24. Failure to Sign the Beatles Was Dick Rowe’s Worst Business Decision, but Not the Only Bad One
The rejection of The Beatles in favor of Brian Poole and the Tremeloes made Dick Rowe and Decca Records synonymous with bad business moves and catastrophic commercial misjudgments. Incredibly, Rowe’s decision to pass on the biggest band of all time was – which was bad enough in of itself to enshrine his name in the Bad Business Decisions Hall of Fame – was not his sole episode of monumental shortsightedness. Just five years after he failed to sign The Beatles, Rowe turned down another musical icon.
In late 1966, Jimi Hendrix arrived in London and instantly created a stir. At his debut in the British capital before an audience whose numbers included Eric Clapton, Hendrix’s guitar play blew all and sundry away. A bassist and drummer were quickly rounded up to form the Jimi Hendrix Experience, and they recorded their first single, Hey Joe. Then their manager Michael Jeffrey approached Dick Rowe to try and get a record deal, only for Decca Records’ A&R man to pass. So Hendrix ended up at the recently-launched Track Records, instead.
23. The Man Who Made Coca-Cola, and the Man Who Made Coca-Cola a Giant
Coca-Cola was invented in the late nineteenth century by John Stith Pemberton, a Civil War Confederate colonel and morphine addict with a medical degree. He sought to develop a non-addictive drink, and eventually came up with and registered Pemberton’s French Wine coca nerve tonic. Inspired by Vin Mariani, a nineteenth-century coca wine medicine, it was basically Coca-Cola with alcohol. When Atlanta prohibited the sale of booze, he marketed a nonalcoholic version, “Coca-Cola: The temperance drink“. It appealed widely to opponents of alcohol.
In 1888, a young druggist named Asa Candler bought a one-third interest in the formula for $50 down and $500 in thirty days. When Pemberton died a few months later, Candler swiftly secured the exclusive right to the Coca-Cola name. He was better at business than Pemberton and saw the concoction’s potential. So he set up a corporation and began to widely market the drink. By the early twentieth century, The Coca-Cola Company was America’s – and the world’s – biggest soft drink manufacturer and seller.
22. Coke Could Have Bought Pepsi Multiple Times, But Declined
While Coca-Cola zoomed to the stratosphere, another soft drink concocted in the same era, Pepsi, languished. Pepsi was created in 1893, and for decades, it was a niche drink with a tiny market and was nowhere near Coca-Cola’s league. In short, it posed no challenge to the soft drink giant’s dominance. That began to change in the 1920s. Charles Guth, president of candy manufacturer Loft Inc., asked Coca-Cola for a discount on its syrup, which was used in some of his retails stores’ soda fountains.
Coca-Cola refused to give him what he wanted, so he cast around for alternatives. Pepsi did not have as savvy a business visionary at its head as Coke’s Asa Candler, and in 1923, it went into bankruptcy. Guth swooped in and bought it for $10,500 (roughly $185,000 today), and had chemists rework its formula to come as close to Coke as possible. Over the following decade, Pepsi-Cola was offered to the Coca-Cola Company for purchase on various occasions, but the soda giant declined the offer each time.
21. Coca-Cola’s Failure to Buy Pepsi When it Could Have Turned Out to Be a Bad Business Decision
In hindsight, Coca-Cola’s refusal to buy Pepsi – more than once – turned out to be a bad business decision that the company came to regret. Charles Guth turned Pepsi around within just two years after he had bought it, and transformed it into a profitable enterprise. By 1936, Pepsi sold about half a billion bottles a year and established itself as the second-largest soda company – behind only Coca-Cola. It was right around then that Loft Inc. accused Guth of breach of fiduciary duty, and sued him. The Delaware Supreme Court eventually agreed with Loft and established what came to be known as the “Guth Rule” in American corporate law.
The rule prohibits corporate representatives from taking personal advantage of business opportunities that could have been exploited by their employer. Loft seized Pepsi from Guth in 1939, concentrated on the drink, and spun off the non-soda businesses in 1941. The Pepsi brand continued to grow, and eventually merged with Frito Lay in 1965, to become PepsiCo. That new company went on to finally eclipse Coke in sales in the 1980s, and in 2005, PepsiCo surpassed the Coca-Cola Company in market value.
