Elon Musk Promotes Power Sharing for Everyone but Elon Musk
The boss of Tesla, SpaceX, and Twitter is now playing a game of three-dimensional management chess with Apple, Google, automakers, governments, and whoever else displeases him. Even for someone like Musk, the distractions can be harmful for business.
BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN
In his latest pronouncement, Twitter owner Elon Musk offhandedly
observed that, if the Twitter app is removed and barred by Apple and Google
from their app stores, he'd simply make his own smartphone and compete with
both of them.
As if. Has he totally forgotten that Microsoft, Nokia, and
Facebook, among others, all failed to successfully produce and market their own
phones? But Musk, who also runs SpaceX and Tesla in his spare time, seems to
believe, in this case, that if a thing has enough style and buzz, the substance
and even the underlying tech -- at least initially -- doesn't really matter
that much. He's dead wrong. Ideas and talk are cheap. Execution and substance
are everything.
This "I can do anything" approach is not uncommon
among the sharpest entrepreneurs out there, some of whom come, over
time, to believe that their skills are readily and easily transferable. And
some, such as Richard Branson, have a pretty good track record. The difference
is that Branson is great at branding. Building actual technology, as Musk
discovered, is much more difficult.
For instance, one of Tesla's earliest design failures was the
poor location of key components and other assembly and access choices, which
made repairing and servicing the cars much more costly and difficult.
Apparently, Elon thought the vehicles would never need maintenance or other
adjustments. Had he consulted anyone in Detroit with actual auto expertise,
these issues might have been avoided.
There's an important lesson for startups here: you have to
design and build your entire strategy into your product from Day One. Quality
assurance and support choices in a service business happen before production,
not after.
But, in fairness, Musk is certainly one of the prime examples of
someone who has demonstrated range across businesses. Still, anyone who thought
of himself as a mere mortal, rather than a deity, might also think twice about
taking on another overwhelming challenge in light of what's presently on his
plate. My guess is that Elon's fantasy phone - if it ever comes to be - will
text and tweet but only make one-minute calls because he hates to waste time in
conversations and thinks the rest of the world does too.
One of the risks of being a one-man show who prides himself on
micromanaging everything and who believes that he's always the smartest guy in
any room is that there's still no substitute for being present and for paying
attention. As the entire world sees, there's more than plenty on his plate, new
players and models are entering the auto market (half of the 30 EVs available
now in the United States weren't on the market a year ago), and even Elon can't
be in three places at one time. I suspect that Tesla will suffer the most as a
result from his neglect and lack of focused attention.
Putting aside the traumas of the Twitter debacle, Tesla itself
is under some substantial competitive pressure apart from Elon's own antics,
which are damaging all his brands. As the glitter and glow of Tesla's last
decade starts to fade, its future is unclear at best. Tesla's domestic market
share continues to drop every quarter. Part of that is to be expected, as more
consumers get more and more choices in EVs from other makers. So, it's entirely
likely that, within the next three to five years, Tesla could be an also-ran,
outcompeted by other EV manufacturers, as Elon takes his eyes off the ball and
the competition continues to heat up. The tortoises have dropped it into gear.
As I wrote in 2020, Tesla's lead in driving experience data accumulation will
be almost impossible for other players to overcome for at least the next decade.
But anyone who knows the science also knows that we're not going to see
completely autonomous consumer vehicles before 2030 at best. We may see truck
lanes established on the major interstates filled with automated convoys of
semis, but the programming challenges of day-to-day urban driving remain
enormous. Tesla may be the "smartest" manufacturer from a data
standpoint, but the data edge isn't going to be enough to make a difference
yet. Having the best answers to the wrong questions isn't much of an advantage.
Similarly, there are huge issues around both ends of the battery
enhancement battle --the onboard battery and the charging unit. The Chinese in
particular are definitely accelerating their push to have bigger capacity and
quicker-charging batteries while also addressing the heat issues that seem to
continue to spontaneously combust a few Teslas every month. Tesla's hard at
work at scaling its newest 4680 battery and also continues to work on plans to
build its own lithium mine, but I'm betting that just about all the battery
players will advance the capacity and speed issues at about the same rate, or
ultimately license the tech from the few winners. As a result, neither of these
concerns will likely be a differentiating factor in selecting any of the
high-end EVs available in the U.S.
Interestingly enough, even though all technologies eventually
become commoditized, and data is the oil of the digital age, the biggest risk
to Tesla isn't what you'd expect. Once you zero out price and performance (all
the high-end models will eventually be comparably priced with Tesla ending up
at the lower end) and assuming that somehow the "safety" concerns are
finessed, all you have left to compete on is your brand, certain qualitative
attributes, and the reputation of your after-sale service. Elon's own Twitter
tweets and actions are already seriously tarnishing the Tesla badge. That means
for all intents and purposes, that Tesla's got to sell "style" and in
truth it's sorely lacking in that department.
As the technology evens out, softer elements will prevail with
consumers, such as the craft of a vehicle's interior appointments, handling,
road noise and even the infotainment systems. Even the most eager Tesla
advocate will admit that its insides look and feel cheap and have always seemed
to have been afterthoughts.
Another note for startups making hard goods. Early bad quality
choices and cheap initial solutions get baked in. They stick around like
cigarette smoke. Waiting too long to upgrade your finishes and other tactile
attributes is a bad bet. The Detroit and European big guys may have started out
slow, but they're already blowing Tesla away in terms of style and especially
high-touch feel. This is something they learned to do well long ago; car
quality is something that has to be planned, designed, and caused, not
controlled after the fact.
Sitting in a Porsche or a Benz EV is something you quickly savor
- sitting in a Tesla is something they ask you to settle for. There may be tons
of Teslas on the road today, but not for much longer. Scale without substance
means squat.