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Hello and welcome you are 
listening to Patrick Boyle on 

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Finance, a podcast exploring 
ideas from quantitative finance,

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examining events occurring in 
markets right now and financial 

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history to see what lessons can 
be taken away, including 

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interviews with some of the most
interesting people in the world 

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of finance. 
To learn more about the podcast,

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visit on finance.org. 
It's always good to learn from 

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your own mistakes, but it's 
possibly better to learn from 

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other people's mistakes. 
So in today's video, let's look 

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at some of the most expensive 
mistakes made by some of the 

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biggest and best known companies
out there, some of which are 

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quite funny. 
And if nothing else, you can 

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feel good that whatever mistakes
you've made at work, they're 

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probably not as big as any of 
these. 

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Now, one of the biggest missed 
opportunities in business 

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history happened back in 1999 
when Excite was a distant #2 to 

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Yahoo in terms of search traffic
on the Internet. 

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Excite was seen at the time as 
the technology play of the two 

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companies as it was a true 
search engine, while Yahoo was 

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more of a web directory. 
There were dozens of search 

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engines competing at the time, 
and most were busy transforming 

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themselves into what was known 
as Internet portals, a sort of 

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front page of the Internet, as 
this was the business model 

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favored by investors at the 
time. 

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Larry Page and Search brand had 
a research project initially 

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named Backrub because the system
checked back links to estimate 

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the importance of a website to 
rank it in search. 

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This was later renamed Google 
and even later Alphabet, a term 

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that we all use today. 
Back in 1999, Larry Page 

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approached the management of 
Excite, offering to sell his 

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search engine for $750,000 plus 
some shares and Excite. 

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The total deal would have been 
worth around $1.6 million. 

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At the time, Page wanted to get 
back to his doctoral studies at 

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Stanford and figured that his 
search algorithm would increase 

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excites revenues by about 
$130,000 every day. 

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So if he implemented his 
technology and work that excite 

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for just a few months, he 
figured he should be compensated

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for his time. 
And thus he came up with the 

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$1.6 million price for what he 
figured was a one off gig before

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he went on to bigger and better 
things. 

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Excite turned down the deal 
after comparing the two search 

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engines because the new search 
algorithm was way too fast the 

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way the management saw it. 
If a search engine instantly 

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took people to the page they 
were looking for, the users 

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would spend hardly any time on 
the Internet portal website that

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they had built. 
And since advertising revenue 

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came from people staying on the 
portal, management felt the new 

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search engine would destroy the 
value of excite Google. 

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I mean, Alphabet went on to be 
one of the biggest businesses in

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the world. 
While Excite limped along for a 

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while, merged with a broadband 
provider at Home Network, which 

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together went bankrupt in 2001, 
our next corporate blunder on 

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the list is Lululemon. 
In 2013, high end yoga apparel 

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brand Lululemon had a PR 
disaster after a batch of its 

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signature black yoga pans were 
found to be too sheer. 

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Customers complained that they 
became transparent when the 

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wearer bent over at yoga 
classes, and bending over is a 

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big part of yoga classes. 
The recall that followed 

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affected 17% of yoga pants sold 
in Lululemon stores that year 

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and cost the company between 12 
and $17 million. 

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Now, we all say the wrong thing 
from time to time, but few have 

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done so as prominently as Chip 
Wilson, the company's founder. 

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He may have been too transparent
in his opinions on Bloomberg 

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Television. 
He addressed the recall by 

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saying, frankly, some women's 
bodies just don't actually work 

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for the pants. 
It's about the rubbing through 

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the ties and how much pressure 
there is. 

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This set off a firestorm of 
controversy, and his seemingly 

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halfhearted apology on the 
company's Facebook page did 

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nothing to calm the outraged 
customers. 

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He eventually stepped down as 
chairman of the company's board,

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and sales have since rebounded 
because of Chip. 

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I've learned to never comment on
the appearance of my viewers. 

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Okay. 
So next on our list is Frito 

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Lay. 
In 1998, Frito Lay introduced 

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Wow Chips, fat free versions of 
its Lays, Ruffles, Doritos and 

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Tostitos brands which were made 
with Alestra, a fat substitute 

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which unfortunately acted as a 
laxative. 

