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On December 13, 2015, MLJ commented on Pomona and the winning model of elite liberal arts colleges :

Awesome post! I really enjoyed the clarity and concision of your writing and am impressed with the sustainable competitive advantages present in this business/operating model combination. It definitely feels like Pomona has carved out a defensible niche for itself at the high-end of the market, although the durability of long-run pricing power is a fair question.

A few questions:
(1) How much of a discount in price do you think you’d have to receive to send your own children to an online version of Pomona with the same professors, curriculum, and exams but without the social, extracurricular, and other in-person intangible experiences? I’d imagine this amount would be a function of your financial situation, but the deeply-rooted desire to provide the best possible opportunities for your children + the existence of government, private, and school-funded subsidies would also limit elasticity.

(2) How differentiated and difficult to replicate do you think the Pomona experience was/is? Top-tier education has been and still is an inflationary good because true substitutes are so hard to create. Top-tier professors are scarce – do you think Pomona’s stand out in terms of quality? While other top-tier institutions might be able to pull them away, how likely do you think it is that they would go to an online or lower-tier competitor?

(3) How much of your personal success and character would you attribute to your alma mater? A key supporting factor to pricing power is the willingness of alumni to donate and subsidize tuition for current students. Pomona’s large per-student endowment size is a sign of its historical success in this regard. Do you think this is slipping, or are they continuing to execute at a high level?

Thanks!! 🙂

On December 13, 2015, MLJ commented on Nitori: 28 years consecutive profit increase :

Kohei, thanks for giving me a heads up about this post when we ran into each other the other day; I really enjoyed reading about this business I’d never heard of before!

A few questions:
(1) How are Nitori and IKEA perceived differently in Japan? How does that factor into the performance of their businesses in the region? I ask because at HBS, I’d guess IKEA is known as the poster-child of many of the business/operating practices that you discuss, yet in Japan, Nitori has achieved a much stronger market position. How much do you think this has to do with different and potentially superior business/operating models (e.g. the focus on interior goods rather than furniture) versus localization/home-team and first-mover advantages? If it is the former, how feasible do you think it would be for Nitori to expand its business to and win in other regions?

(2) How have you found the experience of using Nitori’s logistics services? How often did you use the in-house service versus third-party logistics specialists? Is there a meaningful cost differential to the end consumer?

Thanks again for sharing! If you happen to have any Nitori products in Boston, I’d love to swing by and check them out at some point!! 🙂

On December 13, 2015, MLJ commented on Bolt Bus – Disrupting the Urban Transit Market :

Thanks Trang! This was an interesting and thoughtful analysis of a superior business and operating model that should continue to spread through and disrupt the transportation industry.

A couple questions come to mind:
(1) How much of this model can and cannot be replicated by competitors? For example, curbside pickup instead of bus terminals as a cost-saving measure seems like a no-brainer, but (a) why can’t existing competitors and new entrants do the same thing? (is there a regulatory + space constraint?), and (b) as boltbus scales up, will it have to eventually build out its own terminals if it has enough transportation volume? Can the same replicability be said for the boarding process and the pricing scheme?

(2) How much of this seemingly lower pricing scheme is actually growing the revenue/profit pie (lower per unit price offset by even more volume –> more revenue) rather than shrinking the pie while allowing boltbus to take share? If it is the latter, then how sustainable is profit/share capture by one particular firm, especially if competitive advantages not sustainable (i.e. can be replicated by other firms)?

In the long-run, it seems that these changes are providing greater value to end consumers and making bus transit more affordable and comfortable, but perhaps any capital providers to these companies should not expect an attractive financial return.