Archive for the ‘technological failures’ Category
Not very long ago, on a cold, wintry day of January 1985 the top man at GM, Roger B. Smith, unveiled ‘Saturn’, the first new brand to come out of GM in almost seven decades. A stand-alone subsidiary of GM, Saturn had a promising birth and was touted as a ‘different’ type of a car. Having its own assembly plant, unique models and separate retailer network, Saturn operated independently from its parent company. It was a cut above the rest in using innovative technology and involving its employees in the decision making process. Conceived as a fighter brand to take on the Japanese brands, the small car of superior quality was the product of strong principles with a mission of being America’s panacea to Japan’s challenge. It reaffirmed the strength of American technology, ingenuity and productivity with the combination of advanced technology and latest approaches to management.
Though a revolutionary idea, Saturn wasn’t able to live up to the hype or the hopes of Roger Smith. The case of Saturn is definitely one for the books. Its marketing campaign fired up the public’s imagination and interest perfectly while the product was a miserable failure. Everything the company did was just another leaf out of the handbook of perfect PR. When the first lot of cars had a bad engine antifreeze, the company replaced the entire car instead of just the coolant much to the customer’s delight.
Besides clever marketing, Saturn’s biggest assets were its passionate employees and customer-centric approach which rewarded it with a quick victory. The victory was however short-lived as GM was reluctant to expand Saturn’s offerings for fear of cannibalization on the sales of its other divisions. For the existing models, Saturn’s engine had inferior motor mounts with the plastic dashboard panels giving it a cheap look and even the plastic-polymer doors, the so-called unique feature, failed to fit properly. Overall, the car neither had an identity nor a USP. To make things worse, Roger Smith was on a spending spree from throwing recall parties when vehicle problems were solved to hosting “homecoming” celebrations at plants. This saddled GM with high costs leading to increased doubts of Saturn’s survival among the leaders of GM.
Disaster struck further when Saturn’s sub-compact prices failed to cover the huge costs gobbled up by a dedicated plant with massive operating costs. The fact that the plant churned out cars that barely share any common parts with other GM brands did not seem to help at all. To top it all, at a time when buyers were snapping up minivans and SUVs, Saturn’s offerings were just limited to 3 small models for over a decade, thereby losing out on locking customers in. Just when GM was pondering over the decision of scrapping the car, the UAW visited one of Saturn’s production facility with its international contract, only to be rejected by the workers. As obvious as it seemed, the unique labor contract of the company was dissolved and GM had no choice but to part with the brand by dividing the production among other GM plants.
Automotive history has witnessed myriad failure stories of brands that were supposed to be world-class products but ended up biting the dust. One such underachiever brand was Vector which sprouted out of the aim of producing an American supercar but doomed due to cash flow issues, mismanagement and failing to keep up their insane promises. Sterling, Rover’s disguise into the American market, was another lost car of the 80s which most people haven’t even heard of. Their promise of delivering “Japanese reliability and refinement with traditional British luxury and class” couldn’t save them from continuous sales drop and combating competition from new Japan rivals. Few other epic automotive experimental failures which can be recalled in this scenario would include Chrysler’s TC by Maserati , Subaru SVX, Jaguar X-type, Lincoln blackwood, GMC Envoy XUV, Chevrolet SSR, Chrysler Crossfire and Dodge Durango Hybrid/Chrysler Aspen Hybrid. While some were design disasters, the others just couldn’t perform.
The automobile industry is governed by various factors which include the technology advancements of the time, economic conditions and fluctuations of consumer needs. The latest automotive chip on the block are the electric cars which are set to revolutionize the entire industry. LeEco, a Chinese electronics company is taking serious steps to target Tesla, what with it investing $1.08 billion on developing its debut electric car. Tesla was the name which paved the way for an electronic vehicle era. Whether LeSEE, LeEco’s concept sedan, can surpass Tesla’s performance and give them a run for their money is only something that time will tell. If successful, these electric cars could be the game changers of this century to usher in an electric future. If not, it will fade away and claim its place as a bittersweet memory on the list of flops that the industry has had.
