Startup Story: What REALLY Sank The “Titanic?”

The Titanic and Titanic Iceberg are central characters in our narrative on uncertainty and avoiding venture failure. But, how—or perhaps more importantly, why—did she really sink? We thought we’d share some of the alternative hypotheses and conspiracy theories through the years.

A relatively recent thesis holds that the Titanic was a victim of a long-burning coal fire near one of the central bulkheads damaged by the Iceberg. The steamships of the era were coal-powered. A strong fire to drive speed had to be balanced with the risk of that fire spreading. It was not unusual for a coal fire to break out in the nether regions of a ship. But it is argued that this fire started before the Titanic even set sail, and was getting out of control, leading the Captain to proceed more quickly through iceberg-laden waters than was considered safe.[1] While the fire may have been a contributing factor to a weaker hull, it is unlikely this fire was a major causal factor.

A more intriguing theory suggests that the White Star Line, the owner/operator of the Titanic, did a bait and switch with the Olympic, the Titanic’s sister ship. The Olympic had been damaged months earlier, but White Star was unable to secure insurance for these damages. In Robin Gardiner’s book Titanic: The Ship That Never Sank?, [2] Gardiner suggests that White Star swapped and “rebranded” the ships shortly before launch. The supposed plan was to hit the iceberg, resulting in a slow sinking that would allow passengers to transition safely to lifeboats. But they did not anticipate the interaction of the extensive damage to multiple compartments from the iceberg with the rapid spread of water from the listing of the ship that sped the descent into icy depths. This theory has received little support or evidence.

 Our favorite conspiracy theory is worthy of a movie plot, complete with high-finance intrigue and sinister, self-interested actors.[3] J.P. Morgan, investor in the White Star Line, was a powerful figure in financial circles in the latter part of the 19th and early part of the 20th centuries. You can learn more about him and his influence on White Star’s strategy in our book. Morgan was part of a coalition for forming the Federal Reserve Board. Several powerful opponents to this plan, including John Jacob Astor, Benjamin Guggenheim, and Isidor Straus, perished in the disaster. Morgan’s last-minute cancellation of his own passage on the Titanic added fuel to the notion that Morgan, the Rothschilds, and others engineered the sinking to take out their nemeses. While entertaining and colorful, again there is little supporting evidence for this rendition.

JP Morgan.png

J.P. Morgan

In reality, it was likely not high finance intrigue, a captain bent on speed over safety, aliens, the Bermuda Triangle, or even the Iceberg that sank the Titanic. The sinking, and disastrous casualties, were the result of the cumulative effects of decisions in designing, building, and operating the ship. These decisions spanned the people involved, the customers the White Star Line served, and the technical aspects of the build. The premise of our book, The Titanic Effect is that, like the Titanic, startups sink due to a series of decisions that result in hidden debts across these Oceans. By being aware of them and understanding the tradeoffs of their decisions, founders and their supporters are more likely to weather the impact of potentially journey-ending encounters with icebergs—in whatever form they may take for their startup.

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[1]Telegraph Reporters, “Huge Fire Ripped Through Titanic Before it StruckIceberg, Fresh Evidence Suggests,”The Telegraph, December 31, 2016, accessed September 22, 2017

[2]Gardiner, Robin, Titanic: The Ship That Never Sank?Sheperton, UK: Ian Allan Publishing, 1988.

[3]Mike Bird, “There's a Crazy Conspiracy Theory that the Rothschilds Sank the Titanic to SetUp the Federal Reserve,” Business Insider, October 12, 2015, accessed September 22, 2017