In the 1980s, Gerald Ratner was the CEO of the Ratner Group, which owned over a thousand low-cost jewelery stores in the US and UK called Ratners. In 1991, Gerald was invited to speak at a meeting of the Institute of Directors. “It was a high-profile event with thousands of some of the most powerful investors in the UK,” writes Sean Kernan in Medium. Gerald wrote a speech and showed it to his PR rep, who told him to add some jokes, which he did. He showed the edited speech to his wife, and she told him to delete the jokes he had inserted. He did not do it. Big mistake — it cost him his career and his fortune.
From Medium room:
The start of his speech was standard procedure, celebrating his company’s success and sales figures. Then, halfway through, he started cracking jokes playing on his brand’s cheap reputation:
“Ratners doesn’t represent prosperity – and come to think of it, it doesn’t have much to do with quality either.
We also make cut glass sherry decanters, with six glasses on a silver tray that your butler can serve you drinks on, all for £4.95.
People say, ‘How can you sell that for such a low price?’ I say, ‘Because it’s total crap.'”
Then, he took a painful step by saying:
“We sold a pair of earrings for less than a pound, which is cheaper than a prawn sandwich from Marks and Spencer, but probably wouldn’t last as long.”
The jokes drew roars of laughter from the crowd. But that would have a very different manifestation in the market.
The British press quickly picked up Gerard’s jokes, and working-class people who shopped at Ratners were enraged by the insulting remarks. “At the end of the week,” Kernan writes, “Ratner Group shares lost £500 million valuation ($1.5 billion today). By the end of the year, they had still lost 80% of the company’s value. More than 300 stores were closed and “Gerald was forced to step down as CEO. He was also forced to sell his shares, which he used to pay off his debt, leaving him with nothing.”
He should have listened to his wife.