The Tesla Strategy
I’m not the only person who thinks it’s incredible that Elon Musk publicly shares his master plans for Tesla. It’s a testament to his vision that he can share his strategy and execute it without a successful copycat in sight.
But I don’t think sharing the master plan is among the reasons for Musk’s success. Ultimately, I think Tesla is successful because they launched their highest-margin products first.
There’s a great post on Medium that explains why this works and how to apply it to your own business, so I won’t repeat that in-depth here. The advice is simple enough though: launch a high-margin, pie-in-the-sky product to find your true fans, and use the profits to rinse and repeat with less expensive products until you find mass markets.
What I want to add is this: if you run your own business, you’re likely already penning a response to share with me on Twitter about how you’re not Elon Musk and you don’t run a car company, so this won’t work for you.
But this strategy didn’t work exclusively for Tesla. It’s the same path that Apple took too (the original Mac → iMac → iPod). And it’s also the same plan Walt Disney had decades ago.
Before the multimedia empire, Disney just made movies. And during the Depression and WWII — when Walt made Snow White and Bambi — animated films were both hugely expensive and risky. Nobody had made a feature-length animated movie before — and each layer of each frame had to be illustrated and painted by hand!
But Snow White, Bambi, and many Disney ventures after them were (and continue to be) massive successes.
Walt’s philosophy was that Disney didn’t make movies for the money. They made money so they could make more movies. He bootstrapped Disney with a high-margin, successful product. And he rinsed and repeated until the company hit mass market saturation with toys, games, theme parks, and television networks. Because of the money Disney had in the bank and brand value the company accumulated over decades, even the theme park was a low-risk venture.
The most successful businesses of our time use the Tesla strategy to make great (and noticeable) products they can sell for a premium. What will yours be?