Companies and brands are often arrogant -- surely confident in their right to exist...forever. Sometimes it is an old brand: a once powerful bully that now just stands on the side of the road getting sand kicked in its face. For these old brands, the internet has been like sunlight to vampires. At other times, it is just plain "Internet 1.0" thinking that overestimates the actual market potential of an idea, moving so fast that their only way to dismiss criticism is to attack: "It's a different economy stupid!" Whichever the case, it is wise to realize that as you are reading this the company that you work for may be going under -- on an evolutionary dead-end path to nowhere. Like a giant panda where no mutational change confers any further advantage in replication and survivability, destined for deterministic extinction in the modern world. In a purely Darwinian plot twist, it is not "adapt or die," it is just...die.
And so, I give you "5 giant panda brands" -- the brands that will be dead in five years.
No. 5: The Tribune Company
OK, this may be a little too easy. It went bankrupt in 2008 and then emerged in 2012 as "a new and better company." Scratch that. It emerged as "a new and smarter company ready for the future." Nope, that's not it. It emerged from bankruptcy because "a rich white guy with a heck of a lot of money and ties to Chicago was too sentimental and bought it to take it private."Yup, that's about it. Well, I guess he'll get tax write-offs for the rest of his life. Sam Zell, what were you thinking? As much as I love the Tribune Company, after over a decade of being online it still doesn't understand the medium. The one thing saving the company is that it no longer has to worry about stockholders because there are none. The company went private and was delisted from the NYSE in 2007.
The company that owns the Cubs, oops owned the Cubs, WGN, and a host of other media properties, decided to split into two companies. On the bright side, it decided to ditch its newspaper operation into a separate company it will try to sell. If anyone is stupid enough to buy it, that company will win the "Darwin Award" for the year because it will probably die of a heart attack when it realizes it was under a hallucinogenic haze during the purchase process. Maybe there is an older, whiter, dumber, richer guy than Sam Zell?
Unfortunately, its bets on the future are on brands that are going to slowly die themselves. The company bought the 19 stations that were owned by Local TV for $2.75 billion and launched Tribune Studios. Maybe nobody told it that Netflix, Amazon, and Hulu made that business obsolete as well. Then again, there are always its online properties. You know, CareerBuilder (which will get decimated by LinkedIn) and some other online properties it has a 30 percent interest in that are in the generic space and are part of Classified Ventures: Apartments.com, Cars.com, etc. In fact, it has a 30 percent interest in the Food Network. Do you know what a 30 percent interest in all of these companies tells me? That the Tribune Company is both not competent enough to develop something on its own and has to buy into other's ideas so that it can ride their coattails.
To the Tribune Company and old white men with money everywhere, I salute you for being a dollar short and a day late to the new media party nobody invited you to. Congratulations, you are the PanAm of the publishing world.
No. 4: LivingSocial
Oops! Guess what? It is doing worse than Groupon, and Groupon is the poster child for recent IPO deals gone bad. Oh yeah, and on April 26, 2013 it was announced that LivingSocial's database had been hacked, affecting 50 million registered users. That's a great user experience. From $5.7 billion to a $330 million valuation in two years? And from a $156 million profit to a $50 million loss in one year? Wow. Jeff Bezos and Amazon do not call many wrong, but I think he has gotten a little wacky with all that money, thinking he can do for these companies what he did for Amazon. First LivingSocial and then the Washington Post? That is not a line up for profitability anywhere. Good luck with your next try Jeff, for LivingSocial was "Web 1.0" economics all over again.
Sorry, I really should be referring to it in the present tense, but it's just so hard to. The company is just so -- you know -- dead. Forget five years. LivingSocial could be out of business by the time this article publishes.
No. 3: BlackBerry -- aka "Research in Motionless (RIM)"
It will not survive two years let alone five. The company will be sold in the next 18 months for pennies on the dollar and the new buyer will shutter the service within another 18 months trying to explain to their shareholders what morons they are -- "The iPhone is a joke. It doesn't even have a keyboard!" -- or so the story goes of what RIM thought of Apple's foray into making phones. Oops. And then Google made Android and open sourced it. Oops times two. It's OK; it is in good company with Nokia. The only difference is that Nokia has a huge business in dumb phones that makes it a ton of money.
And then there was BlackBerry Messenger -- the only system with a centralized server so it was actually secure communications. If the company had decided not to cave to governments in the Middle East who asked for access to BlackBerry's system or they would outlaw its phone, then maybe BlackBerry would have a chance. The revelations by Edward Snowden and others have made keeping privacy out of the eyes of snooping governments a top priority for many people. As it stands, BlackBerry just became Betamax in a VCR world -- great technology that, like the PalmOS, will add itself to the pile of detritus accumulating in landfills.
