Transcript:
welcome to think seeds please like subscribe and hit the bell if you enjoy this video turn to your other big story of the day and that is what else it is Tesla Tesla Tesla had black tells us talks one has nine hundred dollars a share a lot of us getting richer faster than any other billionaire how did this happen in this video we’ll go over the secrets of Tesla success and how Elon Musk changed the game for the auto industry first off we know the obvious reasons that make Tesla successful like having Elon Musk as the CEO who commands a following of over 30 million engaged fanatics and customers on social media or having one of the highest brand loyalties in customer engagements with a zero dollar marketing budget that competitors drool over or innovating new technologies and products that people actually love and go crazy for but really how did this happen for Tesla it all started with a top-down disruption approach rather than bottom-up well unpack exactly what this means throughout and by the end of the video you will know all of Tesla’s biggest success secrets first we need to know what Elon has already put out it all starts with the mission Tesla’s mission is to accelerate the world’s transition to sustainable energy this statement started the set of values that are personified through their products and resonates deeply with their customers it is no secret the carbon footprint of humanity is changing earth for the worse and real solutions are needed by taking on this problem Tesla has aligned its company’s values with some of the most coveted marketing demographics two of them being higher income Millennials in Gen Xers and will eventually expand into Gen Z as Lee broadened their top-down approach over a trillion dollars of savings flow just entered millennial wallets as they entered their prime income earning years Tesla’s Model 3 was designed to tap directly into this broad emerging market ok we know tech-savvy eco-friendly higher income Millennials and Gen Xers are some of Tesla’s biggest customers and marketers but what about the business operation side Tesla’s top-down disruption happened by instead of using technology to improve performance over time they use technology to lower cost over time Tesla developed the high-performance end of their technology up front via the Roadster they entered the market through the top not the bottom Elon Musk leveraged his own personal wealth in low-interest loans to execute this very capital-intensive strategy that most companies just can’t do this unlocked the next secret for Tesla vertical integration meaning the supply chain is owned by the company instead of aggregating processes and parts from a network of marked-up supply chains they created their own conventional vehicles are 80% assembled by parts imported from all over the world and typically Frankenstein together with unsold inventory from their parts bin Tesla flipped this formula on its head and makes 80 percent of their parts through in-house processes this makes for zero markups from some complex logistics network of suppliers vendors and Trademark technologies it instead streamlines an elastic supply chain that can synchronize exactly to supply and demand with minimal stagnant capital or unused inventory it additionally gives the benefit of strategic independence and control over their market other companies like Toyota Daimler in Freightliner that are the ones that come to Tesla for parts the benefit of developing their technology up front instead of over time is that it reduces the effects of perceived and manufactured obsolescence also known as the Osborn effect when a product is no longer desirable because a new upgraded version just came out their over-the-air software updates always gives their cars the latest technology it is loosely approximated that 300 gigs of data is generated by each vehicle per day that tesla uses to develop artificial intelligence deep learning data science and other technologies it will use and license in the future this greatly increases their value innovation Tesla’s top-down approach woven the economies of scale into their business model as production output increases cost go down Elon had this plan since the beginning this strategy has been the same from the beginning which is to start out initially with a car that was expensive but low volume and then step two was a car that was sort of mid price mid volume and then our third generation car would be low price high-volume you also need economies of scale Tesla’s market capitalization is now over 130 billion dollars if you put it in a list of the top capitalized stock markets in the world it would rank 33rd in between Vietnam and Austria they’re second in global auto market cap only behind Toyota they have already sold billions worth in the world’s largest electric vehicle market China and their appetite keeps growing Tesla’s only problem is keeping up with the demand Tesla’s next success secret is because of their sales strategy and don’t worry I’m saving the best for last instead of selling through independent dealerships they sell directly to customers online and are the first to do so doing this align themselves with their customers buying habits and the circumventing of dealer protection laws that dictate car companies cannot own their own dealerships instead Tesla has galleries and all the transactions take place online this prevented a bunch of unsold cars sitting in large Lots conventional car companies are hampered by contracts with thousands of independent dealers that does not allow them to easily break relationships with them and change direction Tesla’s competitors are legally trapped in old business models a pattern of great tech companies frankly is to leverage voids in regulation with their new processes Tesla is no different Elon upset competitors when he tweeted out the model 3 cost thirty five thousand dollars after eight thousand dollars worth of credits and fuel savings further skirting regulations by advertising in this way they also have something else their competitors don’t have value innovation for their customers save money by not buying gas with an electric vehicle in style up until the end of 2018 their cars had a $7,500 tax credit and an additional tax credit if you installed their charging system if you look at any successful business it is largely because of the people that make it Tesla’s brand Association and company values have paid dividends in the long term Tesla along with SpaceX are the most desirable companies for talented engineers to work for they deploy their PR and HR teams directly to the event where the most talented engineers congregate ok so there are a bunch of secrets we covered Tesla does that makes them successful like a mission statement deeply aligned with their customer values a top-down disruption approach vertical integration of the supply chain having economies of scale woven in innovating the sales process having better value innovation than the competition market to Talent not just customers and Bend don’t break the laws but there is one secret Elan applied that I think is above all the rest and it is in this book called Blue Ocean Strategy this is the genius to Tesla and how Iran changed the game for an industry Tesla made its own market instead of fighting in crowded competition and market structures that limit their own thinking they explored a market get to be defined or have boundaries because Tesla disrupted from the top-down and developed its own technology and parts upfront other companies are overburdened with developing their own electric vehicle architectures that can’t use their Frankenstein parts bin Elon changed the game and rules the auto industry was playing and now competition is looking in from the outside when they take even a closer look it turns out Tesla has all the patents in trade secrets they need to even compete remotely in the new space at the risk of being a monopoly down the line Tesla released all their patents in 2014 but keeps close guard of their trade secrets this decision also aligned with their mission to accelerate the world’s transition to sustainable energy it opened up access to their technology for others and sets them up to become the main supplier in their market Tesla now commands the market they created by their strategies and Elon Musk is now the one making the moves for the industry competition is forced to playing the game of follow-the-leader thank you so much for watching if you enjoyed this video please like subscribe and hit the bell I plan to make more videos on keep all companies and society comment below to let me know what you would like to see until I see you on the next one have a great day
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