For those of you who did not know or have not yet researched the
answer, "Mercedes" (a Spanish name meaning Grace) was the name of the
daughter of Emil Jellinek, the first distributor of Daimler motorcars.
No relation to either Gottlieb Daimler or Karl Benz.
Just a little auto trivia to remind us all where the roots of even the
biggest companies come from:
If Gottlieb Daimler and Karl Benz were the fathers of the companies
which combined to create the well-known brand today...where did the
name Mercedes come from?
In a recent visit to Harvard Business School, I had the unique opportunity to attend a seminar on Automotive Trends in China and discuss “localization” with its speaker, Su Weiming. Su is the current executive vice president of marketing for Volkswagen of China and grew up in the “Detroit” of China, Changchun providence. With 17% market share, VW is the largest foreign automaker in the country with exceptional success selling taxis, police cars, and utility vehicles to the Chinese government.
What surprised me the most in the discussion was the negative sentiment towards “local” automotive manufacturers within China’s own borders. Even with government support (monetary subsidies, regulation adjustments) and recent advances in R&D “replication” (ala Hyundai’s strength) consumers still don’t value locally made cars. According to Mr. Weiming, it appears that the current needs of the Chinese automotive consumer focus on one metric: “durability.” Since the roads are congested and the opportunity to purchase a vehicle is unique (government lottery), consumers are choosing the Jetta over models by Chery and Brilliance. Furthermore, Su believes that “building quality automobiles is a unique culture” that is cultivated over time and the local manufacturers will continue to be outsold by foreign manufacturers for decades. Right, well, I guess you don’t acknowledge low-end disruptors until it’s too late, but I am sure their time will come.
One can’t draw direct parallels between Local Motors and the suffering “local” automakers in China because:
1.) Customer Needs: In China the vast majority of consumers are looking for a “Model T” to fulfill their basic needs for durability, in the US the market fulfilled against non-consumption in the early 20th century.
2.) Design Strategy: Similar to the Korean automakers, the “local” Chinese automakers are primarily focusing on replication first, whereas we will focus on unique community-built designs
3.) Manufacturing Execution: Chinese and foreign governments are pouring billions of dollars into large-scale manufacturing facilities to be shared by domestic automakers –big volumes, big problems. We plan to pioneer micro-factories that will scale properly
4.) Sales & Marketing: Chinese domestics are still focusing on the traditional model of dealer sales, versus our participatory retail experience
Having just returned recently from our inspirational trip to Charlotte NC where I have seen the blueprints (in rough form) for our first Local Motors facility (at least, I saw them in my head when I was looking at other things in the town), I was not prepared for the visual feast of the Meilenwerk's in Germany. One of our team members from Factory Five, Jason, brought it to my attention when he heard about it and I was immediately impressed. Thanks Jason!
Translated as "mile factory" these three facilities (Berlin, Dusseldorf, and now Stuttgart) are meccas for car enthusiasts. Display spaces, gallery viewing, shop floors, expertise, banquets, and just an exciting place to meet, this is a higher-order engineering hot-house!
Certainly it has a vintage car feel and ethic, but the idea of such a place cannot be lost on a true car enthusiast.
Time to brush up on your German, but here is the link anyway.
And, of course, some pictures.
1) Some of the "working display pieces (work on it on the weeknights, store it for everyone else to see, drive it on the weeknights):
2) A look at the shop in action:
As promised, I watched the film DALE and was enraptured. This is no Hollywood flick with aggrandized plotlines...it doesn't need to be. Dale Earnhardt was the real deal, and his life was worth celebrating without an ounce of embellishment.
Thinking up an exciting new car is something that might seem easy and exciting to most car lovers.....
But have you ever gone through the thought experiment of choosing what vehicle you would ask for if you could have ANYthing you wanted made for you at a reasonable price?
We find that when we challenge people to answer this question, that they typically have a difficult time thinking outside the lineup of cars that are currently available.
Pick a price point and people say: I want a Mini. I want a BMW M3. I want a Toyota Land Cruiser. 
