worker. The stores were huge and the selection was INSANE. Just the section for singles was the size of another music store. And with other businesses like Blockbuster, Sunrise etc. It crashed and burned when the Internet, mp3s and downloads emerged.

    Made me sad. I honestly loved that store. There's still one, in Japan. A monstrous four-story number like the one that was in NYC.
     
  17. Kubla Kahn

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    What still gets me was watching a video in business school about Braniff airlines. At one point the SEO bought television commercials in Texas to BEG people to buy tickets on his airline. Sad and hilarious at the same time.

    Im curious to how long Amazon Prime can last, theyve changed the metrics a bunch since the start. Im always waiting for a fatal misstep that will cross the lines with consumers price or delivery wise.
     
  18. JWags

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    Amazon is becoming a logistics company, both with shipping as well as cloud computing. They are working on building their own fleet. With their distribution network ever expanding, and soon to have their own vehicles, I would imagine their shipping will only get cheaper and faster. Couple that with an ever improving set of original programming and they will have a base that will make it hard for them to not bounce back from any negatives. Bezos is an asshole, but he's a mad genius obsessed with pushing the envelope forward.
     
  19. Crown Royal

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    Alt-Focus: I think Twitter failing would be hilarious. It wouldn't be as celebratory as tumblr or Gawker dying horribly, but nonetheless would be worth it to prove people like Jack Dorsey should take their money, fuck off, and leave running a company to somebody who actually know how and doesn't give moral authority to fuckheads. Twitter went public, started acting like censoring pussies and its value continues to downward spiral. Maybe they should take the hint and listen to WHY people don't like it instead of inventing their own answer.
     
  20. audreymonroe

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    The most powerful cervix... in the world...

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    My original plan was to work in magazines, and the summer before I graduated, when I was living in NYC doing my first internship, was the same summer that a ton of major magazines folded. The most significant one was Gourmet. That news made everyone really start panicking. It basically made it clear that the career I'd been working towards thus far was never going to pan out, especially not like I'd planned/hoped. This was also the summer, though, that people were jumping out of windows on Wall Street and, when I was trying to get a little paying summer job in addition to the internship, open calls for places like Pinkberry and Au Bon Pain were packed beyond capacity with people who up until recently were working in law firms and giant media companies and banks (at least from what I could see by peeking at people's resumes). So that also made it clear that I was graduating at basically the worst possible time to graduate in recent history and was pretty much screwed no matter what.