Daniel Mendelzon

[damendelzon]

Insider Trading: Chase Edition

When I joined J.P. Morgan in 2009, the crisis in the financial sector that led to the Great Recession uncovered schemes involving consultants and bankers from top companies in the industry. 

McKinsey, Goldman Sachs, Procter & Gamble, and of course J.P. Morgan all were involved in a scandal. The problem was so widespread that triggered the government to impose regulations and even inspired a TV show (Billions on Showtime). 

By 2010 I was required to perform an annual disclosure of all my trading accounts. The bank had improved the self-reporting tools for clearing transactions before trading-- these were not directly connected to the employee account. However, it wasn’t until I tried trading after clearing the through compliance that I realized the second check right before placing the order.

Thanks to these mindful discourage ‘nudges’ the bank has significantly reduced the number of scandals involving employee trading.  

[damendelzon]

The Mexican Underdog

“It’s kind of one more entrant into an already very busy space with lots of choice for consumers … But in terms of a sort of a sea-change for BlackBerry, I would think that’s overstating it.”   -Jim Balsillie, Blackberry co-CEO, 2007

The history of Corona and Heineken in the imported beer market reminded me of the above quote from the CEO of Blackberry when Apple entered the mobile phone market in 2007.

When Corona entered the American market in the 1980s, Heineken distributors in the country dissed the beer as a “Mexican soda pop” and a “quirky little alternative beer in Texas and California” because they believed Heineken’s quality was above all competitors. It wasn’t until ten years later that Heineken realized through a distributor survey how far off they were from reality. By then Corona was the number two imported beer in the United States.

The success of Corona in the United States stemmed from three areas that Heineken missed.  

Management established closed connections with distributors by setting up satellite offices. 

The marketing strategy kept the brand identity as an extension of its origins in Mexico

Maintained a consistent customer experience through manufacturing and financial changes with moves such as developing bottles that maintained freshness and absorbing increased tax costs 

[damendelzon]

Jack of All Trades, Master of None.

To many companies achieving the largest market share in their target market is a sign of winning the war against competitors. However, the Black & Decker (“B&D”) case showed that winning battles in adjacent markets could end up being toxic for one of the markets. 

B&D went from a small inventor of power tools in the 1910s to a diversified tool manufacturer in the 1980s. By 1990, the company had the largest market share in the US Power Tool Market but risked maintaining its industry position as it was losing the war in the highest growth market in the US: the Tradesmen market. 

Tradesmen were mostly self-employed and offered independent services to households. On average, these households that tradesmen work at would have B&D products, most likely in a different color, but virtually the same B&D name and, possibly, design. Because tradesmen would bring their equipment to the house, they likely saw themselves differently from the residential customers they were servicing and, as a result, needed different tools - professional tools. 

The B&D brand was built into a consumer brand. Professional users who also serve consumers would not opt for tools that are also used by their clients. To capture the tradesmen market, B&D would need to build a different brand or product. Similar to what Toyota did with Lexus, Marriott did with The Ritz Carlton, and J.P. Morgan did with Chase.