20. History’s First Airline to Earn Revenue from the Transportation of Passengers via Aircraft
In 1908, German Count Ferdinand von Zeppelin founded Luftschiffbau Zeppelin, a company that designed and manufactured rigid lighter-than-air vessels, or airships. In World War I, Zeppelin airships were employed as history’s first long-range strategic bombers and carried out numerous raids against France, Belgium, and Britain. Although the damage they inflicted was relatively minor, the giant cigar-shaped Zeppelins became objects of terror to civilians below. The sight of the rigid airships over London in particular – and the efforts to bring them down – became iconic in the war years.
The count’s airships had civilian applications as well. In 1909, the German Airship Transport Company, which went by its German acronym DELAG, was founded as a commercial offshoot of Luftschiffbau Zeppelin to transport passengers. Headquartered in Frankfurt, Germany, it became history’s first airline to earn revenue from the transport of people via aircraft. Between 1910 and the outbreak of WWI, DELAG carried over 30,000 passengers in more than 1500 flights. Then the war came and hit it hard. First, the German government requisitioned its airships for military use. Then when Germany lost the war, the Treaty of Versailles awarded the company’s best Zeppelins to the victors. DELAG bounced back, however.
19. A Business Upturn That Ended in Sudden Catastrophe
DELAG overcame its wartime and postwar setbacks and went back to business. By 1928, it had designed and built airships capable of nonstop transatlantic flights, years before passenger airplanes had the range to do the same. By the mid-1930s, DELAG had flown commercial passengers for three decades. Its Zeppelins had carried tens of thousands of paying passengers over a million miles, in more than 2,000 flights, without a single injury. As their rigid airships’ popularity soared ever higher, it was widely assumed that they were the wave of the future. Things looked rosy for the company, but there was an overlooked problem.
DELAG’s latest milestone by the mid-1930s was posh giant airships. They flew passengers across the Atlantic in luxury and style, in a mere 60 hours – remarkable for commercial travel back then. Many predicted that airships would dominate global travel. Then catastrophe struck the Hindenburg, DELAG’s flagship and the biggest airship ever built – twice as high and three times as long as a Boeing 747 Jumbo jet. On May 6th, 1937, after an uneventful trans-Atlantic flight, the Hindenburg tried to dock with a mooring mast in Lakehurst, New Jersey. Out of the blue, it suddenly erupted in flames.
18. A Disastrous Decision to Fill its Airships With Hydrogen Doomed DELAG
It took only 37 seconds from when the first spark appeared on the Hindenburg for the world’s biggest airship to get destroyed by fire. Of 97 people on board, 35 perished, and another person died on the ground. The spectacular disaster captured on film and widely disseminated around the world, shattered public confidence in that mode of transport. It brought the airship era to an abrupt end and killed off DELAG’s fortunes along with it. At the time, the catastrophe was commonly blamed on sabotage: the Hindenburg was not only the pride of DELAG but also a source of German national pride and a symbol of resurgence under the Nazis.
Many were eager to stick it to the Nazis: threatening letters had been received, and a fired bullet was advanced as a plausible cause for the fire’s start. Another widely accepted hypothesis pinned the blame on a static spark. Whether an accidental spark or a deliberate shot, the catastrophe would not have happened if not for DELAG’s disastrous business decision to fill its airships with highly flammable hydrogen, instead of a less combustible alternative such as helium. If the Hindenburg had used helium, as airships do today, then neither a spark nor a shot could have reduced it to an inferno in less than a minute.
17. The Founder of America’s Top Seller Whiskey Brand
Jasper Newton “Jack” Daniel (circa 1849 – 1911) was a distiller and business entrepreneur, who is best known as the founder of the Jack Daniel’s whiskey distillery in Tennessee. He created the Jack Daniels whiskey brand, bourbon or whiskey, which eventually became the most widely sold American whiskey in the US and the world. It holds that top rank to this day. In 2017, the most recent year for which information is publicly available, 16.1 million cases of Jack Daniels brands were sold worldwide.
