Transcription
Oh, hi there. I was just perusing the wonderful selection of products on offer from Sky Mall, America's favorite store, which I guess is a thing you can you can kind of just say. For over 25 years, the Sky Mall shopping catalog occupied the back seats of almost every major American airline in the country, nestled right in between other aviation mainstays like the barf bag, used band-aid, and the pamphlet that teaches you how to dye with dignity.
Want a life-sized yeti for your garden? How about a helmet to regrow your hair? Or maybe a watch? A watch that tells you when you're going to die? Well, if you answered no to all of these things, you're certainly not alone. In fact, the most enticing part of Sky Mall was figuring out who in God's name was actually buying any of this junk, let alone 30,000 ft in the air. But that was kind of part of its allure. For almost 25 years, Sky Mall's business of selling obscure novelty products to airline passengers netted well over a 100 million in annual revenue and reached over 650 million passengers a year, making it not only a household name in aviation, but in pop culture as a whole.
>> The Sky MALL. GIVE ME THE SKY MALL, WILL YOU?
>> I ordered a bunch of crap off Sky Mall.
>> How about a Greg Norman executive putter from the Sky Mall?
>> I got it all from Sky Mall. I'm hooked on that catalog.
And honestly, that's what this video was going to be about. Seriously, guys, this was supposed to be a fun one. I was going to focus on the origins of Sky Mall, their business model, and all of the strange and wacky products they had to offer, but I scrapped it. Pretty much the entire script actually, because what I ended up learning about the downfall of Sky Mall ended up being so much weirder than anything they ever sold.
Now, if you're familiar with the company, then you might be able to take an educated guess as to why they went bankrupt. Eventually, with the rise of smartphones on planes, people just weren't browsing Sky Mall's catalog anymore. And with retail giants like Amazon cornering the vast majority of e-commerce, Sky Mall's business model had started to become kind of obsolete. And that really should have been the whole story. But it wasn't. Not even close, actually. In fact, it was the specific way Sky Mall went bankrupt, the scandals that surrounded them, and the very sketchy parent company they were eventually acquired by that takes what should have been a run-of-the-mill downfall story and turns it into a very strange and somewhat disturbing ordeal. And you can believe me when I say that because I get nasly when I'm excited. In fact, this story is so bizarre that by the end of it, I didn't really get all the answers I wanted. And it's for this exact reason that I can't even guarantee you a satisfying ending. But what I can tell you is this gets weird. So, buckle up.
All right, let's start with some context. In the early 90s, Sky Mall's strange in-flight catalog of novelty products was actually a very clever answer to a specific desire in the retail market. Before the internet went on to make novelty infinitely accessible, there was a time when customers had a real appetite to be shown products they had never seen before, things that the neighbors didn't have. And this paved the way for an entirely new genre of retail. Companies like the Sharper Image, Hallmarker, Schlemer, and eventually Sky Mall all built their entire business models around selling the most obscure novelty items they could find. And this led to some really interesting retail experiences.
>> This is Go Ball. Creative name, eh? A plastic bowling ball with an electric motor which makes it revolve.
>> Oh, wow. A remote control bowling ball. Stupid. Useless, but charming nonetheless.
>> The waterfall is $475, but do not attempt to put the pet guppies in here.
>> Very neat. Surely this would be the talk of any outstanding dinner party. Not everything requires batteries, and this ping pong table for midgets is
Okay, so while Sky Mall may not have had their own storefront, what they did have was arguably even better, and that was unimpeded front row access to one of the most unsuspectingly lucrative demographics in retail: the modern airline passenger. It seemed like when customers were shown products of a strange and novel nature, they were much more likely to purchase them when they were in the air. Which doesn't surprise me. There's something about the idea of flying, where one is not at home, yet also not at their destination, that allows your mind to dream, if only for a moment, that you did in fact own that self-cleaning cat litter robot, even with the full knowledge that you don't even own a cat.
Okay, it wasn't that romantic. I mean, if you've ever flipped through a Sky Mall catalog, then you're probably well aware they sold a lot of junk, a lot of wine mom core, a lot of divorced dad core. But from the 90s to the 2000s, the Sky Mall catalog was a quintessential part of the flying experience. But as with most stories involving print media, it didn't really end well. By the early 10s, with more and more passengers choosing to pass the time with their phones, sales from Sky Mall began to plummet, forcing the company to pivot a huge portion of their business away from their catalog. By 2013, over 2/3 of Sky Mall's revenue was now being generated from a completely separate loyalty business that was, to be honest, really boring and not half as exciting as selling whatever in God's name this is. Besides, this new venture wasn't nearly strong enough to save the company. And with catalog sales continuing to decline year over year, Sky Mall was looking like they were headed towards a pretty definite bankruptcy.
But then, right at the cusp of Sky Mall's darkest hour, a savior emerged, a company of incredible proportions, and they wanted to merge with Sky Mall. And it's right around here that things started to get really, really weird.
