The Tesla Model of Entrepreneurship...Creating Moats

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Entrepreneurship is not a one night stand. It is a semi-controlled roller coaster that 99% of the time leads to unemployment. Yet for some, those a little more romantic, it provides a model to change the world.

Instead of cult like followings to "hustling", or "stealth mode", or "Lean", I propose a simple, universal, and realistic approach to entrepreneurship, one which is simply creating value. With this definition in place, I then want to differentiate between entrepreneurs like Elon Musk and your Uncle Ronnie.

What we will learn is that it comes down to stacking value into moats by sticking to one vision and directing all energies towards building on top of that vision.

Problem: Entrepreneurship needs a realistic model for all. Enough with "hustle", or "stealth mode", or "lean" or bust.

The Story of Tesla

It's 5:30 AM. You wake up and roll out of bed to the smell of fresh coffee and eggs being made in the kitchen. You shower, get dressed, and grab your breakfast for the road. You turn on your heated seat, speak “drive to work”, and off you are on another day. 

It’s snowing on your morning commute, but you could care less as you’ve decided to take a little snooze after finishing breakfast and reading the morning headlines. It’s also your favorite part of the day, the only two times you have utter peace and quiet to yourself. Did I mention this is because the car drives itself?

As you approach the office you wake up, grab your briefcase, and step out into the new day. You still have yet to touch the steering wheel.

This day has been an especially great day at work, and you can’t wait for the ride home as you have three chapters left in your favorite book. As you’re getting deeper into the book, you notice traffic is stronger than usual, but who cares!? It just means more time to read.

An hour later you’ve finished your book, and realize your car has already parked itself in the garage and plugged itself in. In fact your doors even opened themselves, welcoming you home to a delicious home cooked meal and two smiling children. As you lay in bed tonight, you revel in the amazement each day now holds.

Here’s the thing. Everything that allowed this day to happen, from the physical transportation to the energy fueling the car as well as your home, are all because of one man.

This one man has built two companies that created this future (*Elon wasn't original Tesla Founder). The first, SolarCity, installed the solar panels on your roof, collecting solar energy. The second, Tesla, collects the energy from this roof and stores it into it’s Powerwall, a battery that can power an average two bedroom home for a full day. Tesla also built the car that drives you to work and fills itself up every night, allowing you to not worry about “do I have to fill up to get to work”. It also drives around as a self driving Uber while you’re at work, generating the income to bring your family to Punta Cana this winter break.

This future is here. Tesla cars have self-driving capabilities, Tesla’s Powerwall battery is onto it’s second generation, and SolarCity will start installing solar roof tiles for cheaper than normal roofs by the end of 2017. This means two companies will do more than just sell you a product, they’ll free you into a whole new lifestyle. 

The Secret

But more impressive than this future is how one man could create such a massive network himself. How could he do this? How can he change our life from the moment we wake up to the moment we’re asleep? The secret, is that he understands the value of a Moat.

Coined by Warren Buffett, a moat is a competitive advantage or bundle of competitive advantages in order to protect a companies profits and market share from it’s competitors. It may be price, or speed, or brand perception, or a combination of different things. No matter the advantage, a moat is when your value is so strong that no one else can penetrate. Think Google with search, or Facebook with social networking, or Twitter with mini-blogging (tweets).

But a Moat holds another property not understood by surface level logic, and this property is what’s allowed to Tesla and SolarCity to become so ubiquitous in our future lives. As well as competitive advantages, a moat is the amount of integration, or what we call value stacking within what a company provides. By value stacking, we mean levels of influence. For example, if you’re Apple (specifically iPhone), everything beyond the actual phone is a level of value stacking. The charger, headphones, cases, these all are additional levels of value. For Elon Musk, he’s managed to do this with whole companies. In his biography from author Ashlee Vance, Vance tells us, “Each one of his businesses is connected in the short term and the long term”. This is reflected when the stock of Tesla goes up when the stock of SolarCity goes up.

The result is that with Tesla and SolarCity, Elon Musk has found a way to create a Moat over a lifestyle of limiting your footprint and doing your part in a sustainable future. He has provided us a way to transport like this, a way to build a home like this (Solar Roof), and a way to use energy like this (Powerwall).

How did one man do this?

By understanding value stacking, a model which can be best described by understanding how to decide which opportunities are a go or no go. You hear in every book or on every blog the power of saying “no”, but what these ignore are the actual patterns driving the power in saying no. 

The result is that with Tesla and SolarCity, Elon Musk has found a way to create a Moat over a type of lifestyle. This lifestyle specifically is one of limiting your footprint and doing your part in a sustainable future.

The Solution

The short answer of how Elon Musk created this moat is by maintaining one vision and adding value around that vision. For Musk, this vision goes back to the books he read as a child. “The heroes of the books I read, ‘The Lord of the Rings’ and the ‘Foundation’ series, always felt a duty to save the world”, he has said. He's now these characters by furthering the sustainability of the human race. Tesla is ridding fossil fuel in transportation, SolarCity is ridding fossil fuel through energy capture, and now that Tesla and SolarCity have merged they control the energy capture and energy storage through their Powerwall battery. Add in SpaceX which allows for a multi planetary civilization, and what we see is calculated decisions all tied in together through what Ashlee Vance calls “The Unified Field Theory of Elon Musk”.

But the application isn't exclusive to Elon. For the past year I've been studying patterns of the most influential players in each industry, and this pattern of unification is valued within every single person I have studied. They all understand the precious value of time, and in making sure all efforts are maximizing this time.

Solution: Creating Value Moats, specifically how Tesla's captured a lifestyle.

How To Build Your Moat

We can all implement this same pattern in our lives no matter our unique vision. The short answer is to create one vision and relentlessly chase it. The long answer requires more than a LinkedIn article, thus if you want to learn how sign up here.

Or if you want to one night stand, just follow South Park.

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Matthew Mottola is a leader in innovation through the convergence of artificial intelligence & the future of work. Located in the heart of Silicon Valley, he works with both enterprises and early stage ventures to help them drive value creation through innovation/disruption frameworks.

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