I talk an awful lot about good business outcomes, but I get a certain kick out of seeing business leaders royally screw up. Not out of some envy-driven form of schadenfraude mind you. I’m referring to people who are, well, awful at business. Or at least have become so. It feels like a sort of cosmic rebalancing to see people who behave like failures start to fail.
I’ve noticed these kinds of failures take many forms. They can be outright frauds, hubristic plutocrats who fly too close to the sun, and paranoid-delusional conspiracy wingnuts willing to sacrifice their previous success in pursuit of goals only their warped minds can understand. More than a few come to mind, so I’m going to split this into two parts. So without further ado, I’ll start with…
AKA the My Pillow Guy. Mike Lindell’s inclusion in this piece may seem odd considering My Pillow is still around. But if you’ve been follow the news lately, you may be able to see writing on the wall. And what it conveys seems rather ominous for the future of My Pillow.
A little bit of background on Mr. Lindell to spare you having to go to Wikipedia. Supposedly, Mr. Lindell really hit rock bottom at one point. I don’t know any details to the contrary, so I don’t mean to imply I know he’s lying, but he has said some rather far-out things lately that cast suspicion on all of his claims. Things I’ll touch on soon.
To hear Lindell tell it, he was a penniless crack addict. After finding God, Lindell straightened his life out. He became completely sober. Set out on a path of clean living, Lindell created My Pillow, which is just that, a pillow. I don’t own one, so I have no idea how it compares to say, any other pillow, but to hear Lindell tell it, it’s a pretty great pillow.
Which is what you’d expect him to say since he is trying to sell as many as he can. And sell it he has. Recent estimates are around 30 million My Pillows sold. I don’t know much about pillows, but that sounds like a lot.
He Was Actually Pretty Good at Business, Once
To his credit, Lindell does know a thing or two about branding. Or, at least he did until he warped his public image. The frequency of his commercials, and the confidence he exuded in front of the camera made him easily identifiable. I’m sure even before recent events, most people you ask about the “My Pillow Guy” would know who you were talking about.
He’s had some pretty inventive marketing stunts as well. Lindell sponsored a successful attempt to set a new Guinness World Record for largest pillow fight, with 6261 participants.
Following That, Some Really Bad Business Decisions Threaten to Scuttle His Success
If it weren’t for the fact that Lindell has been known as the My Pillow Guy for some time, people might forget what it was that made him successful. His recent antics have greatly overshadowed his business success. It’s gotten to the point where his ability to do business is being severely curtailed.
Mike Lindell has made no secret of his right wing political leanings. A lot of business leaders do put their political views on display and have received praise, flak, and everything in between for them. But Lindell has kicked things up a few notches by going far beyond mere political discourse in public forums.
Lindell clings adamantly to the thoroughly debunked notion that the 2020 United States presidential election was conducted fraudulently and that Donald Trump really won. If that weren’t bad enough, Lindell had exhorted the Capitol Hill insurrectionists on January 6th to “fight like hell”. He was spotted leaving a meeting with Trump at the White House with notes that appeared the mention the Insurrection Act, the implication being he was discussing the use of martial law to overturn the election and declare Trump president again. He has not let the fact that pretty much every lawsuit contending there was fraud in the election has been shot down stop him. Certainly none have credibly advanced or uncovered anything.
Why That’s Bad Business, as if it Weren’t Obvious
All of this follows a certain pattern with Lindell. He’s had to settle lawsuits because of fraudulent claims about conditions My Pillow could supposedly cure such as fibromyalgia, sleep apnea, cerebral palsy, acid reflux, restless leg syndrome, and more. Imagine that, all these scientists scratching their heads over how to cure debilitating ailments, and this whole time the cure was a pillow.
Lindell’s asserted he’s a “sleep expert” despite possessing no credentials. His baseless claims have of course led to accusations of false advertising. They’ve become so numerous, My Pillow lost its accreditation with the Better Business Bureau, who downgraded his rating to an F from an A+. When the BBB gives you an A+, it usually just means you filled out a form and paid them, which only makes getting an F even more embarrassing. It’s like failing a class where the only requirement to pass is to show up.
