Last week, Tesla – the car / tech / idea company run by professional visionary / spaceman / blowhard Elon Musk – announced that it once again lost money. It fired hundreds of workers. If you only listened to Musk’s sound bites, this would be tremendously confusing news to you. On the surface, the company seems to be on top of the world.
In fact, Tesla’s overall value surpassed that of Ford earlier this year.
You read that correctly. Tesla, which sells roughly 100,000 vehicles per year was valued at more than Ford, which ships somewhere around 2 million cars and trucks. Drive down any road in the Midwest, and count how many F150s you see, then count the number of Teslas. That’s a trick question – you won’t see any Teslas because they’ll be hidden behind all the F150s clogging the interstate.
So how can Tesla be worth more than Ford? Here’s why:
→ Ideas are the new currency
To be fair, business has always valued new ideas. But they had to be proven before they had value. That’s no longer the case. An idea itself – without research or market testing or prototypes or any kind of factual data – can now be worth millions. Think back to the invention of electricity. It took a lot of really smart people (including Nikola Tesla) experimenting, arguing, collaborating and failing. Then it took decades to implement. Today, all it takes is a nineteen-year-old with an idea for a dating app that connects people with chronically bad breath and pow! – seed money, before a single line of code gets written.
→ New and shiny is better than old and reliable
Again, this isn’t new. But we’ve never seen it move this fast. Ever since the dot com bust, the life cycle of a tech business has been measured in weeks instead of years. We used to take old stuff for granted (“The phone company will never go out of business because we’ll always need phones.”), but now we pretend that old stuff doesn’t even exist (“Closing stores? I didn’t know Sears was still around.”). Our attention span is somewhere between a six-year-old and a cocker spaniel, and that means even the old companies are desperately trying to look new.
→ Facebook made us all into gamblers
Zuckerberg was a billionaire long before he earned a billion dollars. He created a whole new business model even before those moguls on Shark Tank started sweating under the stage lights: attract investors based on your potential rather than your performance. Suddenly, everybody started to look like Kenny Rogers in all his bearded, blurry-video glory, going all-in on ideas like Tumblr that never quite panned out. In fact, the list of businesses that have successfully followed Zuckerberg’s game plan is alarmingly short. Twitter, a company that the average user believes to be a standard-bearer for tech success is still hemorrhaging money like an extra in a Tarantino flick. But that isn’t going to stop us from trying. Oh no.
The cult of personality also works in Tesla’s favor.
Elon Musk wears cool suits, has a cool sounding name (“Elon Musk…the new fragrance from Drakkar Noir”) and says cool things (“I’m going to outer space, nah nah nah nah nah!”), so we think he’s smart.
News flash. He might just be cool – not smart. Or, he might be both. But we’re not going to wait to find out. We’re going to give him our money now.
I don’t know anybody who owns a Tesla yet. But I’m sure I will soon, and when I do, I will ask them politely if I can drive it. Then I will drive it fast, because I want to see what that neck-snapping torque can really do. And I will love every second of it. But I probably won’t order one myself.
Mostly because I’m not completely convinced that Tesla will still be in business in ten years. I hope they are, but only time will tell.
And time is something I am willing to invest, even if I’m a little more careful with my money.