17 Epic Business Fails To Avoid In 2014

Don’t do these things. Especially if you’re trying to make money!

1. DON’T say your yoga-wear company missed product flaws because it skipped the “bend over” test.

Lucas Jackson / Reuters

It was a tough year for the high-end yoga-wear company Lululemon, which suffered a serious hit to its reputation after it was forced to recall a batch of its black Luon pants for being too sheer. Chief Executive Officer Christine Day, who will step down next month, made headlines when she described the issue to analysts on an earnings call, saying: “The truth of the matter is the only way you can actually test for the issue is to put the pants on and bend over.”

The notion of the “bend over” test raised eyebrows on Wall Street and beyond.

“Just putting the pants on themselves doesn’t solve the problem,” Day said on the March call. “It passed all of the basic metric tests and the hand-feel is relatively the same, so it was very difficult for the factories to isolate the issue, and it wasn’t until we got in the store and started putting it on people that we could actually see the issue.”

2. DON’T compare criticism of your employees’ bonuses following a more than $100 billion bailout to lynching.

Bloomberg/Bloomberg via Getty Images

Robert Benmosche, the CEO of insurance giant AIG, really, really doesn’t like the politicians who criticized AIG for handing out more than $100 million in bonuses in 2008 following their massive bailout that rescued the company from collapse and eventually added up to more than $130 billion. In an interview in September, he said that the widespread outrage over the bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that — sort of like what we did in the Deep South [decades ago],” he continued, “And I think it was just as bad and just as wrong.” He later apologized.

It all started as a way for college students to ask one of JPMorgan’s longest tenured and most prominent executives, Jimmy Lee, about “leadership & career advice.” People would tweet their questions and Lee would respond using the @jpmorgan Twitter account. The night before the scheduled “#TwitterTakeover,” the hashtag was flooded with harsh criticism and snark: “How do you decide who to foreclose on? Darts or a computer program? #AskJPM” and “Do you have a secret jail in your offices so your executives get at least one chance to see the inside of one? #AskJPM” or even “I have Mortgage Fraud, Market Manipulation, Credit Card Abuse, Libor Rigging and Predatory Lending AM I DIVERSIFIED? #AskJPM.” After literally thousands of negative tweets, JPMorgan pulled the plug, “#Bad idea! Back to the drawing board!” a JPMorgan spokesman said.

4. DON’T compare an executive change to 9/11.

Brendan Mcdermid / Reuters / Reuters

J.C. Penney employees faced a lot of upheaval this year, with ex-CEO Ron Johnson getting replaced by his predecessor after a disastrous 17-month tenure. But it wasn’t as bad as an organizational therapist said it was during an internal meeting in May.

The therapist and J.C. Penney executive Liz Sweney compared Johnson’s reign and exit to the 9/11 terrorist attacks as well as a bomb explosion, just weeks after the Boston Marathon bombing. The therapist went so far as to screen Boatlift, a 12-minute video narrated by Tom Hanks about the evacuation of half a million people from the devastated piers of Lower Manhattan after 9/11 — the largest sea evacuation in history — as a parallel to life after Johnson. Needless to say, it didn’t go over very well.

5. DON’T say that women can’t be good hedge fund traders just because they have kids.

The hedge fund billionaire Paul Tudor Jones told a forum at the University of Virginia that having kids was a “killer” for a woman’s ability to trade. “As soon as that baby’s lips touched that girl’s bosom, forget it,” Jones said. He continued: “Every desire to understand what is going to make this go up or go down is going to be overwhelmed by the most beautiful experience…between that mother and that baby.” He soon apologized after the comments were made public, saying, “As I’ve told my three daughters, all of whom I’ve at one time encouraged to go into macro trading, any man or woman can do anything to which they set their heart and mind.”

6. DON’T run a food drive for your own employees.

Stephen Lam / Reuters

Wal-Mart, the world’s biggest retailer, drew massive attention to the low wages it pays workers when the Cleveland Plain Dealer wrote about a food drive the discount-chain held for its own employees in Canton, Ohio, in November.

Wal-Mart, which makes more than $250 billion in annual sales, said the drive offered proof its employees care about each other. Others didn’t interpret the act that way. Protests by Wal-Mart employees for higher wages have drawn more attention since news of the food drive broke, and many are questioning whether U.S. taxpayers are effectively subsidizing Wal-Mart’s low wages.

7. DON’T fire someone for taking a picture during a conference call announcing layoffs.

Craig Barritt / Getty Images for AOL

AOL CEO Tim Armstrong hosted a conference call in August with employees of the company’s local news subsidiary Patch to tell them he would be drastically reducing its headcount. When one of the employees in a conference room with Armstrong, Patch’s creative director Abel Lenz, took a picture of his CEO, Armstrong’s immediate response was, “Abel, put that camera down, now. Abel, you’re fired. Out.” The story — and the audio — quickly leaked and Armstrong had managed to turn a story about the inevitable downsizing of a money-losing division into a story about his own bad impulsiveness. Armstrong later apologized to Lenz and to the rest of AOL, although Lenz remained out of a job.

8. DON’T just tweet about basketball while 3,000 people are stranded without power or functioning toilets on a ship your cruise company operates.

Handout / Reuters

Mike Segar / Reuters

 

While the Carnival cruise ship Triumph was stranded off the coast of Alabama, felled by an engine-room fire that left the boat and its most than 3,000 passengers without electricity, air conditioning, or functioning toilets, the CEO and chairman of the vacation conglomerate, Carnival Corporation & PLC, Mickey Arison, was in Miami watching the basketball team he owns, Miami Heat play the Portland Trail Blazers — and tweeting about it. Arison remained mum about the unfolding disaster. He would resign as CEO in June, but hang on to his chairmanship. The Heat, however, won their second straight NBA championship.