Jack Daniel, who was born in Lynchburg, Tennessee, went to work as a child for a preacher who also made money as a grocer and moonshine distiller. The boy did not exhibit much enthusiasm for grocery or the gospel, but when his boss showed him how to operate his whiskey still, or ordered a slave to show him, young Daniel took to it like a fish to water. He exhibited a precocious talent that led him to get his own distillery license, reportedly while he was still a teenager.
16. A Business Entrepreneur Killed by His Own Safe
Jack Daniel’s whiskey became popular, and in 1897 the brand gained its distinctive appearance when Jack began to use square-shaped bottles. The reputation of Jack Daniel was greatly enhanced after it won the gold medal for finest whiskey at the 1904 St. Louis World Fair. That led to a surge of popularity nationwide, even as Daniel’s reputation suffered locally as a result of the growth of the temperance movement that eventually brought about Prohibition. Jack did not live to see that dark day for his business: he was killed years before its arrival by his office safe.
Jack often forgot the combination to his safe, and usually relied on a trusted office assistant to open it for him. One day in October 1911, he went to work early and arrived at the office before his assistant. He tried to open the safe but was unable to do so on his own. Frustrated, he kicked the safe – and injured his toe in the process. The toe became infected, the infection spread, and on October 10th, 1911, Jack Daniel died of blood poisoning. The safe went on to gain legendary status, is featured prominently in tours of the facilities, and even got sent out on public tours of its own.
15. Long Before the Colombian Cartels, Britain Dominated the Drug Business
The United States invaded Panama in the twentieth century because it was unhappy with Panamanian government actions that furthered and facilitated the drug trade. In the nineteenth century, Britain invaded China because it was displeased with the Chinese government’s actions against the drug trade. Back then, Victorian Britain was the world’s biggest drug trafficker – bigger than any Latin American drug cartel or any combination of such cartels. And unlike today’s narco-traffickers, Britain did not conduct its narcotics business in the shadows of the global criminal underground but instead did so openly and in the full light of day.
So openly, that Britain fought wars in order to force a foreign government to allow British merchants whose business revolved around the sale of drugs to sell narcotics by the thousands of tons in its territory. The war’s roots traced back to the mid-eighteenth century when the British East India Company began to grow opium, from which heroin is refined. The crop was shipped to China for a hefty profit. Opium was illegal in China, but the British got around that through loopholes, or simply smuggled it in.
14. When China Seized and Destroyed Stocks of Illegal Opium in its Territory, Britain Demanded Compensation
Chinese opium consumption skyrocketed and British profits from the opium trade went through the roof. In the meantime, China faced an addiction epidemic that caused widespread social and economic disruptions. The Chinese authorities finally began to take serious measures to stop the British from flooding their country with opium. In 1839, a drug czar was appointed, and he initiated a crackdown. 1700 drug dealers were arrested, and over 1400 tons of opium that sat in warehouses were seized and destroyed. Most of that opium belonged to British merchants, and they appealed to their government.
Pressured by its business lobby, Britain demanded compensation from the Chinese government. To back those demands, it sent a military expedition to China. It arrived in June of 1840 and sailed up the Pearl River estuary to Canton. After months of negotiations that went nowhere, the British attacked and seized Canton in May of 1841. The Chinese armies still used medieval weapons and tactics. They were thoroughly outmatched by the British forces, armed with the latest firearms and artillery, and drilled in the most advanced tactics.
13. Britain Fought a Second Opium War to Force China to Accept the Sale and Distribution of Drugs in its Territory
The British invaders easily beat back a Chinese attempt to retake Canton, then seized the city of Nanking in August of 1842. The Chinese sued for peace, and negotiations concluded in the Treaty of Nanking. The Chinese had to agree to pay a huge indemnity and cede Hong Kong to the British. The number of “Treaty Ports” where the British could trade and reside was also increased from one to five. On top of that, British citizens were also granted extraterritoriality, or the right to be tried by British courts, instead of Chinese ones, for offenses committed in China.
The conflict came to be known as the First Opium War. As its numerical designation indicates, it was not the only time that Britain warred with China over Chinese attempts to halt the sale and distribution of opium within their borders. A Second Opium War (1856 – 1860) was waged, also caused by Chinese resistance to the British opium that flooded their country. This time around, Britain sought to force China to completely legalize the opium trade, exempt foreign imports from internal Chinese tariffs, and allow British business entrepreneurs access to all of China.
