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3 Bubbles That Burst

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Like many young people, I'm gradually coming to terms with the sad fact that I won't be able to retire at 25 with the fabulous wealth I accumulated through shrewd sports card speculation in the late 80s and early 90s. While it's disappointing to learn that one can't trade his stack of Harold Miner rookie cards for a new car, there's some small solace in knowing that you weren't the only person to be caught in a bubble. (At least be thankful that you had baseball cards and not, say, Pets.com stock.) Let's have a look at three other popped bubbles:

Tulipmania

Although tulips are inextricably linked to the Netherlands in most peoples' brains, the flowers didn't actually start growing in the area until the late 16th century, when bulbs were imported from the Ottoman Empire. When the plants finally found soil, though, they quickly became immensely popular. Every Dutch aristocrat longed for a garden full of the beautiful, rare spring flowers, and tulip bulbs were suddenly the Netherlands' hottest commodity. Even better, the country's booming trade with the New World had given the potential buyers purses full of disposable income, so there was nothing to keep a boom from taking off.

By 1623, the market for tulip bulbs was starting to warm up, and by 1636, it was overheating. Although the surviving evidence is largely anecdotal, there are stories of collectors being offered the equivalent of year's pay for a single bulb"¦and turning down the offer. Speculators traded their houses and livestock for bulbs they thought they could flip for a large profit, and professional tulip traders peddled their wares throughout the country. Enterprising traders were even offering what amounted to futures contracts for bulbs they intended to plant at later date; this practice was decried as the "tulip wind trade" because the buyers rarely got any sort of tangible return.

The deathblow for the craze didn't come until February 1637 when a group of traders gathered in Haarlem to auction their bulbs. No one seemed interested in buying the bulbs, though, and the traders began dumping their bulbs at reduced prices. The public, though, had already begun to panic and wanted no part of the tulip trade. Certain varieties lost 99% of their value in a matter of days, and speculators faced financial ruin.

Some modern academics have questioned whether these tales of the tulipmania's scope are a bit exaggerated, but the tale is still recounted as a cautionary tale after a speculative bubble bursts. At the end of the day, wouldn't you rather have a garden full of tulips than a portfolio full of dot-com stocks?

The South Sea Company

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The South Sea Company was established in 1711 as the exclusive English trading partner with Spain's holdings in South America. As the plan went, the treaty ending the War of Spanish Succession, which was being fought at the time, would grant the company extensive trading rights with these colonies. The South Sea Company could provide the colonies with slaves, and an even more rewarding racket could be built around trading English cloths and textiles to the natives for precious metals and jewels.

However, when the war finally wound up with the Treaty of Utrecht in 1713, the trading rights weren't as extensive as the South Sea Company's shareholders had hoped. The company could only send one general-commerce ship to South America each year, and contentious relations with Spain meant that these voyages were vulnerable to harassment by the Spanish navy. Although the South Sea Company was fairly efficient as a slave trader, it didn't seem to have the huge long-term potential that its directors claimed.

The company continued to hawks its potentially lucrative trade in the Americas as a great business opportunity, though. The South Sea Company began taking on England's war debts and converting them into equity in the company. For the holders of these debts, converting them into South Sea Company stock seemed like a great way to get in on an up-and-coming commercial enterprise, while the company itself gained a steady revenue stream as the country paid off war debts it now held. In 1720, Parliament agreed to let the company take over an even larger share of the country's debt, and the company's stock went through the roof. Stock prices rose from 128 pounds in January to over a 1,000 pounds in August, and investors were euphoric.

There was a slight hitch, though; this whole endeavor was something of a pyramid scheme. The company was trading its equity for the government debt, but the underlying trading business with South America was fundamentally weak. As investors gradually realized that the South Sea Company had very little in the way of actual products or services to offer, the stock price collapsed. In short, all of this government debt had been converted into stock in a company with comparatively meager prospects for future earnings. By September 1720, the price had dropped all the way back down to 150 pounds a share and continued falling.

This precipitous drop undercut the entire British stock market, and investors wanted answers. The ensuing investigation showed that the South Sea Company had been allowed to get away with such shaky business practices in part because it had bribed officials with cash and free stock. Not everyone lost out on the transaction, though; Robert Walpole, a longtime critic of the company and reformer following the collapse of the South Sea Bubble, parlayed his role in straightening this mess out into the role of the first de factor prime minister.

