Published on August 18th, 2016 | by Zachary Shahan0
Tesla Goes From Lonely To Most Popular Kid In The Mall — Thoughts On Why
August 18th, 2016 by Zachary Shahan
I’ve got one more segment of the Q2 Tesla Shareholder Letter that I’ve been wanting to highlight and then tie to a couple of other key points of interest. Here’s the short and sweet bit from the shareholder letter:
“We are also accelerating store openings and plan to add a new retail location every four days on average during the remainder of Q3 and through Q4. We are adding stores in new population-dense markets like Taipei, Seoul, and Mexico City, while also adding stores in our most mature markets like California. The quality of our new locations is also improving as many shopping malls now consider us the new standard for an anchor tenant based on the amount of foot traffic that we draw and our very high revenue per square foot.”
Every 4 days?! Wow. That’s pretty amazing.
However, the point that jumped out at me and stimulated this article was this one: “many shopping malls now consider us the new standard for an anchor tenant.”
Tesla CEO and co-founder Elon Musk noted during the 2016 Tesla Shareholder Meeting that it was a struggle to get any suppliers to work with Tesla early on but that the company now has the choice of basically any suppliers it’s interested in, since everyone wants to work with Tesla. At the very least, suppliers want to get in on the ridiculous consumer enthusiasm and potential for growth that Tesla offers, and some suppliers are also surely inspired to do their part to help change the world.
It seems that it’s a similar story when it comes to the stores. I don’t know if Tesla had any trouble getting into malls and other prime retail locations at the start of its commercial life, but it’s clear that more doors have opened for the Silicon Valley company as Tesla has become the brand to beat. From the pleasant sales experience to the high-quality products (and high revenue per square foot) to the uplifting and altruistic mission, Tesla’s an ideal anchor. Sitting at the top of the world now, it’s a bit surreal to think that the company very nearly collapsed … a couple of times. Can you imagine a world without Tesla?
Tesla ended up succeeding for many reasons, but I think one definite reason that helped to pull it through was the relationship Elon and the company as a whole have developed with customers. It’s not simply a company — it’s a social movement with a preference toward kindness, fun, and ethical choices.
Again, Elon made this point poignantly at the 2016 Tesla Shareholder Meeting, particularly as it relates to the retail side of the business. From that meeting, here’s what Elon says he tells his retail team:
“Look, the #1 thing is, when someone comes in our store — whether or not they buy a car — the most important thing is that they look forward to coming back to the store. That’s it. Just, like, that’s their goal — make sure that when people visit our store, they look forward to coming back again. That’s it.
“Don’t try to sell them something that they don’t need. Don’t try to sell, don’t sell. Your goal is just to communicate and make people feel good. … Really, it’s about — you want people to fall in love. You know, just, just love it.”
Winnowing it down to its essence, I think this approach is wonderful because: 1) it’s focused on treating customers like humans, not just customers (i.e., potential sources of $$$), 2) it’s focused on kindness and love (we could use a bit more of that in life, and especially in the business world), and 3) it’s simple enough that it’s powerful, effective.
Customers do rave about the wonderful shopping experience. As we’ve seen in recent weeks, Tesla sales staff don’t really use any of the annoying sales tactics that auto dealers push, and Tesla sells electric cars much more effectively than auto dealers. Who’s surprised?
The retail sales experience is near the end of the Tesla chain, of course. In some of Tesla’s darkest hours, it wasn’t the network of customers that saved the company, so focusing on the retail experience only captures a portion of the story. However, when you look at how deeply these values are embedded in Tesla, you can see that this strong sense of humanity, ethics, passion, and love also reached investors, core staff, non-core staff, and the media (well, some of it). Those strings of humanity connected people across sectors and across the world, and I would say that they are the reasons why “Tesla” is more like a social movement than a normal business.
→ Related: Why Elon Musk Is Loved So Much
Tesla’s Human Core
This is basically the thing about Tesla in a nutshell. It isn’t about “having the next big idea.” In fact, Elon has been very clear many times, and several core staff members who have been around since the early days echoed him during the shareholder meeting: everyone basically assumed Tesla would fail. One key reason for starting the company was simply to try to push society into sustainable transportation sooner than later, for the sake of humanity.
Another key reason for starting the company was that Elon and Tesla CTO and co-founder JB Straubel loved electric vehicles. This was a fun passion of theirs, so they wanted to find a way to turn it into a career — in order to have more fun and share that fun with others.
Elon has given so many interviews and held so many Q&A sessions that his mind must go a little number answering the same questions over and over again — hundreds of times. Naturally, a common one is why he started an electric car company. As I noted above, the general reason was that it was to help society move faster into sustainable transportation. However, the core here is ethics and a work ethic centered around helping. Elon repeatedly recounts his reflections in college about the 3–5 most important topics for the future of humanity. One was switching to sustainable transport, one was switching to sustainable energy, and one was space/interplanetary exploration. These are all matters of both ethics and science-based common sense. He apparently didn’t dream of being involved in all of these things back then, but this ethical drive has put him at the helm of electric vehicle, solar energy, and space exploration companies.
Simply put, people love Tesla because of its human approach — its focus on helping society, working from a strong ethical base, and having fun.
Oh yeah, fast cars and futuristic tech are certainly part of that too, but those are the result of the company’s human approach, and of Elon and team’s understanding of what most humans consider to be fun and cool. It is Tesla’s human core that has helped it to make such wonderful vehicles.