12. In the Name of Opium and Expanded Business Opportunities, an Anglo-French Army Marched on Beijing
France, which also sought greater trade concessions and business opportunities from China, eagerly joined Britain in the Second Opium War. The disparity between the Chinese and Western forces was even greater this second time around. Moreover, the Chinese were in the midst of a huge peasant revolt, the Taiping Rebellion, whose leader claimed to be Jesus Christ’s younger brother. The combined British and French army had little trouble in seizing Canton in 1857, and as China’s military setbacks mounted, the Chinese government sued for peace.
When talks broke down, the invaders sailed to northern China, seized the Taku Forts near Tianjin, and advanced upon Beijing. That brought the Chinese back to the negotiating table. At some point in the midst of the fresh round of diplomacy, a British envoy insulted his Chinese counterpart and was arrested along with his party. Half of his entourage was tortured to death. In retaliation, the Anglo-French forces attacked and routed a Chinese army near Beijing, and forced the emperor to flee his capital.
11. In the Name of Business – and the Right to Sell Drugs – an Anglo-French Army Committed a Great Act of Cultural Vandalism
After its victory outside Beijing, the Anglo-French army seized a vast imperial compound known as the Summer Palace. There, the soldiers plundered anything made of gold or silver, then indulged themselves in an orgy of destruction for the sheer fun of it. They crushed exquisite statues, smashed pricey objects of porcelain and jade, ripped precious paintings with their bayonets, and paraded in expensive and ornate silk robes from the imperial wardrobe for comic effect. Then they put the entire palace complex to the torch.
The destruction of the Summer Palace was one of the greatest acts of cultural vandalism of the past few centuries. As one British officer described it: “When we first entered the gardens they reminded one of those magic grounds described in fairy tales; we marched from them upon the 19th October, leaving them a dreary waste of ruined nothings“. Utterly defeated, the Chinese capitulated and signed a peace treaty in 1860 that granted all the invaders’ demands for business concessions. Said demands included the complete legalization of the opium trade within China’s borders.
Bavarian Motor Works, or BMW, has always been known for its high-quality automobiles, and until 1945, for their aircraft engines. In 2020, it had around 130,000 employees worldwide, and global business revenue of nearly 100 billion euros. The company, which today produces luxury cars and motorcycles, is a multinational with plants in Germany, the US, UK, China, India, Brazil, and South Africa. Less known is that its major shareholders, the Quandt family, were close friends and admirers of Hitler and the Nazis. That became an issue after a 2007 TV documentary aired unpleasant revelations about the company’s Nazi-era activities.
An investigation had unearthed plenty of problematic information about BMW’s and the Quandt family’s Nazi past. In a nutshell, the family patriarch, Gunther Quandt, and his son Herbert were up to their necks in collaboration with the Nazi regime. To their credit, the current generation of Quandts, unlike most other companies with Nazi ties, eventually came clean and did not duck the issue or sugarcoat things. They grabbed the bull by the horn, commissioned a respected German historian to research the company’s past, and set him loose on BMW’s and the Quandt family’s archives and files.
9. A Business Empire That Profited Greatly From the Third Reich
Research on BMW’s Nazi-era history led to a 1200-page report, which concluded that “[t]he Quandts were linked inseparably with the crimes of the Nazis â¦ The family patriarch was part of the regime“. Among other things, the Quandts profited from the Nazis’ “Aryanization Program”, which confiscated Jewish property and turned it over to Germans approved by the new regime. BMW’s owners took advantage of their friendship with Hitler and their excellent Nazi connections and took over dozens of businesses that were seized from Jews and handed over to the Quandts.
So instrumental was BMW and the Quandts to the Third Reich’s military that Hitler Named Gunther Quandt a WehrwirtschaftsfÃ¼hrer, or “Leader of the Defense Economy”. In WWII, at least 50,000 slave workers from concentration camps toiled in BMW and Quandt family enterprises to manufacture weapons and fulfill armaments contracts. Many of the slave laborers died from the inhumane work conditions. Some from avoidable accidents, some from neglect, some were starved, and others were executed for workplace infractions.
