When I read this paragraph in an article about Elon Musk (Tesla Motors and Paypal), I got to thinking that the services around an invention are equally important.
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SolarCity's business plan, which Musk first proposed to company co-founders (and his cousins) Lyndon and Peter Rive at the Burning Man festival several years ago, is to leave panel manufacturing--an increasingly competitive and commoditized business--to the likes of BP and focus on building a retail brand. Installing solar capacity in a home or small business costs about $9 per watt, but the panels cost only $4 per watt. The installation business, which includes surveying, planning, sales, and the actual bolting on of panels, is expensive and inefficient. "It's all mom-and-pop contractors, and they basically suck," Musk says. "None of them have put any serious effort into honing the whole process--you know, squeezing out excess parts and labor--and then they have no economies of scale as far as buying panels en masse or establishing best practices."
Accomplishing this has meant creating what might be the new economy construction company, amid a housing downturn. Technicians like Meier and Davis--who would otherwise be making an hourly wage working for roofers or contractors--get stock options in a company that Musk says is headed for an IPO and a nationwide expansion. They're also encouraged to try out different installation techniques--for instance, ways to drill fewer holes into a roof--and report back on their findings. "We have all the engineers' personal cell phone numbers, and they're listening to us," says Davis, a former construction worker. When a customer calls SolarCity's toll-free number, a salesperson uses satellite imagery to assess whether the house gets enough sunlight. Next, laptop-toting employees are dispatched to survey the roof, work up an estimate, and produce a contract. In addition to actual installation, SolarCity processes customers' rebate applications with the state government, remotely monitors the performance of the panels, and handles any maintenance. "Our goal is to reduce the cost of solar so that everyone can adopt clean power," says Lyndon Rive. "We definitely want to be a consumer brand." ===
3 comments:
When I read this paragraph in an article about Elon Musk (Tesla Motors and Paypal), I got to thinking that the services around an invention are equally important.
====
SolarCity's business plan, which Musk first proposed to company
co-founders (and his cousins) Lyndon and Peter Rive at the Burning Man
festival several years ago, is to leave panel manufacturing--an
increasingly competitive and commoditized business--to the likes of BP
and focus on building a retail brand. Installing solar capacity in a
home or small business costs about $9 per watt, but the panels cost
only $4 per watt. The installation business, which includes surveying,
planning, sales, and the actual bolting on of panels, is expensive and
inefficient. "It's all mom-and-pop contractors, and they basically
suck," Musk says. "None of them have put any serious effort into
honing the whole process--you know, squeezing out excess parts and
labor--and then they have no economies of scale as far as buying
panels en masse or establishing best practices."
Accomplishing this has meant creating what might be the new economy
construction company, amid a housing downturn. Technicians like Meier
and Davis--who would otherwise be making an hourly wage working for
roofers or contractors--get stock options in a company that Musk says
is headed for an IPO and a nationwide expansion. They're also
encouraged to try out different installation techniques--for instance,
ways to drill fewer holes into a roof--and report back on their
findings. "We have all the engineers' personal cell phone numbers, and
they're listening to us," says Davis, a former construction worker.
When a customer calls SolarCity's toll-free number, a salesperson uses
satellite imagery to assess whether the house gets enough sunlight.
Next, laptop-toting employees are dispatched to survey the roof, work
up an estimate, and produce a contract. In addition to actual
installation, SolarCity processes customers' rebate applications with
the state government, remotely monitors the performance of the panels,
and handles any maintenance. "Our goal is to reduce the cost of solar
so that everyone can adopt clean power," says Lyndon Rive. "We
definitely want to be a consumer brand."
===
That is a great story of a business transforming status quo. Love it!
The entire Inc. magazine article is here:
http://www.inc.com/magazine/20071201/entrepreneur-of-the-year-elon-musk.html
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