Posted: Marcus Varner | August 29, 2016

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Company Fails 2016: The 10 Biggest So Far and What We Can Learn From Them

company fails 2016

Last year was an unforgettable year for company scandals and gaffes.

The Sony Pictures email hack, featuring North Korean hackers and some sick burns about Angelina Jolie.

The Volkswagen emissions cheating scandal.

Jared Fogle.

Where do you go but down from a year like 2015? Going into 2016, we had to expect that the new year was going to feel relatively quiet compared to the previous year's fireworks. And this assumption has more or less proven true. Sharing the spotlight with a raucous presidential election season full of scandals of its own, companies' actions have been overshadowed. What would normally be monumental mistakes have gone mostly under the radar.

Mostly.

Yes, some companies' mishaps have still managed to find their way into the headlines. Unfortunately, none of them feature North Korean hackers, but they have proven to be entertaining and educational nonetheless. Here are the 10 biggest, most public company fails of 2016 so far, and what we can learn from them:

1. Microsoft's Twitter Bot

biggest company fails 2016

While this golden oldie of the tech industry can never seem to try to make a splash without belly-flopping, the uncalculated release in March of their Twitter artificially intelligent bot, Tay, surprised and shocked even its own creators. Or perhaps, put more accurately, what the bot revealed about human nature shocked us all.

As most of the world knows by now, within less than 24 hours, online trolls had taught Tay to spout racist, sexist, and pro-Trump rants:

company fails 2016

By the time Microsoft pulled the plug, their very own Pinocchio was well on its way to Pleasure Island, and offending pretty much every minority group on its way there. Oh, and it made us more terrified of AI than we already were.

Of the Tay debacle, Lindsay Friedman, staff writer at Entrepreneur, said simply, "Sometimes, science is simply better left alone."

Lesson learned: Everybody loves amazing new technology, but only if it doesn't kill, injure, or make us feel like our future dominance on the planet is in jeopardy. Before releasing new technology onto the world, no matter how great of a public relations story it might seem like on paper, thoroughly test that tech in a controlled environment. And, for goodness sake, take into account the endless propensity of humans to turn things evil for the sake of a laugh.

2. Mylan's EpiPen Price Hike

company fails 2016

Price hikes are part of a free market economy, right? Companies are free to raise prices on goods and services until the market signals back that they've gone too far. Except maybe when you're selling medicine that could make the difference between life and death.

Such was the mistake made by Mylan, maker of the EpiPen, a pen-shaped delivery device that has saved the lives of countless people suffering from Anaphylaxia. Earlier this month, Mylan doubled the price of the EpiPen, from an affordable $300 per two-pack to a more daunting $600.

Users of the EpiPen rose up to voice their outrage on social media. Sensing an opportunity to score points with voters, Democratic presidential nominee Hillary Clinton took to Twitter to blast Mylan and other biotech firms that "charge too much" for their life-saving products:

company fails 2016

"That's outrageous-and it's just the latest troubling example of a company taking advantage of its consumers. I believe that our pharmaceutical and biotech industries can be an incredible source of American innovation, giving us revolutionary treatments for debilitating diseases. But it's wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them."

The White House and other politicians chimed in. Mylan's stocks plummeted. Biotechnology stocks, as a whole, went into freefall. Still, Mylan refused to lower the price, offering instead a $100-off coupon. Politicians and the people said, "No, thanks."

In the end, Mylan, the maker of a lifesaving device, is coming out looking like a villain. And the one thing that will satisfy the masses, they can't (or won't) give.

Lesson learned: First, never underestimate the power of small groups on social media. EpiPen users probably make up a percent of a percent of social media users. But amplified through those platforms, through the news media, and then through attention-hungry politicians, their cause can seem like a national emergency.

Second, any company considering dramatically altering their pricing-like, say, doubling it-should also be prepared to walk back that price if the market reacts negatively. Mylan, it seems, was unprepared for this possibility and now finds itself stuck playing the bad guy.

3. Volkswagen's Continuing Crisis

Yes, this one started last year, but it continues to haunt the company this year, with new wrinkles. Now that VW has begun the process of repaying U.S. customers $14.7 billion for buybacks, damages, and penalties, German customers have taken notice and are demanding a similar payment. Unfortunately, VW's allotted for the crisis tops out at $18 billion. To comply with German customers' wishes could potentially crush the legendary automaker.

VW CEO Matthias Müller said grimly, "You don't need to be a mathematician to recognize that a damages payment of any amount would overwhelm Volkswagen."