With the tumult surrounding the Capitol Hill insurrection, the conspiracy theories around imaginary stolen elections have become even less fashionable. This is true even for Newsmax, a very conservative, Trump-friendly media outlet. Lindell’s antics were apparently too much for what would normally be a receptive crowd for his flavor of politics. He so offended his host, anchor Bob Sellers, that Sellers stood up and walked off the set in the middle of a Lindell diatribe.
Lindell received similar treatment on One America News, another far-right, Trump-friendly media outlet. They were the only outlet of any note to air Lindell’s “documentary” containing his fraud allegations, which included accusations against Dominion Voting Systems, providers of voting and tallying machines used in the election. They also distanced themselves from Lindell with a 90-second disclaimer saying they were not co-signing any of Lindell’s claims and that those claims were not intended to be presented as fact.
There’s nothing like a good old fashioned lawsuit to put the fear of god into conspiracy peddlers. Lou Dobbs found that out the hard way. Even after walking back his election fraud allegations, Lou Dobbs was still let go, by Fox News of all places, because they didn’t want to be in the blast radius of the salvo of legal actions coming the way of everyone hurling accusations at Dominion.
Lindell may find himself in Dominion’s crosshairs as well. If that weren’t bad enough, Lindell is finding himself de-platformed. I don’t need to tell you just how bad that is, but I will anyway. Lindell can blame his woes on cancel culture all he’d like, but he can’t deny these are serious woes.
Apart from having both his personal and My Pillow company accounts banned by Twitter, Lindell is finding the platforms he really depends upon, like department store retailers, pulling the rug out from under him, no pun intended.
According to Lindell himself, Bed, Bath, and Beyond, Kohl’s, H-E-B, and Wayfair will no longer carry My Pillows. Though several retailers still do carry My Pillows, the company hasn’t picked up any new platforms to sell on. So, it only follows Lindell is going to sell fewer pillows. I can’t see how that doesn’t happen. Unless the increasingly small segment of the United States that believes in the stolen election myth makes up for the inevitable declining purchases elsewhere. But that’s too farfetched to happen. It’s one thing to whine about cancel culture being out to get someone, because that doesn’t cost you anything. What are Lindell’s supporters going to do? Buy a My Pillow for every one someone else won’t own because of how he’s sullied his brand? I doubt it. How many pillows can someone own?
I can’t say for certain My Pillow will go out of business. If David Hogg, prominent survivor of the Stoneman Douglas Massacre has anything to say about it, My Pillow is up shit’s creek. It could be exciting to see the upcoming pillow wars pan out.
Mike Lindell forgot one crucial thing about how not to conduct bad business. Know your audience. Read the room. If your audience, that is, your total addressable market, doesn’t want to hear your conspiracy theories, best keep that sort of thing to yourself. I’ve extolled the virtues of courage, but somehow, I don’t think this is what Peter Thiel had in mind when he said entrepreneurs should not be afraid to voice controversial opinions. I get the feeling even Thiel knows there are some things better left unsaid.
Case Study #2: Bad Business Barbie
The woman you see in the meme above dispensing such vapid “wisdom” is Elizabeth Holmes. She founded a company called Theranos. Before I break down Holmes’ fall from grace, and what a fall it was, I must digress for a moment. I remember seeing this tripe, encapsulated in meme form in the above picture, making its rounds on LinkedIn years ago. It really helped open my eyes to the sheer foolishness that passes for insight among business professionals on social media, and just how often it is digested and regurgitated without any thought given to critical analysis, something I couldn’t help but write about.
At the time Forbes credited Holmes as the youngest female billionaire and youngest self made billionaire in the world. And that’s exactly where everyone took their thinking caps off. Clearly in so many people’s minds, wealth and success, even the illusory kind, equals truth and credibility. It’s appalling how many people don’t realize ideas either have or don’t have their own merit. They have little, if anything, to do with who conveys them.
