Startups like Twitter and GoPro were applauded when they went public. Yet, they have taken heat and felt the effects of declining share prices when their financials don't meet theexpectations of their investors.
We know exactly what happens when a company tries to stay true to their roots. Their shares plummet, they are faced with scrutiny and the media calls their companies sinking ships.
But what really happens when a company buys into the board and models their business for the interest of the shareholders?
Over the last decade, you've probably seen it. Companies start to live off their reputation, then skimp on everything else.
For example, Honda released a few cars before fully testing them. One example of that is the 2015 CR-V. When they released this car, they got consumer feedback of vibrations at stoplights. So you do what you know to do, and that is to go into the dealer. You expect a resolution, but they tell you it's a 'known issue' and that they're working on a solution. But the implementation for a solution can take over a year like it did for Honda, but will other brands even do anything at all?
Then in regards to features. Standard features like vanity lights get stripped from sun visors, arm rests become optional features and the lights inside the glove box are removed.
Poor Quality and Workmanship
Parts are being skimped on from every corner.
But is it only the automobile manufacturers living off their reputation? Or does it fall into other brands as well?
I've been a long time customer of Salvatore Ferragamo. I have been buying their leather goods since 2004, back when I used to work in Macy's selling women's shoes.
I took pride in seeing myself with such a prestigious brand and carried different items of theirs in my wardrobe for over a decade.
Because Ferragamo became a brand that I could trust and depend on to maintain their quality and workmanship.
Increased Prices ≠ Better Quality
But something happened along the way. Shoes increased in price from $440 to $595. Shoes stopped being stitched together and glue was used instead. Belts like mine started to rip at the seals by my fourth wear. So not only did prices increase, but quality and workmanship fell down the drain.
I saw this happening with the quality of Burberry years ago when I bought their belt, but I never expected something like this could happen with a brand like Ferragamo.
Feeling a bit betrayed, I reached out to Ferragamo on Twitter requesting assistance, but I was insulted further as people said that my belt looked fake, that it was stitched improperly and that it looked as if it was made in China. It wasn't just me feeling that my product was faulty, but the quality of the product was so bad that others felt that I didn't have the decency to buy an authentic piece of clothing.
A few days later, I spoke with Carmen Maduro over at the offices of Salvatore Ferragamo in the United States and told her about my issue with my belt and informed her that Saks Fifth Avenue had agreed to refund the belt, but the public embarrassment I felt rendered a better solution.
Carmen Maduro had informed me that "The vendor is responsible for the defect and if they are offering you a refund, that is all that we can do."
I asked if I can quote her on that, and she said I could. But before I asked her that, I asked if they were releasing themselves from all liability of this since they were the manufacturer of the product. She instilled all the responsibility onto Saks and wiped the virtual hands of Ferragamo clean of the issue.
The Bottom Line Matters Most
This just shows that profit is such a strong indicator for companies that not only do they raise prices and skimp on material and workmanship, but customer care is no longer a concern either.
And the examples don't stop there either. Products are even failing while the consumer is still in the store. I know a woman who went into buy an expensive dress from another publicly traded fashion brand. When she tried it on, the strap fell apart while she was in the dressing room. She didn't tug at it either. It just fell off.
It's kind of sad, but this is just the nature of how business works. Once you become a public company, it no longer becomes about the customer or the image of the brand. The only thing that matters is decreasing costs and increasing margins.
And shareholders, in many situations, feel that the objective of profit should be achieved at any cost. So they start to design their products for the dump. Then the brand is hurt, their loyal customers leave them and in the end, this game can put the big brands out of business.
There's no such thing as 'too big to fail' anymore, because if startups decide to stay private, their smaller, nimbler teams can utilize this as an opportunity to innovate and bring out better quality products, making the landscape of the most prestigious brands completely different in the next decade, while many of the leaders who follow these same practices have a slow and steady crash, then a painful burn.
How many public companies do you know have moved their manufacturing factories to third world countries? Or cut out goodies in their products or lowered the quality to eliminate costs? Or just didn't test their products enough and just got them out in the market?
There's probably dozens you can think of on top of your head. But the real question is, how long are you going to take it?
Are you going to speak up to get brands to stand behind their reputations and do the right thing or stop buying their product altogether? Or if you have an entrepreneurial spirit, are you using this as an opportunity to put your resources to work and provide a better service for the people?
I'd love to hear more. Comment below.