Beanie Babies

beanie-babies.jpgNothing says "Destined to hold its value indefinitely" quite like a teddy bear stuffed with plastic pellets. Or so collectors thought in the late 1990s when Beanie Babies, the plush stuffed animal brainchild of Ty Inc. founder Ty Warner, were sweeping the national collecting market.


What made these little stuffed critters a billion-dollar industry that sucked in both children and scores of adults? A number of factors contributed to the beanbags' meteoric rise as collectibles. Ty's brass originally envisioned the product line as a set of inexpensive, high quality stuffed animals that kids could afford. Prices were generally around $5, low enough that kids could get the whole set of Beanies. Ty eschewed normal distribution chains for stuffed animals; the company avoided big chain discount retailers in favor of smaller gift-shop type outlets, a decision that made the product seem classier and rare.

Moreover, the Beanie Babies themselves received constant tweaks. Colors or names changed, their trademark ear tags would be subtly redesigned, and, most importantly, Ty retired certain models, further spiking collector demand.

As you may remember, the secondary market for the toys absolutely exploded. By 1996, Beanies had graduated from kids' fad to full-blown collecting craze. It seemed that almost any Beanie could conceivably become the next hot limited edition, so collectors snapped them up as soon as they hit store shelves. A royal blue Peanut the Elephant, which was only produced in limited quantities for a short time in 1995, could sell for over $3000. Other individual Beanies, like a wingless Quackers the Duck, fetched prices well over $1,000 apiece. The good times were never going to stop rolling, and Beanie Babies seemed poised to replace the less-adorable dollar as the nation's currency.

That is, until the good times promptly stopped rolling. By 1999, the craze had started to lose its steam. Most of the newer toys hadn't appreciated like their predecessors, possibly because the market was so flooded with bean-filled animals. (Ty's revenues had ballooned to over $1 billion, which represents an awful lot of stuffed bears flowing into collectors' hands.) In 1999, Ty announced it was completely retiring the entire Beanie line, and although a fan outcry convinced the company to revive the line in 2000, the hysteria was dead.

Certain rare Beanies still have significant value, but they're far below their heady late-90s peaks. Peanut the Elephant seems to be bravely soldiering on; two examples of his royal blue variant sold for $1100 and $2000 on eBay last week. These examples are exceptions, though; the great bulk of speculative Beanie purchases seem to be worth a few bucks at most.

Ethan Trex grew up idolizing Vince Coleman, and he kind of still does. Ethan co-writes Straight Cash, Homey, the Internet's undisputed top source for pictures of people in Ryan Leaf jerseys.

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40 Fun Facts About Sesame Street
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Now in its 47th season, Sesame Street is one of television's most iconic programs—and it's not just for kids. We're big fans of the Street, and to prove it, here are some of our favorite Sesame facts from previous stories and our Amazing Fact Generator.

Sesame Workshop

1. Oscar the Grouch used to be orange. Jim Henson decided to make him green before season two.

2. How did Oscar explain the color change? He said he went on vacation to the very damp Swamp Mushy Muddy and turned green overnight.

3. During a 2004 episode, Cookie Monster said that before he started eating cookies, his name was Sid.

4. In 1980, C-3PO and R2-D2 visited Sesame Street. They played games, sang songs, and R2-D2 fell in love with a fire hydrant.

5. Mr. Snuffleupagus has a first name—Aloysius

6. Ralph Nader stopped by in 1988 and sang "a consumer advocate is a person in your neighborhood."

7. Caroll Spinney said he based Oscar's voice on a cab driver from the Bronx who brought him to the audition.

8. In 1970, Ernie reached #16 on the Billboard Hot 100 with the timeless hit "Rubber Duckie."

9. One of Count von Count's lady friends is Countess von Backwards, who's also obsessed with counting but likes to do it backwards.

10. Sesame Street made its Afghanistan debut in 2011 with Baghch-e-Simsim (Sesame Garden). Big Bird, Grover and Elmo are involved.

11. According to Muppet Wiki, Oscar the Grouch and Count von Count were minimized on Baghch-e-Simsim "due to cultural taboos against trash and vampirism."

12. Before Giancarlo Esposito was Breaking Bad's super intense Gus Fring, he played Big Bird's camp counselor Mickey in 1982.

