Nowadays it seems as though it’s impossible to avoid celebrities launching all sorts of companies. Whilst some seem ridiculous (obviously not naming anything to keep it professional however, definitely Goop), others such as Fenty Beauty by Rihanna have been massive successes. In this week’s blog I am tackling the ones which I think are the worst of the worst. Companies with such a poor business plan that not even an A-list name could save them.
Firstly, we have the infamous Donald Trump. As both a business man and a celebrity, it looked as though the stars should have aligned perfectly for his new (at the time) venture into “Trump Airlines”. Whilst it was dubbed an airline, a more effective phrase to describe their services would probably be “shuttle”. Based in the North-East of America, they did local and national flights which at the time were highly profitable. Trump took over the business form Eastern Airlines for a negotiated $365 million (more than what it would cost to start the business yourself, however this way you were guaranteed market share). Eastern airlines then went out of business, giving Trump the opportunity to not only negotiated a cheaper deal but also get more aircrafts. The deal was approved by the bankruptcy court, and by 1989 Trump had a profitable airline that he intended to turn into a luxury service (by painting his name on the side and improving the interiors). Unfortunately, due to conflict in the Middle-East, jet fuel prices doubled, which meant that the massive increase in price for the company had to be reflected in the prices for the customers. Many corporate travel budgets were tightened due to the recession, meaning less money spent on fancy shuttle services. By 1991 Trump had to sell the company in order to avoid $135 million in debt that he was personally accountable for.
Secondly, we have a director turned restaurateur. Steven Spielberg dove (you will later discover this is a pun) head first into starting his very own restaurant. He started a nautical themed eatery named “Dive!”. This concept originally grew out of his fascination for underwater exploration (not a passion for the food or service industry). They predicted immense success, claiming there would be over 60 locations in the coming years. The concept was simple, every 45 minutes, make the diners feel like they were in a submarine going underwater whilst serving them sandwiches. However, this concept makes it difficult to get returning customers, and it quickly became a habit for people to not even eat and just buy the merchandise. The loud noises became tiresome and the food was boring, with no repeat customers and tourists choosing to just buy the keychains, all branches closed by 2000.
Our final celeb is famed rapper Jay-Z. When you think American rap culture, you probably associate it with clothing, rap music and maybe some specific foods and drinks (Patron tequila comes to mind). You probably don’t think about luxury hotels, or at least, not luxury hotels owned by the people who rap about how they used to sell drugs. His plan was to open a series of hotels dubbed “J Hotels” starting with an extremely expensive location in the centre of New York. Unfortunately for him, his partners all defaulted on their $52 million loan, which then prompted a legal debate over who would manage the lion share of the interest repayments. Jay-Z then filed a lawsuit against some of his investors, they filed a counter-claim and by December 15th 2010 it was all settled out of court and the J Hotels dream was dead.
Those are my personal favourite out of all the celebrity business fails. We asked our Viewsbankers if they would purchase a product if it were endorsed by a celebrity they liked and an overwhelming 65.4%of Viewsbankers said no. Some of our favourite comments were:
- “Depends on the product, if it's a good product it doesn't need a 'celeb' to endorse it, the quality will sell itself. A celeb’s name being attached to a product or service is irrelevant.”
- “Celebrity endorsement is the last thing I would take into consideration when buying a product.”
What do you think about celebrities who go off-brand to start new business ventures? Do you think there are better celebrity business fails out there? Let us know in the comments!