Perkins’ Picks

photo credit: Yasmine V Arman

The Thrasher Funds Blue Ocean: We Reinvent What it Means to be an Investor

I am writing because while many understand that Thrasher’s brand offers a new, stylish, unique and cutting edge perspective and approach to investing,  few really comprehend Thrasher Funds’ importance and role in the investing markets, imperative offerings and unique opportunity, as evidenced by our small size and head winds to growth compared to larger firms. I have decided to prepare an abbreviated case study on our company and the future of the investing markets to lend to a greater understanding of Thrasher Funds. This is also a Part 2 to first piece I wrote exclusively for AARP magazine on the future on investing.

I was recently rereading the book Blue Ocean Strategy printed by the Harvard Business School School Press (go bulldogs*) and authored by W. Chan Kim and Renee Mauborgne, both professors at INSEAD, France, the worlds second-largest business school. HBS is famous for analyzing a strategy to wits end and lastly giving it a catchy name. Blue oceans “are defined by untapped market space, demand creation, and the opportunity for highly profitable growth”. This is all that Thrasher is about, all the key elements for the future of the investing markets.

But, before we go any further I must first point your attention to the Thrasher Funds’ Circus. Yes, the Thrasher Circus. A circus would be the last type of company that you would think Thrasher has a lot in common with but it is true (strategy wise, not in actual success, yet). Blue Ocean Strategy starts with a look at Cirque du Soleil, and we have a lot in common with their strategies for the future of industries.

“Created in 1984 by a group of street performers, Cirque’s productions have been seen by almost forty million people in ninety cities around the world. In less than twenty years Cirque du Soleil has achieved a level of revenues that took Ringling Bros. and Barnum & Bailey – the global champion of the circus industry- more than one hundred years to attain. What makes this rapid growth all the more remarkable is that it was not achieved in an attractive industry but rather in a declining industry in which traditional strategic analysis pointed to limited potential for growth”.

As the authors put it, “children cried out for play stations rather than a visit to the traveling circus”. The circus industry has looked unattractive for some time. And with the Financial Crisis, it looks as though we have a new circus (industry).

The financial industry is now facing some of the same hurdles, just by a different name. Decreased demand for financial services by the older generations. New regulation by animal rights groups is akin to new regulation by the government. All this augurs for lower revenues with no real plan in sight outside of red noses and lipstick.

So how did Cirque defy a declining industry?

• “Another compelling aspect of Cirque du Soleil’s success is that it did not win by taking customers from the already shrinking circus industry, which historically catered to children. Cirque du Soleil did not compete with Ringling Bros. and Barnum & Bailey.
• “Instead it created uncontested new market space that made the competition irrelevant.
• “It appealed to a whole new group of customers.”
• One of the first Cirque productions was titled “We Reinvent the Circus”.

So how is Thrasher going to defy a declining industry?

• We do not plan to build on a shrinking and differentiated financial services industry, which historically catered to Baby Boomers. We are not competing with Morgan Stanley or Goldman Sachs. And we no longer have to worry about Lehman or Bear.
• Instead, we have created uncontested new market space that made the competition irrelevant.
• We are appealing to the next generation of investors.
• The first month of our website saw 700,000 young adults seek knowledge about investing.
• Obviously to appeal to the NEXT generation of investors we are having to consider marketing techniques that the financial industry ha never thought about considering, such as blogs, social networking websites, and youtube to name a few.
• We Reinvent What it Means to be an Investor.

Thrasher Funds does not compete for a share of contracting market shares. To get back to the ‘oceans thing’, we get back to the book, where the authors say it eloquently.

“To understand what Cirque du Soleil has achieved, imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. Red oceans represent all the industries in existence today. This is the known market space. Blue oceans denote all the industries not in existence today. This is the unknown market space.

“In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of existing demand. As the market space get crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody.”

This increased competition and reduced prospects for lower profits is what led to the BS products that financial institutions created and the increase in risk taking just for the potential for outsized profits.

Blue oceans, in contrast are defined by untapped market space like young adult investors, demand creation like seven hundred thousand kids going to a finance website, and the opportunity for highly profitable growth.

And can you believe Thrasher still hasn’t closed a deal with a large institution interested in future revenues. I am not hard to find. Nor are the huge opportunities in the next generation of investors hard to see.

Oh keep in mind Cirque du Soleil is a lot more stylish than the traditional circus, as Thrasher is a lot more stylish than the traditional financial services firm. I’m just saying. But that is an entirely new and different study about the future of marketing, art, fashion, and their role in business models.

*The Bulldog is Yale College’s mascot, and clearly a superior institution. ☺