tom_boy wrote:FRM2011 wrote:I didn't want to comment on this thread until an equity staff told me something that scared me yeterday. He said, Dr.JM had once told a group of senior mgrs that the only company left for him to conquer was safaricom.
I hope it was a lie, I hope he was exaggerating. If not, then Lee Kun Hee, Samsung's president in 1997 comes to mind. Lee had a larger than life personality within Samsung. He had transformed Samsung and brought it huge success. His senior managers could not dare to express their reservations on wrong decisions made by Lee. So 1997, Lee started Samsung motors which folded a year later having lost $15bn of shareholders money.
The parallels with JM's entry into mobile telephony are too eerie to ignore.
When Jack Ma, Alibaba founder, was faced with eBay's entry into China, he told his staff;
"We are a crocodile in the Yangtze river and eBay is a shark in the ocean. We take the war to the ocean we die, we bring the war to the river we win"
He kept the war in his territory and his net worth now stands at $25bn after the IPO yesterday.
But Dr.JM has decided to get into the ocean and fight with a brutal and ruthless shark. It can only end one way.
Studies have proven that people are less likely to make optimal decisions after long periods of success.
I would wish to re-visit this thread after 3 years. I hope the fight between the crocodile and the shark will last that long.
Some people feel that JM cannot fail but I can think of some instances where he has failed
1. JM had the first opportunity to partner with Safcom on mobile banking. As we speak, mpesa could well be an equity bank - Safcom product. I feel that JM refused to negotiate because maybe his ego would not allow him to bow down to Safaricoms demands. That was a big mistake.
2. Entry strategy into Uganda was a big mistake. They made serious losses initially. I dont know if anyone was to blame for this but it shows that Equity also makes mistakes.
3. Equity had a health insurance product launched a long time ago. Does anyone hear about it any more? I know some people are using it but it did not turn out to be the revolution that everyone was expecting. What happened?
4. Their regional expansion had to be put on hold at some point due to poor execution. At that time JM was talking of going to West Africa and even SA. This shows a man who wants to achieve his dreams no matter what.
I have noted that ventures that involved collaboration with other players have not gone well. JM had to establish his own telcom unit so as to provide mobile money transfer. This was not really necessary.
Now lets wait and see how things will pan out. It still wont be a walk in the park. JM has to fight safaricom plus kcb plus cba. Scangroup, nation et al will be laughing all the way to the bank.
1) M-Kesho failed when the cost [Safcom charging Equity Bank or its customers 4/- per USSD session. Safcom didn't want to share the pie. That's why EAZZY 247 is not full-featured coz of the issue of costs. Paying 4/- a USSD session x 2.5mn sessions/day adds up fast. Even checking the balance is a session.
2) Yes, UG was a mistake. The mistake was NOT going into UG but the (very) poor Due Diligence on the Loan Book. Equity did not buy any other banks after that but went in with 'greenfield' projects after the Uganda Microfinance Ltd debacle when they absorbed staff, bad loans, etc... Next time Equity 'buys' a bank, I expect a claw-back provision where the Seller absorbs losses from bad loans.
3) Equihealth is around. And growing. A huge business as part of the overall BancAssurance business of Equity Bank. And posed to grow further with the MVNO using the menu.
4) West Africa is on the cards BUT not until 2015-16. And even then it will be a slow rollout. First country is Ghana. The MVNO has to be fully rolled out in Kenya before Ghana is considered. Airtel is #2 or #3 in Ghana.
Scangroup and Nation will benefit but Word of Mouth + Social Media is a cheaper way to go. Yes, Scangroup has Squad Digital to manage Social Media.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett