Tesla’s EV market share (finally) falls below 50%. Good news for founders— incumbents took 15 years to match 1 founder.

Elon Musk single-handedly took on the entire automotive industry. No one, including me, thought he would succeed. But he's built an $800B company. Whether sales are slowing down misses the mark: the punchline is it took well capitalized, professional automakers 15 years to catch up to a single founder. 

Sure, Elon Musk is special. But this goes beyond just Elon Musk. It shows that founders today have more business power than founders have ever had. They can take on the most established industries.

The reason is that the pace of innovation is faster than ever. No business model is safe. 

And founders are the only ones who can react. 

Keywords
Tesla, EV market, car manufacturers, Elon Musk, disruptive innovation, business models, founders, rate of change

Transcript

So I see this article today that says Tesla's share of EV market in the US drops below 50 % for the first time. And it goes on to talk about how basically other car manufacturers are catching up to Tesla. But my interpretation of this honestly was like, what took them so long? I mean, the Roadster launched in 2008, the Model S launched in 2012. So it's been like 15 plus years since Elon Musk and Tesla have been fighting the EV battle. In the meantime, Tesla's built like an 800

billion dollar company, something that just about nobody thought was possible, including myself. I frankly thought they were going to fail for the longest time. And so I started thinking about how did that happen? Because honestly, at the beginning, like here's this guy, I it was Elon Musk, obviously, I mean, super impressive founder. Back then, he wasn't Elon Musk that he is today. Like today's a much, much bigger deal than he was back then. But still, he was a successful founder competing with companies that had been around for decades, in some cases for centuries that were pushing out millions of millions of cars that were perfectly optimized.

build cars that already had existing brands, existing infrastructure, existing marketing, incredible budgets. How could he possibly win? And there's a bunch of reasons for why you want to me in a sense, you could think of this as a bit of a disruptive innovation. It doesn't really fit the mold perfectly. But I mean, at the beginning, when the Roadster came out, it was a bit of a niche product, EV enthusiasts, tech enthusiasts really cared about it. A lot of other people didn't. But even though it was going after a small market, it was actually better in a lot of the important elements.

than the existing cars. think about the Porsche Boxster or Porsche 911, like the Roadster, as soon as it came out, had exceptional performance, exceptional driving experience. in terms of the important factors, which is not normal for, know, disruptive innovation, it already exceeded the incumbents, but it was going after the small market. And so from the perspective of the big auto manufacturers, was like, well, why waste our time? You know, we have fully optimized for ICE, internal combustion engine. Why go after this electric thing? But honestly, for me, the biggest reason for why Tesla was able to do what it did.

to become so big, bigger than many of the other automakers combined in frankly, a pretty short amount of time in the world of automaking, like 15 years, not a hundred years is Elon Musk. Which brings me to something that I think has really changed dramatically over like the last few decades. And I think that what's happened is as the rate of change has accelerated so much, power has shifted from business models founders. There's this really famous quote by Warren Buffett that says, when a management with a reputation for brilliance,

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tackles a business with a reputation for bad economics. It is the reputation of the business that remains intact. In other words, what Warren Buffett's saying is that business models actually have more power than managers. Yes, teams are very important, but there's some business models that are so entrenched, you can't do anything about it. You classic example is the newspapers back in the day. Once a newspaper had established a local monopoly, there was just no way to rival that newspaper because it already had the distribution. It already had the writers. It already had all of

pieces you needed to work to succeed. so even if a great team went after it, it was really, really hard to challenge them. Like if you think about it on a power spectrum, on one extreme you have the business models, like the newspapers, or you think about the older businesses like US Steel or Standard Oil. And on the other extreme you have like the teams, the founders. In the slower moving world of like a few decades ago, where companies really got their power from owning supply, power accrued mainly to these business models. And once a business model was entrenched and it owned supply, it was nearly impossible

to dislocate and the world was moving pretty slowly. even a bad management team was able to adapt slowly over time. And sure, like the owners of those companies, you think about Carnegie, US Steel or Rockefeller Standard Oil, they made a lot of money. They made a lot of wealth, comparable wealth to the Jeff Bezos or the Elon Musk of today. But the difference is they didn't really have business power. In other words, even they couldn't just jump industries. That's why these guys are defined by one thing. So for example, Carnegie is steel, Rockefeller is oil, JP Morgan is finance.

It's just one thing they can't move around because the way that things worked back then, the rate of change was slower. And the way that power was obtained was by owning supply was by controlling the production of oil. And once somebody had that sort of monopoly, it was almost impossible to dislocate. But today the rate of change is the only thing you can take for granted and successful business models that are optimized for today may very well not work tomorrow. This is exactly what happened with Elon Musk, EVs and automakers. Automakers were perfectly optimized for an ICE world.

even an EV world, which is not even that far away for them because it's really the same branding, the same sort of distribution model. I you can go direct from sewer or through dealerships, but you're selling cars at end of the day. It's just a different production model. And even that, they found it hard to adapt to. The only ones who can actually react quickly to incredible changes, like, you know, a couple of years ago, we weren't talking about AI in the same way that we're talking about it today. These sort of things are going to

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more often, more frequently in bigger ways. The only people that can react at a fast enough pace are founders, are excellent operators, which is why today the best founders have more business power than the founders of a century though. That's why people can jump industry. So for example, Jeff Bezos can go from e -commerce to streaming. Elon Musk can go from finance at PayPal to EVs to launching rockets. Steve Jobs could go from making phones to making movies. This is the power.

that founders have today because the rate of change is accelerating so much that no existing business model is safe. The monopolies of today are not like the monopolies of before. They can be disrupted. And the only people that can disrupt them or the only people that can keep an existing business safe from disruption are founders or excellent operators. An analogy, like to think about it. Like if you go back hundreds of years, the most powerful individuals were war generals like Napoleon, like Alexander the Great, because

They had the power. They were the ones that were able to truly, in effect, change the world, bring thousands and thousands of people together and frankly invade other countries and change the way the world worked and the way the world was set up. Today, I don't even know who the army general is for Canada or for the US or frankly for any country for that matter because army generals don't wield that same sort of power. I would argue that the people that wield the power today are the founders. That's why everybody knows Zuckerberg. They know Bezos.

They know Elon Musk. These are the people that are now able to change the world in a way that entrepreneurs could never do before. The rate of change has accelerated so drastically and the people that are best suited to work with constant change are founders. just gave you content that you liked so much. You actually listened to the end and guess what? You didn't pay a single dollar. Not only that, I didn't even put any ads in your face. So you just got a bunch of content for free and

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