Vince McMahon lost one-third of his fortune ($300 million) in one day. That day was yesterday.
And I get upset if I lose a quarter down that awkward tight space between my car seats.
This week, WWE signed a contract with USA that exceeded the value of their previous agreement by 50%. A 50% increase in the annual amount of money made from one revenue stream. So why did WWE's stock tank, sending McMahon's net worth down with it?
Not living up to the hype.
There are a lot of factors that go into failure/success with this story that I won't go into (or don't know about). But I think the root of the perceived failure can be found here.
McMahon announced an exclusive, subscriber-only network for wrestling with a lot of fanfare. He confidently projected a minimum of 1 million subscribers and showed a chart to investors of the incremental revenue of a growing network. He also promised he would be able to double the value of his existing contracts.
Instead, his contracts grew 50%. For a lot of companies, that would be worth celebrating (especially companies that are established). Instead, he's viewed as a complete failure at the moment because he didn't live up to the hype. Sure, 50% was good...but it wasn't double.
My boss Mark DeMoss has an entire chapter written about this in his book The Little Red Book of Wisdom. His mantra here at our office is "under-promise, over-deliver." In reality, a client or organization could do a lot of great things that would be deemed successful by many standards. However, if those achievements don't at least match or surpass the previously-hyped numbers, it will be viewed as failing.
Stocks see value based on hype. People buy shares in companies they feel confident in. Sure, McMahon's hype helped surge stock prices temporarily, putting him back into billionaire status. However, when his company failed to live up to the pre-determined hype, confidence fell...along with the stock price.
Over-promising and under-delivering can contribute to losing trust and credibility. Or in Vince McMahon's case, over $300 million.
What do you think? Is there a place for hype?