8. The Tycoon Who Abused His Business to Indulge in Personal Pettiness
Few people would be surprised to learn that Howard Hughes (1905 – 1976), the billionaire recluse, eccentric, and all-around weirdo, could be a jackass at times. When Hughes was still a child, his father invented a rotary bit to drill oil wells in previously inaccessible places and made the already financially comfortable family fabulously wealthy. Hughes thus grew up in the lap of luxury, and all doors were opened for him to maximize his – admittedly great – potential. He became a successful pilot, engineer, movie director, investor, and business tycoon.
People that successful often have a bit of jackass in them, and are reluctant to accept “no” as an answer from anybody. However, Hughes went to extremes of pettiness in order to unleash his inner jerk. For example, he once bought a major movie studio to which an ex-girlfriend was contracted, just so he could mess with and wreck her career. As seen below, his victim was Jane Greer (1924 – 2001), a film noir actress who made a splash in the 1940s with femme fatale roles in movies such as Out of the Past, Dick Tracy, and The Big Steal.
Jane Greer caught Howard Hughes’ eye in 1942 when she was eighteen years old and he saw her in a magazine. Greer’s mother worked for the War Department, and she ensured that her daughter was one of three young women chosen to model uniforms for the new Women’s Army Corps (WAC) in 1942. When Greer appeared in the June 8th, 1942, issue of Life magazine, many across the country were smitten. Their numbers included Howard Hughes. He became infatuated with the teenage girl, sponsored her, and sent her to Hollywood to become an actress. The eccentric tycoon liked to collect people – especially beautiful women – like normal folk collect stamps. So he signed the eighteen-year-old model to a personal contract.
“Personal contract” was as creepy as it sounds: soon after she signed, Hughes told the teenager that he never wanted her to marry anyone. At first, that was not a problem for the inexperienced Greer, who initially liked Hughes. As she recalled years later: “I found him rather endearing, like a child. His idea was to go to the amusement park â¦ He won a large collection of Kewpie dolls for me“. Trouble arose when Greer eventually began to take an interest in other men. That enraged Hughes, who reasoned that he had made her so she was his, and that he had every right to break her if she stopped being his.
6. Howard Hughes Was Livid When a Singer Stole a Girl He Thought Was His
Jane Greer was content with Howard Hughes and their trips to amusement parks – at least at first. Things went sideways, however, when Greer welcomed the attentions of other men who saw her as a woman and not a child, and wanted to do more with her than visit amusement parks. Hughes wasn’t the only one captivated by Greer’s 1942 magazine photo. Star Crooner Rudy Vallee was also smitten, and he tried unsuccessfully to get her address from Life magazine. When he eventually found it, things got complicated.
Greer liked her time with Hughes, but an eccentric business tycoon who treated her like a child with trips to amusement parks was no match for a star singer who romanced her like a woman. Rudy Vallee swept Greer off her feet, and after a whirlwind courtship, they got married in 1943. Hughes seethed with jealousy and warned Greer that unless she divorced Vallee, he would wreck her career. Whatever the legality of the “no marriage” clause in the personal contract that the young actress had signed, Hughes had meant it, and he felt betrayed. So he went from doting to destructive and set out to wreck Greer’s career.
5. A Business Mogul Who Bought a Movie Studio Just to Wreck the Career of His Actress Ex
Howard Hughes had brought Jane Greer to Hollywood, but when she showed an interest in other men, he kept her shelved with no screen tests or movie work. So she sued to get out of her personal contract to Hughes, bought it back, and joined RKO – one of the Big Five studios of Hollywood’s Golden Age. Greer had a run of successful films with RKO – until Hughes bought the studio to wreck her career. He called Greer to his office and told her he would not use her anymore.
“Since I was under exclusive contract to Howard at RKO, that meant I would not be able to work for anybody else, either. I told him directly that this meant that he was ruining my film career. He replied by saying, âYes, that’s right’“. Greer managed a few roles, but only when Hughes could find nobody else. After six years of barely any work, she paid the final installment to buy out her contract. By then, however, Hughes’ pettiness and business abuse had cost Greer the best and most lucrative years of her career.