9. DON’T make it that much easier for harassers to abuse your product without the victims knowing.

Kacper Pempel / Reuters / Reuters

Twitter changed its block feature to allow to let blocked users see and even interact with the person who blocked them, without the blocker knowing. This led to an immediate backlash, especially from feminist activists and users, some of whom had long criticized Twitter for what they see as an hands-off approach to online bullying, harassment, and abuse. Twitter quickly rolled back the change in less than a day. “We never want to introduce features at the cost of users feeling less safe,” said Twitter’s vice president of product Michael Sippey.

10. DON’T say gay people are banned from your pasta company’s advertisements and respond by saying, “They can always eat another brand of pasta.”

Barilla pasta chairman Guido Barilla made the colossally poor decision to say the following in a September interview: “We won’t include gays in our ads, because we like the traditional family. If gays don’t like it, they can always eat another brand of pasta. Everyone is free to do what they want, provided it doesn’t bother anyone else.”

The brand was met with outrage and boycotts. Barilla apologized and has since announced a new diversity initiative.

11. DON’T release a totally meh product when your company is on the line.

Mark Blinch / Reuters

It was supposed to be the phone that would save BlackBerry. With no keyboard and a big touch screen, this would be BlackBerry’s last stand against iOS and Android. The Z10, however, was a total flop. Before the phone was released to the public, BlackBerry named Alicia Keys its “creative director,” desperately trying to build buzz. The lack of popular apps and an app store “overflowing with junk apps” helped doom the phone. Seven months after the phone came out, The new phone ended up costing BlackBerry just under $1 billion. It would later put itself up for sale but only attract an investment instead. The CEO who oversaw the Z10 launch, Thorstein Heins, was fired.

12. DON’T use the media to fight with your fellow company board members, especially after the guy you chose to run that company just lost more than a quarter of its business in 17 months.

Brian Snyder / Reuters / Reuters

Famously bullheaded activist investor Bill Ackman had an aggressive, public spat with the rest of J.C. Penney’s board in August after he published open letters calling for change at the retailer. The letters were full of scathing accusations, essentially saying J.C. Penney was in deep trouble from a management and financial perspective. J.C. Penney was forced to respond with statements addressing its own board member, while the media wrote up the awkward exchange.

What made the fight especially uncomfortable? Ackman was the most instrumental force in hiring Ron Johnson, the ex-Apple retail chief who was ousted in April after a 17-month tenure. Johnson oversaw the loss of more than $4 billion in annual sales, or 25% of the company’s business, and drove away many of its customers by eliminating discounts and removing core brands.

13. DON’T publicly advise your employees that they should get a second job to support themselves.

Mario Anzuoni / Reuters / Reuters

McDonald’s unveiled a budgeting website for its employees this summer. Inserting the fast-food chain’s minimum wage into the budget calculator showed it wasn’t possible to make ends meet on that amount. However, McDonald’s did include space to account for a second job.

Stephen Colbert had fun with this one.

14. DON’T be more open about changing your logo than on whether or not your email service is working.

Brendan Mcdermid / Reuters / Reuters

Stephen Lam / Reuters

 

Yahoo spent a month painstakingly rolling out its new logo, until finally revealing it in a Tumblr post written by Marissa Mayer. Three months later, its email service, which also underwent a Mayer-supervised revamp over the summer, went out. The outage affected a huge portion of Yahoo Mail’s 100 million users. The Yahoo Mail outage was a particular problem for Mayer, a product development whiz who was brought in to save Yahoo by revamping its web offerings to win back users who had fled the company. Even worse, Yahoo was spotty in responding to user complaints and informing the public about how widespread the outage was and how long it would last, with Mayer eventually apologizing, as usual, on Tumblr.

15. DON’T shell out $155 million for a painting after your hedge fund paid $616 million to settle insider trading accusations.

Steve Marcus / Reuters / Reuters

 

After SAC — the hedge fund he founded, runs, and whose name is formed by his initials — paid $616 million to settle insider trading charges, Steve Cohen didn’t lie low or put a check on his conspicuous consumption, he instead purchased Picasso’s “Le Rêve” from casino billionaire Steve Wynn for $155 million. A source told the New York Post that the painting was “a gift to himself.” While Cohen had not and still is not charged criminally with insider trading, the firm plead guilty to insider trading, paid another $1.2 billion, and agreed to shut down its outside investing business.

16. DON’T send tweets that mock minimum-wage workers, women, and use the N-word, especially if you’re the CTO of a media company.


Pax Dickinson was ousted as chief technology officer at Business Insider in September after Valleywag wrote about the stunningly offensive tweets the executive regularly posted.

One such example, from July 2010: “Who has more dedication, ambition, and drive? Kobe only raped one girl, Lebron raped an entire city. +1 for Lebron.” He was forced to resign. Business Insider CEO Henry Blodget said the tweets “do not reflect our values and have no place at our company.”

17. DON’T fire someone who has $8 million worth of dirt on you.

Bloomberg/Bloomberg via Getty Images

Stephen Lovekin / Getty Images

 

When Fox fired its longtime PR chief Brian Lewis in July, the company said he was responsible for “financial irregularities” along with “multiple, material and significant breaches of his employment contract.” That didn’t stop the cable giant from reaching a settlement that Gawker pegged at $8 million. Why did Fox shell out so much? In August, Lewis’s attorney said “Brian Lewis no longer has any confidentiality obligation to Newscorp or Roger Ailes” and, chillingly, “Roger Ailes and Newscorp have a lot more to fear from Brian Lewis telling the truth about them than Brian Lewis has to fear from Roger Ailes and his toadies telling lies about Brian Lewis.”

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