Tesla Explained: Tesla, Apple, and Disruption

Tesla Explained: Tesla, Apple, and Disruption


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Tesla has been the instigator in the great
auto disruption we’re currently watching
play out. They’ve brought one of the lowest
cost, high performance electric vehicles to
market in the Model 3. Proven that owning
an EV is not only a viable option, but cheaper
to own and operate than a gas car in the long
run. In essence, they’ve been a major disruptor
in the automotive industry. I think part of
that success stems from how they operate,
which is more like a Silicon Valley tech company
instead of an automotive company. And other
new EV companies may follow the same playbook.
And this is where a lot of you will get angry
with me again … because yes … they have
a lot in common with companies like Apple.
As much as some of you may hate Apple, I really
do think Tesla shares many of the same traits.
But the comparisons also extend to companies
like Google too. With Apple announcing their
new iPhones today, I thought it was worth
taking a look at how Tesla’s EV disruption
has similarities to Apple’s smartphone disruption
that happened a decade ago. All I ask is that
you hold off on a flame war in the comments
until you hear me out. If you still disagree
with my assessment at the end, let loose.
Before I dive in, take a moment and hit the
subscribe button and notification bell, so
you don’t miss out on future videos just
like this one. I’m Matt Ferrell … welcome
to Undecided.
Most of the time product and user experience
design is looking at addressing a specific
issue, feature, or problem. It’s not uncommon
to have an answer presented as the solution
before you’ve even addressed what the problem
is … or better yet … what the question
even is. In holistic product design you’re
taking a step back and looking at the full
picture. Seeing how all of the different
pieces of the product interact and relate.
And seeing how a customer’s interactions
with your company and products are affected
throughout the experience.
Apple is one of the best companies in the
world at doing this. I can feel the rage growing
in some folks out there, but hear me out.
Apple has always been an incredibly secretive
company. They try their hardest to prevent
any details of products in development from
leaking before they’re ready to announce
them. And the vast majority of the time they’re
not announcing a product until it’s ready
to ship immediately or within a few weeks.
There’s a couple of good reasons for this.
One is surprise and delight. The big reveal
of a new product has a wow factor and garners
attention. The other reason, which is more
important, is that it gives them time to iterate,
polish, and think through the full experience
of that product. As Steve Jobs is famous for
saying:
When you think about focusing, right?
Well, you think focusing is about saying yes. No.
Focusing is about saying no.
Focusing is about saying no.
You’ve got to say … no, no, no … and when you say no it’s going to piss off people.
Focusing is about saying no. And the result of that focus
Is going to be some really great products where the total is much greater than the sum of the parts.
And at WWDC in 2013, Apple put together a
great video reiterating that idea. The
entire Apple manta is stated clearly in the
video with, “The first thing we ask is what
do we want people to feel?” And, “We simplify,
we perfect, we start over, until everything
we touch enhances each life it touches.”
This is holistic design in a nutshell.
Tesla’s manta is centered around first principles
thinking, which is about breaking down complicated
problems to generate original solutions. Tesla’s
existence and success can be mapped pretty
clearly to that principle. And it’s really
not far off from holistic design. Both are
beginning with questions rather than the answers.
Both are about creating your own theories
and how to apply those to a better product,
experience, or manufacturing technique.
Both Apple and Tesla design their products
and operations with the full product life
cycle in mind from manufacturing to disposal.
Apple rarely takes parts off the shelf from
suppliers. A good example is in recent years
is how Apple brought processor design in house.
Their A series of mobile processors are among
the fastest available today. And by bringing
it in house, they can custom tailor their
silicon to their product features and software
needs. Other mobile phone makers are using
off the shelf parts with features that are
meant to cover a broad spectrum of needs.
The end result is an iPad Pro that uses less
power than a typical laptop, but still beats
the performance of a majority of laptops on
the market. iPhone’s often have smaller
batteries than their competition, but will
last as long. This comes down to the tight
optimization that Apple is able to accomplish
between their hardware and software.
Tesla designed their own battery pack and
cooling system instead of using third party
suppliers with more generic, ready-made parts.
One outcome of that is the super bottle, which
you may have seen Sandy Monroe talk about
on Sean Mitchell’s recent interview.
It’s more than that. The super bottle is a great example of how the normal automative companies don’t work together and Tesla does.