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When people ate too much of it, 
sales initially exploded, making

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these snacks the best selling 
new product in the United States

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the year of their introduction. 
But given the problems they 

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caused and the media storm 
around the unpleasant side 

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effects, sales quickly began to 
decline. 

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An FDA mandated health warning 
label was added to products 

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containing Alestra, which read 
Alestra may cause abdominal 

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cramping and loose stools. 
Alestra inhibits the absorption 

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of some vitamins and other 
nutrients. 

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Vitamins ADE&K have been added. 
Now I know Don Draper, but from 

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an advertising perspective that 
just doesn't work. 

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No amount of added vitamins 
makes up for the first sentence 

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in that statement. 
No long term damage was done to 

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Frito Lay as a brand. 
They possibly did miss the 

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opportunity of introducing their
own brand of toilet paper, but 

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no one thought of that at the 
time. 

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At #4 on our list is Kodak. 
Kodak have a long history of 

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developing and introducing 
innovative products. 

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They built some of the most 
popular camera models of the 

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20th century, including the 
Brownie, the Autographic, and 

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the Instamatic. 
The company's Kodak moment catch

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phrase entered the popular 
lexicon to describe an event 

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that deserved to be recorded for
posterity. 

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George Eastman, the company's 
founder, pivoted the company's 

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core business from dry plates to
film and from black and white to

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color, despite these new product
introductions hitting the sales 

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of profitable existing product 
lines when they were brought to 

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market. 
Decades later, Kodak blew its 

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chance to lead the digital 
photography revolution, despite 

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the fact that a Kodak engineer, 
Steve Sasson, actually invented 

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the digital camera in the 
company's R&D labs in the 1970s.

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This technological leap was a 
product of Kodak's willingness 

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to invest in R&D. 
But having the space in capital 

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for innovation is not 
necessarily enough. 

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Company management also needs to
be willing and agile enough to 

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make the most of the innovations
that the engineering department 

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develops. 
Kodak's leadership rejected the 

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idea of the digital camera, 
fearing it would cannibalize 

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their existing business of 
selling photographic film. 

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As the engineer, Sasson told the
New York Times it was filmless 

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photography. 
So management's reaction was 

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that's cute, but don't tell 
anyone about it. 

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Kodak's management instead 
focused on the flaws of early 

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digital cameras when their 
competitors brought them to 

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market, highlighting the early 
digital cameras, slow processing

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times and low resolutions, 
management didn't have the 

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vision to see the utility to 
millions of potential customers 

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of good enough digital camera 
technology. 

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Kodak's rivals, of course, leapt
at the opportunity, leaving 

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Kodak to settle for pursuing 
patent royalties on a technology

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that they developed and then 
squandered. 

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Kodak's digital camera patent 
expired in 2007, and they filed 

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for Chapter 11 bankruptcy in 
2012. 

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The company emerged from 
bankruptcy in 2013 and continues

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to provide commercial digital 
printing products and services. 

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Motion picture film and still 
camera film. 

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They licensed the Kodak brand to
several products produced by 

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other companies. 
Next up we have one of the most 

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famous botched product 
introductions in history, New 

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Coke. after World War 2, 
Coca-Cola had a 60% market share

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for cola soft drinks. 
By 1983, their share had 

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declined to under 24%. 
Largely due to competition from 

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Pepsi, Pepsi was outselling Coke
in supermarkets, and Coke only 

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maintained its lead through its 
network of soda vending machines

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and sales to fast food 
restaurants, in particular 

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McDonald's. 
Older consumers had become more 

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health and weight conscious and 
had moved to diet drinks, and 

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younger drinkers had started 
favoring the sweeter Pepsi in 

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increasing numbers. 
When a new CEO took over in 

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1980, he told employees that 
there would be no sacred cows in

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how the company did business, 
including how it formulated its 

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drinks. 
Cocacola tested out a new 

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sweeter formulation, which 
overwhelmingly beat regular Coke

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and Pepsi and taste tests, 
surveys and focus groups. 