Rarely do people say, I want a 6 seat, performance sedan, with a transverse-mounted engine, all-wheel drive, 40mpg fuel efficiency, and amazing looks that make everyone want one, but low enough volume that only a select few actually have them on the road. These types of descriptors are not concrete enough, instead people's vocabulary is fixed in the lexicon of cars that are currently available even if they fall short in many features that they might want. I want an Escalade, a Touareg, a Mercedes S-class, da-da, da-da, da-da.
And if this difficulty is evident when the constraints of engineering are not applied. Just imagine how much less likely people are to think up new vehicles when they are asked to imagine a vehicle they would like to have if the engineering required sharing certain platforms in order to be more financially viable.
Our team of engineers and designers is no different in being susceptible to this habit. At first, I wondered whether we would ever be able to break free of the "current car" trap. But over the last week, we have had a breakthrough round of cross-functional meetings about our prototyping effort, and I am amazed at the team's unique approaches and fresh ideas. We have to use specific thought experiments to allow ourselves to "think outside the dealership", but we are having success.
In addition to dreaming up new models, we have made an equally strong effort to redefine the product "offering" in general.
To be successful in this RE-definition, you have to be willing to believe that there is more to the "willingness to pay" for a car than that which is represented by the car itself. Said differently, thinking "differently" means that you are willing to ascribe a certain amount of value to the parts of the purchase outside of the four wheels and tires - i.e. the purchase experience, the service experience, the ownership experience, etc. Folks like Mika Toyota of Rhode Island (Toyota of Newport) and the Sewell family of Dealerships in Dallas have known this for a while, but how much further could someone go if such thinking was brand-wide!
These are the brainstorming challenges that we are up against, and we are loving every minute of it. Don't worry though... we are not going to make any major decisions without you. We are not! We treasure the input from our community of fans and future customers, and we look forward to your participation... we only ask that you put your thinking caps on and think outside the dealersip!
Medical products giant, Johnson & Johnson, has a "credo" which puts
doctors and patients first. (http://www.jnj.com/our_company/our_credo/index.htm)
Home storage leader, The Container Store, has a mantra 1)employees, 2) customers, 3)shareholders
Basically, both of these priorities, place the group of people who
promote the product (doctors and employees) at the top of the priority
list.
This makes complete sense since those groups either make or break a
product based on their passionate belief.
Similarly, I believe Local Motors should prioritize: 1)car builders, 2)
buyers, 3)shareholders.
If you can see from this sign (though it is hazy) it is the Concord, NC city limit sign....an "All American City".
Today was a day of unbelievable range. We started at 430am and visited
4 businesses in North Carolina.
First up was an investor and muckety-muck in the state. This was a
hard and unfriendly conversation. We stuck with it though and who
knows what will come of it. Maybe some introductions? The lesson is
always be polite and think that not everyone (in fact, mostly no one)
will share your vision and enthusiasm until it is a safe bet. Keep
happy.
Next was a superb composite fabricator, automotive enthusiast, and
well connected entrepreneur. He is the kind of friend in business that
makes me want to set up in North Carolina. God bless ya bud, I hope
that we can find a reason to do business, but either way we will
certainly be friends.
After that visit we trundled over to Penske Racing's HQ for a little
inspiration. We were given a quick look round by a wonderfully giving
gentleman who made himself completely available. Roger Penske (the
business owner, whom we were not lucky enough to meet this time) ought
to be most proud of his team and the business he has built. It is a
fine reflection and strong example of his character.
Finally, we travelled fast down to South Carolina's largest community
college. There we saw employee training the likes of which you simply
cannot find in the northeast. Wow! First rate equipment and first rate
training programs. Makes me want to be a machinist...a better one.
Finished up at 1930.
So that was our day, and boy have we learned alot.
Off to Texas in a day for more work with a world class composites
expert and a couple more interested backers.
Go Local or Go Home.