13. Thankfully, those episodes are available on YouTube.

14. How big is Big Bird? 8'2". (Pictured with First Lady Pat Nixon.)

15. In 2002, the South African version (Takalani Sesame) added an HIV-positive Muppet named Kami.

16. Six Republicans on the House Commerce Committee wrote a letter to PBS president Pat Mitchell warning that Kami was not appropriate for American children, and reminded Mitchell that their committee controlled PBS' funding.

17. Sesame Street's resident game show host Guy Smiley was using a pseudonym. His real name was Bernie Liederkrantz.

18. Bert and Ernie have been getting questioned about their sexuality for years. Ernie himself, as performed by Steve Whitmere, has weighed in: “All that stuff about me and Bert? It’s not true. We’re both very happy, but we’re not gay,”

19. A few years later, Bert (as performed by Eric Jacobson) answered the same question by saying, “No, no. In fact, sometimes we are not even friends; he can be a pain in the neck.”

20. In the first season, both Superman and Batman appeared in short cartoons produced by Filmation. In one clip, Batman told Bert and Ernie to stop arguing and take turns choosing what’s on TV.

21. In another segment, Superman battled a giant chimp.

22. Telly was originally "Television Monster," a TV-obsessed Muppet whose eyes whirled around as he watched.

23. According to Sesame Workshop, Elmo is the only non-human to testify before Congress.

24. He lobbied for more funding for music education, so that "when Elmo goes to school, there will be the instruments to play."

25. In the early 1990s, soon after Jim Henson’s passing, a rumor circulated that Ernie would be killed off in order to teach children about death, as they'd done with Mr. Hooper.

26. According to Snopes, the rumor may have spread thanks to New Hampshire college student, Michael Tabor, who convinced his graduating class to wear “Save Ernie” beanies and sign a petition to persuade Sesame Workshop to let Ernie live.

27. By the time Tabor was corrected, the newspapers had already picked up the story.

28. Sesame Street’s Executive Producer Carol-Lynn Parente joined Sesame Workshop as a production assistant and has worked her way to the top.

29. Originally, Count von Count was more sinister. He could hypnotize and stun people.

30. According to Sesame Workshop, all Sesame Street's main Muppets have four fingers except Cookie Monster, who has five.

31. The episode with Mr. Hooper's funeral aired on Thanksgiving Day in 1983. That date was chosen because families were more likely to be together at that time, in case kids had questions or needed emotional support.

32. Mr. Hooper’s first name was Harold.

33. Big Bird sang "Bein' Green" at Jim Henson's memorial service.

34. As Chris Higgins put it, the performance was "devastating."

35. Oscar's Israeli counterpart is Moishe Oofnik, whose last name means “grouch” in Hebrew.

36. Nigeria's version of Cookie Monster eats yams. His catchphrase: "ME WANT YAM!"

37. Sesame's Roosevelt Franklin ran a school, where he spoke in scat and taught about Africa. Some parents hated him, so in 1975 he got the boot, only to inspire Gob Bluth’s racist puppet Franklin on Arrested Development 28 years later.

38. Our good friend and contributor Eddie Deezen was the voice of Donnie Dodo in the 1985 classic Follow That Bird.

39. Cookie Monster evolved from The Wheel-Stealer—a snack-pilfering puppet Jim Henson created to promote Wheels, Crowns and Flutes in the 1960s.

40. This puppet later was seen eating a computer in an IBM training film and on The Ed Sullivan Show.

Thanks to Stacy Conradt, Joe Hennes, Drew Toal, and Chris Higgins for their previous Sesame coverage!

An earlier version of this article appeared in 2012.

How Apple's '1984' Super Bowl Ad Was Almost Canceled

More than 30 years ago, Apple defined the Super Bowl commercial as a cultural phenomenon. Prior to Super Bowl XVIII, nobody watched the game "just for the commercials"—but one epic TV spot, directed by sci-fi legend Ridley Scott, changed all that. Read on for the inside story of the commercial that rocked the world of advertising, even though Apple's Board of Directors didn't want to run it at all.