That super bottle crosses many lines that you can’t cross here.
If I’m in charge of engine cooling or battery cooling.
I don’t want nothing to do with cooling the cabin.
And yet we’ve got the motor cooling … the battery cooling … and electronics … and electronics.
And all going through one little bottle that’s got some clever
Ball valves that open and close to make sure everything is getting heated or that everything is getting cooled to where it needs to be.
So I’m taking something that I would have a pile … like this … of bits and pieces.
And I’ve got this super bottle. I mean … I…. I… I…
We all thought that was the best thing in the whole damn car.
Tesla has also designed their own self-driving
computer instead of continuing to use an off
the shelf system from Nvidia or another company.
This helps to make them a master of their
own destiny. Reducing their dependence on
a third party supplier for a core piece of
technology means that they won’t be held
back in rolling out a new product or feature
because that suppliers hardware isn’t yet
capable of what they need it to do. And Tesla
is able to tailor the silicon and software
to complement each other and achieve incredible
efficiencies.
Google may have started as a search and ad
company, but they’ve always been an artificial
intelligence company under the hood. Using
machine learning and algorithms to figure
out relationships between websites and content
in order to surface the most relevant search
query. Or machine learning to put just the
right ad, in front of the right person, at
the right time. Google Now parsing through
your web history, emails, and calendar, to
figure out what notifications and reminders
to display on your Android phone when you
start your day. And right here on YouTube,
figuring how what videos you are most likely
to be interested in watching with suggestions
on your home screen or along the side of videos
just like this one. They are an artificial
intelligence company through and through.
The head of Google Now has said:
“You want to pick problems that are hard
for humans, and easy for machines, not the
other way around. It’s about making the
technology do the heavy lifting for you, rather
than doing it yourself.”[3] -Aparna Chennapragada
But unlike the holistic design approach, Google
tends to look at technology and features first,
and then see if there’s a product that can
come from those breakthroughs. There’s no
better example of that then Google Glass.[4]
There was a product that had some amazing
technology, but if you asked a simple question
of the average consumer, “what problem does
this solve and why do I need it,” they’d
come up empty. There’s a graveyard of half-baked
Google products over the past decade that
resulted from the technology first, product
second mentality. Google Buzz, Google Wave,
Google Talk, Google Nexus Q, Google +, and
Allo.[5] And those are just a few.
On one hand the “fail fast, fail often,
but always fail forward” mentality that
drives much of silicon valley, can bring about
rapid change. You learn what works and doesn’t
work and quickly change direction.
How does this tie into Tesla? On the surface
Tesla looks like a car company, but they’re
really an energy company driven by software.
They’re heavily invested in AI and machine
learning to enhance their products, with the
obvious one being auto pilot and self driving.
Tesla’s Autonomy Investor Day event walked
everyone through their approach to computer
vision and the exponential growth of machine
learning systems in autonomous driving. The
end result is a product that could make cars
an appreciating asset because the car you
own could be earning you money as part of
a ride sharing network.
“Buying a car today is an investment into
the future. I think the most profound thing
is that if you buy a Tesla today, I believe
you are buying an appreciating asset — not
a depreciating asset.” – Elon Musk[6]
They’re using machine learning in their
Energy products too.
Tesla developed its own software in-house
to monitor, control and monetize Megapack
installations … Autobidder, Tesla’s machine-learning
platform for automated energy trading. Tesla
customers have already used Autobidder to
dispatch more than 100 GWh of energy in global
electricity markets. And, just as Tesla vehicles
benefit from continued software updates over
time, Megapack continues to improve through
a combination of over-the-air and server-based
software updates.[7]
And that brings me to the constant software
updates that Tesla brings to all of their
products. Much like Google, Tesla is constantly
tweaking and adjusting their systems and features
they put in front of their customers. As soon
as a feature hits a certain level of readiness,
it’s rolled out for everyone to start using
right away.
Apple overturned the music industry with the
iPod and iTunes. And then they did it again
with the iPhone and the mobile phone market.
Steven Sinofsky, the former president of the
Windows Division at Microsoft, wrote a great
article in 2014 titled, “The Four Stages
of Disruption.”[8] Those stages almost read
like the stages of grief when it comes to
the incumbent being disrupted. And you can
see that the pattern fits what we’re seeing