Technology, a combination of two Greek words signifying ‘systematic treatment of art/craft/technique,’ is:
the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives..
Whether it was discovery of fire, building a shelter, invention of weapons – and in modern times – invention of Internet, microchips, etc., it has always been about inventing, discovering and using information, techniques and tools to induce or cause economic, scientific and social progress or improvement.
However, the progress that technology caused has neither been linear or impending or ubiquitous or even obvious. All Four Great Inventions of China happened before 12th century AD. But, on the other side, despite Hippocrates’ treatise (dating from 400 BC) that, contrary to the common ancient Greek belief that epilepsy was caused by offending moon goddess Selene, it had a cure in form of medicine and diet, 12th-14th century Christendom perceived epilepsy as the work of demons and evil spirits, and its cure was to pray to St. Valentine and other saints. And in many cases, progress of technology itself or its consequences have been a matter of pure chance or serendipity, whether it is penicillin, X-rays or 3M’s post-its.
So, ironic as it is, until recently, technology hasn’t been very systematic in its own progress, let alone its impact on society, economy and culture of nations. But it’s become a lot more systematic since the dawn of Information Age, last 60 or so years. Since microchips, computer networks and digital communication were invented (all in the US), the technology became more systematic in its own progress and it’s becoming more miniature, cheaper, faster and more ubiquitous than ever before in human history. Ubiquitous technology makes the world hyper-connected and digital. Whether it is our phones, thermostats, cars, washing machines, everything is becoming connected to everything. It is thus no coincidence that California (Silicon Valley + Hollywood) has recently become the 6th largest economy in the world, thanks to its beaconing technological and creative progress embodied in last 60 or so years.
Trump era has begun in January 2017, and he already did more to damage any potential technological and scientific progress coming from the US than any of his predecessors. From trying to unreasonably curb immigration from Muslim countries to terminating TPP to undoing progress in transitioning to clean energy and again focusing on coal to disempowering OSTP, Trump wraps his decisions with firebrand rhetoric and well-thought out psychological biases (anchoring bias is his favourite) around one message: MAGA. Hopes are turning to China as the next flag-bearer of technological progress.
Nowadays, even coffee-shops are hyper-connected, aiming to personalize our coffee-drinking experience. And thanks to its omnipresence and pervasiveness of Internet, wireless connections, telecommunications, etc., technology (smartphones, games, virtual worlds, 3D headsets, etc.) is becoming and end in itself. In countries and cities like Singapore, Hong Kong, New York, digital and smartphone addiction is already a societal problem causing unintended deaths, lack of maturity, loss of educational productivity, marriage breakups, to cite but a few. In Singapore, where according to recent research, Millennials spend an average of 3.4h/day on their smartphones, government is now putting in place policies and organizations to tackle this psychological addiction.
However, even Bernie Sanders knows that technology cannot and should not be an end in itself or an addiction. Could Internet and technologies fail? Could Internet and thinking linked to it spell the end of capitalism? Could it cause societies, cultures and nations to fail?
Technology has proven to fail itself and us when it became an end in itself.
Only when it stays true to its nature and acts as an enabler, a platform for human endeavors is when technology will succeed. It can even end poverty or other problems and issues human race is facing..
Continuing from the previous post on dotcom failures, below is the list of top 20 venture capital investment failures. Unsurprisingly, names such as Pets.com, Webvan and Kozmo.com appear in this list as well as among the biggest dotcom failures.
1. Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills.
2. Procket: Networking company Procket was once one of the most highly valued telecom startups in the U.S. It had $272 million in venture-capital funding and a valuation of $1.55 billion but was ultimately sold to industry behemoth Cisco Systems Inc. for a disappointing $89 million.