On our second day of our Federalization trip. Today we are in
Charlotte, NC. What a great town!
Wow, what a day. Definitely good news. We are going to have a strong way forward in federalizing a car, and I believe that we will find a good partner(s) to do that. Today was an excellent clearinghouse of information in pursuit of that goal. The greatest takeaway is that there are so many entrepreneurs and companies in this field of small volume auto manufacturing that seem so immature, thankfully, the folks with whom we met today are first-rate.
FEDERALIZATION - What an awful word! For some states this was an act of oppression which caused scars that last through today (read the Federalist Papers to see what the Government of the time was up against). For those of us humble and crazy enough to go into this car business, this word is equally repugnant. It really equates to a patchwork of regulation meant to protect us from ourselves from both a crash-worthiness and environmental degradation perspective. These are both worthy causes, but the realistic effect of the regulation is to play to the lowest common denominator and to cut the heart out of most of the exciting vehicles that might have made it to market. If all manufacturers were more self-regulating and responsive to their customers, then such federal interposition might have been less necessary, but it is here to stay.
One of my best friends co-founded AllAdvantage.com the first go-round (http://en.wikipedia.org/wiki/AllAdvantage) and was involved the second time (www.AGLOCO.com). As of Dec 6, AGLOCO shut down, bringing to a close another shot at making this business model take wing. This is sad to see, but a reality.
I recommend that you also look at the Edgeio failure (http://wiki.edgeio.com/display/ExternalWiki/Home). This is a good reminder that even $6.5MM (that’s what Edgeio raised) in capital does not go very far. So what does this have to do with Local Motors? IMHO, community must be more than aggregating data from RSS enabled sources (Edgeio’s business), community must be based in a human need to associate and build relationships. AllAdvantage exposed the desire to get paid to watch ads, and in truth IT WORKED. But the cash burn was too high to keep up with the revenue model. The second time around, the desire to associate in order to build up shares in a company (instead of cash) was not as high, and the community did not take off. Whether or not Local Motors has what it takes to uncork that human association will remain to be seen. We are betting that a true community of car-lovers is what will seed this development.
Good to be humble, though, and lots of work to be done. I tip my hat to the Web 2.0 graveyard and hold my breath as I walk by hoping not to end up there someday.
I met with Doc Searle’s (http://blogs.law.harvard.edu/doc/) a couple of weeks ago and we talked over a pizza about just this type of issue. Doc is a fine gentleman, author, and a deep thinker about open source. We were there talking a lot about ERP/CRM/ and even VRM (vendor relationship management) and when I told him I was building a community of real car builders, Doc shared a story with me about a market in Lagos (“Markets are miracles” http://doc-weblogs.com/2001/04/03). This story was so thunderous because it was a story about the inability for true markets to be described adequately in the definitional terms of accounting. Instead, it displayed the necessity to describe true markets in the realm of deep personal relationships. I believe that Local Motors car community is just such a market of deep personal relationships.
Good communities do not just have to be about cars, though. For example, I looked at another of Jeff Clavier's (http://blog.softtechvc.com/) investments called Seesmic, and the community connected with me alot(still in closed alpha - which apparently means not available yet). It is a video based community. The community is immediately apparent when you watch the precursor site called www.loic.tv. It is like an underground news community with 2 recognizeable folks called Loic and Vivin. They are catchy and have some memorable shows (http://youtube.com/watch?v=Mw7GAwXRl4o) such as this one about Loic's visit to the White House. Again, to me it is not as memorable as the community around cars, but it shows what you can do even with a self-manufactured community of video clips. Just imagine what we can do with the same type of community around great cars and design.
This makes me think that we should start by chronicling the lives of auto enthusiasts and begin by featuring designers who submit to our site. Everyone who loves cars has a story to tell, No? Stand by for more to follow on this development.
Today Tim Thomas joined us to help in the creation of our web presence, and we are so lucky to have him. He has many prior exploits (Smarter Living, Inc., Essential.com), and his latest, divorce partner (www.divorcepartner.com) is an impressive work for a very robust community with real needs and wants. So, in welcoming Tim aboard, I thought that I would say something about our community. A bit of a longer post, but appropriate, because we have not yet said much about our community.