today in the auto industry.
Stage 1: Disruption of Incumbent
– The disrupter introduces a new product with
a distinct point of view.
– The incumbent discounts the disrupters product
as irrelevant to existing customers.
When Apple released the iPhone, the reaction
from the phone industry leaders should sound
familiar to what we’re hearing today.[9]
”There’s no chance that the iPhone is
going to get any significant market share.
No chance.” – Steve Balmer, Microsoft
“We’ve learned and struggled for a few years
here figuring out how to make a decent phone.
PC guys are not going to just figure this
out. They’re not going to just walk in.”
– Ed Colligan, Palm
“It’s kind of one more entrant into an
already very busy space with lots of choice
for consumers. But in terms of a sort of a
sea-change for BlackBerry, I would think that’s
overstating it.” -Jim Balsillie, Blackberry
Sound familiar? Like Ford Europe’s CEO,
Steven Armstrong, mocking Tesla only being
able to produce 7,000 cars a week.[10] Or
Bob Lutz, former GM CEO, saying that Tesla
is “heading for the graveyard.”[11] And
that we all just need to wait for the big
auto companies to step in and start producing
EVs.
Stage 2: Rapid linear evolution
– The disrupter rapidly adds new features
and capabilities after gaining traction with
early adopters.
– The incumbent begins to compare their full-featured
product to the disrupted product to show deficiencies.
Tesla has been rapidly improving their manufacturing
process to reduce costs; beginning to upgrade
their Supercharger network to even faster
charging speeds; and rolling out new features
to the fleet, which will ultimately culminate
in self-driving. Meanwhile, we have companies
like Toyota creating ads touting their “self-charging”
electric vehicles (a.k.a. hybrid cars).[12]
Or Lexus trying to hit slow charging times.[13]
Or BMW’s “Wait or Drive” ad campaign.[14]
Stage 3: Appealing convergence
– The disrupter sees opportunities to acquire
broader customer base by appealing to slow
movers.
– The incumbent considers cramming some element
of disruptive features into existing product
line to show they can keep up with trends.
This is the stage I think we’re in right
now. I think you could argue that the new
Tesla Insurance is a part of trying to capture
slower adopters. Same with the upgraded Supercharger
speeds and new locations. The current cars
that Tesla are making can go toe-to-toe with
the competition, but they’re continuing
to push forward with motors that can last
one million miles. And it’s looking like
Tesla may be on the cusp of a battery pack
that’s rated to last one million miles,
too.[15] These kinds of advances push an EV
from going toe-to-toe with an internal combustion
car, to blowing right past them on the cost
and maintenance fronts. This is the kind of
thing that will pull in the slow movers.
And on the side of the incumbents, you have
pretty much every car company in the world
having announced some portion of their fleet
moving towards EVs. Most of the 2020 models
and beyond. Even Toyota.[16]
Stage 4: Complete reimagination
– New entrants to the market can benefit from
all the disrupters product has demonstrated.
– The incumbent is too late and goes into
retreat.
As I said, I think we’re somewhere around
stage 3 right now, so there aren’t good
examples here yet. We’re just now starting
to see new, from the ground up EVs hitting
the market that can compete with Tesla’s
offerings, like the Porsche Taycan. And we
have entries coming from other new auto manufactures
like Rivian and Byton. The true reimagination
of the industry has yet to take shape, but
I’m betting that it’s autonomous cars.
The cars we’re seeing made today still resemble
traditional cars, but with a different power
source. The power of computers and software
will completely upend cars as we know them.
We’ll start to see cars without steering
wheels. Seating that’s tailored more to
comfort and entertainment than to operating
a vehicle. And with robot taxis we’ll see
fewer and fewer people wanting to own a car
in the first place.
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Setting aside what you think about Apple or
Google, I think it’s pretty clear that Tesla
isn’t a car company. They’re a technology
and energy company. They approach producing
cars like most technology companies approach
writing software … including their own manufacturing
process and car improvements. They don’t
have model years on their cars, and they roll
out new features and improvements as they’re
ready. It’s treating hardware improvements
like software improvements. Nothing like a
traditional car company. This is one of the
reasons they’ve been so effective in disrupting
the auto industry. The rapid, Google-like,
approach to development makes them extremely
nimble and quick to adapt. Their first principles
thinking is leading to a better product, much
like Apple’s holistic design approach.
Okay, you can re-engage your Apple or Google
comparison hatred. What do you think? Do you
think Tesla has a lot in common with Apple
and Google? Are there other companies that
you think are a closer fit? Jump into the
comments and let me know.
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56 Replies to “Tesla Explained: Tesla, Apple, and Disruption”

