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Tesla & why startups fail

Well, I posted something on Sunday about Tesla and, lone behold, they are in the news again with more internal turmoil.It seems that Martin Eberhard, the visionary [ousted] founder of Tesla was promised car #2, which has not yet been delivered despite the fact that car #3 has…   

Whether this is due to internal production incompetence or a desire to further punish Eberhard is largely immaterial, what is clear is that Tesla is not capable of delivering a car as promised and they are terrible at communicating issues.  Carolyn Eberhard (Martin’s wife, I think, but I don’t know either of them) put it best in a comment "… not one person at Tesla felt the need to pick up the phone and tell Martin about the "defects" and "delays." He had to learn about it through the Tesla blog. This is not great customer service."  No, not great customer service, and, worse than that, perhaps a sign of impending failure and certainly a sign of very, very poor planning.  Not good.

I did a presentation some time ago about why startups fail. It had three slides:

  1. Do whatever it takes – Most startups don’t
  2. Focus on your customer – Lack of focus will kill you quickly
  3. Remember the exit – Your investors care about this above all else…

It strikes me that Tesla is at least breaking rules one and two, and probably three as well.  Car companies live in die by customer experience, because, in the end, all the brand and lifestyle attributes can’t make up for the fact that the car won’t start, rattles or the dealership is rude and unethical.  Mercedes found this out the hard way.

This is exactly the kind of thing that will kill a car company faster than anything else. There is no excuse for the lack of communication and failing to follow through on promises, particularly to the company founder (whatever the internal politics).  Like I said in my previous post about Tesla, they are off to a bad start, and Fisker looks likely to eat their lunch, at least in the larger four door market.  That is, if Fisker follows the rules.