On the Couch with Dr. Schadenfreude

(Of the Millennium Dome, Talk, Enron, and the culture of arrogance)

I’ve long been fascinated by failure. Not the run-of-the-mill, never-been, B-list sort of failure that Howard Stern used to trot out so masterfully on the glory days of his radio show. No, the failure I appreciate most is the can’t-miss, blue-chip variety, the one that has everything going for it, but still manages to miss the mark.

The most obvious of these failures is the Titanic, of course. Not the Leonardo Di Caprio version, which was quite the commercial success, but the luxury liner herself. Almost as highly touted as the “Dan vs. Dave” ad campaign (you remember: the decathlon rivalry manufactured by Reebok for the 1992 Olympics, in which one of the decathletes (Dan) actually failed to qualify for the Olympics), the unsinkable (in theory) Titanic came across an iceberg (in practice), and that was all she wrote.

As the media have come to dominate our lives, the expectations they generate makes failure all the sweeter (especially when it doesn’t involve massive loss of life).

Take the Millennium Dome in London. Its principals made such grandiose claims for the tourism it would attract that they failed to notice the Dome was a cement monstrosity located near the old gas-works. Meant to stand for a century, it closed down 18 months later.

Take Long Term Capital Management, the scientifically designed hedge fund that placed so many investments (read: bets) that it could not fail. Except that it did, requiring a Congressional bailout to keep the world economy from convulsing.

Take Talk magazine. Positioned as an unstoppable combination of magazine savvy (editrix Tina Brown) and movie-making bravado (Harvey Weinstein of Miramax) set to turn publishing on its ear, it turned out no one listened to what Talk was saying. The magazine shut down three years after its inception.

Take Matthew McConaughey. Before his first major movie (A Time to Kill) was ever released, Vanity Fair did a cover profile on him, explaining why he was going to be The Next Big Thing. The rest of the mainstream media was also on the bandwagon, offering up carefully placed tidbits about the guy’s social life, family history, and movie-making aspirations. But a funny thing happened: McConaughey didn’t happen. His career never really took off, the public never took a serious liking to him, and he never became the superstar that the media machine insisted he would become.

I could go on in my sour-grapes way about these can’t-miss failures (Kurt Andersen’s novel Turn of the Century; the #1 pick of Joe Smith in the 1995 NBA draft; almost the entirety of the dot.com boom; that by-the-numbers disaster that was Pearl Harbor, the Movie), but I suppose there’s a point here, about how arrogance precedes a fall. To me, the truly grand failures are the ones in which the possibility of failure is never even imagined.

For months now, we’ve all been witness to the blame game being played by every single entity connected to Enron. No matter how close any executive, accounting firm, lobbyist or politician was to the collapse of the energy-trading company, their fingers all point to someone else. Like Long Term Capital Management, Enron could not have gone wrong. After all, it had paid off our country’s legislators to relax regulatory rules and allow it to build a commodities trade in businesses that weren’t mature enough to support such a model.

Belief in the commidification of everything (or the culture of arrogance, depending on how you look at it) led company executives to create shady partnerships to hide company debt of more than $1 billion, likely with the complicity of its auditors. One executive cursed out an investment analyst in a teleconference for asking what turned out to be the right questions. Then the death-spiral started, as investments tanked, debtors welshed on payments, executives lied about debt while dumping overvalued shares, and the rank-and-file were barred from selling company stock from their retirement plans. Add it all up, and you have one of the grandest failures in the history of American business.

In our own industry, some are drawing parallels between Enron and ImClone, the biotech company that watched its stock collapse after the FDA refused to review its NDA for Erbitux, a colorectal cancer drug that, by anecdotal evidence, did wonders for patients. The facts are still out on the ImClone case, but the media has pounced on the president and CEO, who allegedly made quite a killing in company stock while sitting on information about the inadequacies in the Erbitux NDA. Since the main investor to get hammered is Bristol-Myers Squibb ($1 billion in stock purchase last fall, another $1 billion to come in milestone payments, if Erbitux gets back on track), the public outcry hasn’t been as severe. We’ll have to watch how it shakes out, to see if ImClone joins Mr. McConaughey, the Dome, Tina Brown, et alia on my special list.