  1. Good talk butTelling us things we already know…… Take a risk! EG give us your views on the quantum computer revolution opening up…. BIG SUBJECT …. I would be interested

  2. Tesla is losing some of their followers by not tweaking their model s and model X cars so you have to get a model 3 to get anything new. A model S or X purchased today is pretty much the same as one in 2016, with a few minor software tweaks.

  3. Agree with you. However Musk’s claim that your Model 3 will be an appreciating asset is bogus in my view. 10 years from now the Model 3 will be outdated by many new design developments and battery developments.

  4. Good point about Tesla being an energy company rather than an automotive company. I do use both Apple and Tesla (you actually convinced me to purchase Model 3 in your previous video) and I couldn't agree more with you. Great video as always!

  5. Apple has nothing to do with Tesla, at least since they lost their visionary leader. Tim Cook is basically a technology accountant, approving incremental improvements each year, no original ideas, no creative drive, no revolutionary products.

  6. Matt,. I do like your program layout. I know it's just the engineer in me liking things organized and presenting in a logical way.
    I know some folks will probably let you know that they already know what you're talking about but I am fairly sure there are many who do not.
    I like your program and thank you.
    Cheers,. John L. Virginia USA

  7. Couldn’t agree more! I really think there has been one company for each segment of the consumer market that has revolutionized their product/service, and set a new standard for how things should be done. Companies like Amazon, YouTube, and of course Tesla, and Apple weren’t the first to bring their products to market, but they did them very well, and in a way that the average person can use in beneficially and practically in their lives.
    I can’t believe you are already above 80,000 subscribers! I think I was here just after 10,000. Keep up the great work, always excited to see a new video from you!

  8. omg, just watching the google ai part and you are right! YT is suggesting the superbottle interview to me next to the video in 5. place, which im interested in and i was gonna look for next O.o

  9. Great video, and very informative!

    Right now, I'm reading up quite a bit on the whole strike between UAW and GM to see the direction of GM. To be honest, I feel terrible for GM in this situation as the UAW is against electrification for a few reasons. First, it would mean their engine and transmission suppliers would go out of business and they wouldn't be able to pivot to building EV parts. Second, because the company has no expertise in battery tech, they would have to tap into suppliers/engineers from Asia, thus even less jobs. Finally, it doesn't take as many people to assemble EV compared with an ICE car simply due to the lack of moving parts. The UAW is basically rejecting moving an EV production into the unallocated Lordstown factory since it wouldn't employ as many workers.

    Currently, this is happening to GM, but soon it's going to hit the rest of the big three (Ford and FCA). When people talk about how legacy manufacturers are going to catch up with Tesla, I have no idea how it's even possible. Almost half a million workers are represented by an union that is going to fight them on every step of the way.

  10. There will be few legacy auto mfgers that will survive the EV disruption. Who can overcome stranded investments in ICE suuply chain and capex? Who can overcome the dealership model? Time will tell

  11. Great comparison points. I’ve had a few conversations with others already who see some shared characteristics between both companies. While Apple poked light humor at PC/Windows computers in the past, they generally don’t bash other manufacturers. Both companies tend not to get riled up over rumors and do release, as you pointed out, products when they are ready immediately or within a few weeks.

    Interesting info as is your editing and presentation skills!

  12. Two more common things that Tesla has with Apple:
    – Start from the high end, high price products first and then make the affordable products for the masse.
    – Make compatible products, i.e. iPhone, iPod, iPad, iMac all have the same feels and functionalities and talk with each others, versus Tesla EV, charging network, Powerwall, Solar Roof/Tiles.

  13. I'm somewhat mad at Tesla at the moment.
    Bought my M3 in January this year for 61k with the only option available at the time, autopilot.
    Paid 3k last month to upgrade that to FSD.
    Checked this month on the Tesla store, a new car with all the same stuff as my own was 'in stock' for 47k with autopilot included. Q_Q

  14. Can the big guys like GM, Toyota,  learn this new industry paradigm with machine learning changing their foundation methods in time? It may be too, disruptive. I can definitely see the parallels between Apple and Tesla.

  15. Corrupted news are attacking TSLA today, 24 sept, for something that happened 3 years ago.
    The worst is that they presented solution this month with commercial solar and other options made easy, with economics being obvious.

