Failed Tech Companies Never Die, They Just Fade Away

Sudip Verma

September 26, 2013

General Douglas MacArthur addressing a Joint Session of Congress. Image provided by: {link:}World War II Database{/link}

In his final speech to a joint session of Congress, General Douglas McArthur closed with a quote that has become a part of American folklore:

“I am closing my 52 years of military service. When I joined the Army, even before the turn of the century (Note: he’s talking about 1900!), it was the fulfillment of all of my boyish hopes and dreams.The world has turned over many times since I took the oath on the plain at West Point, and the hopes and dreams have long since vanished, but I still remember the refrain of one of the most popular barracks ballads of that day which proclaimed most proudly that old soldiers never die; they just fade away.”

What Happens to Tech Companies? 3 Lessons to Learn

We’re all inclined to think that failed tech companies just disappear when they’ve run their course. Some are bought out, some file Chapter 11 and never emerge, and others just quietly liquidate themselves. But like General MacArthur, I’d like to argue that Tech companies slowly fade away before finally succumbing.

When you think of companies such as Wang, Polaroid,  Nokia, and BlackBerry, you’re reminded of once great companies that either disappeared or ended up a shell of themselves.

So what happened to these former industry stalwarts? Are there common themes in their respective stories that entrepreneurs of today can learn from?

1) Ride the Hot Hand, But Know When to Diversify

286/365If you think of Polaroid, you will likely recall their Instamatic line of cameras. While these were popular, Polaroid hit a brick wall with the advent of digital cameras. In Wang’s case, it was their heavy reliance on Word Processing computers and their inability to compete with PC’s wider abilities.

It’s important to develop established product lines, but it’s even more important to know when you’ve tapped out your market. As a modern day example, formerly boutique luxury car makers are expanding into building SUV’s to broaden their fan base and attract new buyers.

2) Leadership

blackberry ceosAn Wang, the founder of Wang Laboratories, had chosen his son as his successor. While his son was certainly accomplished, he lacked the experience to run a company as large as Wang. After a series of dismal quarters, he ended up being fired by his father.

If you look at BlackBerry, they had an interesting Co-CEO power sharing agreement between founder Mike Lazaridis and Jim Balsillie. Both were remarkably successful building the company up. However, would they have been better served with only one CEO to set the strategic direction for the company? Hindsight is always 20/20, of course.

3) Losing Touch With The Customer

Nokia 100 and Apple iPhone 5Show me a company in distress, and it won’t be hard to see that their customer base has become alienated and sought to have their needs fulfilled elsewhere. In BlackBerry and Nokia’s case, their customers were wowed by the sleek and user friendliness of the iPhone. Prior to the 2007 debut of the iPhone, BlackBerry and Nokia dominated the mobile space.

Nokia had become heavily reliant on their bread and butter feature phones — they hadn’t anticipated the resounding success that the iPhone would become. Likewise, BlackBerry had built a huge following amongst corporate and ordinary consumers alike. They were slow to offer a phone with a Touchscreen and functionality that could rival the iPhone.

Why These Lessons Matter

In the end, all of these companies began a slow slide towards irrelevance. As they started to struggle, the slide became steeper. Product lines matured, new products faltered, credibility was lost, and in the end customers left.

While some of these companies have managed to re-organize and painfully reinvent themselves, it’s important for entrepreneurs to take a look at their history and learn the relevant lessons going forward. In this way, they can optimize their profits and ensure that their companies don’t experience the same pitfalls.

What are some other cautionary tales the tech companies of the present and future can learn from?



Sudip Verma

Corporate Strategy, Sales Operations

Sudip is in charge of Corporate Strategy, Sales Operations at <a href="">Alegeus Technologies</a>. Previously, he worked at OpenView from 2012 until 2014 with portfolio companies to provide insights on the markets they operate in, their customers, and drive development of business strategies.