I've been a fan and shareholder of Tesla for many years. Along the way, I've become intrigued with their ability to execute against their massive roadmap.

Recently, I started peeling back how they do it.

The more I went down the rabbit hole, the more I realized that they are applying the same methodologies, frameworks, and strategies that I use day-in-day-out as a Product Manager.

Connecting these dots has given me a deeper appreciation for how they've been able to accomplish so much, and at the same time, only be the tip of the iceberg for what I believe the company (and stock) will become in the next 5–10 years.

Connecting the dots has also helped me better understand my own craft and how much more I still have to learn.

In this article, I've distilled three main reasons, using my perspective as a Product Manager, why I think Tesla is winning and will continue to win.

Reason #1: Tesla has built a product that people love

As a PM, my bar for success is easy to define — build a product that customers love and are willing to recommend to others (at scale).

However, even though this goal is simple to articulate, it is not easy to achieve.

In order to build a great product, you have to deeply understand how and why a potential customer would use your product versus the current solution they have. You have to tease out the problems they face, their range of feelings while using your product, their potential concerns / reservations at key moments in their journey, and more.

Then, you have to work together with an internal team (and often with multiple teams) to mold and shape the product into reality. Specifically, you have to translate those learnings into a series of features and experiences that are easy to use, that anticipate their needs, that create moments of delight, all while solving their problems each step of the way.

In the book, "Inspired", Marty Cagan describes three major chasms to cross in order to build a great product. First, you have to know what is feasible. Then, your product has to be usable. And finally, your product has to actually be valuable for your customers.

Re: feasible

This one is obvious. If you don't have the right team (ie. Product Managers, Designers, Engineers, Marketers), or if your team don't have the right set of complementary skills…most likely, it won't be feasible to build a product and successfully bring it to market.

(Of course, there are stories of solo entrepreneurs, like Pieter Levels, who've learned how to code, design, and sell. I'm not saying it's not possible. But, this is the exception, rather than the norm.)

Re: usable

Even if you have a team who come together and have the right set of skills to build and launch a product, by no means will the product magically become usable.

I believe this is where most product teams actually get stuck.

It's relatively easy to build a product with lots of features. And it is easy to add extra bells and whistles too. But if it's not the right set of features, that are easy to find and use, at the right time in a customers journey, or if there is a mismatch in expectations with how a feature is supposed to work…the product ultimately won't pass the usable threshold.

A tell-tale sign I look for is how much a user has to "think" while using a product. That's because if they have to think about how to use a product, their attention is not focused on doing the actual task at hand that they hired the product to do.

By violating the "don't make me think" principle (I wrote more about that here), a product won't be considered "easy to use" and "intuitive". And over time, products that aren't easy to use will struggle with retention.

Re: valuable

Finally, even if you have the right team, and even if you are able to build something that is really usable, it still doesn't mean it'll actually be valuable.

I believe that products that are both feasible and usable, but not truly valuable, lack a deep understanding of the jobs to be done principle. Put another way, if you don't really REALLY understand how your product fits into your customers big picture workflow, then it'll be very difficult to provide a lot of value for them.

How do you know your product is really providing value? To me, it's when your customers say things like, "I can't imagine what life was like before using [your product]"! Or, better yet, they go out of their way to refer your product to others.

And this brings me to the first reason why I think Tesla is winning!

They've successfully built not one, but multiple products that people really LOVE. That means they've figured out a repeatable process to cross over the chasm from feasible → usable → valuable.

Why is this so important?

When customers rave about a product and recommend others to try it out too, it changes the decision making process. Instead of laboriously researching, comparing, and deliberating, the odds get stacked in your favor (as a product and as a company) to acquire these new potential customers who have been referred.

Let's look at this from both sides.

Think about the last time you gave a recommendation (no matter if it was for a restaurant, a book, or an app).

Did you recommend it if you didn't like it? No.

Did you recommend it if it only was mediocre? No.

Or did make the recommendation because it was something you personally loved and enjoyed? Yes!

Why does that happen? Fundamentally, we're social animals. And when we vouch for something, we're putting our social capital on the line. So that's why we only recommend the products and services that we love.

