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Tesla and Facebook Tell the Corporate World to Change, or Be Changed

March 1, 2014

It’s rare that you have a week like this- two maverick disrupters- Facebook and Tesla, release news that they’re taking their revolutionary acts to the next level.

The acquisition of WhatsApp by Facebook for $19bn knocked us sideways and then came another killer punch; the story that Tesla is planning to build the world’s biggest single factory and use it to manufacture lithium batteries for its cars and more.

These moves sent shock waves around the world and especially into the boardrooms of telecos (Whatsapp’s messaging has already taken tens of billions from the balance sheets of telcos and will take even more when it moves into voice), energy (Tesla’s batteries could make solar cheaper and more viable because the sun’s energy can now be stored more easily) and automotive companies.

WhatsApp is growing at a rate of 1 million members per day and is on track to reach a billion users some time next year, with zero marketing dollars invested. Zuckerberg’s purchase of the “tiny” 55-person company has been widely covered with a wide range of viewpoints from “good value” to “it’s a bubble and he overpaid”, through to “he should have built it himself”.

Irrespective of the commentators, Facebook clearly recognized their need to fastrack their progress on mobile; they had been doing well, but there was more to do and faster- WhatsApp solves that problem in one move.

Tesla has nothing but huge ambition to be the next big industrial giant, by transforming the automotive and energy businesses. To make this happen, it needs batteries and lots of them, building a giant factory is the way to ensure it gets the supply it needs at a price that makes sense.

These two announcements are amazing given their scale and audacity and given that the companies concerned are relatively young in corporate terms- both are around 10 years of old.

They also are reflective of the contemporary realities of business. You have to act, not over-think and strategize, because at best, a good strategy these days has about 6 months of life in it. You’ve got to put cheap money or cash, to work for you and to build business advantage.

Of the two moves- Tesla’s is the least risky because it’s basically doing a Henry Ford, by taking control of the manufacture of one its most critical components.

Facebook’s move is full of risk, because the messaging category is moving so fast, players have very little differentiation in terms of the user experience, WhatsApp users like the ad-free nature of the service and with Facebook that could easily change bringing with it some obvious consequences.

Tesla is clearly operating in a different business arena to Facebook, but by acting like the Silicon Valley company that it is, it can easily disrupt the more traditional players in Detroit, Germany and Japan, who with their long planning cycles and labor law realities, have a signficant challenge to be agile and responsive.

Facebook has to be paranoid; it’s par for the category and even despite the aquisition, it’s still going to have to be relentlessly thinking about the future from multiple angles, if it’s going to survive the long haul.

For all the criticisms of the What’sApp purchase and there are obviously many, Zuckerberg can’t bee criticized for complacency; he’s astute enough to recognize that paranoia is the only sensible strategy to pursue.

Many in the corporate world should treat this week’s news as a cathartic wake up call to seize the initiative and make the bold moves required to stay relevant; it’s now a change, or be changed, by outside forces you can’t control, world.

 

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