The origins of the Daimler-Benz group go back to 1883. In that year Karl Benz, Max Rose and Friedrich Wilhelm Esslinger founded Benz
& Co. in the German town of Mannheim. The first motor cars took to the roads in 1886. The Benz & Co. designed car made its debut in July. At around the same time, Gottlieb Daimler, working separately, also carried out trials with his design for a motor carriage.
By the late 1880s, the brand’s identity was already starting to emerge. A Mercedes advertisement dating from 1888 or 1889 may be the first ever for a motor vehicle. It sang the praises of the Benz three-wheeler invented in 1885 and considered by Mercedes fans to be the first true automobile. Only a handful of the wondrous ma- chine were built. Mass production would have to wait until Henry Ford arrived on the scene.
In 1890, Daimler founded the Daimler-Motoren-Gesellschaft (DMG) in the town of Bad Cannstatt just outside Stuttgart. It is claimed that the design of the first fully functional vehicle engine in America, built in Hartford, Connecticut, was based on drawings pro- duced by Daimler.
Daimler’s sons suggested the star be used as a trademark. Their father had once sent his wife a postcard with a star marking out the house where he was boarding in Deutz. He wrote on the card: “One day this star will shine down on my work.” In 1909, a trademark was taken out on the star. Its three points symbolize the three branches of motorization: on land, on water and in the air.
In the depression in Germany that followed the end of World War I, the Benz and Daimler companies were hit by hard times and forced to diversify into other consumer goods such as typewriters and bicycles.
The prevailing economic climate and the over supply of vehicle manufacturers also encouraged alliances. By combining forces, com- panies stood a better chance of gaining sufficient market share to be viable. In 1924, Daimler and Benz formed an association of com- mon interest, marketing their cars under the now famous Mercedes- Benz trade name.
The Mercedes-Benz brand established itself as the classic fusion of German engineering and stylish design. Unlike other German marques the best models brought together the beauty of the car designer’s art with the reliability and longevity of solid no-nonsense mechanics. Mercedes were built to last. The way they looked and felt gave buyers confidence that the premium price was money well spent.
The glory days of Daimler-Benz were the 1960 and 1970s when the classy cars redefined the luxury market. Such was the prestige of any vehicle that bore the three-pointed star on its hood that price was not an issue. By the 1980s, however, the US automobile indus- try was in disarray, and competition in Europe was becoming more intense. Not only were other European marques including BMW, looking to close the gap with Mercedes, the Japanese in the shape of Toyota’s Lexus – a Mercedes wannabee if there ever was one – were making a concerted effort to muscle into the luxury car market.
Some luxury brands went under or, like the British marques Jag- uar and Rolls Royce, found themselves pushed from pillar to post in a desperate search for a new home. For a time, the leviathan Daimler- Benz seemed impervious to the crisis engulfing the European car market, but eventually it, too, found itself struggling against the tide of competition.
The business press briefly hailed the company’s charismatic chair- man Jurgen Schempp as Germany’s Jack Welch, the CEO credited with saving General Electric. He was dubbed Neutron Jurgen as he fought to slim down the monolithic Daimler machine into some- thing more economically viable and fleet of foot. But even with a brand as powerful as Mercedes-Benz, the company could not sur- vive alone. The question was who to couple its carriage to? The an- swer: a re-invented and greatly improved Chrysler in a deal codenamed Operation Gamma.
The deal was sealed in early 1998, with a $40 billion merger of the two legendary auto brands. It combined Mercedes’ brand muscle in the luxury car market with Chrysler’s share of the volume market (attempts by Mercedes to crack the volume market with it’s own
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cheaper Mercedes branded offering called the A-Type had run into problems).
The deal was a reality check for many in the car industry. It underlined the dramatic game of survival being played out among the world’s leading manufacturers. An editorial in Fortune observed:
“The result, the largest industrial marriage in history, takes what had been the world’s number 6 car company, Chrysler, and stuffs it into the trunk of erstwhile number 15 Daimler-Benz to produce the planet’s fifth biggest automobile concern.”
Valued at around $40 billion, the new company has 400,000 employees and is expected to generate around $130 billion in sales.
Mercedes-Benz purists may mourn the passing of the company’s German identity. But the deal guarantees the survival of one of the most famous brands in the world.
M icrosoft
he arrival of the Microsoft brand represents a major change in the business world. For the first time ever, branding the intangible – a computer program called MS-DOS – was more powerful than traditional physical brands. With Microsoft Bill Gates branded brainpower.
Founded in the mid-1970s by Gates and his long-time friend Paul Allen, by the second half of the 1980s, Microsoft had become the darling of Wall Street. From a share price of $2 in 1986, Microsoft stock soared to $105 by first half of 1996, making Gates a billionaire and many of his colleagues millionaires.
But the rise in Microsoft’s share price also signaled the end of the old world order. There were technology brands before Microsoft, but they were on the hardware side. IBM, Digital Equipment, Motorola, were all technology brands. In Detroit, the brands of Gen- eral Motors, Ford and Chrysler were based on their technological leadership, as was General Electric. What all had in common was that they put their logos on technology that customers could see and touch – even if they didn’t understand how it worked. Microsoft was different. It put its brand on something called an “operating sys- tem.”
Without an IBM box, the Microsoft brand was meaningless: at least, that’s what IBM thought when they signed Bill Gates to supply the operating system for the company’s first PC. At a fateful meeting with IBM in 1980 the future of the entire computer industry – and arguably the entire business world – took an unexpected turn. Ex- ecutives from Big Blue signed a contract with a small Seattle-based software firm to develop the operating system for its first PC. They thought they were simply saving time by outsourcing a non-core ac- tivity to a small contractor. After all, they were in the computer hard- ware business; where the real money and power lay. You could brand a box. You couldn’t brand an operating system. But they were wrong.
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To some commentators the whole business world changed in the early 1990s when the market valuation of Microsoft – which owned little more than a few buildings in Redmond, Washington, and the Microsoft brand – exceeded that of General Motors – with all its physical asset, factories, components and inventory. On 16 Septem- ber 1998, the market valuation of Microsoft passed that of the mighty GE, to become America’s biggest company with a market value of
$262 billion. The intangible brainpower brand had overtaken the physical.