In many ways you can say the original iPhone that debuted in 2007 was a major hit. But there’s another side to the story. Most people dismissed the iPhone as an overpriced gadget and couldn’t imagine themselves ever owning one.
I remember standing in line on the first day to get the original iPhone. It reminded me of standing in line to reserve the Tesla Model 3 almost 2 years ago. The excitement in the air was similar. Everybody standing in line knew they were wanting to get their hands on something revolutionary and spectacular. There was a hope and faith in the air.
After standing in line for several hours and finally holding the original iPhone, it was a magical moment. It was even better than what Steve Jobs had promised. The touch interface, the scrolling, the built-in apps… everything was just amazing.
However, when I showed my iPhone to my friends almost all of them dismissed it as an overpriced toy. I was quite shocked.
I remember I was at a friend’s party shortly after getting my iPhone in 2007 and I was showing it to some people, but there was little interest in it. There must have been 30 people at the party and not a single person wanted to play with it. I remember playing a game, Taboo, with folks and using my iPhone as the timer. It was awesome, at least to me, but nobody cared.
Several days later I was eating dinner at a restaurant with a few friends and I had my iPhone out on the table, and one friend told me to put it away because she was embarrassed by it because it “costed so much” and she didn’t understand why anybody would want one. She said she was happy with her Blackberry and had no interest in ever owning an iPhone.
I could go on with stories of disinterested people with the iPhone back in 2007. The reality was while there was a small minority of people who were infatuated with the iPhone and understood its significance, the vast majority of people completely dismissed it.
Steve Balmer, the then Microsoft CEO, remarked, “There’s no chance that the iPhone is going to get any significant market share.”
He was just so sure the iPhone was a fluke, a gadget, a toy. In retrospect, the original iPhone was truly a historical and momentous moment, one that would forever change how people consumed information.
In similar ways, the vast majority of people are completely missing out on the transformation and historical moment of the Tesla Model 3. On the surface, it’s easy to judge it as a “gadget” or “toy”, and something that only Tesla fanatics are in to.
However, what people are missing is they don’t understand the essence of the Model 3, just like the didn’t understand the essence of the original iPhone.
What we have now in the iPhone is a maturation of what the original iPhone signified. And most people didn’t grasp or understand this because they saw the original iPhone as more of a static product. They didn’t and couldn’t foresee how it would evolve, improve and change over time to encompass more and more features.
In a similar way, most people don’t see the significance of the Tesla Model 3 because they see it as a static product. They think, “oh, it’s a car. Not bad. But just like other cars. I’ll just keep my current car.”
What they don’t see is the trajectory that Tesla is on. Just 5 and 1/2 years ago, back in 2012, Tesla released the Model S and it was the best car they could deliver at the price point they offered it. To go 265 miles at 4.2 seconds 0-60mph with some options in the car, one had to pay $100k. But that’s the best Tesla could have done at that time.
Fast forward to today and Tesla is able to deliver a car that goes 4.8 seconds, goes 310 miles, with options for close to $50k, half the price of a comparable Model S in 2012.
Further, the Model 3 offers the best-in-class Autopilot features that will only get better over time. Even on the base $35,000 model, Tesla has added 9 video cameras on the car. That’s right, nine! 3 cameras looking forward, 4 on the sides, and 1 in back… and also 1 in the inside of the car looking at the driver and passengers.
Most of these cameras are not activated at the moment. But Tesla still includes them. The reason is because Tesla will be activating them over time as they get the software ready.
Even without the Autopilot option, the standard $35,000 Tesla Model 3 will have the best safety features in its class. And over time, even without Autopilot, Tesla will be able to add new safety features based on the 9 video cameras. If one buys a $35,000 standard option Model 3 in 2018, five years from now the car will be better and safer… with more features activated and with a more refined and capable operating system in the car as well.
No other major car company operates like this.
What people are missing is where Tesla will be in 5 years. They will be able to deliver an even more capable and more advanced car for the same price or even lower.
In fact, in 5 years I wouldn’t be surprised if Tesla can deliver an Gen4 economy car that competes in the Accord/Camry/Civic class for $25,000-30,000. But of course it will be no competition because Tesla’s economy car in 5 years will not only have the advantages of an electric powertrain, fast charging, long range, but also of advanced technology, software and the use of AI in autonomous driving.
In many ways, Tesla is just getting started. The Model S was a proof of concept of sorts. Some people will say the original Roadster was a proof of concept, and that’s true. But the Model S was also something that Tesla needed to do to prove out the technology and to gain scale so they could make what they really wanted, the first mass-affordable electric car that would be spectacular.
Tesla now has the core product, the Model 3, that they have been envisioning since they started in 2003 (yes that’s right, Tesla is 15 years old). With this core product, they are now able to ruthless iterate and improve it, just like Apple did with the original iPhone.
The Tesla Model 3 over time will gain new features, faster charging, better software, better value, more safety functions, etc. Just like Tesla worked to improve the Model S and bring the first Model 3 over the past 5 years, Tesla will apply their focus and maniacal ambition to improve the Model 3 and bring more cars (the Model Y, pickup truck, Semi, and more affordable cars in the future).
Over time, Tesla will build not just more software, design, and scale advantage, but as Elon has mentioned several times, they will apply AI and robotics to achieve a manufacturing advantage that other car manufacturers simply won’t be able to compete with since they are not software-oriented companies like Tesla.
What we see now in the Tesla Model 3 is just the beginning. And a lot of people get distracted with the minor, like “hey, where’s the buttons?” or “there’s only one center screen”.
But what Tesla has achieved in the Model 3 is simply remarkable. It’s what most everyone thought was impossible just 5 years ago. And those same people have no clue what’s coming from Tesla in another 5 years.