Electric Cars and the Whole Product Lesson

While everyone in the tech industry was busy with who was briefed about Google OpenSocial, Shai Agassi launched his ambitious automotive business model. To me, both stories belong in “Advanced Business Strategies” class and show how much the high-tech industry has advanced over the last 15 years and turned to be a driving force and a thought leader for the entire global economy.

There is no doubt that the high-tech industry innovated a lot in the last 15 years. Most people would think it innovated too much. Fifteen years ago we didn’t use the Internet, we accessed files by typing specific commands in DOS and were surprised to discover that products with no target are doomed. Thanks, Geoffry Moore… The industry kept doing and doing, and mistaking and mistaking and the veterans of this industry (all under 40…) learned some lessons you can learn only in a lifetime or two. And now they use them…

Lesson # 1: Google (now the 5th biggest company listed in the US) learned the old Microsoft mythical method of using its power and patience to jump last into an industry and win it over by sheer power and influence. The young student overtakes the old master by using the master’s techniques… While doing it, Google didn’t forget to lure Microsoft in, only to isolate it, together with Facebook, in a dark (and expensive) corner. Brilliant.

Lesson #2: At the same week (but on the other coast), Shai Agassi, a Silicon Valley veteran, launched a project that has little to do with social networks or high-tech, but everything to do with the learnings of the industry. Shai went back to the simple principle of the whole product Geoffry Moore coined in Crossing the Chasm 15 years ago: the sum of everything related to a product, including the physical product plus services, support, integration, product positioning, and even marketing, is the whole product. If you develop only the core product (the electric car) but don’t take care of the wrap (easy charge and replacement for the batteries), you can’t cross the chasm and get to the masses.

In 1999, Bill Gates reportedly compared the computer industry with the auto industry and stated: “If GM had kept up with technology like the computer industry has, we would all be driving $25 cars that get 1,000 [miles] to the gallon.” Less than 10 years later, it looks like the high-tech industry is creeping into the car industry to do just that, using the principles that were developed based on billions of wasted lines of code.

Gadi Shamia

PS (takeaway for your own company)- You don’t always need to build the whole product yourself, but you need to make sure that someone is creating the missing parts, so your product will be complete. It is not so difficult to do and it’s applicable for every industry: take a pen and paper (keyboard will do as well) and write a story about how your product should be used. Now look at the story and check that every component is either included in the product, or readily available by someone else. This is the trick, but so many people don’t do it.

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Electric Cars and the Whole Product Lesson

4 thoughts on “Electric Cars and the Whole Product Lesson

  1. Surely Shai will be successful, but in many cases, getting into ‘cleantech’ is the perilous folly of the bored technology VC or founder. Battery technology is based on chemistry, physics, and painful R&D that rarely scales out of the lab. Certainly R&D can be improved but it is not software. Today there still is not a full working model of the basic lead-acid battery … not for lack of trying but b/c it’s not just bits and bytes …

  2. Jason- thanks for the insight. I am no expert in batteries and I don’t think Shai is. What is special about what he is doing is the strategy: he is not trying to invent a better battery but rather create the conditions for the existing battery to work by using the current grid.

  3. terrabeing says:

    alas, the ultimate question and answer. If our world is to be free of using fossil-fuels, we still have to remember that most of our instruments and technologies that are used in these matters, ultimately are derived from such substances as those that are used to create our technology.

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