There are many lessons for entrepreneurs in the battle between Tesla Motors Inc (NASDAQ:TSLA) and BMW AG, Peter Yared asserts in a post for TechCrunch.
Yared, who was once the CTO & CIO of CBS Interactive before founding and becoming CTO of Sapho, shared five key lessons entrepreneurs can get watching Tesla Motors Inc (NASDAQ:TSLA) battle it out with BMW AG.
The first lesson Yared shared is about brand. He wrote that though the BMW i3 has a “3” in its name, it should be better classified under the 1 series. Pointing this out, he noted that legacy companies, companies he said are entrenched in the space they are competing in, can “mislabel their products to leverage their brand, especially if an upstart compares itself directly to a particular model.”
Tesla Motors Inc (NASDAQ:TSLA) is one such company that is comparing their goal car to the BMW 3 series.
Another lesson, Yared said, is that legacy companies can bundle their old technologies along with newly-developed ones for them to fight new competitors. In the case of the Tesla Motors Inc (NASDAQ:TSLA) cars and its i3 vehicle, BMW AG has chosen to bundle electric with internal combustion. This combination is also found in other cars that use electric power.
As for volume, the executive said that legacy companies also have the leverage of scale when it comes to those technologies they bundle together. For instance, Tesla Motors Inc (NASDAQ:TSLA) is in the process of planning and building a “gigafactory” which takes advantage of scale to bring costs down for their batteries.
For sales, Yared wrote that disruptors in any space will do well by not underestimating “the power of a legacy company’s sales channel.” This means that innovators will have to compete with better machinery to distribute goods as well as deeper pockets to bankroll incentive for buyers that legacy companies have.
Meanwhile, Yared said that the topic of market entry can teach entrepreneurs looking at the Tesla Motors Inc (NASDAQ:TSLA) versus BMW AG battle that legacy companies usually use their economies of scale in numerous segments of the market to thwart efforts made by upstarts.