That is not an easy question. Human beings have been conducting business of all kinds for a long, long time. I wondered, would the answers involve singular cultural moments, like the leader of a hunting and gathering band who dismissed farming communities as a passing phase? How about a Babylonian trader who went bankrupt because he wouldn't adopt the zero. Maybe something terrible happened on the Silk Road to change civilization forever? Or, perhaps it was China accidentally missing the Industrial Revolution? If someone was claustrophobically, provincially American he might even offer Britain's introduction of the Stamp Tax, ultimately losing the American colonies, or Henry Ford's tragic misread of the American consumer.
I don't pretend to be a global business historian, but I love this kind of stuff and was anxious to see what the best and brightest gathered by The Atlantic would have to say.
Then I read answers two and three, which turned out to be identical: The worst business decision ever made, according to an American business journalist and an American venture capitalist, was "Apple's firing of Steve Jobs in 1985."
Huh?
Did I misread The Atlantic's question? Was it really: "What is the worst business decision made by an American technology company since 1984 that you can recall off the top of your head, forgetting that the world was doing business before Apple was founded?" Understand that it's not even a good example of a business blunder, as Walter Isaacson pointed out in his recent biography of Jobs: "The best thing ever to happen to Steve is when we fired him," said Arthur Rock. An immature Jobs went off, indulged all of his instincts, and hatched "a series of spectacular products that were dazzling market flops." NeXT, for example, built a factory to churn out 10,000 units a month and sold just 400 a month. In other words, Steve Jobs wasn't Steve Jobs the Messiah when he was fired, and there might be no Apple at all had "the worst business decision of all time" not been made in 1985.
The larger point is not the misinformed example, but how two intelligent observers of the business scene could have so little historical perspective. (Remember when Google's chief economist decided that nothing much had happened before 1700?) It would be like asking modern economists the worst economic blunder of all time and having them choose the bailout of General Motors, or a group of generals saying the worst military blunder that ever happened occurred during the Persian Gulf War in 1991.
The respondents to The Big Question, all Americans, seem to have largely concluded that if it didn't happen in America in their lifetimes (and maybe near their offices), it apparently didn't matter. Here's my back-of-the-napkin:
Note that every VC/entrepreneur/journalist not only chose an event that happened in America, but 12 of the 14 found something after 1970. New Coke. AOL's takeover of Time Warner. Fox signing over rights to Star Wars merchandise to George Lucas. BofA's purchase of Countrywide Financial. McDonald's decision to sell Chipotle. Really? Selling a Mexican grille restaurant chain was the worst business decision of all time? This is a profoundly narrow definition of business history. Or maybe just a very American definition.
The oft-maligned Tyler Winklevoss is one of two entrepreneurs who gets extra credit for choosing an event before 1970, and Dutch at that: the 1626 sale of Manhattan for about $1,000 ($951.08 to be exact). Considering New York City became the commercial capital of the world, that's not a terrible answer by any means.
The other "Before 1970" journalist selected Napoleon's sale of Louisiana at 63 cents an acre to Thomas Jefferson. This is another reasonable stab, though it's worth noting that Napoleon was forbidden by treaty with Spain from selling the land, and Jefferson was forbidden constitutionally from buying it. So, considering the seller was offering something he couldn't sell to a buyer who could not buy, Napoleon did alright.
The most dreadful answer of all, however, has to be from the CEO of Zappos. He's decided that the worst business decision in the history of the world was all the bad hires Zappos has made, leading to a cumulative cost "of well over $100 million." I'm hoping he just misunderstood the question.
Better yet, maybe modern business executives don't need to know much about business history. And entrepreneurs in particular get paid for being narcissistic about their own companies. Do we care if the CEO of Zappos knows the history of retailing, much less business? Do we need our automobile mechanics to know the history of Ford engines, or the genesis of a monkey wrench? Do we worry if our doctors don't know how the Greeks treated wounds? After all, technology has changed the world so radically that some kinds of history seem extravagant to our jobs--more avocation than vocation. And, if you happen to believe that business before the computer age was hardly business at all--well, the worst business decision would had to have taken place after 1970.
Still, the generals might have it right. Nothing has been transformed more by technology than warfare, and yet--soldiers still study classic battles. Maybe it's because terrain and confusion and weather and ambition and logistics and fear are all constants in history. Maybe it's because, as Mark Twain wrote, history doesn't repeat itself, but it does rhyme.
And so, perhaps we did get a fair response to The Atlantic's question, however inadvertently.
Q: "What's the worst business decision ever made?"
A: The one we make today, the one we didn't have to make if we'd just studied up a little on our history.
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