TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC
  1. TMC is currently READ ONLY.
    Click here for more info.

TSLA Market Action: 2018 Investor Roundtable

Discussion in 'TSLA Investor Discussions' started by AudubonB, Dec 30, 2017.

Tags:
Thread Status:
Not open for further replies.
  1. Familial Rhino

    Familial Rhino Endangerous Herbivore

    Joined:
    Feb 27, 2014
    Messages:
    1,555
    Location:
    Toronto, ON
    #22821 Familial Rhino, Aug 2, 2018
    Last edited: Aug 2, 2018
    In reverse order:

    He said that, but I confess I don't buy it. I simply don't believe they have stacks of PowerWalls that they can't install for lack of electricians. I mean, there may be a shortage, but I don't think that is the bottleneck. I'm way more inclined to think that they can't make the PowerWalls in the large numbers demanded by the market right now, simply because they can't source enough cells.

    This one is really interesting, and it has really been a long-running phenomenon with Tesla. Customer service seems to be really disorganized and erratic, with no shortage of horror stories. But I don't regard it as a constraint on growth, and I am really, really not worried about it.

    A while ago, I read this book (highly recommended) called Inside the Tornado by Geoffrey Moore (of Crossing the Chasm fame). He makes the striking observation that companies going through the 'tornado' stage (which, by my estimate, Tesla has just entered in Q2) should focus all their resources on themselves and not the customer. That doesn't mean shipping crappy product; quite the contrary, quality is essential to avoid returns and service expense. But you can afford to, or even should, ignore the customer! This stage is fundamentally a land grab. The only thing that matters is to ship.

    His exposition matches Tesla to a tee (emphasis mine):

    The market consequence of this stampede is that, virtually overnight, demand dramatically outstrips supply, and a huge backlog of customers appears. The financial implications of this backlog are hard to overstate. For not only does it represent a massive sales opportunity in and of itself, it also represents an even larger follow-on market opportunity. That is, since switching costs in high tech are so high, once customers settle on a particular vendor, they rarely switch. So each sale gained in a tornado really should be looked at as an annuity, and the total number of sales a company can garner while the tornado is in process sets the limits of their installed base and thus the boundary conditions on their future revenue from that marketplace.

    In sum, the tornado is a hugely significant time. It is also a bit confusing for the marketing department. They are used to defining their value to the company as creating demand, but in a tornado there is no need for this service. So what should the marketing strategy be now?

    To put it as succinctly as possible—just ship!

    Don’t segment. Don’t customize. Don’t commit to any special projects. Just ship. It is like a sardine run. You don’t bait hooks, you just stick in your bucket, pull them out, and go back for more. Do anything you can to streamline the creation, distribution, installation, and adoption of your whole product. The more friction you can avoid, the more throughput you can achieve. Focus on supply chains and quality to ensure that as you ship you do not get caught up in returns. Don’t focus on the customer, in other words; focus on yourself. You, not they, are the gating item in this market.

    One of the premier embodiments of this principle was Oracle. In their tornado stage, their main competitor was Ingres. Oracle didn't care about the customer; Ingres put the customer first. The rest is history:

    None of this was reflected in Ingres’s approach. They were the nice guys. They said, we simply cannot grow any faster than 50 percent and still adequately serve our customers. No one can. Look at Oracle. They are promising anything and everything and shipping little or nothing. Everybody knows it. Their customers hate them. They are going to hit the wall. They will implode, just wait and see. We are doing things the right way; we are going to stay our course.

    Ingres was confident it was taking the high moral ground and would be rewarded. It turned out it was only half right. In 1991 Oracle did indeed hit the wall, but that was long after the critical market share competition was over. By that time, Ingres was a bewildered company that had lost its sense of direction and sold itself to ASK Computers. It simply could not believe what had happened. It was as if Darth Vader had slain Luke Skywalker, as if Bambi had met Godzilla.

    What Ingres—as well as many of the rest of us at the time—did not understand is that, for pragmatist customers, the first freedom in a rapidly shifting market is order and security. That can only come from rallying around a clear market leader. Once the apparent leader-to-be emerges, pragmatists will support that company, virtually regardless of how arrogant, unresponsive, or overpriced it is. Thus the penalty for poor customer satisfaction in a tornado is negligible compared to the rewards for going out and getting the next customer.

    And that brings us to the third and final lesson that Oracle taught.

    Ignore the Customer

    In a tornado, the correct marketing strategy really is to ignore the customer! The reason is that, in a tornado, customers are lining up for the hot product. They do not need—or want—to be courted—the problem is not to create demand: they need—and want—to be supplied. Anything you do to restrict the throughput of the supply process works against this goal. That is why Henry Ford not only could say, but was correct in saying, “You can have any color Model T you want as long as it’s black.”