THE AD

If you haven't seen it, here's a fuzzy YouTube version:

"WHY 1984 WON'T BE LIKE 1984"

The tagline "Why 1984 Won't Be Like '1984'" references George Orwell's 1949 novel 1984, which envisioned a dystopian future, controlled by a televised "Big Brother." The tagline was written by Brent Thomas and Steve Hayden of the ad firm Chiat\Day in 1982, and the pair tried to sell it to various companies (including Apple, for the Apple II computer) but were turned down repeatedly. When Steve Jobs heard the pitch in 1983, he was sold—he saw the Macintosh as a "revolutionary" product, and wanted advertising to match. Jobs saw IBM as Big Brother, and wanted to position Apple as the world's last chance to escape IBM's domination of the personal computer industry. The Mac was scheduled to launch in late January of 1984, a week after the Super Bowl. IBM already held the nickname "Big Blue," so the parallels, at least to Jobs, were too delicious to miss.

Thomas and Hayden wrote up the story of the ad: we see a world of mind-controlled, shuffling men all in gray, staring at a video screen showing the face of Big Brother droning on about "information purification directives." A lone woman clad in vibrant red shorts and a white tank-top (bearing a Mac logo) runs from riot police, dashing up an aisle towards Big Brother. Just before being snatched by the police, she flings a sledgehammer at Big Brother's screen, smashing him just after he intones "We shall prevail!" Big Brother's destruction frees the minds of the throng, who quite literally see the light, flooding their faces now that the screen is gone. A mere eight seconds before the one-minute ad concludes, a narrator briefly mentions the word "Macintosh," in a restatement of that original tagline: "On January 24th, Apple Computer will introduce Macintosh. And you'll see why 1984 won't be like '1984.'" An Apple logo is shown, and then we're out—back to the game.

In 1983, in a presentation about the Mac, Jobs introduced the ad to a cheering audience of Apple employees:

"... It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM-dominated and -controlled future. They are increasingly turning back to Apple as the only force that can ensure their future freedom. IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple. Will Big Blue dominate the entire computer industry? The entire information age? Was George Orwell right about 1984?"

After seeing the ad for the first time, the Apple audience totally freaked out (jump to about the 5-minute mark to witness the riotous cheering).

SKINHEADS, A DISCUS THROWER, AND A SCI-FI DIRECTOR

Chiat\Day hired Ridley Scott, whose 1982 sci-fi film Blade Runner had the dystopian tone they were looking for (and Alien wasn't so bad either). Scott filmed the ad in London, using actual skinheads playing the mute bald men—they were paid $125 a day to sit and stare at Big Brother; those who still had hair were paid to shave their heads for the shoot. Anya Major, a discus thrower and actress, was cast as the woman with the sledgehammer largely because she was actually capable of wielding the thing.

Mac programmer Andy Hertzfeld wrote an Apple II program "to flash impressive looking numbers and graphs on [Big Brother's] screen," but it's unclear whether his program was used for the final film. The ad cost a shocking $900,000 to film, plus Apple booked two premium slots during the Super Bowl to air it—carrying an airtime cost of more than $1 million.

WHAT EXECUTIVES AT APPLE THOUGHT

Although Jobs and his marketing team (plus the assembled throng at his 1983 internal presentation) loved the ad, Apple's Board of Directors hated it. After seeing the ad for the first time, board member Mike Markkula suggested that Chiat\Day be fired, and the remainder of the board were similarly unimpressed. Then-CEO John Sculley recalled the reaction after the ad was screened for the group: "The others just looked at each other, dazed expressions on their faces ... Most of them felt it was the worst commercial they had ever seen. Not a single outside board member liked it." Sculley instructed Chiat\Day to sell off the Super Bowl airtime they had purchased, but Chiat\Day principal Jay Chiat quietly resisted. Chiat had purchased two slots—a 60-second slot in the third quarter to show the full ad, plus a 30-second slot later on to repeat an edited-down version. Chiat sold only the 30-second slot and claimed it was too late to sell the longer one. By disobeying his client's instructions, Chiat cemented Apple's place in advertising history.

When Apple co-founder Steve Wozniak heard that the ad was in trouble, he offered to pony up half the airtime costs himself, saying, "I asked how much it was going to cost, and [Steve Jobs] told me $800,000. I said, 'Well, I'll pay half of it if you will.' I figured it was a problem with the company justifying the expenditure. I thought an ad that was so great a piece of science fiction should have its chance to be seen."

But Woz didn't have to shell out the money; the executive team finally decided to run a 100-day advertising extravaganza for the Mac's launch, starting with the Super Bowl ad—after all, they had already paid to shoot it and were stuck with the airtime.

