Daily Podcast: Tesla Fashionability Shows Problem for Startup Car Companies
Some two weeks ago I opined that Tesla, Carbon Motors, Fisker, and other startups might show the future of the auto industry. Small firms, smaller volume, lots of venture capital funding, and the sort of flexibility you’d assume to be inherent in a small operation. Now that I see Tesla’s current predicament, it makes me think that perhaps that flexibility will be utterly crucial to surviving more than one product cycle. Tesla is cutting back on employees (and shifting to their fourth executive in 12 months), presumably for financial reasons. In other words, they need more money, and at $100,000 a pop, sales of fifteen Tesla roadsters isn’t going to cover all the bills. While Tesla intended for the Roadster to be a break-even project, I can’t help but think that the media and consumer public’s ADD is going to hurt them. Since gas came down, somewhat, in price, I haven’t been seeing the panicked news stories about the man that rides a stray Lion to get to work everyday, braving the carnivor hunter’s back to save on fuel costs. Nor have I seen anything about how the Tesla is the future of the car. Whether Tesla’s fifteen minutes of fame has passed is a separate question: the more important one is whether having only fifteen minutes of fame means these small firms are going to sink afterwards.
Immensely bored law student. I've also got 3 dogs.
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Paging Mr. Segway, Pagin Mr. Segway .... When Silicon Valley types tell you they are going to revolutionize an industry, get out your salt shaker. The really big hits usually start out small and then get lucky and take off through organic and/or viral growth. Think Ebay. The super-hyped stuff usually goes super bust. GO tablet computers, Webvan, Pets.com, Transmeta and a hundred other companies come to mind. In fact, I'm having trouble thinking of a recent valley company which received saturation press coverage at the start; and then went on to become a company which lived up to the hype machine. Can anyone help me think of one? The real monsters started out as a dedicated team of people trying to make something happen with only a shoestring worth of money to get going. Intel, Microsoft, Apple, HP and Dell were all exceeding low profile as startups. Do you know what HP's first product was? An electronic oscillator for making sound effects which was sold, quietly, to Walt Disney. Apple started as a maker of systems for hobbyists and was in fact started by a couple of hobbyists. Dell was started in a UT dorm room and was bootstrapped for a very long time. Michael Dell dropped out of school because his business demanded full time attention. Microsoft started as a software provider to the hobbyists Apple and others were selling hardware to. Intel was founded by Grove & Noyce because they felt that their Fairchild Semiconductor business was being poorly treated by the East Coast bosses at Fairchild Camera & Instrument, so the left to do their own thing their own way. Intel's first products were utilitarian Static Ram chips which were pretty much a commodity product ... something to get some cash flow going. Big hype Valley start-ups are really designed to shake cash out of investor/gamblers. The vast majority go bust. If you are reading about a start-up in mass market magazines before they have a real product on the market in volume, the odds of failure go way, way over 95%.
It seems to me that a new and potentially successful "business" within the automobile industry might be a comprehensive set of services designed to help designers of new vehicles actually build them. Tesla might not be a good basis for this business but out-of-work Detroit engineers might. If some of these guys could get a chunk of capital together, they might be able to set up a plant for simultaneous production of different low-volume vehicles, and provide valuable support in design, engineering and regulatory compliance. Of course, Lotus provides a lot of support to Tesla along these lines.
http://www.nytimes.com/2008/10/16/technology/start-ups/16tesla.html?em
Did someone buy the ebay-star Flying Car or is the notebook about to explode towards the end of the podcast there?