    To be sure, once the tornado was over, Ford ended up painting its cars in two-toned purple if that’s what the customer wanted. But that is not what the market requires or the customer desires during the tornado. They just want to get their first car, or their first telephone, or their first PC, or their first laser printer. They want the commodity. So your focus must be on getting them that item as quickly, easily, and cheaply as possible. This means becoming intensely internally focused on your delivery capabilities and not letting yourself get distracted by “secondary” factors such as an individual customer’s particular needs.

    The shorts retweet incessantly every bad Tesla customer service experience they can find and present it as evidence that Tesla is crumbling. This sounds somewhat perverse, but I see it as confirmation that they are doing the right thing. They are focussing all their resources on the single most important thing, which right now is not the customer, but their ability to ship.
     
    • Informative x 31
    • Love x 14
    • Like x 9
  2. UnknownSoldier

    UnknownSoldier Unknown Member

    Joined:
    Apr 17, 2017
    Messages:
    1,797
    Location:
    WA
    CROM LAUGHS AT YOUR FOUR SHORTS
     
    • Funny x 3
  3. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    14,676
    Location:
    Ithaca, NY, USA
    Basically, yeah. I wouldn't say that they all *want out* but maybe some of them want to *take some profits* or *trim their positions*. Of course it's also possible that there are "smart shorts" who were successful shorting at $350 and are going to try again. Or it's a computer algorithm which is programmed to think the same sort of things.

    Either way, it means there are a bunch of people who think $350 is "too rich" for the stock. That's what a "resistance level" is. You break through it when you run out of those people.
     
    • Like x 4
    • Helpful x 1
    • Informative x 1
  4. wipster

    wipster Gold Member

    Joined:
    Nov 10, 2013
    Messages:
    3,120
    Location:
    Kennewick, WA
    I think it would be sweet if they discovered who was feeding him the info and provided some FUD to them, just to mess with his head and make his audience lose confidence in his data.

    Damn, I'm starting to act like a short... Argh!
     
    • Funny x 3
    • Like x 1
  5. Words of HABIT

    Joined:
    Jan 19, 2013
    Messages:
    912
    Location:
    Canada
    • Funny x 3
    • Informative x 2
    • Like x 2
  6. madodel

    madodel X at the end of a rainbow

    Joined:
    Apr 6, 2015
    Messages:
    2,395
    Location:
    Poconos, NE Pennsylvania, United States
    Ah, twats isn't something you really want to be asking about in this forum. Just saying. :rolleyes:
     
    • Funny x 1
  7. ZachShahan

    ZachShahan Active Member

    Joined:
    Dec 3, 2014
    Messages:
    1,051
    Location:
    Sarasota, FL / Wroclaw, Poland
    I have to say, I'm not a big fan of that claim — which was indeed in the Tesla shareholder letter. They only compared to a handful of models, not the entire class.

    Given that there isn't a smaller Tesla, I think it's most appropriate to combine small & midsize luxury cars for such a comparison. But even if you want to stick to midsize cars only, there are more than what is in the Tesla graph and Tesla didn't have >50% of the market segment. When I first saw the headline in the letter, I was about to publish our story on dropping Toyota sales, so I quickly ran to reverse the math and figure out more or less a solid estimate of Model 3 sales. I came up with ~20,000! ... Then I saw that the comparison wasn't for every car in the class — just for a handful of them.

    When I went and got the July numbers for each of the models Tesla showed in the graph, I concluded the Model 3 number was probably 13,000–14,000.

    Good Car Bad Car should have rounded up all the numbers soon — or I may go ahead and do so first — but you can see June figures here to get a sense of the whole market segment.
     
    • Like x 7
    • Helpful x 2
    • Informative x 1
    • Love x 1
  8. steve3

    steve3 Member

    Joined:
    Apr 17, 2016
    Messages:
    183
    Location:
    Denver
    First of all thanks for consistently sharing info from the MS notes as they come out; always helpful.

    My TSLA holdings were up 31% today. I’m retired, looking to establish a core position of X shares by exercising my M’19 $100c with proceeds from twice as many J’20 $400s. Started off with $7k to invest at time of M3 reveal 2 years ago, and added what I could every month...it’s been a bumpy two years, but road ahead looking good.
     
    • Like x 8
  9. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    14,676
    Location:
    Ithaca, NY, USA
    You're thinking more short-term than I am. :)

    I don't think it's going to constrain growth for *at least three years*, probably more like five, but it could be quite serious if it isn't fixed later.

    You're absolutely right that Tesla will keep having customers, and awful customer service won't affect revenue, as long as nobody is making a competitive product. And right now, nobody is.

    The trouble with building up an actual *reputation* for bad customer service is that when the competitive product shows up, you can lose your entire customer base as fast as they can switch. There is some evidence that this has been happening with Uber (vs. Lyft).

    This is all pretty much right. But switching costs are much lower in cars than in databases or software formats, and there are *ongoing costs from using a product with poor service*.