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One bottling company even 
threatened to sue Cocacola if it

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didn't put the new formulation 
on the market as a precursor of 

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what was to come. 
Some customers involved in the 

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focus groups, around 10 to 12% 
of them, said that they would 

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stop drinking cocacola 
altogether if the new recipe 

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replaced the old one. 
They suggested that the new 

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recipe should be released 
alongside the existing product, 

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rather than replacing it. 
This was a warning of what was 

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to come. 
New Coke was introduced in 1985 

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to coincide with the drinks 100 
year anniversary. 

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The launch didn't go very well, 
as journalists pointed out that 

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the marketing emphasis on the 
new formula, Sweeter Taste, 

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clashed with previous Coke 
advertising, which touted Coke's

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less sweet taste as a reason to 
prefer it over Pepsi. 

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Don't knew Coke was accepted by 
many Cocacola drinkers, in 

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particular in the Northeast, 
where it was first introduced. 

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Others, particularly in the 
southern U.S. states, resented 

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the change. 
Comedians and talk show hosts 

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made regular jokes mocking the 
switch. 

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The company received over 40,000
calls and letters expressing 

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anger or disappointment. 
A few months later, Coke bowed 

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to the pressure introducing 
Cocacola Classic with the drinks

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original formula. 
Many people to this day believe 

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that the introduction of New 
Coke, which only happened in the

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United States, was a ploy to 
hide the switch from cane sugar 

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to the much cheaper high 
fructose corn syrup. 

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This change had, however, 
already occurred five years 

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before the switch to New Coke. 
In reality, New Coke was nothing

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but a massive marketing error. 
While Coke had focused group 

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information showing that people 
preferred the new taste, the 

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company failed to take into 
account the bond its most loyal 

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customers had with the brand. 
Next on our list we have Xerox, 

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who in 1970 founded the Palo 
Alto research company Park, 

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staffing it with the smartest, 
most creative men and women in 

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the tech industry, who were 
charged with coming up with new 

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ideas that Xerox could 
eventually monetize. 

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Park researchers developed 
numerous innovations like the 

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computer mouse, the graphic user
interface, what you see is what 

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you get word processing software
and Ethernet technology to 

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network computers together. 
Steve Jobs and a group of Apple 

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employees managed to negotiate 2
tours of Xerox Park in 1979. 

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Xerox showed them around as 
Xerox planned on investing in 

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Apple before its IPO, which 
would happen a year later in 

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1980. 
Larry Tesler, one of the park 

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researchers, remembers the Apple
cofounders barely restrained 

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enthusiasm when he saw what had 
been developed at Xerox Park. 

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The visit convinced Jobs that 
his new Lisa computer needed to 

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incorporate many of the ideas he
saw on his visit, including the 

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computer mouse. 
Jobs replicated many of the 

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innovations he saw at Xerox, and
in 1994 even sued Microsoft, 

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claiming that Windows had copied
the look and feel of the 

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Macintosh operating system, 
which he had copied from Xerox. 

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Midway through that lawsuit, 
Xerox filed a lawsuit against 

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Apple, claiming Apple had 
infringed copyright Xerox held 

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on its graphical user interface.
The District Court at the time 

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dismissed Xerox's claims without
addressing whether Apple's 

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interface infringed Xerox's 
rights or not, saying that this 

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decision needed to be made by 
the Copyright Office. 

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Apple lost all claims in the 
Microsoft suit, except for the 

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ruling that the trash can icon 
and folder icons from 

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Hewlettpackard's New Wave 
Windows application were 

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infringing on their copyright. 
The Xerox Alto computer that 

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Jobs had seen in 1979 was way 
ahead of its time. 

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It featured the keyboard and 
mouse interface that we still 

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use today. 
It was networked, had cutting 

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edge word processing software 
and other modern ideas like 

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event reminders. 
Xerox senior management in 

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upstate New York didn't care 
about what had been developed in

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Palo Alto. 
They looked at the Alto computer

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and just saw a complicated 
workstation that would cost 

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$40,000 apiece. 
They figured there was no market

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for that. 
Xerox funded the production of 

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only 2000 machines and never 
went ahead with its commercial 

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release. 
The only thing Xerox managers 

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were interested in at the time 
were printer and copier 

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00:15:18,680 --> 00:15:22,440
innovations. 
Xerox, much like Kodak, had 

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developed cutting edge 
technology that they were 

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squandering due to a lack of 
vision. 