No. 2: Sony
You almost forget about Sony. Samsung has become what Sony was, and I do not see a way out of this mess for Sony, unfortunately. According to The New York Times:
"In the company's financial year that ended in March 2012, it projected a record net loss of Y455 billion -- the equivalent of $5.7 billion. It was Sony's worst loss ever, as an additional tax expense hurt a company already battered by heavy losses in its television business, a strong yen and natural disasters in Japan and overseas."
In 2013, it is doing better, but it has had to shunt assets to do it. A slimmer more profitable Sony is possible, it is just unlikely in the long term. The company will lose its edge and sales as its diehard fans get older and, well, die themselves.
If there was ever a company that should have "got" the internet and created an "internet of things," it's Sony. It was the ultimate disruptor of its time. Yes, Betamax failed, but it was better quality than VCR. Yes, the Minidisc was kind of stupid. In fact, when I really think of it, the company has always had a great love of proprietary technology that is not shared with the industry. Thus, this is the root of its problems.
It just has never been able to get out of its own way. When it tried massive restructuring at the beginning of the century, it lost all of its talent, who were eagerly scooped up by its competitors. The company lost innovation. It lost what it meant to be Sony. Now, it is a multiple personality behemoth that can't decide if it is an entertainment, electronics, or gaming company. In the end, I predict Sony has a good four to five years before it lingers on as a zombie company. Sure, it may "exist" in five years, but it will still be dead -- like someone who has swallowed a slow-killing poison and yet still walks around like nothing has happened.
There is an urban legend of the "Sony Timer," a self-destruct program that is built into every Sony product that will execute after a certain amount of time has passed, usually around the end of the warranty, forcing the diehard Sony fans to pony up more money for whatever its latest version of a product is. It doesn't matter whether it's true or false. Many people believe it's true. Sony, your timer's ticking. Sayonara.
No. 1: Sears
Yes, yes. We already all know that JC Penney will be out of business. It will be dead by next summer, so I am not even counting the company. It is No. 0.
But Sears? The brand that our parents grew up with, and our parents' parents grew up with, and our parents' parents' parents grew up with. And that our children do not even know exists and will never want to? The brand that spawned Craftsman and Kenmore and Diehard should shutter its moribund self and let the brands it spawned that deserve to survive live on. Sears will be but the desiccated husk bowing and scraping to the god of retail. Once Target decides it can sell appliances, there will be no need for anyone to go to Sears. Amazon kicks its ass in online sales. Walmart destroys it in almost every other category. And Target is actually located in neighborhoods where you won't get shot. Sears? Fails on all accounts, and it is effectively worth nothing. It's a shame. I loved Sears. I loved the Wish Book. I loved learning tools with my father while at Sears when the stores were staffed with people who could actually help you. Now, well, if the staff speaks some form of English that I can understand, they spend their time repeating what is on the display card underneath the item I am looking at. I almost do not have the heart to tell them that I can actually read and understand. When I ask them any question, however, I get that vacant stare of non-comprehension, as if my words are echoing through their empty skulls and landing on nothing.
So much is Sears worth nothing that the real-estate value of Sears' property is worth more than what the company is valued at.
My advice? Ditch the dead weight. Sell all of the real estate, and use the money to support Kenmore, Craftsman, and Diehard. And the company may already be way ahead of me. In 2007, the company placed its three major brands in KCD IP, a "separate, wholly owned, bankruptcy-remote subsidiary." KCD stands for the three brands: Kenmore, Craftsman, and DieHard. KCD IP then issued $1.8 billion in bonds that were sold to Sears' insurance subsidiary based in Bermuda. Sears would thus pay KCD for use of the three brands' trademarks.
So what will happen to Sears? It will get rid of that sprawling Mecca of an office park in the middle of nowhere in Illinois. It will redistribute those three KCD brands that are worth something at every Home Depot, Lowe's, and Best Buy on the planet. And you know what will happen? You still end up with a company that is valued higher than the company is today. It's just not called Sears anymore, but it has billions in the bank from the real estate. Not bad. I wonder if all those people who work at Sears think they'll have a job in a couple years. I do not wish anyone ill-will, but a piece of advice my father always gave me was, "Don't get stuck on the Titanic arranging deck chairs." All the employees of Sears should head this advice because after this ship goes down, no one will want to hire you. It will be like having Enron on your resume.
Sears, we love you, we're just not in love with you anymore. Because, you know, we don't like dating dead people.
Sean X is digital strategy director for Amazon Advertising.
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