Tuesday, June 4, 2013
According to a quick scan of financial history in Google, Tesla has raised roughly $1.8BN in a combination of equity and debt over the past 4 years. The vast majority has gone to R&D, Manufacturing, Capex, etc…
In that same time frame Ford has spent roughly $16BN on just Ads and Marketing alone.
That’s an order of magnitude larger. And I think Tesla is in a much more interesting strategic position for the next ten years than Ford is.
Sometimes, as a big company, it’s just easier to tell people you have a better product (over and over again… with a Tom Brady cameo) than it is to actually build a better product. But this is always a short term solution.
It’s a classic trade-off that even the earliest startups face. Every dollar you invest in marketing is a dollar you didn’t use to build a better mousetrap.
I’m not saying, “Don’t market your product.” Instead, I’m stressing the importance of capital efficiency in marketing. Paying for users is a drug that is very hard to ween yourself off of later.