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A copyright lawyer told the New 
York Times in 1990 during the 

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Microsoft lawsuit that Xerox had
waited too long to file a 

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copyright infringement case and 
had to resort to a weaker charge

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of unfair competition. 
He said. 

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I think it's unfortunate because
Apple is running around 

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00:15:47,360 --> 00:15:51,360
persecuting Microsoft and 
Hewlettpackard over things that 

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they borrowed from Xerox Okay. 
So last on our list is 

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BlackBerry. 
It's not that long ago that the 

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00:15:59,570 --> 00:16:02,850
best smartphone you could buy 
was a BlackBerry. 

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00:16:03,170 --> 00:16:07,010
All bankers and lawyers and 
business professionals had one 

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00:16:07,010 --> 00:16:11,290
of these iconic smartphones with
a keyboard and the little wheel 

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00:16:11,290 --> 00:16:14,170
on the side. 
It was nicknamed the Crackberry,

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00:16:14,170 --> 00:16:17,090
hinting at how dependent people 
were on them. 

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00:16:17,410 --> 00:16:21,370
Obama famously refused to give 
his up when he entered the White

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00:16:21,370 --> 00:16:25,720
House in 2009. 
Even when the first iPhones came

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00:16:25,720 --> 00:16:30,240
out, they weren't very good. 
I bought an iPhone 3, which I 

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00:16:30,240 --> 00:16:34,600
still have today, and it was so 
useless as a phone that I went 

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00:16:34,680 --> 00:16:38,560
right back to using my 
BlackBerry and used the iPhone 

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00:16:38,600 --> 00:16:42,960
as an MP3 player. 
When the iPhone 4 came out, it 

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00:16:42,960 --> 00:16:47,080
had such bad cellular reception 
that it would only work if you 

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00:16:47,080 --> 00:16:50,720
held it a certain way. 
Apple fixed this by selling a 

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00:16:50,720 --> 00:16:55,760
rubber band that covered the 
antenna for $29.00, improving 

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00:16:55,760 --> 00:16:59,760
cellular reception. 
The original iPhone came out in 

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00:16:59,760 --> 00:17:04,119
2007, but it didn't really 
function as a phone until the 

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00:17:04,119 --> 00:17:07,240
iPhone 5, which came out in 
2012. 

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00:17:07,640 --> 00:17:11,640
BlackBerry had a huge lead and 
lots of time to build a better 

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00:17:11,640 --> 00:17:15,119
product, but they didn't until 
it was too late. 

258
00:17:15,660 --> 00:17:19,660
When the iPhone and the similar 
Android phones first came out, 

259
00:17:19,940 --> 00:17:23,500
the computer industry was moving
towards bigger touchscreen 

260
00:17:23,500 --> 00:17:27,980
displays, a trend that Apple 
jumped on with perfect timing. 

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00:17:28,339 --> 00:17:31,980
While all of this change was 
happening, BlackBerry was more 

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00:17:31,980 --> 00:17:35,780
concerned with protecting what 
it already had instead of 

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00:17:35,780 --> 00:17:39,140
developing new products. 
It's somewhat understandable 

264
00:17:39,140 --> 00:17:41,980
too. 
The majority of big businesses 

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00:17:41,980 --> 00:17:45,700
and government organizations 
relied on Blackberries, which 

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00:17:45,700 --> 00:17:50,180
had much better security, 
reliable e-mail, replaceable 

267
00:17:50,180 --> 00:17:52,940
batteries so you could bring a 
few of them with you on a 

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00:17:52,940 --> 00:17:56,780
business trip and you could drop
the phone and it would keep on 

269
00:17:56,780 --> 00:18:00,140
working. 
I had one that accidentally went

270
00:18:00,140 --> 00:18:04,420
through a laundry cycle and when
it dried out it still worked. 

