Startup Project

Tag: Tesla

  • Brands Can Die, Even Tesla

    In this post I want to talk about brands. They are everywhere from movie star brands to chicken soup brands. They are hard to create but also easy recognize. Some brands are willed into existence like A16Z, while some brands are pure consistent performance or quality or some other attribute that consumers like.

    Great brands start as a cult and graduate to being a religion.

    A while back I write about how Tesla graduated from cult to a religion. In which I claimed it is going to be the new Apple.

    I am reconsidering that thought now.

    The reason being Elon buying twitter, not that I am against it or for it. I love it, because what is the point of having f**k you money if you cant do wildly unimaginable & interesting things. Whether you like the fact that Elon might own Twitter or not, you cant say its an interesting situation to watch in real time.

    But this makes me wonder how much impact is this going to have on the brand Tesla. Twitter is a political platform and that can easily make the owner of Twitter perceived as political. It doesn’t matter if he is political or not.

    We have already seen these dynamics play out with Facebook. Mark is disliked by both sides of the spectrum alike and it definitely effected the brand Facebook.

    So by associating himself with Twitter Elon might end up jeopardizing the brand Tesla. This will only reflect down the road say in 5years but not in near term. It might play out similarly how Facebook brand got tarnished with each new leak, security breach, and the continuous drip drip drip.

    Having said this Elon is unique and can make it work, the general physics of business logic doesn’t apply to Elon.

    P.S: Elon can walk away any time before the deal closes by paying a break up fee of $1B.

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    Past guests of Startup Project podcast include Ali Moiz (stonks.com), Kirby Winfield (Ascend.vc), Eric Bahn (Hustle Fund), and many more.

    To stay up to date checkout thestartupproject.io & follow us on twitter: @natarajsindam

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    If you like this episode, you might also enjoy the conversation with web3 critique Liron, long time business journalist Todd Bishop or Angel Investor Sajid Rahman.

  • Apple’s $1 Trillion Moat

    In an earning’s call, Elon Musk while replying to a question said Tesla would open the charging network for other company EVs and mentioned that he doesn’t believe in moats. To quote him he said, “moats are lame.”

    He went on to say that it’s not the moat, but the pace of innovation which is more important for the long-term success of a company. He cited Amazon as an example, which innovates at an exponentially faster pace than Walmart, as the reason for its market dominance. And anyone who saw this could have easily predicted the success of Amazon from miles away.

    Moats in general, are viewed as a great defense for a company, protecting it from traditional market competition and enabling it to deliver long-term shareholder value. And Tesla’s supercharger network is considered as a great moat for the company by its investors. But if rapid pace of innovation can beat all kinds of defenses, the question is if there is a moat that can withstand rapid innovation cycles.

    Well there is one — brand.

    You ask why?

    One word — Apple.

    The last two months have seen a barrage of new smart phones in the global market from a bunch of Chinese and American companies. Every new device has the same specifications — lots of memory, screen with a good pixel density, and of course a great camera. But only Apple makes a whopping 80% of the money in the smart phone industry.

    There are many companies around the globe trying to get a slice of this Apple pie. For instance, there are some really commendable efforts from One Plus (just look at one plus 6T available at $549 only) , Xiaomi, Oppo, Huawei & Samsung (after all, this one makes money by selling displays to Apple).

    However, none of the above companies are even close to competing with the cult following Apple has, the emotional defense its patrons come up with, the ridiculous splurge of budgeted dollars, and the irrational exuberance shown for a new Apple product.

    This is the nothing, but the ultimate brand devotion felt and shown for the most valuable brand ever created!

    This is because, brand value is essentially earned and not merely innovated. Unlike other moats, brand is intertwined with people’s emotions, aspirations, and their commitment towards it through and through. Christianity is probably the only other consumer brand which evokes such strong capital returns & humongous cash flow as Apple.

    Despite of rapid innovation cycles from companies like One Plus and Samsung , the market share must bow down to the holy altar of Steve Jobs and the brand he created. This isn’t to say Apple doesn’t innovate, it does but at its own pace.

    P.S — I don’t use Apple products because I am only reasonably irrational in my choices.