Davis founder brands 091812

Davis Brand CapitalClarity.

Founder Brands From Original Vision to Sustained Value

September 2012

Copyright © 2012 Davis Brand Capital

What do some of the world’s most valuable and well-known brands

have in common?

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They are all founder brands.

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What does this mean?

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A founder brand is most easily defined as a brand where a founder or founding family exercises significant influence over the business.

6Source: International Finance Corporation, “Corporate Governance,” 2007, p. 1


That “influence” is manifested through ownership, effective voting control, management or history.

7Source: International Finance Corporation, “Corporate Governance,” 2007, p. 1


Why do founder brands matter so much?

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Copyright © 2012 Davis Brand Capital 9

Founder brands make enormous contributions to the U.S. economy.

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244Copyright © 2012 Davis Brand Capital

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more than 35 percent of Fortune 500 companies are family owned or controlled

Source: Conway Center for Family Business, “Family Business Facts, Figures and Fun,” 2012


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eighty to 90 percent of all U.S. businesses are family owned or controlled


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sixty percent of all public companies in the U.S. are family controlled



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the founder brands* on the 2011 Davis Brand Capital 25 had a market capitalization exceeding $244 billion…

* Apple, Microsoft, Google, Toyota Motor Corporation, Volkswagen, Samsung Electronics, Wal-Mart

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http://bit.ly/Pwgnyp

http://bit.ly/Pwgnyp


ARPIL 2011 JULY 2011 OCT 2011 DEC 2011 JAN. 2011

JANUARY 9 , 2011 – DECEMBER 30 , 2011

FOUNDER BRANDS (+13.53%)DBC25 (+9.32%) NASDAQ (-1 .80%)S&P 500 (0.00%)DOW JONES (+5.53%)

0%

-2%

-4%

-6%

-8%

-10%

-12%

-14%

6%

4%

2%

10%

12%

14%

8%

… and outperformed the S&P by 13.53 percent in 2011

Note: Based on a hypothetical stock portfolio comprised of the 25 companies on the Davis Brand Capital 25, with holdings proportionately allocated according to each company’s position in the ranking.


Surprisingly, even when family businesses grow into major brands,

they are neither well understoodnor well studied.


Think

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Founder brands are oftenthe product of a

supremely charismatic and motivated individual.

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Consider


The brand and the individual become one in the public’s mind.

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Think


Separating founder and brand to ensure the brand’s growth and longevity is one of the core issues founder brands face as they grow.

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However, sometimes the founding influence

gets eclipsed over time.

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Who would you name its greatest leader?

Thomas Edison or Jack Welch?23

Consider


No matter the scenario, founder brands are unique brands …

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… facing unique challenges and opportunities for growth – everyday.


Founder brands share five common challenges and opportunities …

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For founder brands, image and reputation are not abstract concepts.

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1.


Managing a personality-focused equity can be a major challenge and

how a brand handles it, can be the difference between

short-term success and sustained value.


How to solve this conundrum?

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For example, convey a brand promise that lives beyond a personality

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Steve Jobs effectively prepared the company and his successor, Tim Cook. Apple now is the world’s most valuable company, nominally.


Or, define a higher ideal that both honors the legacy and shapes the future

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IBM has evolved into an iconic, global brand, honoring not its powerful founder, but the more universal power of “thinking.”


So, what will Martha Stewart do next?

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http://online.wsj.com/article/SB10000872396390443991704577579591260707070.html





Founder brands must consider that what is best for the brand may not be

what is best for the founder. This is an essential consideration for keeping

competitive position and consumer trust.

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The road from founding garage to founder brand is not always clear, nor free of potholes and u-turns.


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ThinkJerry Yang’s attempt to right the long-suffering Yahoo,

the company he co-founded.

The result?One of many executives dismissed by a board without a roadmap.


The result?Too early to tell.

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ConsiderWall Street’s pressure on Mark Zuckerberg’s Facebook.


Founder brands often struggle with how best to manage and leverage

past achievements in a meaningful and future-focused way.

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To protect the equity in the founder brand, a portfolio strategy

is essential to its longevity.

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Allowing the brand to evolve …

39Hermes, contemporary artisans since 1837


… and connect with a new generation of customers with different needs and habits.

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petit h, a new Hermes collection, made from up-cycled studio scraps but with the same level of artisanship


Founder brands also tend to undertake innovation with extreme due diligence, which can be a positive and a negative.

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Case in Point

Kodak’s auction of intellectual property has yet to produce a sale. But it has had one unlikely result: turning the fiercest rivals in the global patent battle into potential collaborators.

In recent days, the rival technology giants and patent-hoarding firms that had mounted competing bids for the portfolio have joined forces, people with knowledge of the negotiations said – a move that could take the patents off the market at a price below what Eastman Kodak Co. had hoped to raise in a competitive auction.

The bidding group brings together a raft of strange bedfellows. It includes Apple Inc. and Google Inc., …

Source: wsj.com, August 22, 2012

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Founder brands are often synonymous with a strong company culture.

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Founder brand cultures rise and may fall

on the vision and spirit of those who brought them to life.

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He serves as an adviser and teaches in the company’s learning and development center. Southwest has also created a video archive featuring interviews with Kelleher and the company’s founding

employees, “so people won’t lose that connection with the founder.”

ConsiderSouthwest Airlines’ founder and chairman emeritus, Herb Kelleher


But, the intensity of founder brand cultures can end up creating insular

environments and blind deference to the founder’s ideals as well.

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It took a grieving mother and the government of theUnited Kingdom to expose what was likely clear to many on the inside: Murdoch and his children might not be the best choices

to run the global media empire he had created.

ConsiderNews Corporation’s phone hacking scandal


Historically, founder brands excel at social responsibility and some have even

spearheaded new notions.

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Founder brands are in a particularly good position to extend the

trusted relationships they enjoy with their customers.

They can further cement their brand’s future success by institutionalizing

the implicit contract they entered with early supporters.

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ThinkPatagonia

Under founder Yvon Chouinard’s vision, Patagonia became one of the first B corporations.

http://bcorporation.net/

http://bcorporation.net/


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ConsiderChipotle

Steve Ells redefined fast food and introduced the notion of “food with integrity.”


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ThinkThe Bill & Melinda Gates Foundation

While separate from Microsoft, the Foundation reveals the Gates mind at work in familiar ways:

finding and deploying solutions to global needs.


Taken together…

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Founder brands are subject to unique opportunities and challenges

throughout their lifetime.

To manage them for full value, a keen understanding of

their particular nature is paramount.

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For ongoing updates and perspectives on founder brands, follow:

#founderbrands on Twitter#FounderBrands on Unbound Edition

Or, request a copy of the white paper:[email protected]

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mailto:[email protected]

mailto:[email protected]

Davis founder brands 091812

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