3. Webvan: Webvan was a grocery-delivery business that served nine metropolitan areas. Once valued at $1.2 billion with plans to expand to 26 cities, the company went bankrupt in 2001. Despite millions in sales, the company’s demise was brought on by a money-burn that exceeded sales growth. Major purchases included $1 billion for warehouses, enterprise servers and more than 100 Aeron chairs. Additionally, it acquired HomeGrocer just a few months before going under. This fast expansion proved to be too much for Webvan. This company that once had about $800 million in venture capital ended up with $830 million in losses, with about $40 million on hand.
4. Caspian Networks: Caspian Networks, orgiginally founded as Packetcom Inc., had a number of ups and downs, including a washout in 2002; the company finally shut down in 2006. Caspian Networks fluctuated from more than $300 million in funding and 323 employees to less than 100 employees and closed doors.
5. Pets.com: This icon of the dot-com bubble died out in November of 2000, going from a listing in NASDAQ to liquidation in just nine short months. The site sold pet supplies and accessories online. Once backed with $50 million by Hummer Winblad Venture Partners, Bowman Capital, and Amazon.com Inc., Pets.com had promise and even bought out competitor Petstore.com. But in the end, its stock bottomed out at 19 cents per share. Remembered for its sock-puppet ads, the expense of its $1.2 million Super Bowl ad, as well as large infrastructure investments, proved to be too much. Pets.com’s sock puppet lives on as the icon of BarNone Inc.
6. Optiva: Optiva, a nanotech company that laminated flat-screen TV sets, had to shut down after it failed to continue to raise funding. It initially raised and ran through $41.5 million in venture capital. The problem was that it took too long to release its product, which was obsolete by the time it came to market.
7. Kozmo.com: Kozmo.com’s small-goods delivery service, while a recipient of around $250 million in investment, and popular with students and young professionals, ultimately met its end and liquidated in 2001. Its business model was criticized as unprofitable because it didn’t charge for deliveries. Kozmo.com’s demise is profiled in the documentary film e-Dreams.
8. CueCat: This much-mocked pen-sized bar-code scanner was designed to make finding information about ads easier. Instead, Digital Convergence Corp., CueCat’s creator, burned through $185 million from investors like The Coca-Cola Co. and General Electric Co. The device simply failed to catch on, and it was plagued with security problems.
9. DeNovis Inc.: DeNovis software once attempted to change the medical-claims world but ended up shutting down instead. It raised $125 million in venture capital and had 110 employees. Unfortunately, that wasn’t enough, and this promising solution simply didn’t have the cash to hang on until the software could be launched.
10. PointCast Inc.: After tens of millions of dollars in venture capital and a $400 million buy offer, PointCast was finally sold for $7 million. It was originally touted as the next big thing, but failed to live up to its hype when its software and downloads irritated customers.
The remaining ten are here.
Loads of money poured in; results – catastrophic. With less capital available, startups and entrepreneurs must still carefully consider money sources. There is sometimes more headache and problems coming with money than one would anticipate or would like to have. As an unavoidable consequence, the current economic and financial crisis makes angel investors and venture capitalists more careful and vigilant in what they invest and pushes them to introduce tighter controls and additional transparency, having in mind the final objective of (an even more rapid) sell or IPO for a startup.
The list was compiled in 2007 and will certainly get new entrants by the end of this or the beginning of next year.
Starting from year 1995, the world got an extra doze of anxiety. All approaches to millennia are debates between “the roosters and the owls.” Conspiracy theories started to flourish. Anticipation peaked. Some even predicted an inevitable doom and came up with end of the world theories. At the same time though many venture capitalists and investors started zealously investing large amounts of money in all kinds of startups and pouring dollars into pockets of geeeky college grads with barely decent business plans and fairytale ideas. This era (1995-2001) marked the rise and fall of many startups, followed by colossal losses whereby an estimated $5 trillion in paper wealth on Nasdaq were wiped out.
Below is the list of most spectacular and significant of those startups (and their brief stories), which are singled out for the accompanying hype, large sums of burnt money or for manner of their failure.