Now that I’ve said my peace on that, back to Elizabeth Holmes. This pretend wunderkind burst on the scene with claims of revolutionary blood testing capabilities her company had developed. Holmes has a severe dislike of needles. She threw all of her energy into Theranos, whose technology it was claimed, only needed very small amounts of blood to test for things like infections or abnormalities. For an endeavor to be successful, it needs to be executed properly and solve an actual problem bad enough to get someone to pay for it. One other important thing; feasibility. It needs to be possible to do. Several of Holmes’ professors at Stanford told Holmes her idea wasn’t feasible.
She Didn’t Let That Deter Her
Ms. Holmes could apparently be quite persuasive. She convinced the dean of Stanford’s school of engineering, Channing Robertson, to back her idea. She eventually stocked her board of directors with some heavyweight names. The BOD included former Secretary of State George Schultz and future (at the time) Secretary of Defense, James Mattis. By the end of 2010, Theranos had $92M in VC funding. After emerging from stealth mode, Theranos secured a partnership with Walgreen’s to provide in-store blood sample collection centers.
Additionally, Theranos had dozens of patents. Forbes estimated the valuation of Theranos at $9B, putting Holmes’ fortune at $4.5B in 2015. But, as the saying goes, not all that glitters is gold. Despite all of the accolades and admiration, Theranos was doomed to fail.
How Bad Business Sets You up for Failure
The radical claims Holmes made about her company’s blood testing capabilities naturally drew scrutiny, which isn’t a problem when you can back up your claims. Unfortunately for Holmes, she could not. After receiving a tip, The WSJ began an investigation into Holmes’ claims, ultimately concluding she didn’t have the goods. Holmes denied the WSJ’s claims, calling the Journal a “tabloid”, but the wheels had been set in motion.
Turns out, the Journal was right about Theranos. Their blood testing technology could not do what Holmes claimed. With the smoke dispelled and the mirrors shattered, everything quickly fell apart.
CMS banned Theranos from operating blood testing services for two years. Walgreen’s ended its partnership with Theranos. The FDA ordered the company to cease use of one of its most prominent technologies. Lawsuits swarmed over Holmes and Theranos like locusts. They came from everywhere, including the BOD, which voluntarily dismissed its lawsuits in return for 99% of the equity. Forbes revised its estimates of Holmes’ net worth to $0. That is one potential outcome of being paper rich and cash poor.
Bad Business Can Have Even Worse Consequences
If Holmes’ woes ended at losing her company and fortune you might be able to say it wasn’t so bad for Holmes’. Unfortunately for her, she’s now facing more than a dozen felony charges and looking at serious jail time. I don’t know the exact charges, but she’s been accused of defrauding her shareholders and doctors and patients.
It boggles the mind a bit to consider how Holmes’ thought she’d actually get away with this. She had to know her technology couldn’t do what she claimed. So, what was the end game? Make a fortune and “change the world”, as she put it, with technology that didn’t work? Then ride off happily into the sunset? Holmes’ is apparently entertaining a mental illness defense against the charges. I’m not qualified to comment on her mental state, but, not being able to make sense of Holmes’ game plan, I find the assertion to be credible.
In hindsight, this sort of behavior doesn’t seem too surprising for Holmes’. She apparently had a fascination with Steve Jobs, and deliberately copied his style of wearing black turtlenecks. Nothing wrong with that, but she claimed it was because that was how her mother dressed her as a child. In fact, an employee introduced her to Issey Miyake turtlenecks in 2007. Not an egregious lie, but makes you wonder if she didn’t always have a touch and go relationship with the truth, sort of like Mike Lindell.
There was also the affair she and the president of Theranos, Ramesh “Sunny” Balwani had. Most business ethicists would agree the pair crossed some pretty strict lines. Illicit affairs are certainly bad business. The two weren’t adulterers, but given their positions in the company, it seems like the right thing to do would have been to keep their relationship professional.