In 2013, Sky Mall was approached by the Exhibit Corporation, an up-and-coming software company that boasted an impressive portfolio of products and a fancy $300 million valuation. Now, for Sky Mall, this must have looked like a godsend. After all, Exhibit was a tech-oriented company and would be the perfect match to help launch Sky Mall's archaic business model into the new age. Not to mention, the company's insane valuation looked really impressive to investors as well. So, where could one hope to invest in such an established and promising looking company? The New York Stock Exchange, maybe the NASDAQ? No. In 2013, Exhibit Corp was trading on the OTCBB, which was a system mostly reserved for trading risky penny stocks. Oh, and they also used some really sketchy tactics to get themselves listed in the first place. Finance people, pause here if you're interested. But it gets weirder.
In fact, when you actually take the time to look at Exhibit a little closer, you start to wonder why a company as big and reputable as Sky Mall ever got involved with them in the first place. On the surface, Exhibit marketed themselves as a cloud-based software company, boasting a glossy, sleek website and a suite of exciting digital products. But you barely have to dig to realize that the vast majority of it is vaporware. Either half the products that Exhibit boasts about were never really launched, and the ones that supposedly did never reported any meaningful revenue. For example, TwitYap, the most exclusive social network. Well, it must have been pretty damn exclusive because no one ever used it. For three whole years, their website just sat parked as a vague coming soon page until it eventually turned into what looks to be a directory for knockoff luxury handbags. Because of course it did. This is so obviously the natural life cycle for sketchy [ __ ] like this. What else we got? Ooh, movie social. Ever notice how there's no movie app that integrates social media with the movie ticketing experience? We noticed too, and there still isn't, because I could find no evidence of this ever existing in any capacity.
All right, so from the looks of it, it also seems like Exhibit dabbled in mobile gaming as well, or at least tried to. Their website advertises one game called Running Caveman, which looks to be one of those endless runner clones. "Get ready for the run of your life. Ooh, bad copy. Show the world what you're made of. As Bob's boat Bob, what the [ __ ] Bounce through enchanted forest. Sprint through molten lava and never let your guard down." Wow. Okay, remember folks, 2013, no AI here, just raw, unfiltered human brain power for fans of icicles. The frozen for fans of icicle. Okay, we're done. So, by the looks of the gameplay, it does seem like a real game was made. But as to whether people actually played it is anyone's guess. I don't know. Let's check the comments. "This is [ __ ] stupid and so is your fake company."
All right. So, I think it's pretty clear by now that Exhibit wasn't really selling much software. And I think Price Anonyomics puts it pretty aptly when they describe Exhibit as more of a parody of a tech company than a real company at all. But if Exhibit wasn't actually a successful software company, then how were they making money? What could they have possibly been selling to deserve their $300 million valuation and a majority share in Sky Mall? Well, if you've been following along, you might just be able to guess. In fact, let's say it together. Ready? 3, 2, 1. Weight loss supplements and colon cleansers. Jinx, you owe me a soda.
And this wasn't going well for Exhibit. Turns out the vast majority of the company's health products were lacking proper quality and safety certifications, resulting in a slew of bad business that eventually placed Exhibit in serious financial trouble. And this info is like not hard to find, by the way. I mean, the company just kind of admits to all of this in their annual report for 2012. So, with all this being said, it's probably pretty easy to tell why this was kind of weird. You see, on the surface, Exhibit was an up-and-coming tech company with an impressive portfolio of products and an absurd valuation. And they looked pretty legit. These guys had an office. They had employees. They had cringy workplace Nerf gun battles. But only a couple years prior, Exhibit was a financially unstable neutaceutical company that sold poorly manufactured colon cleansers on the internet.
So, what was really going on here? Well, one random internet user thought he had a clue. Enter Isaac Sberman, a user on the Seeking Alpha Finance website and a former business analyst who kind of has a killer track record for sniffing out suspicious companies. In his article, Isaac reveals evidence which suggests that Exhibit Corp could have potentially pivoted themselves into a tech company in order to build hype for a quote "sophisticated pump and dump scheme." Now, look, Isaac uses a lot of complicated analysis to support his accusation, but it's his investigation into some of Exhibit's shareholders that really sparked my interest. In his thesis, Silverman reveals that multiple insiders within the Exhibit Corporation had once held shares in multiple sketchy penny stocks and pump and dump schemes, including the company's very own CFO.
So, all of this begs the question: why on earth would Sky Mall, a reputable and once prosperous company, merge with a shady, overvalued tech business whose only significant source of revenue came from selling colon cleansers? Well, there's a couple possible scenarios. One is bad, and the other is so, so much worse.
Scenario one: Sky Mall was tricked. Technically, there's a reality where Sky Mall failed to do their homework and genuinely believed Exhibit was an up-and-coming tech company that was truly worth its absurd valuation, which is kind of hard to believe. I mean, the info on Exhibit's past is really not hard to find. And if a bunch of journalists and bloggers on the internet could figure it out, you'd think Sky Mall would have uncovered Exhibit's sketchy history through routine due diligence.