On the other side, when we receive a real recommendation, we trust it more. So when Tesla customers go out of their way to recommend the cars, it's much more effective than any advertisement that they could put out there.

For Tesla, that means more people who end up test driving and buy their cars!

Every company knows that getting the word-of-mouth flywheel going is the holy grail — and Tesla has proven it understands that, first, you need to build a product your customers not only like, but love.

The flywheel is spinning for Tesla. According to a Bloomberg survey, almost 99% of Model 3 owners said they would recommend the car to their friends and family.

Zooming out, it means that for each customer they have right now, it'll directly lead to one or more new customers who will also test drive and ultimately buy a car in the near future. And in turn, those newly converted customers will go on and tell THEIR social circles about Tesla too!

Want more proof that Tesla customers love their cars and go out of their way to tell others about it?

• how about owners volunteering time at the end the quarter to help out with deliveries of cars to new owners? (link)
• how about owners going out of their way to let strangers test drive their car? (link)
• how about owners posting videos on YouTube to their hundreds of thousands (if not millions) of subscribers? (link 1, link 2, link 3)

Of course, having a product that customers love is not the same thing as having a perfect product.

Tesla cars aren't perfect. Some have paint defects or panel gap issues. Others have had issues with the battery packs. It can also take a long time to get the car serviced or repaired. And at times, their software updates are buggy.

But in spite of these issues, it's amazing to see a company build a product, especially a high price point one, that so many people love and go out of their way to recommend.

It's easy to think, "duh, of course you have to build a product that people love". So the real question is, how did Tesla actually go about building that product?

I believe it's because they understand that a product has to be 10x better than the competition.

Reason #2: Tesla has a 10x better product

I think a lot about why certain products get adoption, while others don't. To me, it comes down to how much better a product is compared to the competition at doing the same job.

I believe a product can't just be incrementally better. Rather, it has to be orders of magnitude better. Let's call it, 10x better.

That's because your potential customers already have a current solution that, to some degree, solves their problem. It might be a direct competitor product, but it could also be homegrown solutions too (like spreadsheets, pen & paper, etc).

Your potential customers have invested time and money into their current solution. And they've spent their energy learning how to use it and integrating it into their larger workflow.

That means, in order for these potential customers to make the switch, there would be a real cost to incur.

But if a product is only incrementally better, why would they switch? They'd be stepping away from the known and into the unknown. And there is a real chance that the new product wouldn't actually work as well as their current solution.

I believe for someone to even consider overcoming these switching costs, it has be readily apparent how and why your product is 10x better. And of course, your product has to actually deliver on that promise.

Let me give an example.

Years ago, I used to use Microsoft Word. And I was generally satisfied with it.

But now, I exclusively use Google Docs.

Why?

Well, there was one critical part of my workflow that Google Docs solved, that the Microsoft Office suite could not compete with.

And that made Google Docs 10x better for me. So it was a no brainer for me to make the switch. And since I've made the switch, I've never looked back.

Let me explain.

My job requires collaboration and feedback. For any document I create, there are multiple stakeholders who will provide input, share different perspectives, and propose changes before that document is considered finalized.

In the past, I'd create a first draft of the document using Microsoft Word. I would then save it locally (often with "v1" or "draft" appended to the file name). Then, I would send it out to multiple people on my team (as well as other stakeholders) for review and feedback.

Each person would annotate their local version of the Word doc with questions, suggestions, and proposed changes. They'd rename the file, and attach the document over email and send it back to me.

Then, I had to go through each of their changes and manually merge it back into my master document. And more often than not, I'd be on version 3, but then I'd get late feedback on a version 1 file from someone…

Let's just say, collaboration was a royal headache but a required part of my workflow that I had to manage.

But then, Google Docs came along. And overnight, it completely streamlined the collaboration and feedback process. It took away the need to manage versions and ensured everyone was always looking at the most up to date changes.

All of a sudden, I freed up hours of time per document from doing low value-add work. Instead, I could now focus on making sure the contents of my document was crisp, clear, and everyone involved in the project was on the same page.