  16. Very good video. I will agree with Tesla disrupting the car market like Apple did to the phone market. I will agree both Apple (more so years ago) and Tesla both have remarkable strategies and products.
    However, there is something to be said with "off the shelf" parts. If you have to take your iPhone in for repair you're typically paying 3-4 + times more than the same repair on an android phone. I can't speak about Tesla and service since I do not own one.
    Tesla is going to have to allow mechanics or independent authorized service centers access to reasonably priced parts and/or schematics. Not all of us even live in a state where Tesla's are sold. Being able to get your vehicle fixed anywhere is a necessity.

  17. Not owning a car? Nah, renting is for suckers. You always need a vehicle like you need a place to live. Renting in the long run is more expensive.

  18. I see your point. I'll even agree to the comparison. I am just not an Apple kool-aid drinker. When iPhone came out the industry pivoted shortly after. A year or less depending on some points. Tesla has at least 5 to 6 years of lead time. And is now taking sales of record-able size from auto makers with the 3. So until there is a "Android" of equal or greater quality, I'm drinking the Tesla water.

  19. Spot on! Another understated way Tesla has disrupted the automobile industry is by their complete lack of advertising. No TV commercials (lol, so early 2000s), no billboards, no magazine ads, no social media advertising, just really humorous Twitter replies and lots of great fan support. I can't think of a single model of any other car which has become so popular without any advertising – it's a stupendous testament to their product. Great video, as usual.

  20. I concur with JL, my profession is not engineering yet many of us appreciate well organizational thoughts that makes for great conclusions

  21. Great video, I'm impressed! Yes, Tesla is actually better than Apple and Google in my opinion. Tesla is now the new leader to follow!

  22. Great video… well put together information and thoughts all the way down to the transition to the sponsor. Keep up the good work and I see more subs in you future 👍🏾

  23. We may be in Stage 3 for a while. Tesla (and apple) keep pushing the envelope. Tesla especially with markets beyond cars. Most companies don't think beyond their existing market.

  24. Matt, you hit everything right on the nail. I was talking to my coworker about some things you just mentioned including the death of Blackberry. 👍

  25. Great video as always Matt. Very informative on the stages of disruption, I had not heard of this before and it certainly seems as though Tesla is well positioned. One of the questions I have about this phase of transportation history is what time-frame is realistic for the remainder of the stages of disruption. Another is the accuracy of Elon Musk's claim that a Tesla purchased now is an appreciating asset. A few of my own thoughts:

    1. On the time-frame for disruption. I think despite Tesla's rapid innovation, it will still take at least a decade for things to pan out. Tesla may not build on the normal automotive product cycle and they may be the energy & technology company masquerading as a car company; but fact remains they build hardware. Another fact remains that hardware still takes longer to produce than software when you look at the time-frame for equipment to build their products (the machine that builds the machine). So I think Tesla is still forced into a similar multi-year development cycle – maybe not as long as traditional OEMs, but still not the same as the yearly new product roll-out as say, smartphones.

    2. I think the idea of buying a Tesla as an appreciating asset is appealing, but I think premature for a few reasons. First and foremost is the law; there's simply no way federal regulation or legislation on something as technically complicated as autonomous cars happens at the speed a tech company develops software. So until the law catches up, it's a fantasy to think you can buy a new car and expect it to pay itself off. Not yet anyway. Current Tesla's on the road have batteries that I believe are rated to something like 90% charge @5000 discharge cycles, but even if I'm off. My point is current batteries will likely be approaching end of life by the time any the law sorts out regulation/legislation. This makes the batteries, and thus the cars a depreciating asset at present time.

    2a. Another argument I have on why Elon Musk is wrong to say a Tesla purchased today is an investment has to do with the incongruity with the story Tesla tells about itself and the industry it claims to be a part of. Tesla, as it likes to portray itself and as you have compared, is like a Silicon Valley Tech Company. Well, it's not a stretch to say electronics & software have a firm trend of downward price pressure. Nobody wants a 10 year old computer when they can get a better one cheaper. So if Tesla claims to be innovating as rapidly, why would anyone think a newer model will not be cheaper and better in ever conceivable way. Yes I know they do over the air updates, but things like batteries, motors and power electronics can not have the same update, and upgrading those will likely not be free.

    Anyway, I'd be curious to hear your take on these topics.

  26. I think the two companies are a like. The main difference I see with Tesla and Apple is customer service. I spend 100 times more on a product and I get treated like a jackass. I think Tesla’s stock for the last few years reflects all the problems that they have that the majority of the public have no clue of what is going on.

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