Essay 6

Are Electric Cars… Cars?

Al Vasquez is a YouTuber. But not the kind you're imagining. He's not 18. He doesn't do crazy stunts. He's a senior automotive journalist who built a loyal Spanish-speaking audience through his honest, emotional, deeply personal way of reviewing cars.

In the first 40 seconds of his review of the Hyundai Ioniq 5, he says something that stopped me cold:

"Lately I've become a real expert in electrification and everything coming in the future. But I'm very, very, very worried — because I'm going to have to change the way I make videos. Because all these things look the same. Before you had a 4-cylinder, a 6-cylinder, an 8-cylinder, transmission, all of that... now there's nothing to talk about. Now we're going to talk about the flat front, no engine, and pure technology inside, no sound. We have to change the way we present cars, because otherwise it's going to become incredibly boring."

Al Vasquez just described the most important challenge in business today. He doesn't know it. But he did.

The New Animal

What Al is experiencing is that the parameters by which he used to measure cars — the things that made one car different from another — no longer exist in electric vehicles. The V6 vs V8 debate is irrelevant. The transmission is gone. The engine sound is gone.

He's not facing a new version of the same thing. He's facing a completely different kind of animal.

And the assets that differentiate electric cars are entirely different: design, technology, materials, software, sounds that are designed rather than mechanical. Things that were secondary before are now primary.

This is exactly what's happening to businesses right now. The assets that differentiated companies in the industrial era — scale, efficiency, distribution, manufacturing capability — are becoming commodities. The new differentiators are of a completely different nature.

Three Companies That Got It Right

Tesla is worth more than the next ten automakers combined. How? They understood that they weren't building a car — they were building a technology platform that happened to move people. Their assets: proprietary electric technology, a narrative that made "electric car" synonymous with Tesla, a user experience designed by software engineers rather than car engineers, Autopilot, Superchargers, and Elon Musk himself as the most powerful marketing asset in the world.

Netflix started as a DVD-by-mail company competing with Blockbuster. They reinvented themselves before the market made them irrelevant — a rare act of corporate courage. Their assets: a content calendar that creates constant novelty, technology that made streaming better than piracy, original production that competes with Hollywood, Big Data that personalizes the experience for every user, an interface that makes choosing what to watch a pleasure rather than a chore, and a culture that attracts the best creative talent in the world.

Starbucks took the most commoditized product on earth — coffee — and made people willing to pay five times the market price for it. Their assets: the sofa (the idea that you could stay for hours), the cup with your name on it, the barista who knows you, the standardized experience that feels the same in New York and Singapore, proprietary machines, and a workforce that was proud to be called baristas rather than coffee makers.

The Ecosystem Principle

None of these companies won with a single asset. They won with ecosystems of assets — interconnected, mutually reinforcing, designed around a clear value proposition.

An asset by itself is not value. An asset in the right ecosystem, aligned with a clear promise to the customer, is value.

The iPad wasn't the first tablet. But Apple understood that previous tablets had made the mistake of putting a desktop experience on a tablet form factor. The iPad was designed from scratch around what a tablet actually needed to be — and that required understanding its nature, not its predecessors'.

The same principle applies to every business entering the era of high added value. The assets you need to build are of a different nature than the ones that made you successful before. They need to be designed from scratch around your value proposition — not inherited from the industrial era.

"The valuation of companies in the future will have nothing to do with the valuation of the past. The only way to win is through ecosystems of high added value assets."

Al Vasquez will figure out how to review electric cars. The question is whether your business will figure out how to build the assets that matter in the new era — before your competitors do.

← Previous essay All essays Next essay →