The biggest companies in the world are worth trillions of dollars. Apple, the world’s largest technology company? A $2 trillion dollar valuation. The company, founded in 1976, has defied all odds to make it this far.
And what about Amazon? The world’s largest retailer is worth $1.63 trillion.
It’s ready to think that companies will often reach a point where they are too big to fail. But if we look at history, we know there is no such thing.
There are countless companies that had huge valuations. But the companies that failed to adapt to an ever-evolving market are the ones that ended up as failed companies, wiped from the face of their planet.
Wondering what some of the famous failed companies of our generation are? Read on below to learn why huge companies can still go out of business.
Too Big to Fail Meaning
What does it mean for a company to be too big to fail? If a company is so big, and its products are used by millions of people across the planet, it’s tempting to think that they will be around forever.
How could a company making billions of dollars go out of business? It’s actually quite easy to understand.
The biggest reason is adaptation. Or rather, lack of adaptation.
The market is always evolving. Consumers are constantly looking for a new and exciting way of doing things. And ultimately, it’s their money and their attention spans that drive the market forward.
Companies can get comfortable in their business model. But we live in an age of disruption. Look at the taxi industry. They’ve been almost completely wiped out by the likes of Uber and Lyft. The taxi industry never adapted to changing consumer behavior and has become a relic of the past.
Likewise, there are countless failed car companies, tech companies, and retailers that thought they were too big to fail, that thought they were in control of the market, only to be disrupted by new, innovative business models.
In 2008, blockbuster CEO, Jim Keyes, said that both Redbox and Netflix weren’t even on his radar regarding competition in the movie rental industry.
In 2022, both Netflix and Redbox are still around. Blockbuster has become a distant memory. At its prime, Blockbuster operated more than 9,000 stores across the country,y employing more than 80,000 people.
Even as Netflix started shipping out DVD rentals and eliminating late fees, Blockbuster was very slow to consider that as a revenue model for their business.
Just two years after that statement by the CEO, in 20210, Blockbuster filed for bankruptcy, boasting $900 million in debt. Netflix has revolutionized the industry by eliminating the need for physical DVDs entirely, launching the streaming revolution.
But Netflix isn’t sitting back and enjoying its success. It aims to survive and thrive. It currently produces its own shows and movies, since many other streaming platforms have launched in recent years.
Toys R Us
Toys R Us operated about 700 retail stores around the US at its peak. But the company was comfortable. It wasn’t innovating, and it didn’t adapt to the growing e-commerce industry, thinking that parents would continue doing their toy shopping in stores.
The company filed for bankruptcy in 2017 with more than $6 billion in debt. It attempted to reinvent itself in 2019 by opening two stores that focused on interactive displays and play areas, but those too, have closed.
Likewise, the failure of Toys R Us put a huge damper on Mattel. Toys R Us was the largest customer of the toymaking company.
The brand behind Barbie, Hot Wheels, and Fischer-Price is a staple in the American economy. The sudden liquidations of Toys R Us caused huge drops in Mattel revenue. But this only unveiled bigger problems with the toymaker.
The company has been struggling, especially compared to its bitter rival, Hasbro, who attempted to acquire Mattel in late 2017.
Due to Mattel’s huge debt, low sales, and constantly-changing leadership, it wasn’t in a good position to invest in e-commerce and develop new products.
Mattel is still hanging on, however, and is investing heavily in television shows, such as Barbie, He-Man, and Thomas and Friends.
Many people expect Hasbro to attempt an acquisition again, and it might be in Mattel’s best interest to consider the merger.
The sporting goods retailer, Sports Authority, had been around for nearly 100 years. At its peak, the company was operating more than 400 stores across the US.
Like many physical retailers at this time, sales were very low to companies that weren’t focused on e-commerce. In 2016, the company went bankrupt and closed all of its stores. Dicks Sporting Goods acquired the intellectual property of Sports Authority.
Pier 1 Imports
Pier 1 finally went bankrupt as a result of the COVID pandemic. But the company was approaching bankruptcy for years prior to the pandemic. The 60-year-old retail was on a string of nine straight quarters with declining sales and couldn’t last very long was COVIS set in.
Ringling Bros. and Barnum & Bailey Circus
Founded in 1884, the traveling circus has been a mainstay in American entertainment for almost 150 years. And while it had seen a decline in viewership for decades, it wasn’t until the 90s when things got really bad.
Americans had far more options regarding entertainment, and few were interested in seeing a physical circus. Animal rights groups have been destroying the public perception of the company. And in 2017, the company finally went out of business.
Borders was a favorite bookstore that rivaled the likes of Barnes and Noble for decades. But as Amazon launched its online bookstore in the 90s, and as Barnes and Noble fought for its place by launching its own e-reader, Borders quickly fell behind.
The company went bankrupt in 2011 with more than a billion in debt, far outweighing the value of its assets.
Not every failed company has disappeared entirely. Some have been acquired for pennies on the dollar and are trying to reinvent themselves in this new era.
Here are a few companies that are still clinging on, even though they already missed the boat.
Myspace took the internet by storm in the early 2000s as it was one of the first social media companies to ever exist. For about four years, it was one of the most popular websites in the world, attracting the attention of millennials for hours and hours every day.
But the company was sold in 2005, giving Myspace Tom a big payday (he’s been traveling the world as a photographer ever since). The website focused too much on generating ad revenue, ignoring the user experience.
So when Facebook came around in 2008, users flocked to the user-friendly platform, leaving Myspace almost as fast as they had discovered it just a few years prior.
The site still operates today, but few people use it.
What Google is today, Yahoo was in the 90s. It launched as an email platform, news congregate, and web search platform. The company missed out on some of the best possible opportunities, such as the opportunity to buy both Google and Facebook in their early years.
Today, Yahoo is floundering. It was purchased by Verizon in 2016 for $4.8 billion, even though it was once worth more than $100 billion in years past.
Kodak was once king of the camera industry. But they focused primarily on film cameras. When digital cameras were first launched, they failed to jump on the bandwagon. And that was in 1975.
The company held strong to its belief that film photographs were of higher quality than digital photographs. But ultimately, it’s not about what a company believes, it’s about what a consumer believes.
The company stopped selling its film cameras in 2004 and eventually filed for bankruptcy in 2012. However, the company is still operating today. They continue to produce photo-film for traditional cameras, as there has been a resurgence in demand for film in recent years.
While it will never compare to the demand for digital photography, film still holds a special place in the hearts of millions of photographers across the globe.
General Motors and Chrysler
And of course, you can’t talk about large, failed corporations without mentioning the auto industry, which caused the bankruptcy of an entire city; Detroit.
Both General Motors and Chrysler were considered two of the big three automotive manufacturers, alongside Ford. But while Ford survived, both Chrysler and General Motors went under. They both filed for bankruptcy in 2011.
But a government bailout kept the companies going. If there were any companies that the general public assumed would stay around forever, it was these companies.
Their failure was partly due to the increase in oil prices as a result of the oil shortage in the mid-2000s. This led consumers to leave behind SUVs and trucks for more fuel-efficient vehicles.
And since many consumers used home equity loans to finance their vehicle purchased, the mortgage crisis in 2008 halted sales, causing these giants to suffer immediately.
There’s No Such Thing as Too Big to Fail
There are massive companies around today that most of us think will last forever. But they might not.
All it takes is one industry disruption and stubborn leaders to let a company fall behind. And when you fall behind, it can be incredibly difficult to catch up.
Who will be the next big company to fail? Time will tell, but it likely won’t take long considering the amount of disruption taking place today.
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