4. A Business Whose Negligence Caused a Catastrophe
Like most days at the Union Carbide pesticide plant in Bhopal, India, little stood out about December 2nd, 1984, to differentiate it from other days. That night, however, the plant leaked roughly forty tons of a highly poisonous gas called methyl isocyanate (MIC), along with other toxic airborne substances. It was one of history’s worst industrial accidents. The plant was located in a densely-populated area and surrounded by shanty towns. Over 600,000 people suffered from exposure to the lethal cloud. Thousands perished, and thousands more suffered permanent disabilities or were otherwise seriously injured.
It came to be known as the Bhopal Disaster. What took the catastrophe from the realm of industrial accident to one of sheer corporate evil was the callousness exhibited by Union Carbide before, during, and after the event. As seen below, the plant had a history of poor safety practices and near misses. The alarm had been raised for years but was ignored. The business had even turned down a request from local management for protective measures that would have averted the leak because it deemed such measures to be too expensive.
In 1969, Union Carbide built a plant in Bhopal to produce carbaryl, a pesticide that is sold under the brand name Sevin, and for which methyl isocyanate (MIC) was a key component. MIC is a highly toxic irritant, and is extremely hazardous to humans. Other manufacturers eventually switched to other processes to produce carbaryl that did not require the use of the highly dangerous MIC. Not so Union Carbide, which made the business decision to stick with MIC at its Bhopal plant because it was cheaper.
Union Carbide also cut corners in the maintenance of the MIC storage tanks and pipes at the Bhopal plant in order to save money. There were numerous leaks over the years, in which dozens of workers were killed or injured. By early December 1984, the plant was a disaster waiting to happen. Pipes and valves were corroded, one of three MIC storage tanks was out of commission, most safety systems were out of order, and special vents to scrub poison gasses did not work.
2. A Plucky Journalist Raised the Alarm for Years but Was Ignored
Indian journalist Rajkumar Keswani began to investigate the safety protocols and procedures at Union Carbide’s Bhopal plant in 1981 after a friend died there in an industrial accident. Helped by whistle blowers, he examined that and earlier mishaps and discovered that things were even worse than they looked. There had numerous screw-ups in which only dumb luck averted catastrophe. In one incident, a gas leak forced thousands of nearby residents to flee their homes in terror. In an internal telex exchange, Union Carbide’s Indian manager sought better pipe coating from the parent company in America. In one of the more evil replies in corporate history, he was told that it would be too expensive.
After a nine-month investigation, Keswani published the first of a series of newspaper articles that ran from 1982 to 1984. In them, he detailed dismal safety standards at the plant and raised the alarm about a potential catastrophe. With headlines such as “Bhopal Sitting on the Brink of a Volcano“; “Save Please, Save this City“; and “If You Don’t Understand, You All Shall be Wiped Out“, Keswani’s articles left little doubt about the seriousness of the situation. Unfortunately, like a modern Cassandra, his warnings were ignored. Then, on the night of December 2nd, 1984, the catastrophe he had spent years warning about occurred.
1. A Business Decision to Skimp on Safety to Cut Costs Exposed 600,000 People to Poison Gas
The predictable catastrophe at Union Carbide’s Bhopal plant began at around 11 PM on December 2nd, 1984. Employees noticed that pressure inside one of the MIC tanks had increased from the normal 2 psi to 10 psi. Half an hour later, the effects of gas leakage were detected. At 11:45, a leaking pipe was spotted. In the meantime, the pressure in the MIC tank continued to rise. By 12:40 AM, it had reached 55 psi and began to vent toxic gas into the atmosphere. Within two hours, over 40 tons of MIC had been released and were blown into Bhopal.
The methyl isocyanate stayed low to the ground, burned the eyes of victims, made them nauseous, and killed many. Corporate callousness and the business decision to skimp on safety resulted in about 600,000 people harmed by MIC. 8000 perished within two weeks, and another 8000 died later. About 40,000 suffered serious injuries, and 4000 were permanently disabled. In 1989, Union Carbide paid the equivalent of U$ 875 million in 2021 dollars to settle litigation. It was less than U$ 1500 per victim, or less than $15,000 for each of those seriously injured, permanently disabled, or killed.
Where Did We Find This Stuff? Some Sources and Further Reading