I read with interest this article that Silicon Valley isn’t about startups anymore. I can understand the logic of this as VC is now a scale game too – bigger funds with roughly the same number of partners (to keep income high!) does mean that you can’t do so many deals.
Small deals require as much work as larger ones and the amount of money you can put to work in a large deal just makes it much more attractive.
This does offer some advantages to being in Scotland. When I ran Orbital you needed a large chunk of money to even build the product. There was no web services, content management systems or API’s. Now all that is available pretty instantly to anyone with good programming ability.
Lots of billion dollar companies have been build without having to create the plumbing that we required in the heady technology boom days of the late 90’s. So you can be a sole developer or small team in Scotland and build significant technology companies with little capital.
In fact, I am now a great believer that less money equals better decisions, you really need to concentrate on the product and once you reach scale, you can always attract big name VC’s to your business (like Skyscanner!).
So concentrate on the user and the customer problem you are solving and don’t get distracted with thinking about fund raising as an excuse to not getting started…
Generally I don’t like to talk about investments on this blog, my general investment strategy is linked to Andrew Carnegie quote. “The way to become rich is to put all your eggs in one basket and then watch that basket.”
Human nature isn’t good at doing nothing. So the financial services industry is built on encouraging you to sell one stock and buy another. My personal view is do stock selection up front and then do nothing.
Tesla is one of the stocks in my portfolio. I have a large position which isn’t something that sits comfortably with me. I bought the car itself as an early adopter not just because I love new technology but there are very few car makers in the world that are using a new channel dynamic (selling online). In the press this week the 20 year anniversary of the first online transaction was celebrated by stating 90%+ of us now buy online, so why should cars be any different. Sitting in your bed and comparing, checking prices and specifying something is really the ultimate consumer experience. It is incredibly convenient!
The issue with Tesla is it isn’t just changing the dynamics of car buying, it also has a truly unique product with supply side constraints that do mean it can only sell a few (keeping prices high in the short term). In the long term, it’s new battery factory will help bring electric vehicles to the middle market, and the word of mouth I have seen in the few weeks since I have owned the car is amazing. Most people in my friends and family would seriously consider the car if it cost approximately half of the current price (around £30,000-£40,000). This is still a huge premium to an ICE car (Internal Combustion Engine – geeks!) but with running costs and range anxiety gone the barriers to adoption fall.
The stock price has been on a one way movement vertically, which would warn me that it should correct at some point, but the remarkable customer service attitude that Elon Musk has to knocking down barriers to adoption keep me pretty hooked on the long term as a holder, even if their are price corrections over the years.
I would never recommend buying stocks to anyone, but it is worth keeping an eye on Tesla through the years to see what happens.
Disclaimer: This probably means the stock will bomb – and the reason I tend to invest in private companies!
Customer experiences are so important for word of mouth marketing.
Everyone is wowed by receiving their first iPhone box and how lovely the packaging is.
I had a similar experience last week with a car – which is quite unusual!
Here is my car being unveiled with a personalised printed sign showing the results of 6 months + wait for a new car (unusual for me!)
It was a great experience and I think every startup should think about the experience of opening a delivery.
In less than 12 hours I am picking up one of the most technologically advanced cars on this planet. I have been waiting for over 12 months for this car, and have been logging on everyday to get a status update.
I have struggled with what to name it, but it has to be called Tom (Tesla Tom). Why is a deeply personal story. Tom was my Uncle and the owner of many technical innovations that inspired me. He owned a lot of different cars in his life and loved the technological innovation the newest model brought.
In addition he inspired me in two ways – my father died when I was quite young, and at 13 I had no idea what to do. Tom was someone who left school, got an apprenticeship and became an electrician. In addition he then studied and worked to get an Open University degree while still working full time and looking after a growing family.
He also bought a BBC microcomputer – something that to me is has similarities to the Tesla I have bought today. It is a new technology entering our home – most people didn’t think it would “catch on” but Tom did and so did I.
I have spent my career living on the edge of technology – where most of my friends think I am mad or weird (OK I give you that!) but that is the spirit of Tom.
In addition at Orbital he was our first landlord after we left the garage to Corbiehill Road, Davidson Mains and believed in Calum, Alan and I to rent us some space, when most people laughed.
I will check the stats with Alan, his son – but I am sure he owned more than one car (52 to be precise!) – Tom, this is for you, an all electric innovation – all the way from Silicon Valley.
All I need to do now is drive the 404 miles back to Edinburgh!