Which brings us to scenario two, the worst one. In this scenario, maybe Sky Mall knew all about Exhibit's shady past and they just didn't care. In this scenario, maybe Sky Mall's executives knew their company was headed for bankruptcy. Maybe they were looking for an out. And maybe in this scenario, they wanted to go out with a bang. So, what does this mean in plain speak? Well, at this point in 2013, Sky Mall was basically a sinking ship, which is a dumb analogy to use for an airplane business, but I'm currently writing this at 3:00 a.m. And as we also know, pump and dumps are built on hype. And if Exhibit were to acquire Sky Mall, this would add a lot of hype. And that it did.
In May of 2013, Sky Mall officially merged with the Exhibit Corporation, catapulting Exhibit stock price up by a whopping 80%. Now, remember our boy Isaac? Well, in the public's eyes, this ends up putting a real fork in his whole pump and dump thesis. And all of a sudden, he has to start doing battle in his comment section because the Sky Mall acquisition has now added legitimacy to Exhibit's portfolio.
"Don't understand how you can call this a pump and dump. Does the Sky Mall merger change your opinion at all?"
"In my opinion, it gives it some legitimacy."
"How's that short thesis of yours after the news today?"
"Did anyone read the news? Think you called this one wrong, Isaac?"
"Isaac, you called it wrong. This company is now huge and thriving. Sky Mall is now under their management."
All right, so when you read these comments with hindsight, it kind of makes you want to pull out your eyelashes because it was now looking like a decent portion of the financial community was beginning to cast doubt on Isaac's theory. But throughout all of the criticism, even when the hype train was moving full steam ahead, Isaac held true to his claim and maintained his short position. And thank God he did, because vindication is one hell of a drug. Over the course of the next 2 and a half months, Exhibit stock price would plummet from an all-time high of $7 per share to an ultimate low of just $1. And if this market move was indeed the result of some elaborate pump and dump scheme, well, it was probably right around here where you could call it a success.
But this didn't mean Exhibit was over. After all, they still did own Sky Mall. And according to them, they were determined to save it. The following year, Exhibit would make a shocking statement when the company announced they had officially ended all operations of their software business to focus 100% on Sky Mall, which was probably pretty easy to do since the majority of their software business arguably never existed.
So, what was their first order of business? What was Exhibit's big plan to revitalize the Sky Mall brand? Well, remember Sky Mall's second business I mentioned? You know, the revenue stream that made up over 2/3 of the company's income and was arguably the only thing keeping Sky Mall's boat afloat. Damn it, not again. Well, Exhibit sold it to pay off debt. But this makes no sense. Why would Exhibit shut down their software business, focus the entirety of their efforts to run Sky Mall, and then immediately sell off the only part of the business that was actually making money?
Well, I'm willing to speculate that Exhibit never had any intention of actually running Sky Mall. They weren't going to steer it out of bankruptcy, diversify their revenue streams, or innovate their existing ones. My guess is they knew Sky Mall was doomed from the very beginning. And now they were going to gut it for all it was worth. And so from 2014 to 2015, Exhibit sold off Sky Mall's most valuable business, declared bankruptcy, and disappeared forever.
Now, what do we make of this? When we look back at this chain of events, is it fair to assume that Sky Mall's final years were just used to inflate the value of a sketchy tech company that was allegedly involved in a shady stock market scheme? And is it possible that the executives at Sky Mall were in on it from the very beginning? Well, I can't say for sure. I'm also not a financial expert and I would never make any direct accusations. But what I can say is that there are many people much smarter than me who agree that the whole thing just reeks, including the SEC, who eventually launched a private investigation of Exhibit in 2015. But the results of that fiasco seem to remain undisclosed.
So what happened to Sky Mall? Well, after declaring bankruptcy in 2015, a company by the name of CNA Marketing would purchase the trademark for a measly $1.9 million. Today, Sky Mall operates just like any other online store. And while the company still holds true to their model of selling somewhat unorthodox products, the inflight magazine has long since disappeared. And the business now feels more like just another generic drop shipping website than the established American icon it once was, which is probably for the best. Maybe much like the products it sold, Sky Mall was just a novelty, a moment in an era of pop culture that has long since come and gone. And perhaps they had a lot more in common with Exhibit than I originally thought. Sure, on the outside, both companies looked impressive, exciting, and full of possibilities. But once you opened them up and took a closer look inside, you started to realize that what they were really selling was just a whole lot of junk. Except for the Garden Yeti. I like the Garden Yeti. I'm partial to the Garden Yeti. Had I been aware of its existence prior, I might have indulged myself.
Ladies and gentlemen, if you've made it this far, thank you for your enthusiasm. Thank you for your time. Just want to let you guys know that we got a lot of stuff planned for this year. I got a second channel with my brother. If you didn't know about it, surprise. This is the big reveal. We talk about a bunch of goofy topics that are similar to what we do here on the main channel, and we have a lot of fun with it. Also, I just started testing out a live show where I talk about the weirdest and latest in brands and marketing that I'm trying to do every first and fourth Wednesday over on Twitch and YouTube. So, that's it. Got a lot of stuff planned for this channel as well. Very excited about it. Take care. I miss y'all already, but I'll see you again very soon.