For every success story in business there are probably at least a dozen failures (don’t quote me on this stat – just follow the line of thinking). Most failures go unnoticed except by the authorities and the people that the failed business owes money to.
Very few fail so spectactularly, so publicly that they become a byword for all that can go wrong in business.
Sometimes a good business will turn bad because of one moment of poor judgement as in the case of Ratners.
At a speech in 1991, the then CEO Gerald Ratner made the following comment & within days had wiped off £500m from the value of the family business.
“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?” I say, because it’s total crap.”
This was compounded later in the same evening when Ratner later remarked that
some of the earrings were “cheaper than an M&S (UK food retailer) prawn sandwich but probably wouldn’t last as long”
Ratners although considered ‘tacky’ had over many generations built a very successful business selling low cost jewellery. Branding and image had been successfully used to overcome the quality deficiences of the product. Unfortunately, the media had other ideas and seized on the story.
Within 18 months Ratner was gone. Within 3 years so was the family name. ‘Doing a Ratner‘ was a part of the British vocabularly. The name would always be associated with spectacular falls. In his defence, Gerald Ratner has always said that it was a private function which he did not expect to be reported, and his remarks were not made seriously.
Is there a connection with Boo?
Yes and no. Comparison and contrast. Ratners had been successful over many years and only the power of the British media brought the long established business to its knees.
With Boo (and yes, with hindsight) the writing was on the wall from Day One. Boo was never successful, even for just one day. But it’s 15 minutes of infamy will live forever.
Launched in early 1999, Boo burnt its way through nearly $120m before being forcibly closed down in May 2000. Within just 18 months, one of the most hyped dot com businesses had entered folklore as the 6th greatest dot com disaster according to CNET.
So how could a business get it so wrong, so quickly?
…. the answer is in tomorrow’s blog!
