In the short history of the Internet there have been monumental errors from businesses and individuals that have not just cost them money, but have seen new business empires forged and existing business giants crumble. For every Facebook there has been a Friends Reunited, for every Google there has been a Cuil.
Here are some of the biggest mistakes ever made in the history of Internet, though most of them seemed like a good idea at the time.
ITV purchases Friends Reunited for £175 million
Just four years ago the TV channel ITV spent an incredulous £175 million buying the social networking website Friends Reunited, just as Facebook launched. Even at the time this seemed a lot of money for a website with a modest audience, limited features and an already ageing userbase.
Unsurprisingly, as Friends Reunited refused to switch from its paid subscription model (losing all but the very computer illiterate of its users to Facebook) the value of the website plummeted to the point where the TV channel sold it earlier this year for just £25 million, making a grand loss of £150 million.
Just why did ITV believe they could venture into online marketing? Their own website shows just how far behind they are without spending £175 million on a white elephant.
Cuil (and other Google killers)
This isn’t so much about Cuil as it is about search engines that try to take on Google with no real understanding of why Google has become so successful (and yes, you can shove Bing in with this if you like).
A few years ago it seemed as though every fortnight we’d be presented with a new ‘Google Killer’ that was supposed to revolutionise the way we searched for things on the Internet, only to find that all of the money spent on them merely produced some attractive new feature(s) and some press releases. Once users looked at them they found that the search results were less than ideal, which is, after all, the whole point behind a search engine.
Thankfully the Google Killers are few and far between now, having mostly all died out. Heck, even Yahoo and Microsoft have admitted they can’t go it alone so how is a new Cuil going to cope?
Speaking of Yahoo…
Not, not Yahoo doing anything in particular, just Yahoo in general. Yahoo has been responsible for perhaps the two biggest mistakes of all time. You’d think they’d have learned?
First of all, way back in 2001 (doesn’t seem that long ago does it?) Yahoo passed on a deal to buy Google. Google’s founders, Larry Page and Sergey Brin, believed their new company with the colourful logo was worth $1 billion. Yahoo’s Terry Semel on the other hand, did not. Semel was proved wrong almost immediately as the value of Google increased to $3 billion inside seven days, and Yahoo had an option on buying the fledgling company for under $5 billion.
Semel however didn’t think Google was worth anywhere near that and decided against any investment in the sort of business decision that would have left the gang in Dragon’s Den fuming.
The Google brand alone is believed to be worth over $38 billion today, even in our current repressed financial marketplace.
As if this mistake wasn’t bad enough, Yahoo had to go one better when they turned down a fair at the time (very high with hindsight) offer from Microsoft to buy them out. Yahoo’s directors refused to sell at $31 per share, which placed the value of Yahoo at $46 billion in February last year. That’s a lot.
Yahoo’s share price as of yesterday was just over $17; if only Yahoo had sold when the price was right?
Time Warner and AOL merger
This one is a real story of riches to rags as AOL went from a value of $160 billion in 2000, to just $20 billion in 2006, and less than $5 billion today.
Time Warner and AOL merged at the start of the millennium to create an all-encompassing super company that controlled TV, film, magazines and Internet. AOL was worth $160 billion (more than the 82 year old Warner Brothers) despite being just a few years old itself.
The marriage made in heaven quickly headed for the divorce courts as AOL Time Warner became just Time Warner after three years, and after six years AOL received investment from Google to the tune of $1 billion for 5%, placing its new value at $20 billion.
AOL is now worth less than $5 billion, dwarfing the money lost by ITV on Friends Reunited.
As the Internet grows and fortunes are made and lost, you can be sure that more mistakes of epic proportions have yet to be made by companies and, who knows, maybe Yahoo will surpass itself with a third gargantuan cock up that makes its previous two mistakes seem trivial in comparison.
Yahoo, we’re watching!