TECH GIANTS THAT FELL FROM GRACE
IN THE FAST-MOVING, ever-changing world of technology, life on top doesn’t last forever. At WIRED, we like to see the people building truly innovative technology succeed. It’s sad to see once-mighty Internet titans fail to keep up with the times, and it’s maddening to learn that the technologists we believed in have been hiding something all along.
Here, for your year-end schadenfreude or genuine pity, are 2015’s top scandals, flameouts, missteps, and struggles. Not all of these companies can be blamed for the fate that befell them (though, some of them most definitely can—we’re looking at you VW), and most of them stand a chance of rebounding in 2016, if they haven’t already. All of them, however, serve as cautionary tales for the rest of the industry.
1. VOLKSWAGEN DUPED US ALL
Volkswagen is still reeling from the revelation that it used software on its supposedly “clean” diesel vehicles to evade emissions standards in the US. The discovery compelled federal regulators to order Volkswagen to recall a half-million vehicles. Shortly afterward, Volkswagen admitted 11 million vehicles were implicated worldwide.
Volkswagen’s CEO Martin Winterkorn stepped down, but the company faces tens of billions of dollars in fines from the US government and countries around the world, not to mention lawsuits from duped car owners. Still, despite the depth of the company’s deception, Volkswagen’s stock priceis already showing signs of a rebound.
2. ASHLEY MADISON’S OUTED CHEATERS
When the dating site for men (and supposedly women) who want to cheat was hacked, exposing some 30 gigabytes of customer and company information, the news shook not only the tech industry but politics and entertainment, too. Reality stars and politicians were among those implicated in the scandal. The fallout ruined lives and, according to the Toronto police, resulted in two outed users committing suicide. Somehow, though, the service saw a bump in usageafter the hack was revealed.
3. THERANOS WAS EXPOSED
People hailed Theranos as tech’s Next Big Thing long before seeing real evidence supporting the blood-testing company’s claims. That had a lot to do with the persuasive power of its founder, Elizabeth Holmes, who began working on Theranos’ diagnostic technology while she was still in college and was often compared to the late Steve Jobs. But when a meaty exposé in The Wall Street Journal alleged that Theranos exaggerated the capabilities of its blood tests and worked hard to cover up the shortcomings, the med-tech startup appeared to possess more sparkle than substance.
Theranos has denied many of The Journal’s allegations. Nonetheless, the controversy revealed how the Silicon Valley hype cycle can spin wildly out of control.
5. YAHOO CAME UNDONE
We saw this one coming a mile away. Ever since Marissa Mayer took over as CEO of the once dominant Internet giant, she’s struggled in vain to right the rusty old ship, even as shinier, speedier vessels like Google and Facebook left Yahoo bobbing in their wakes.
It was clear for some time that Mayer would have to make a big decision about the future of the company, and this month, that decision came when Mayer announced Yahoo would spin off its core Internet business and keep its stake in the Chinese giant, Alibaba. Of course, Yahoo’s Internet business is for all intents its entire business, meaning the spinoff is quite valuable and may fare better on its own. Still, the move had a kind of “desperate times call for desperate measures” feel to it.
5. REDDIT REVOLTED
This was the year that Reddit, the self-described “front page if the Internet,” went dark. Why? The brass fired a popular Reddit employee, inspiring many moderators to protest by making nearly 300 subreddits private. Then-CEO Ellen Pao tried to apologize for the company’s lack of communication but was viciously shouted down by Reddit’s vast army of trolls, driving her to announce her resignation days later.
Reddit’s original co-founder, Steve Huffman soon returnedas CEO and started making changes intended to make the Reddit community a little less mean. Reddit is bouncing back, but whether Huffman can ever rid Reddit of the ugliness that almost led to its demise still remains to be seen.
6. THE WORLD WAS TOO CRUEL FOR SECRET
Back in early 2014 the tech world couldn’t get enough of Secret, the anonymous social networking app that quickly became a hotbed of industry gossip. But by the end of the year, faced by competitors like Whisper and Yik Yak, it seemed Secret was going through something of an identity crisis. In 2015, it took its last breath when founder David Byttow announced that the startup, which had raised $35 million in funding, was shutting down.
His rationale was that anonymity online is “the ultimate double-edged sword, which must be wielded with great respect and care.” In other words, when social networks are anonymous, people are jerks. We might just be better off without yet another tool for trolling each other.
7. HOMEJOY CLOSED UP SHOP
In 2015, the on-demand economy got hit hard by worker classification lawsuits arguing that the drivers, cleaners, and personal shoppers that keep all those companies running ought to be classified as employees, not independent contractors. Homejoy, an on-demand cleaning service startup, was among those sued. Unlike richer contemporaries like Uber, Homejoy couldn’t handle the potential liability and shut down in July.
The company’s failure also revealed the challenges on-demand startups face when they try to force growth. In order to expand its customer base, Homejoy offered its services to first-time customers at dirt-cheap prices, making it next to impossible to retain those customers later on.
8. GE COULDN’T SAVE QUIRKY
It wasn’t long ago that General Electric was celebrating Quirky as the future of manufacturing. The company helped inventors get access to the design and manufacturing capabilities needed to make their inventions a reality, and raised $185 million, including from GE, which partneredwith Quirky on a new line of products. Now, GE regrets that move.
This year, Quirky filed for bankruptcy, revealing just how difficult it is to run what was effectively a manufacturing company as a tech company. GE, for its part, was none too pleased, accusing Quirky of damaging GE’s reputation by failing to keep up with customer service contracts for existing products.
9. GAWKER LOST ITS WAY—AND ITS STAFF
We’re still not sure what to make of Gawker’s roller coaster of a year. It started off on a high, setting of a trend of unionization within the digital media industry. But the web giant soon plunged into disarray after publishing a controversial story that outed another media executive.
Gawker pulled the story, but the internal strife it created drove several top Gawker editors to leave the company. Founder Nick Denton vowed that Gawker would do some “soul searching,” and come out of it “20 percent nicer.” Now, Denton plans to transition the gossip site into a political site.
10. TWITTER TOOK A NOSEDIVE
It’s been a bittersweet year for Twitter. On the one hand, 2015 saw the return of Jack Dorsey, Twitter’s founder, as its new CEO, as well as the debut of Moments, a new feature that’s turning out to be a pretty useful way of navigating Twitter’s firehose of information. On the other hand, Dorsey’s return was accompanied by a big round of layoffs. Before that, Twitter was awash in criticism over former CEO Dick Costolo’s failure to produce the user growth that other competitors like Facebook have enjoyed.
In August, Twitter shares dropped below their IPO price, a response to its second quarter earnings report. All the while, the company has struggled to contain the rampant and dangerous abuse that takes place on the platform. We’re not counting Twitter out yet, but Dorsey certainly has a busy year ahead of him in 2016.
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