    If my 8-year unlimited Ranger service runs out and Tesla *still* hasn't built an upstate NY service center (Syracuse or Rochester), I'm probably going to buy a competitor's electric car (maybe a Bolt or whatever generation of Leaf they have by then) and not worry about the lack of Supercharging or other weaknesses. The costs of having to personally arrange to haul my car 200 miles every time it needs repairs -- both financial and in terms of time and trouble -- would be high enough to outweigh everything else.

    Except... Oracle is now being killed by pretty much everyone, including free Postgres/Citus. Takes a while, but it's happening. The market's mature now, it's not a land-grab, and the worst possible platform to use is Oracle, because they still have a bad attitude. Those stuck on Oracle are trying to get off. So in the long run, this is an awful stupid strategy. Everyone hates Oracle. Switching costs are high, but companies WILL do it to get away from Oracle. (Just like companies paid a premium to get away from Microsoft, where switching costs were even higher). Oracle's been bleeding market share for five years.

    So in the truly long term, the Oracle strategy is a plan for corporate death. It takes many years, but it happens. I want Tesla to be a 50-year-plus investment.

    Tesla's already better off than Oracle because Oracle is openly customer-hostile (as was Microsoft!) and Tesla is *trying* to do a decent job. But it's important not to ever be like Oracle.
     
    • Like x 9
    • Informative x 5
    • Love x 1
  10. Jayjs20

    Jayjs20 Member

    Joined:
    Apr 28, 2016
    Messages:
    845
    Location:
    California
    I recall someone saying you're not supposed to share overly specific numbers here, but what the hey. Feel free to mod if it's against the rules.
    http://oi67.tinypic.com/ibyp6s.jpg
     
    • Like x 4
    • Love x 2
  11. Familial Rhino

    Familial Rhino Endangerous Herbivore

    Joined:
    Feb 27, 2014
    Messages:
    1,555
    Location:
    Toronto, ON
    Of course, I agree Tesla should not aspire to behave like Oracle. Except for the tornado stage :).
     
    • Funny x 3
    • Love x 3
    • Like x 1
  12. SPadival

    SPadival Active Member

    Joined:
    May 7, 2016
    Messages:
    1,004
    Location:
    Texas Terafactory
    The great Tamberrino shuffle lol.. raised PT by $15

     
    • Funny x 24
  13. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    14,676
    Location:
    Ithaca, NY, USA
    I think the most impressive thing is that Model 3 is, for July, the 20th best-selling vehicle in the US. Sometime next year, when they reach 10K/week, it will be in the top 5.

    Anyway, "small and midsized luxury sedans"... Model 3 should be about 25% of that market class in August.
     
    • Like x 5
    • Love x 2
  14. ZachShahan

    ZachShahan Active Member

    Joined:
    Dec 3, 2014
    Messages:
    1,051
    Location:
    Sarasota, FL / Wroclaw, Poland
    Yes, the rise has (happily) forced me to do at least 3 posts a month putting it into perspective — US EV Sales, Small & Midsize Luxury Sales (which are getting insanely fun), and Top Car Sales. The latter should get really interesting in coming months.
     
    • Like x 4
  15. oneday

    oneday Active Member

    Joined:
    Nov 29, 2014
    Messages:
    1,074
    Location:
    Bay Area
    I am a little surprised NVDA didn’t have any selling pressure today due to the new Tesla chip announcement.
     
    • Informative x 2
  16. EinSV

    EinSV Active Member

    Joined:
    Feb 6, 2016
    Messages:
    4,318
    Location:
    NorCal
    I thought it was impressive that the Model 3 was already the Number One/Numero Uno/Top Dog passenger car in the U.S. by revenue for the month of July (and still ramping fast). But no one else seems to care so I guess I'm easily pleased.:)
     
    • Like x 9
    • Funny x 3
    • Informative x 2
  17. jhm

    jhm Well-Known Member

    Joined:
    May 23, 2014
    Messages:
    9,294
    Location:
    Atlanta, GA
    BOOM BOOM BOOM BOOM
     
    • Funny x 1
  18. Nate the Great

    Joined:
    May 20, 2016
    Messages:
    359
    Location:
    Houston, TX
    21.69 %
     
    • Love x 1
  19. EinSV

    EinSV Active Member

    Joined:
    Feb 6, 2016
    Messages:
    4,318
    Location:
    NorCal
    Doesn't really matter but perhaps the Pickup would be more comfortable in a bucket with cousin Semi?

    Another possibility -- a third shift in Fremont could (theoretically) boost Model S/X over 100K once Model 3 production settles in a bit.

    So many paths ....
     
  20. elasalle

    elasalle driVIN(188xx) it !!

    Joined:
    Jan 26, 2016
    Messages:
    3,870
    Location:
    VA
    Apologies got us just $15 ;)
     
    • Funny x 10
    • Like x 1
Thread Status:
Not open for further replies.

Share This Page

  • About Us

    Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.
  • Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


    SUPPORT TMC