A core lesson from the dot-com boom is that even if you have a good idea, it’s best not to grow too fast too soon. But online grocer Webvan was the poster child for doing just that, making the celebrated company our number one dot-com flop. In a mere 18 months, it raised $375 million in an IPO, expanded from the San Francisco Bay Area to eight U.S. cities, and built a gigantic infrastructure from the ground up (including a $1 billion order for a group of high-tech warehouses). Webvan came to be worth $1.2 billion (or $30 per share at its peak), and it touted a 26-city expansion plan. But considering that the grocery business has razor-thin margins to begin with, it was never able to attract enough customers to justify its spending spree. The company closed in July 2001, putting 2,000 out of work and leaving San Francisco’s new ballpark with a Webvan cup holder at every seat.
Another important dot-com lesson was that advertising, no matter how clever, cannot save you. Take online pet-supply store Pets.com. Its talking sock puppet mascot became so popular that it appeared in a multimillion-dollar Super Bowl commercial and as a balloon in the Macy’s Thanksgiving Day Parade. But as cute–or possibly annoying–as the sock puppet was, Pets.com was never able to give pet owners a compelling reason to buy supplies online. After they ordered kitty litter, a customer had to wait a few days to actually get it. And let’s face it, when you need kitty litter, you need kitty litter. Moreover, because the company had to undercharge for shipping costs to attract customers, it actually lost money on most of the items it sold. Amazon.com-backed Pets.com raised $82.5 million in an IPO in February 2000 before collapsing nine months later.
The shining example of a good idea gone bad, online store and delivery service Kozmo.com made it on our list of the top 10 tech we miss. For urbanites, Kozmo.com was cool and convenient. You could order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour. It was the perfect antidote to a rainy night, but Kozmo learned too late that its primary attraction of free delivery was also its undoing. After expanding to seven cities, it was clear that it cost too much to deliver a DVD and a pack of gum. Kozmo eventually initiated a $10 minimum charge, but that didn’t stop it from closing in March 2001 and laying off 1,100 employees. Though it never had an IPO (one was planned), Kozmo raised about $280 million and even secured a $150 million promotion deal with Starbucks.
For every good dot-com idea, there are a handful of really terrible ideas. Flooz.com was a perfect example of a “what the heck were they thinking?” business. Pushed by Jumping Jack Flash star and perennial Hollywood Squares center square Whoopi Goldberg, Flooz was meant to be online currency that would serve as an alternative to credit cards. After buying a certain amount of Flooz, you could then use it at a number of retail partners. While the concept is similar to a merchant’s gift card, at least gift cards are tangible items that are backed by the merchant and not a third party. It boggles the mind why anyone would rather use an “online currency” than an actual credit card, but that didn’t stop Flooz from raising a staggering $35 million from investors and signing up retail giants such as Tower Records, Barnes & Noble, and Restoration Hardware. Flooz went bankrupt in August 2001 along with its competitor Beenz.com.
eToys is now back in business, yet its original incarnation is another classic boom-to-bust story. The company raised $166 million in a May 1999 IPO, but in the course of 16 months, its stock went from a high of $84 per share in October 1999 to a low of just 9 cents per share in February 2001. Much like Pets.com, eToys spent millions on advertising, marketing, and technology and battled a host of competitors. And like many of its failed brethren, all that spending outweighed the company’s income, and investors quickly jumped ship. eToys closed in March 2001, but after being owned for a period by KayBee Toys, it’s now back for a second run.
The rest of the five remaining flops can be found here (among which boo.com, the biggest European dotcom failure, about which there is a longer account here). Let us not forget that the huge losses of the dotcom bust must not make us loose sight of the fact that two US corporations (Enron $80+ billion and WorldCom $74+ billion in 2000/2001 alone) probably account for more direct losses than all the dotcom spending.
Let us also remember that not every startup was a looser. Indeed few companies such as Google and Amazon were also created during that period and came out of it healthier and stronger than they or the industry experts could have anticipated.