Sometimes, Even The Best Are Guilty of Bad Business
You may recall hearing about Haven, a healthcare joint venture formed by Jamie Dimon, CEO of JPMorgan Chase, Jeff Bezos, founder and CEO of Amazon, and Warren Buffett, the legendary Oracle of Omaha and CEO of Berkshire Hathaway. Haven was these titans attempt to “disrupt” healthcare by using the power of private industry to offer affordable, comprehensive healthcare to their employees. An ambitious goal for certain. They seemed to get off to a great start, sending existing healthcare company stocks plummeting. They hired what seemed like the right group of technocrats, a surgeon as the CEO for example. The rest of the executive leadership team included healthcare executives from several companies.
So, you might be wondering, why mention Haven in an article about business failures? I remember thinking when the news was first announced that there was no way something like this could be anything but a success. Judging by the reaction in equities markets, I wasn’t alone. To the surprise of many, myself included, Haven did in fact, fail.
How could this trio, collectively worth hundreds of billions of dollars, leading three of the most massive corporate juggernauts in history, fail at a business venture?
How Did it Go So Wrong?
The article points out that the details are a bit murky, but sheds some light on a few problems given the benefit of hindsight. For starters, the CEO being a surgeon didn’t matter as much as the fact that the CEO was not an experienced executive. Turns out, being an expert in a field is not the same as leading a company providing value in that field. Leading a company is a vastly different competency than performing surgery, as difficult as the latter may be. All in all, Haven’s hires weren’t all they were cracked up to be.
The trio conceived of the idea to provide lower cost and better healthcare to their own employees, who were very spread out considering how many there were. Haven’s approach, to create simple, affordable, and effective solutions for them all turned out to be implausible. There are a myriad of regulations and separate realities pertaining to healthcare across vast geographies and environments. This made it impossible to create across the board effective healthcare plans for them all.
It reminds me of when people said healthcare reform should include the right to purchase healthcare across state lines. When Obamacare actually permitted such (pg 2), very few states formed cooperative agreements amongst themselves, largely because they couldn’t agree on regulations. Those that did saw no health insurers offer plans out of state. Healthcare is a local problem Haven tried to tackle with global solutions. As the article about Haven’s downfall points out, it had a vision, but not an effective plan.
What it Likely All Comes Down To
Lastly it seems, the trio could not see the forest through the trees. They were all concerned with lowering healthcare costs at their own companies. More so than for the group as a whole. Maybe that’s because it wasn’t feasible to lower healthcare costs across the board, and they quickly picked up on that. The successor to Haven’s legacy appears to be Amazon Care, an added benefit for Amazon employees in Seattle purchasing traditional healthcare from the company. The goal of Amazon Care is to reduce healthcare expenditures by finding alternative ways to treat conditions not requiring an in-person visit with a physician. Additionally, Amazon has created Amazon Pharmacy, which is exactly what it sounds like. Looks like Amazon is really just trying to grow a new line of business, and its partners may have been doing the same, pitting them all against each other rather than fostering cooperation.
The first pertains to Mike Lindell, which I’ve already stated but will repeat here. Know your audience. Even if you humor the notions that Lindell is right about his views and should be free to express them, reality simply is not that considerate. If you have controversial views, no matter how justified you may be in holding them (Lindell certainly is NOT), it’s best not to shout them from the rooftops if your aim is not to alienate your customers.
Another is that business success isn’t always replicable. The combined success and acumen of three of the business world’s most capable men was not enough to make their bold, combined venture successful. The fact is, success in a particular venture only says one thing about the successful person, just that they were successful in that one instance. It does not make them an automatic expert in anything, just as it doesn’t make them automatically successful at anything else.
So, when someone with high profile success says something, don’t abrogate your responsibility to critically analyze their sentiments. They stand or fall on their own merit. Could be that whoever is broadcasting such faux wisdom is a Holmesian fraud, but that ultimately wouldn’t matter, since Holmes’ insipid wisdom didn’t become any more stupid the moment it was revealed she was a fraud. It was stupid to begin with.