271
00:18:04,840 --> 00:18:08,040
BlackBerry Messenger even 
managed to make a business 

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00:18:08,040 --> 00:18:11,160
device popular among young users
as well. 

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00:18:11,720 --> 00:18:15,200
The mobile phone industry went 
through a period of rapid 

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00:18:15,200 --> 00:18:19,000
evolution at a time when 
BlackBerry felt it made sense to

275
00:18:19,000 --> 00:18:23,680
focus on its existing high end 
business customers by making 

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00:18:23,680 --> 00:18:28,080
small, iterative improvements. 
Being conservative and failing 

277
00:18:28,080 --> 00:18:31,320
to see how the average phone 
customer might start to buy 

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00:18:31,320 --> 00:18:35,680
higher end phones that did more 
was only half of the problem. 

279
00:18:36,040 --> 00:18:40,000
BlackBerry showed hubris in 
believing that its customers 

280
00:18:40,000 --> 00:18:43,360
would put up with a lack of 
innovation and still stick with 

281
00:18:43,360 --> 00:18:46,110
them. 
They insisted, along with Adobe,

282
00:18:46,110 --> 00:18:50,070
that Flash would be the future 
of rich mobile content and 

283
00:18:50,070 --> 00:18:53,910
delayed the release of a more 
modern smartphone until they had

284
00:18:53,910 --> 00:18:57,430
a chip powerful enough to handle
the requirements of Flash. 

285
00:18:57,830 --> 00:19:02,270
BlackBerry believed people would
wait for its superior product or

286
00:19:02,270 --> 00:19:06,550
would put up with limitations 
because, well, it's BlackBerry 

287
00:19:06,990 --> 00:19:10,670
business and government 
customers did hold on for quite 

288
00:19:10,670 --> 00:19:13,400
a while. 
Mainly because Blackberries were

289
00:19:13,400 --> 00:19:16,920
significantly more secure than 
the competition. 

290
00:19:17,320 --> 00:19:21,200
But when BlackBerry finally came
out with the Z1, which was 

291
00:19:21,200 --> 00:19:24,800
actually quite a good phone, it 
was simply too late. 

292
00:19:25,080 --> 00:19:28,440
App developers were no longer 
interested in developing 

293
00:19:28,440 --> 00:19:32,680
software for an operating system
that no one was really using. 

294
00:19:32,920 --> 00:19:37,200
As good as the Z1 was, if you 
bought one, there were no apps 

295
00:19:37,200 --> 00:19:39,790
for it. 
BlackBerry phones are now 

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00:19:39,830 --> 00:19:42,870
officially defunct and can no 
longer function. 

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00:19:43,110 --> 00:19:47,670
In January 2022, the company's 
CEO confirmed that the 

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00:19:47,710 --> 00:19:51,790
infrastructure, operating 
system, software and services, 

299
00:19:51,790 --> 00:19:54,630
which had been around for 20 
years, were being 

300
00:19:54,630 --> 00:19:58,110
decommissioned. 
The company is still around 

301
00:19:58,110 --> 00:20:02,150
today and is focused on 
cybersecurity and encryption 

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00:20:02,150 --> 00:20:06,230
based services for the medical 
and automotive industries. 

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00:20:06,610 --> 00:20:10,170
The story of BlackBerry shows 
you that no matter how much of A

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00:20:10,170 --> 00:20:13,850
lead you have, you can still 
lose out if you don't change 

305
00:20:13,850 --> 00:20:16,850
with the times. 
Thanks for tuning into today's 

306
00:20:16,850 --> 00:20:19,210
podcast. 
If you enjoyed it, please tell a

307
00:20:19,210 --> 00:20:22,170
friend or two as that will help 
the channel grow. 

308
00:20:22,410 --> 00:20:24,730
Have a great day and talk to you
again soon. 

309
00:20:24,850 --> 00:20:28,050
Bye. 
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310
00:20:28,050 --> 00:20:30,890
sure to subscribe so you're 
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311
00:20:30,890 --> 00:20:33,130
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312
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supporting this content on 
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313
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314
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Finance channel or follow us on 

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Patrick eboyle, thanks for 

316
00:20:45,670 --> 00:20:46,630
listening. 
Bye.