At Tekedia Institute, we have a case study on Tesla, and I have used this company extensively in our Startup Masterclass program, driving home the point on the necessity of meeting customer perceptions, well beyond customer needs and expectations.
You always hear from executives: “I will 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!
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 close to 9 million cars than Tesla, but Tesla is valued at multiples more. How can a company which makes $54 billion gross revenue be valued more than a ” group” with total revenue of $1.6 trillion*?
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Look into your business, move beyond needs and expectations. Elevate the perceptions of customers, set a new basis of competition and unlock value.
Look at the profit of Ford, GM, etc, but see how the market has valued Tesla; it goes beyond absolute $$. Tesla has turned customers into FANS and created a fandom in markets. Others are still meeting Needs but Tesla is creating Perception, a continuum with a mathematical asymptotic behaviour: catch me if you can!
*Tesla has given some points in the market cap
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If you are told that you will be great in five years time, there’s more premium in it than when you are told that you are great already. So, as long as the future is always more valuable than present, Tesla will remain far ahead, because when market looks at it, it sees the future, such cannot be said of traditional automobile companies.
It doesn’t really matter whether Toyota and Ford sell EVs, they will always be afterthought, because it’s only Tesla that has a brand name that is synonymous to EV; changing that perception will take a very long time.
Tesla is a cult, just like Apple, and when your brand is in that orbit, normal market logic doesn’t apply.
When you buy your Toyota or Ford car, you own it 100%, but trying owning your Tesla car or iPhone 100%, you realise that you are caged, that is why it is a cult…