Due to Elon Musk’s recent momentous takeover of Twitter for an estimated $19 billion dollars over asking price, some have labelled the takeover as Musk “creating his own nightmare”, however we still don’t know whether or not this decision will be a catalyst for success or failure for the social media platform’s future.
Companies such as Google and Microsoft that are now worth trillions of dollars all started somewhere, and certain decisions in their pasts could have completely changed the way they exist today. In addition to company decisions, some business deals changed the lives of individuals that believed in themselves enough to take on huge risks – and they paid off.
To further explore in more detail some of these important business decisions, XTB.com decided to research some of the biggest business decisions ever made, both good and bad, in order to shed some light on how the success stories of today came about:
Blockbuster vs Netflix
Before the rise of streaming platforms, Blockbuster were the biggest company in the movie and entertainment rental industry, with over 2,800 locations around the world in 1992. Nine years after Blockbuster was founded, in 1994 Viacom paid $8.4bn to acquire the company, just three years before Netflix was even founded.
Unlike Netflix, Blockbuster did not see the value of the online rental service and decided against investing in it. So much so that they even turned down the opportunity to purchase Netflix in 2000 for $50m. Since this decision, Netflix has grown to be one of the most valuable companies in the world valued at $142bn, and Blockbuster has closed all but one of its last remaining stores.
Excite.com turn down opportunity to purchase Google for $750,000
In 1999, one of the original Internet portals Excite.com were given the opportunity to purchase a then relatively small company called Google for a reported $750,000; however, the then CEO George Bell rejected the deal.
It hasn’t been all doom and gloom since this deal for Excite.com, as they were purchased by Ask Jeeves for $343m in 2004 – however Google have since gone on to become a company valued at over one trillion dollars.
Facebook purchases Instagram for $1bn in 2012
A company with just 13 employees in 2012, Instagram was rapidly rising in popularity in the social media industry – so much so that it attracted the attention of the powerhouse of the social media world, Facebook, who decided to purchase the social media platform for $1bn.
You could say that the owners of Instagram received a great deal for their relatively small company in comparison to Zuckerberg’s empire at the time, but since then Instagram has grown to a gargantuan size and is currently valued at over $200bn.
Motorola’s hesitance in the smartphone market
At the turn of the millennium, Motorola were a gargantuan player in the mobile phone industry, with their Razr model being a best-seller worldwide with over 130 million units sold across the world – the best-selling clamshell phone to date. However, possibly due to the popularity of this model, they were hesitant to invest in producing smartphone models and quickly found themselves left behind.
The company that once boasted a 22% market share of the mobile phone industry went from being worth an estimated $49.14bn in February of 2006, to just $8bn three years later in 2009 – a valuation plummet of 83%.
Electronic Data Systems Turn Down Microsoft for $40m
In 1979, American IT company EDS (Electronic Data Systems) was worth over $1bn, and they were in the search to invest in buying a small computer company to provide them with valuable software. They met with a then 23-year-old Bill Gates as Microsoft were one of their options, however his valuation of $40m was too high and they turned it down.
Since then, Microsoft has grown into one of the biggest companies in the world and is worth over one trillion dollars.
In addition to some business decisions that massively affected companies, there have also been some business decisions that have changed the lives of individuals instead of companies:
George Lucas and Star Wars
In the 1970s when Star Wars had just been conceived, George Lucas approached Fox Executives with a different deal to the one that they had offered him for the films that were worth $500,000. This new deal meant that instead he received just $150,000 instead, but he got to keep the rights to the merchandising of Star Wars and the rights to any sequels that may come after the original film.
Thanks to this deal and the unprecedented success of one of the most valuable movie franchises of all time, George Lucas is now estimated to be worth around $5.4bn, from what was once a $350,000 pay cut.
Floyd Mayweather Jr. creates his own promotions company
Titled by some as “Boxing’s Greatest Investment”, in 2006 Floyd Mayweather Jr decided to buy himself out of his contract with Top Rank for $750,000, to establish his own promotions company called Mayweather Promotions.
Just one year later in 2007, Mayweather fought Oscar de la Hoya and earned himself around $25m thanks to his new contract situation, and since then, he has gone on to earn a total of around $350m from his promotions company.
J.K. Rowling and Harry Potter
After being turned down by 12 publishers in a row, J.K. Rowling must have been beginning to lose hope that her magical novel Harry Potter and the Philosopher’s Stone would ever be published – that’s until Bloomsbury appeared.
Bloomsbury decided to take a chance on the tale of wizards and witches and since then, Harry Potter has become one of the most valuable movie/book franchises in the world worth an estimated $25bn, netting Rowling over $1bn in royalties from the books and films.