Historically, science and technology have gone along many routes which turned out to be dead-ends.
Science has many discredited theories and obsolete paradigms such as alchemy, phlogiston, universal ether, and more. They failed the reality test and were cast aside, occasionally turning up in fantasy stories and crackpot websites. Some scientists use science to explain/interpret social and cultural phenomena. Sam Harris, for example, says (completely ignoring the spiritual, cultural and social aspects) the religion “is indeed failed science” and expresses hope that information, education and science will rectify this situation. In the modern world even renowned scientists are prone to making claims and predictions, which cannot be substantiated. An interesting case in point is Paul Ehrlich, a world-renowned entomologist whose failed predictions about environment (for example “There is no evidence that global warming is real“) are still resoundingly discrediting relevant scientific research and available empirical data. There are even cases (controversy surrounding discovery of element 118) when scientists deliberately fabricate fake data to support their theories and claims.
Technology has a bit more wiggle room but is still full of false/failed predictions and intentions. Some technologies were perfectly viable from an engineering standpoint, but either couldn’t compete economically or never really had a market. The canonical example is airships. With abandoned technologies there’s always the suspicion that if things had turned out differently we might be driving atomic cars or be regular tourists on the spacecraft Cycler commuting between Mars and the Earth or some other high-end, futuristic sci-fi-inspired gig. Douglas Self‘s Museum of Retro Technology contains information on dozens of devices, which existed, but never became part of everyday life.
Failed technologies are different from completely bogus technology. We’ll never get power from a Keely Motor and we will most probably be unable to make mainstream steam-powered airplanes because they either had high costs related to manufacturing or unprepared markets or could simply not compete with more conventional designs.
But all these false roads and blank directions were not taken in vain. If you take a look at major inventions and discoveries in science and technology you will see that most, if not all, happened by merry happenstance (radioactivity theory by Marie Curie), unanticipated development (Arpanet and Internet) or in the course of pursuing a plainly different objective (serendipitous case of discovering penicillin by Alexander Fleming).
It all started one day in 1985 with a vision and commitment of one of Motorola’s brightest engineers, whose wife complained that she was unable to reach clients via her cell phone from the Bahamas. He envisioned a technology that would allow effortless communication from and to any corner of the earth. His name was Bary Bertiger. Bertiger submitted his idea to his superiors (who had rejected the concept, it was no less than Robert Galvin, Motorola’s chairman at the time, who gave Bertiger approval to go ahead with the project), gathered a star team of engineers and businessmen and started working on it. His idea was to put up a network of low orbiting satellites covering the entire orbit of the earth and linking them with mesh technology for routing calls to and from any point in the world.
Work on the project started in 1987. While satellite phones were available in the 1980s, they had limited global coverage and, owing to the height the satellites orbited, the transmission and receiving delay made a conversation sound as though speaking down a long tunnel. Motorola thought that the world was ready for something better, and proposed creating a massive network of satellites that would provide global coverage. These satellites would orbit at a much lower altitude than their competitors and so the quality of transmissions would improve dramatically. The initial cost of the project was estimated to be over A$7 billion and required to put 77 satellites into low earth orbit. Because of this number of satellites , the project was dubbed Iridium after element 77 in the periodic table of Mendeleev.
However, cost saving issues resulted in a proposed redesign of the project, reducing the number of satellites to 66 only. The marketers kept the name Iridium, instead of changing it to element 66 — dysprosium (from Greek “hard to get”).
The launch of satellites started early in 1997 and was completed by 1998 (from launching pads in Kazakhstan, China and America).
Iridium services commenced from December 1998. “Iridium’s core identity was defined by its transcendence of national borders, a structure that is particularly post-Cold War,” Wired magazine gushed in its October 1998 cover story. “Iridium may well serve as a first model of the 21st-century corporation.”