So VW is stuck between a rock and a hard place: pleasing their customer base in Europe or staying afloat financially.

Lesson learned: Don't cheat, especially on a feature that you tout so prominently. Play by the rules or the rules will eventually catch up to you. VW now finds themselves in a situation so dire that they have to be wondering if their emissions cheats were valuable enough to warrant putting in jeopardy its almost 80-year legacy.

4. Deutsche Bank's Shady Deals

company fails 2016

Breaking news! Just announced, the U.S. Department of Justice is investigating Deutsche Bank for allegedly using "mirror trades" the movement of approximately $10 billion out of Russia. For whom and why are still a mystery, but the investigation is enough to cast more notoriety on any already shady financial institution. In the past, it has been embroiled in everything from financing the Nazi regime to inflating the 2008 housing bubble to hiding $12 billion dollars in losses in 2010.

Lesson learned: For Deutsche Bank, learning lessons just might not be in their DNA. Paying ridiculous sums of money to make problem to go away, on the other hand, is. For those companies with more ethical aspirations, the lesson learned can be found in #3 above.

5. Rio Olympics' Stumbles

company fails 2016

It seems that not a day had passed after the announcement that Rio De Janeiro would be hosting the 2016 Summer Olympics before statements of doubt began to hit the airwaves. Could the poverty- and crime-stricken city rise up to host a major international event like this?

As if this weren't challenge enough for Rio, Brazil itself soon found itself swallowed up in scandal from the country's president to its biggest business leaders. The hand of corruption was found to have reached even into some of the largest Olympics construction projects.

When the opening ceremonies arrived, there were more than a few eyesores. Riots alongside the the torch relay route. Unsafe drinking water. Olympians refusing to stay in the Olympic Village. Green pool water. Olympians being robbed and mugged. Perhaps the biggest surprise of all surrounding the Rio Olympics was that nothing truly disastrous occurred-unless you count Ryan Lochte's troubles with Rio law enforcement.

Lesson learned: Sometimes even widespread failure can be covered up by doing enough things well. Despite so many noticeable embarrassments, the Rio Olympics left the world with enough inspirational sports moments and intrigue to keep them smiling. Mission accomplished.

6. Exxon Crossing the Line

company fails 2016

Oil is a dirty business, always has been. Nowhere is this more apparent than the oil industry's dealings with the subject of climate change. Oil companies have shelled out millions in grants, research, and advertising to separate oil from climate change in the mind of the public. But now it seems Exxon has crossed a line they shouldn't have.

A few weeks ago, Senators Elizabeth Warren and Sheldon Whitehouse published an op-ed in the Washington Post, blasting Exxon for shutting down state probes into alleged efforts by the oil giant to bamboozle the public on the topic of climate change.

"Let's call this what it is," they wrote, "a master class in how big corporations rig the system."

Now Exxon is in the hot seat as attorneys general dig into their allegedly unlawful relationships with lawmakers and lobbyists and the climate change researchers they allegedly tried to bully into silence. The Washington Post op-ed has taken an issue that had been of concern to a relative few and blown it wide open into a mainstream topic of discussion.

Lesson learned: While companies certainly have a right to bring their resources to bear to sway the public in favor of their products and services, they don't have the right to impede state and federal investigations. They also don't have the right to withhold information that could potentially harm the public. Once companies cross this line, they are on thin ice.

7. Lyft Denied

company fails 2016

Ride-sharing companies are now mainstream, and Lyft has mostly been regarded as runner-up to the ride-sharing leader, Uber. This industry has gotten so big, in fact, that it's attracted the attention of larger players looking to get into the game. Knowing this, Lyft went shopping for buyers among the biggest names in technology-think Apple, Google, Amazon, yes, Uber itself, and some car companies.

Ultimately, embarrassingly, Lyft came up empty-handed and will continue forward as an independent entity. While not a scandal by any stretch of the imagination, this setback does have the subtle effect of creating doubt around the Lyft brand. For any future potential investors especially, the question will always linger in their minds: "Why didn't GM want to buy Lyft?"

Lesson learned: Companies need to lock down news about these types of events by contractually obligating everyone involved to keep their mouth's shut. It's not that these events are inherently harmful; it's that people can and will easily misinterpret them, if they they don't equal an instant win for the company.

8. Warner Bros' Woes

company fails 2016

While Disney is running away with the lion's share of the 2016 box office, Warner Bros Studios is likely shaking their collective heads, trying to figure out what happened to what was supposed to be their two big tentpoles of the year.

