In the past, the mantra was this: I will just go and execute, and the numbers will do the talking. Interestingly, you can execute, but the numbers will not help you. Simply, how you make money, and where you make money, are more important than the actual numbers on the balance sheet and P&L.
You can generate more $30 billion in profit and still be valued less than 50% of another company in the same industry!
Tesla is a car company which sells “software subscription” and emission credits, and makes all its competitors look lost, even though most are delivering “better automobile numbers”; Toyota sells more than 10 million cars than Tesla, but Tesla is valued at more than 2x.
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Remember: Toyota sold around 11.23 million vehicles worldwide in 2023 while Tesla sold 1.8 million vehicles
Look at the profit of Samsung, but see how the market has valued Tesla; it goes beyond absolute $$. Tesla has turned customers into FANS and created a fandom in markets.
Momentum drives the future, and momentum is anchored on Perceptions in markets. But perception is not physics and that means you have to play it. You can have speed, but companies with velocity win because they have a clear direction. Markets like companies with clear anchors into the future, and they invest on those growth vistas. Tesla is seen as part of the future and it is rewarded heavily.
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The future sells much more than the present, because no one has been there, and you sell future based on probabilities; you cannot sell the present on probabilities. It is not about quality and sophisticated engineering, rather who can articulate superior story about what will happen, get more people to keep talking about it, and you are winning.
It is not science, so don’t bother about analyzing or predicting anything, just sell a great story about the future, if it catches, then you have won.