This is what I consider a step function improvement. It wasn't incrementally better, but rather, it was 10x better compared to my old process.

And this leads me to the second reason why I think Tesla is winning.

They've built a 10x better car compared to the competition. (and yes, I know Tesla is more than just a car company)

If you look at the cars in the Tesla lineup, it doesn't matter whether it's the Model S, X, 3, or Y…they accelerate so fast they make people giggle, handle better, and are much safer too. And they don't emit any pollution either!

And if that isn't enough…Teslas can drive themselves too. (yes yes, I'm aware they aren't fully self driving yet and you still have to pay attention for now. But they can steer, speed up, slow down, change lanes…and most recently, can even recognize and respond to red lights and stop signs too).

When you compare a Tesla against a gas powered car that we've been so used to owning and driving, there is no comparison. One is 10x better than the other.

So then, we should be asking ourselves, "how did Tesla build a 10x better car?".

If we look under the hood (metaphorically), we'll see that it's in their DNA to constantly innovate.

Reason #3: Tesla continuously innovates

Years ago, I used to think that if I could just build a 10x better product and get your customers to recommend it (at scale), I'd cross the finish line!

I had imagined getting my products to this point, and then just sitting back to watch all the charts go "up and to the right".

But now, I have a very different perspective.

Simon Sinek coined this concept called the infinite game. To me, it is a mindset that your product will never perfectly solve the problems your customers have. You'll never "win" per se because the landscape is eternally shifting. And the objective isn't even to beat your competition. But, rather, the objective is to further the company mission by making your product better than it was yesterday, and the day before that.

After having built a number of different products across real estate, financial services, and personal productivity space too, I've realized that the work is never done (in a good way).

There will always be some tradeoff you made in v1 that can be improved for v2. Or it might be new breakthrough insight you uncover after launch about how to better solve your customers problems. Or it could be a new technology paradigm that opens up. Or, it might be a macro shift in trends that causes you to evaluate the very foundation of your product and business model.

I believe that the best companies play the infinite game. And that means, they continuously innovate at every level.

Unfortunately, most companies and product teams don't have an infinite mindset. Most will lose sight, slow down, or stop innovating entirely once they have a successful product on their hands.

It's easy to see why.

It's expensive to keep innovating. Changes to the product don't always result in improvements. And risk appetites shrink once a product is already performing.

But over time, I believe if you aren't willing to continuously innovate on your own product and business, you'll eventually lose product-market fit.

This brings me to the final reason why I believe Tesla is pulling away.

It's in their DNA to keep innovating. If anything, their pace of innovation is picking up, not slowing down. And more importantly, every part of the product stack is subject to innovation.

Here are a few examples of the ways Tesla cars have gotten better over time:

• on the entertainment side, they've added games, car karaoke, and Netflix / Hulu
• on supporting new use cases, they've added features like Dog Mode and Sentry Mode
• on the cars themselves, they've added improvements to range and acceleration
• on the autonomy side, they've most recently added the ability for the car to read and respond to red lights and stop signs
• on production processes, they've taken lessons from Model 3 and applied it to the Model Y

Forgetting the production processes (which most customers do not see and care about), Tesla cars are tangibly getting better over time. And this happens even after you buy it!

Compare that to every other car in the market. No matter how shiny or new it is on the dealer lot, once you buy it, it's frozen in time.

It won't accelerate faster. It won't get safer. And you won't get new entertainment options added unless you trade in the car for a newer model.

But that's not the case with Teslas.

So over time, if you compare the two options — one car that keeps getting better, and another one that becomes outdated — it's easy to see why continuous innovations make owning a Tesla more attractive.

Takeaways

Seeing what Tesla does to successfully build products that people love and recommend at scale is eye opening. That's because it is a playbook that we, as Product Managers, can directly apply in our own jobs.

So now, as I think about the products I manage, I'll need to remind myself to:

1. Continuously innovate to better solve the problems my customers have
2. Look for step function improvements so it becomes a no brainer for customers give my product a try
3. Measure success based on how likely customers are to recommend it