While Batman v. Superman eked out a decent return, it was pounded on at every step by critics and disgruntled fans alike-certainly not what Warner Bros had expected from one of the most highly anticipated movies of the year.

And then comic fans and Warner Bros execs alike looked to Suicide Squad to be the fun, rollicking comeback the studio needed. It wasn't, instead choosing to dish out an uneven mish-mash of comedy, dark action, and bizarre editing choices. Why was this happening, critics and fans cried out.

Then rumors emerged of post-production troubles between execs and filmmakers on both films. Most irregular of all were reports that execs, shaken to the core by criticism of Batman v. Superman, decided to give the almost finished cut of Suicide Squad a makeover. They charged the film's director David Ayers with creating a more fun, energetic cut of the film. But this isn't the weird part.

The weird part is that they requested the same thing from the company that produced the film's first trailer. That's right: two versions of the film, one from a trailer production studio. This is unheard of, even in crazy Hollywood.

If you've seen the movie you can probably guess which cut they went with. If you guessed the trailer company, you guessed correctly.

Instead of launching a new power franchise and putting to rest talk about how superior Marvel is to DC, Warner Bros tripped on their own shoelaces and fell on their own grenade.

Now it looks like Warner Bros woes aren't even close to being resolved. Similar rumors about next year's Wonder Woman movie have already begun to materialize on the Web.

Lesson learned: The studios inability to successfully launch a film franchise (other than Christopher Nolan's Dark Knight trilogy) seems to come down to two things. First, they don't seem to have a creative/strategic anchor, one person powerful, passionate, and visionary enough to align execs and filmmakers to a single vision. Marvel has this is Kevin Feige, but who does DC have?

Second, despite Warner Bros claims that it's superhero franchise would be director-friendly, its history so far only shows a studio without faith in its creators or its creations. Where Marvel films proudly wear their geek cred on their sleeves, DC films seem outrightly embarrassed to be there.

Companies that don't share a single vision and don't have faith in their brand or their ability to create a worthwhile product will never be able to convince their customers that their product is worthwhile.

9. ITT's Ban

company fails 2016

For-profit schools, as a whole, are an easy target for this list. The majority take advantage of down-on-their-luck people, make them Ivy League-sized promises, charge them Ivy League prices, and then deliver a sub-community college education with no support or guidance. ITT Educational Services is only the most recent school to be outed as a complete fraud.

How bad is ITT? So bad that an accreditation group evaluated ITT and found they "failed to meet several basic standards and were unlikely to comply in the future."

So bad that the U.S. Department of Education banned them from accepting any students who use federal financial aid.

So bad that the state of California has issued an emergency ban against the school, forbidding them to accept any new students at their 15 California locations.

So bad that California is working to revoke their approval to operate in the state altogether.

"The federal action raises grave concerns about the continued financial viability of ITT," said state representative Joanne Wenzel. "We took today's action in the interest of protecting potential students who are considering enrolling in ITT."

Needless to say, ITT's days are numbered.

Lesson learned: Few industries embody "putting profits before customers" more than for-profit education. To be fair, there are for-profit schools that are thriving-I'm looking at you, Liberty University and Western Governors-thanks to their dedication to providing quality education first, and not just collecting financial aid checks. Companies that make decisions based on profits before their customers will always be at risk in the long-term. Either their customers will simply leave or regulators will find them and stamp them out.

10. Jawbone's Failed Lawsuit

company fails 2016

In more embarrassing news, fitness tracker company Jawbone figured if it couldn't beat Fitbit, then it would sue the wearable tech leader. They accused the company of poaching employees, stealing trade secrets, and violating their patents, in hopes of getting Fitbit banned from importing its products into the U.S. It was a bold move that would've put a stake into the heart of their biggest competitor.

Unfortunately, Jawbone's case was, shall we say, flimsy.

Invalidated evidence kept the lawsuit from even making it to trial. The case was dismissed. Jawbone was left looking desperate, possibly out of ideas, which Fitbit CEO called out when he said the lawsuit was "a desperate attempt by Jawbone to disrupt Fitbit's momentum to compensate for their own lack of success in the market."

company fails 2016

Instead of owning up to the futility of their suit and focusing on being a better company, Jawbone instead announced their plans to the review the ruling and perhaps find another legal avenue.

Lesson learned: You can't litigate your way to market dominance. Long-lasting business success always comes from a long-lasting, successful relationship between a company and its customers.

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Written by Marcus Varner

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