Unfortunately, despite the brilliance of the technology and the team behind its design and marketing, expectations had changed since 1987. People expected their phone to be lightweight, usable inside buildings and the calls to be relatively cheap. Iridium phones were heavy (not suitable for carrying in a pocket) — as they needed powerful batteries — and they didn’t work inside buildings, costing around A$10 per minute. In parallel, the demand, anticipated by the original Iridium creators, was slowly being met by a advent of portable mobile phones. 1G cellular telecoms have been launched by NET in Japan in 1979. However, the dawn of mobile phones came with the launch of 2G systems such as GSM in 1990s and still ubiquitous around the world. By then, the market for satellite phones was estimated at 2-3% of the mobile-phone market and there were other companies (Globalstar, ICO, and Ellipso) are chasing the same (satellite) customers.
Less than a year later, Wired News backtracked, saying, “After losing nearly US$1 billion in two disastrous quarters, the engineering marvel is in danger of becoming the Ford Edsel of the sky.”
At the cost of construction of A$7 billion, Iridium needed over one million subscribers to break even. By mid 1999 it had gained 55,000 subscribers and was rapidly running out of money. In August 1999, the Iridium was bankrupt and subscribers found themselves without a dial tone. There were several attempts at selling Iridium, but no company could afford it.
By early 2000 the only employees left at Iridium were those employed to ‘de-orbit’ the satellites (during the estimated period of two years).
In 2000, the company was taken over by Iridium Satellite LLC (for A$35 million), contracted by US Defence Department. In 2007, Iridium Satellite LLC announced that it would be launching new satellites to attract partners, providing services beyond voice calling such as a next-generation global positioning system, environmental monitoring and satellite photography, becoming fully operational by 2016.
It currently has 280,000 subscribers and counting, despite the fact that the phone requires a line-of-sight with a satellite and thus can’t work inside buildings.
Time will tell if its current incarnation is more successful than its first.
Murphy’s Law (“If anything can go wrong, it will“) was born at Edwards Air Force Base in 1949 at North Base.
It was named after Capt. Edward Murphy (born in 1918), an engineer working on Air Force Project MX981, a project designed to see how much sudden deceleration a person/humanoid can stand in a crash with subsequent tests performed by medical doctor John P. Stapp, then an Air Force captain. Featured on the cover of Time magazine in the 1950’s, Stapp became known as the “Fastest Man on Earth” for his G-force experiments, which involved the use of rocket sleds. He was a famous researcher who helped develop restraint systems including automobile seatbelts.
Murphy was engaged in supporting this research using high speed centrifuges to generate G-forces. One day, Murphy’s assistant wired the harness, and a trial was run using a chimpanzee. The sensors provided a zero reading, however; it became apparent that they had been installed incorrectly, with each sensor wired backwards. It was at this point that a disgusted Murphy cursed the technician responsible and said, “If there is any way to do it wrong, he’ll find it,” despite having the possibility to calibrate and test the sensor installation prior to the test proper, which he declined, not getting along well with the project team.
The contractor’s project manager, present at the time when Murphy told the phrase, kept a list of “laws” and added this one, which he called Murphy’s Law.
While the origins of the law are still debated, everyone agreed that Stapp played a critical role in popularizing Murphy’s Law. After the incident, he gave a press conference during which he said that their good safety record on the project was due to a firm belief in Murphy’s Law and in the necessity to try and circumvent it. Aerospace manufacturers picked it up and used it widely in their ads during the next few months, and soon it was being quoted in many news and magazine articles.
Murphy’s Law was born .
One dark evening in 1990, Murphy’s car ran out of gas. As he hitchhiked to a gas station, while facing traffic, he was struck from behind by a British tourist who was driving on the wrong side of the road.
A variation of the original Murphy law favored among hackers is a takeoff on the second law of thermodynamics: The perversity of the Universe tends towards a maximum.
P.S. Stapp had a paradox of his own, Stapp’s Ironical Paradox, which says, “The universal aptitude for ineptitude makes any human accomplishment an incredible miracle.”