Most importantly, the Local Motors’ community is meant to be one that is physical, web-based, and even solitary. How can a community be solitary? I believe in fact, solitary community is one of the greatest tests of the strength of association, because it is a sense of intense belonging even when you are alone. Ask any car nut who is sitting in his garage alone working on his car…or just staring at it…and thinking about all of the memories of where they have been together…and that is the definition of solitary community.
So the web is an important arm of our community, but it is just that – an arm. We want it to be powerful and forward leaning, but it should never get lost in the Web 2.0 hype that is surrounding some companies that flash-in-the-pan. A car community is a physical community, it is about the love of the vehicle and the sharing of components, the love of the road and the memories of where you have been, the love of meeting new people and talking about their cars. The web allows us to improve and extend this community.
There are so many automotive communities with a web presence, which I would like to highlight for their passion, here are a few:
Goodguys: www.good-guys.com
Factory Five: www.factoryfive.com
Spec-Miata: http://forum.specmiata.com/cgi-bin/ultimatebb.cgi
Ev1: www.ev1.org
Jalopnik: www.jalopnik.com
Off-Roading: www.pirate4x4.com/forum/
Lamborghini: www.lamborghini-talk.com
Volkswagen: http://forums.vwvortex.com
Baja Race: www.race-dezert.com
Land Rover: www.landyzone.co.uk/lz/
Ferrari: www.ferrarichat.com
NASCAR: http://forums.nascar.com
Formula 1: http://forums.autosport.com/index.php
Car Design News: http://forums.cardesignnews.com/eve/ubb.x
Harley Davidson: http://hdforums.com/
Ford Mustang: http://mustangforums.com/
Some of these are model specific, others are event, or powertrain, or replica specific, but all are virtual embodiments of a physical community. It is in this tradition that Local Motors intends to follow.
Watch for more, we will have many twists that will surprise and delight the heart of the enthusiast.
Tonight the team got a first look at the draft report from the Local Motors' entrepreneurial marketing team. It was amazing. We have all spent several months working hard on the roadmap to bring our product to market and this was the first time we had seen a roadmap all together backed by customer research. VERY EXCITING.... more to follow, but a teaser: we are looking to find a core group of enthusiasts who become the keepers of the flame and the missionaries who spread the gospel of the company. Any Local Motorheads out there who want a first crack at our product?
I met a guy who runs a small CNC machine shop tonight. He was talking about how he despises the existence of clearinghouses that bring buyers to suppliers such as MFG.com. As we talked more, he emphasized that MFG.com took the relationship out of the business of making parts for someone who desperately needed "just the right part", and while the price might be slightly better at MFG, without the relationship the whole industry and quality falls apart. At first, I thought "that's a pretty standard reaction for a fat-cat small supplier who doesn't like a little buyer power being thrown into the mix." But then I thought about Toyota and the reputation they have built for being "kind" to their suppliers over time and how it has benefited them, with a network of loyal suppliers that will move with the manufacturer almost anywhere.
Local Motors thought for the day.
It is a big day for Local Motors as the furniture arrived in the office. Now mind you, while this is stylish and beautiful furniture...it did not cost us a dime. This was hand-me-down furniture from a great entrepreneur for whom I used to work. In fact, we even used this furniture in our headquarters for his business selling medical products in China, and before that - long before that - it was to be found in Houston at a real estate development company. This furniture has seen many business deals - many successful ones - and is now gracing the halls of Local Motors to bring us great success. That is good usage...and say good-bye to the tyranny of CORT Rentals or saw horses and plywood (which are now sitting in the closet).
And soon our floor began to whip itself into shape. We now smile even bigger when we come into the LM prototype garage. Hopefully you will too when you come to visit.
This is where we started at the latest LM site....just a couple of months ago. Not that pretty is it?
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