To answer this we have to understand another phenomenon related to so-called first-mover companies and the early adopters that support them. Going back in time we could think about Apple or Microsoft; more recently we can think about Tesla. Tesla builds a brand-new type of consumer product that is a radical change from earlier iterations: an automobile that runs on electricity instead of carbon-based fuels. Tesla enjoyed first-move advantages because entrenched automobile companies had too much to risk by trying to move consumer spending behaviour away from the typical automobile purchase to anything radically new. Resistance to change is always encountered when cash flows could be threatened.
Tesla’s stock was only $15 per share in 2010 but has mostly been above $300 per share this year as investors piled into the promise of what could be. Before the company ever built its first car for sale, thousands of early adopters sent deposits to the company and placed themselves on waiting lists in order to be one of the first to receive the highly anticipated new cars.
Elon Musk, the brilliant founder and CEO of Tesla makes very few mistakes in life. One of the world’s most signif-icant visionaries and a success in every public definition of the word, he DID make one mistake with his execution of the Tesla evolution: he forgot that those early adopters lining up for the first versions of the car exhibit behaviour more like fans than consumers. Those early adopters would have bought ANYTHING that came off the production line, so enamoured were they with the global benefits of a cleaner world and all the other promises of the Tesla dream. It is testament to Musk’s character that he was able to produce a beautiful and successful consumer product that met the needs of those early adopters. But he also shaped his strategies based in part on those needs, and early adopters by their very existence do NOT define the larger market.
Consumers are in Charge, NOT Growers
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