The Genius of Tesla’s Product Launch Strategy
Your R&D and Product teams spent two years building a new disruptive technology. The CEO is feeling the heat from investors and the board as you’ve all burned through millions of dollars. It’s time for a mass release of your product — or is it?
It’s all or nothing when you release your newly minted product to the masses. There is a better way, once that Elon Musk and Telsa have mastered.
For too long, we have been hearing that the electric car revolution is “right around the corner.” Maybe it is time, but Tesla did it their own way:
Let the “superfans” of electric cars be the first to drive their first model. There is a sub-culture of electric car fans and early adopters who love futurism and going beyond the gas pump. They are willing to tolerate mistakes and a car that doesn’t function 100% as it should. These early adopters don’t run to the media to complain — instead, they sit with Tesla Product Managers and have deep discussions on their driving experience with Tesla cars.
The luxury early adopters
The Tesla Model S was released in 2012. Within 3 years, 100,000 units were sold — pretty much every electric fan early adopter and their families. Tesla’s technology and product teams gained priceless insights from 100,000 drivers.
The Tesla Model S starts at $72,000. Almost no one buys the basic version. Add all of the perks and you are at over $130,000.
When early adopters did speak out, they gave rave reviews to the automotive industry and the media. Tesla’s early adopters paid a lot of money for their “toy”.
The person on the street
Years passed by and Tesla got a 2-for-1 deal with their brilliant strategy. Early adopters helped the company improve their car and build a better next generation electric car — the eagerly awaited Tesla Model 3.
At the same time, a strong community of early adopters became a “subliminal PR and branding campaign” for the masses. We, “the people”, read about Tesla over the years — from their challenges to the high price to even YouTube videos giving us a glimpse into the future of the automobile industry.
By 2016, everyone had heard of Tesla and Elon Musk. At the same time, Tesla put to good use the product critiques the early adopters offered and were designing the Model 3, which will be rolled out in 2017 and 2018. The Model 3 will start at $35k but can cost as much as $55k.
A $35k-$55k price point means they are targeting the upper-middle class. There are a lot more people who can and will spend $35k than $100k for a car.
Amazing story — but it won’t mean a thing if Tesla can’t overcome its next biggest challenge ever.
Supply chain — when cars meet tech
Now Tesla faces another huge challenge — supply chain. Preparing the entire supply chain for a new car model is a formidable task. Even the most experienced automakers find themselves struggling to gain the ability to ramp up production numbers.
Cars are not laptops. ICE (Internal Combustion Engine) cars have 10,000 to 30,000 moving parts. Toyota says their cars have about 30,000 parts (note — not moving parts — there are many different and unsettled definitions in the automotive industry). Estimates put Tesla Model S moving parts in the dozens — under 100.
The below Tweet from Tesla says it all:
Tesla isn’t just electric, it is a revolution in cars. Less parts = less maintenance needs.
If the new Tesla Model 3 will have less parts, why is it such a challenge to build? It is easy to imagine why the cars we drive are so complex to assemble — 30,000 parts is a lot bigger than the puzzle’s I’ve ever put together.
Tesla’s 50 or so parts is even harder. I would be willing to bet that almost all of the Tesla Model 3 parts embed disruptive technologies unto themselves — each and every one, in its own domain.
It is one thing to build a powerful computer at home, it is quite another to build one on parts that you have just designed from scratch yourself or bought from a startup that has never sold a thing, but has a promising tech that you need.
Ramping up industrial parts and ramping up tech-based parts are both daunting challenges. Tesla could face challenges in scaling the supply chain for the new Tesla Model 3 — but I wouldn’t bet against Elon Musk. The lessons learned from this stage will be worth their weight in gold.
Launching like Tesla
Never release your product to the masses all at once. You might find out that it’s not ready for mass adoption yet (that’s usually the case), and you’ll have a hard time gathering feedback, measuring and learning.
In case magic happens and people are loving your product and the demand is booming, then you will probably have a hard time supplying that demand at scale.
In every scenario you are always better off launching products, and even features, in a gradual controlled way. There we have it, the Tesla way–
Create a barrier of entry. Price can be an intentional barrier of entry, community based personal invites can be another useful barrier you can use. Make sure you target people who are likely to cooperate with this kind of experimentation, and will provide you the input you need to improve.
Listen, learn, and improve. Targeting the right people will make sure you get the engagement and collaboration you are looking for. Get to know your customers and learn their jobs-to-be-done. Improve your product to make sure you are making something that customers want to buy.
Open your product for a larger target audience. At this point your product is different from what you started out with — product marketing, packaging, and messaging follow the new strategy. Sometime your might even change your business model. Your community of early adopters become your PR ambassadors that carry you out to the masses.
Beat scale challenges. Grow your business to be strong, not fat. Make sure you remain productive and optimized. Pay close attention to the culture you are building, and how fundamental values are carried out by the branches. From infrastructure and performance to product management to HR — this is the time to stress test the “machine” you have been building.
Truth is, getting any product off the ground is always hard, no matter how experienced we might be. There’s no magic formula in this case—no “one size fits all”. However, Tesla’s experiences offer great lessons to all of us, and another fantastic strategy to consider for our next product launch.
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