Business Leaders Who Bounced Back After Bankruptcy
Bankruptcy can feel like the end of the road for many entrepreneurs and business leaders. The financial ruin, damaged credit, and public shame can destroy careers and sink promising companies. However, some remarkable business leaders have overcome bankruptcy to rebuild even stronger companies. Their resilience and perseverance provide inspiration.
Steve Jobs – Apple
Steve Jobs co-founded Apple in 1976 and led the company as it revolutionized personal computing. However, after a power struggle in 1985, Jobs was ousted from Apple by the board and CEO he hand-picked to succeed him. As Jobs later said, “I was out and very publicly out.”
-With his reputation tarnished, Jobs started a new computer company called NeXT. However, high prices caused NeXT computers to flop. By 1993, Jobs’s net worth had plummeted to below $5 million. NeXT was forced to withdraw from the hardware business entirely and focus on software – laying the foundation for macOS and iOS later.
In 1996, a still-struggling Apple bought NeXT for $429 million, bringing Jobs back as a consultant. He soon took over as interim CEO. With Jobs’ vision and demanding leadership style, Apple began its historic comeback. It launched the iMac in 1998, the iPod in 2001, iPhone in 2007, and iPad in 2010 – revolutionizing consumer electronics and making Apple one of the world’s most valuable companies.
Donald Trump – The Trump Organization
Before becoming president, Donald Trump built an empire of hotels, casinos, golf courses, and other real estate under The Trump Organization. However, overexpansion and debt brought Trump’s business to the brink of collapse in the early 1990s.
Trump declared business bankruptcy four times between 1991 and 2009, according to reports – more than any other major U.S. company. This allowed him to renegotiate debts and hold on to key assets. Trump’s bankers and investors took massive losses, but he maintained control.
-“I used the laws of the country to my benefit,” Trump has said. Critics accused him of exploiting bankruptcy laws. But Trump rebounded, at least for a while, with The Apprentice TV series burnishing his image.
Henry Ford – Ford Motor Company
Henry Ford founded Ford Motor Company in 1903. He pioneered mass production techniques that made cars affordable for average Americans. By 1918, half of all cars in the U.S. were Model Ts. Ford became the world’s largest automaker.
However, Ford resisted updating the aging Model T design as consumer tastes evolved. Meanwhile, General Motors launched innovative new models. Ford’s market share plunged from 60% in 1921 to 20% in 1927.
In response, Ford shut down production for 18 months to roll out the next-generation Model A. It was a risky, all-or-nothing gambit that brought Ford to the brink of collapse. But the Model A was a hit and revived Ford’s fortunes. The company went on to pioneer groundbreaking manufacturing techniques that cemented its dominance.
Dave Liniger – RE/MAX
In the 1970s, Dave Liniger was a struggling real estate broker in Denver barely making ends meet. In 1973, he founded RE/MAX based on a radically new business model. RE/MAX brokers would be independent contractors who paid fees to the parent company instead of employees. This gave them major incentives to hustle.
-RE/MAX brokers proved incredibly productive. But as the model fueled rapid expansion, overhead and debts mounted. In the early 1980s real estate market crash, RE/MAX came dangerously close to bankruptcy with over $1 million in unpaid bills.
Liniger avoided bankruptcy through aggressive cost-cutting, loan renegotiations, and equity-for-debt swaps with creditors. By 1984, RE/MAX was profitable again. It has since grown into the world’s largest real estate brokerage franchise with over 130,000 agents.
Milton Hershey – Hershey Chocolate
Milton Hershey pioneered mass production of milk chocolate and founded what is now The Hershey Company. But his first ventures were failures. In 1886, his first candy company in Philadelphia went bankrupt after just six years.
-Hershey persevered and continued experimenting. He perfected a unique process to mass produce milk chocolate, which until then had been a luxury product. In 1903, he built a factory in rural Pennsylvania and founded the Hershey Chocolate Company (later renamed).
Hershey dominated the U.S. chocolate market for decades. But by the late 1980s, its aging factories were uncompetitive and major product recalls hurt the brand. Hershey’s stock price collapsed, and the company was close to bankruptcy.
New CEO Kenneth Wolfe led a successful turnaround in the 1990s based on factory modernizations, cost cuts, layoffs, and new products. Hershey returned to profitability and stability, allowing it to acquire competitors and diversify.
Robert Downey Jr. – Comeback Actor
Robert Downey Jr. was one of Hollywood’s highest-paid young actors in the late 1980s with acclaimed roles in films like Less Than Zero and Chaplin. However, Downey fell into a spiral of drug abuse and arrests that left him virtually unemployable in Hollywood by the mid-1990s.
In 1997, Downey declared bankruptcy with just $100 in his bank account. “It’s like I have a loaded gun in my mouth and my finger’s on the trigger, and I like the taste of the gunmetal,” he said of his addiction and downward trajectory.
After years of rehab and recovery, Downey achieved the seemingly impossible comeback. His career was revived when he landed the lead role in 2008’s Iron Man, which spawned a mega-successful Marvel superhero franchise. The films demonstrated Downey’s box office appeal and led to other hits. He became the world’s highest-paid actor by 2013.
Resources
Videos
- Steve Jobs’ 2005 Stanford Commencement Address – Jobs recounts his firing from Apple and the early days of Pixar.
- How Donald Trump Bankrupted His Casinos, Left Contractors Unpaid, Ruined Investors & Made Millions – Analysis of Trump’s casino bankruptcies.
- The Henry Ford Documentary – Ford’s innovations and leadership of his namesake company.
Articles
- From Bankruptcy to Billions: 5 Entrepreneurs Who Turned It All Around – More stories of entrepreneurs overcoming failure.
- Billion Dollar Loser: The Epic Rise and Fall of Adam Neumann and WeWork – Profile of how WeWork’s founder was ousted after the company’s disastrous IPO attempt.