1984 - Big Brother

WHAT EVERYBODY ELSE THOUGHT

When the ad aired, controversy erupted—viewers either loved or hated the ad, and it spurred a wave of media coverage that involved news shows replaying the ad as part of covering it, leading to estimates of an additional $5 million in "free" airtime for the ad. All three national networks, plus countless local markets, ran news stories about the ad. "1984" become a cultural event, and served as a blueprint for future Apple product launches. The marketing logic was brilliantly simple: create an ad campaign that sparked controversy (for example, by insinuating that IBM was like Big Brother), and the media will cover your launch for free, amplifying the message.

The full ad famously ran once during the Super Bowl XVIII (on January 22, 1984), but it also ran the month prior—on December 31, 1983, TV station operator Tom Frank ran the ad on KMVT at the last possible time slot before midnight, in order to qualify for 1983's advertising awards.* (Any awards the ad won would mean more media coverage.) Apple paid to screen the ad in movie theaters before movie trailers, further heightening anticipation for the Mac launch. In addition to all that, the 30-second version was aired across the country after its debut on the Super Bowl.

Chiat\Day adman Steve Hayden recalled: "We ran a 30- second version of '1984' in the top 10 U.S. markets, plus, in an admittedly childish move, in an 11th market—Boca Raton, Florida, headquarters for IBM's PC division." Mac team member Andy Hertzfeld ended his remembrance of the ad by saying:

"A week after the Macintosh launch, Apple held its January board meeting. The Macintosh executive staff was invited to attend, not knowing what to expect. When the Mac people entered the room, everyone on the board rose and gave them a standing ovation, acknowledging that they were wrong about the commercial and congratulating the team for pulling off a fantastic launch.

Chiat\Day wanted the commercial to qualify for upcoming advertising awards, so they ran it once at 1 AM at a small television station in Twin Falls, Idaho, KMVT, on December 15, 1983 [incorrect; see below for an update on this -ed]. And sure enough it won just about every possible award, including best commercial of the decade. Twenty years later it's considered one of the most memorable television commercials ever made."

THE AWFUL 1985 FOLLOW-UP

A year later, Apple again employed Chiat\Day to make a blockbuster ad for their Macintosh Office product line, which was basically a file server, networking gear, and a laser printer. Directed by Ridley Scott's brother Tony, the new ad was called "Lemmings," and featured blindfolded businesspeople whistling an out-of-tune version of Snow White's "Heigh-Ho" as they followed each other off a cliff (referencing the myth of lemming suicide).

Jobs and Sculley didn't like the ad, but Chiat\Day convinced them to run it, pointing out that the board hadn't liked the last ad either. But unlike the rousing, empowering message of the "1984" ad, "Lemmings" directly insulted business customers who had already bought IBM computers. It was also weirdly boring—when it was aired at the Super Bowl (with Jobs and Sculley in attendance), nobody really reacted. The ad was a flop, and Apple even proposed running a printed apology in The Wall Street Journal. Jay Chiat shot back, saying that if Apple apologized, Chiat would buy an ad on the next page, apologizing for the apology. It was a mess:

20-YEAR ANNIVERSARY

In 2004, the ad was updated for the launch of the iPod. The only change was that the woman with the hammer was now listening to an iPod, which remained clipped to her belt as she ran. You can watch that version too:

FURTHER READING

Chiat\Day adman Lee Clow gave an interview about the ad, covering some of this material.

Check out Mac team member Andy Hertzfeld's excellent first-person account of the ad. A similar account (but with more from Jobs's point of view) can found in the Steve Jobs biography, and an even more in-depth account is in The Mac Bathroom Reader. The Mac Bathroom Reader is out of print; you can read an excerpt online, including QuickTime movies of the two versions of the ad, plus a behind-the-scenes video. Finally, you might enjoy this 2004 USA Today article about the ad, pointing out that ads for other computers (including Atari, Radio Shack, and IBM's new PCjr) also ran during that Super Bowl.

* = A Note on the Airing in 1983

Update: Thanks to Tom Frank for writing in to correct my earlier mis-statement about the first air date of this commercial. As you can see in his comment below, Hertzfeld's comments above (and the dates cited in other accounts I've seen) are incorrect. Stay tuned for an upcoming interview with Frank, in which we discuss what it was like running both "1984" and "Lemmings" before they were on the Super Bowl!

Update 2: You can read the story behind this post in Chris's book The Blogger Abides.

This post originally appeared in 2012.

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