Author Topic: Scale Economics Shared  (Read 1973 times)

bjakes00

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Scale Economics Shared
« on: August 11, 2019, 02:03:10 PM »
(Hopefully I haven't missed a thread elsewhere on the topic)

There are many examples of incredible companies that have achieved long term, sustainable success through what some would call "scale economics shared", i.e., a relentless drive to give back to the customer via lower prices and better service as the business scales.

Think Costco, Amazon, Southwest Airlines, GEICO, Progressive.

I am trying to assemble a list of these companies and was looking to the forum for any additional insight they could provide. I am particularly interested in hearing about relatively young companies whose founders/leaders are pursuing a similar strategy - for example a very small company that is starting out on this path is Majestic Wines (WINE LN - will be called Naked Wines in a few weeks).


jschembs

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Re: Scale Economics Shared
« Reply #1 on: August 11, 2019, 04:43:03 PM »
Vanguard seems like an obvious addition.

bizaro86

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Re: Scale Economics Shared
« Reply #2 on: August 11, 2019, 07:10:48 PM »
I'm not sure about young companies, but Wal-Mart fits that description as well.

ROST as well I would say, and has more of a growth runway than WMT.
« Last Edit: August 11, 2019, 07:32:08 PM by bizaro86 »

Broeb22

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Re: Scale Economics Shared
« Reply #3 on: August 16, 2019, 07:37:39 AM »
IBKR?


Jurgis

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Re: Scale Economics Shared
« Reply #4 on: August 16, 2019, 11:53:59 AM »
IBKR?

IBKR has "a relentless drive to give back to the customer via lower prices and better service as the business scales."?

Wake me up when they remove inactivity fees for accounts below $100K. My bank has better fees than IBKR.

Edit: IBKR - the company that cannot correctly fill a simple tax form, has to be told to fix it, and then takes couple weeks to file amended one. And has the same errors next year.

Perhaps they should scale more to improve their service?
« Last Edit: August 16, 2019, 12:03:06 PM by Jurgis »
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Spekulatius

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Re: Scale Economics Shared
« Reply #5 on: August 16, 2019, 01:43:16 PM »
I believe IBKR‘s high rating here are skewed by having an active investor and money manager audience. For most average investors IBKR would be a poor choice. I think folks overestimate the addressable market for this firm.

I like them for what they are, but I wouldn’t  recommend them to my wife even ( her accounts are with Fidelity).

I accruals think that Robinhood May be a good example if shared economics- yes they sell order flow, but for a small investor, does this matter?
« Last Edit: August 16, 2019, 01:46:05 PM by Spekulatius »
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thepupil

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Re: Scale Economics Shared
« Reply #6 on: August 16, 2019, 01:47:55 PM »
I believe IBKR‘s high rating here are skewed by having an active investor and money manager audience. For most average investors IBKR would be a poor choice. I think folks overestimate the addressable market for this firm.

I like them for what they are, but I wouldn’t  recommend them to my wife even ( her accounts are with Fidelity).

Agreed. The most material of IBKR's advantage is in its margin rates, which is a niche customer (myself included).

I keep unlevered accounts and several IRA's (including wife's) at Fido. My IBKR margin account is less than 25% of our net worth.

Of course, if IBKR can continue to grow in the professional money management world, they may not need to grow share in the retail world for the stock to work. I don't know the comapny (as an investment) very well.

I loooove them as a customer, but the appeal seems narrow.