You can’t buy a Tesla in Tesla

I must admit I have not been paying too much attention to the growth of Tesla and their electric cars over the last decade. However, a recent article grabbed my attention. In the US, and in particular West Virginia (where the town of Tesla is), is has been reported that the powerful political constituencies and lovers of the more common gas guzzlers and car dealerships have unfortunately signed a bill that prevents manufacturers from operating their own dealerships. This is a direct attack on Tesla. Similar laws have passed recently in New Jersey and Michigan though the he ban in New Jersey was subsequently recently overturned. This will continue to happen, just wait and see.

Sure being an internet billionaire helps, and despite these challenges, there are some things that are swinging in Elon Musk’s favour, namely, an expected drop in cost for lithium-ion batteries, which could potentially help the company lower prices to lure customers and pump out more vehicles. Anyhow it got me thinking this Easter break, why and what is getting people upset about the emerging digital disruptive market?

To start with, tax, and the lack of paying of it. It is well documented that technology companies (think Google and Apple) continue to exploit loopholes in offshore havens to avoid paying billions in taxes. However, and finally, the tide is turning against this practice, with the Australian government and governments across the world taking a much keener interest in their business dealings. I think this does not help with the general midst around disruptive companies.

As Benjamin Franklin once said, “In this world nothing can be said to be certain, except death and taxes.” – I think a balance and further tax reform is needed to attract disrupters to stay here and also share their spoils. Fair is fair, no?

Continuing the theme of the disrupter disrupting. In Australia, and recently following the State elections, the nation’s taxi sector is poised for a regulatory shakeup after the government’s wide-ranging review of Australia’s competition law found that limits on taxi licenses has raised costs for consumers and hindered innovation. Here is a usually story that it borne out of a disruptive challenger exploding into a traditional market i.e. Uber. This is proposed change is good for all of us. Uber is allowed to continue to challenge the taxi industry, and taxis become more affordable. On this particular topic, I have sat in cabs that are also registered to Uber and GoCatch, because they bring far more customers in than the assigned rank. Change and reform simply become obvious.

Airbnb is another good example of a digital company disrupting a traditional market. Over the last year or so articles have emerged of city councils in Barcelona and New York looking to either fine homeowners or Airbnb itself based on laws essentially protecting the hotel industry (sorry that should read protecting consumers against poor service). In my home town, as another example, the City of Sydney council, reportedly is considering fining the public up to a million dollars (hilarious?!). Interesting, the Council itself noted that their planning controls “have not caught up with the rapid development of the collaborative consumption market led by companies like Airbnb”. Hotels will always be needed, they are (should be) a guarantee of service. However, we cannot all afford nor want a hotel.

I am sure there are many more examples, and far more to come, of disruptive businesses being challenged by archaic existing laws, powerful (for now) sector lobbyists, and impending tax reform (here, I agree, every company needs to pay their fair share).

In my opinion, if you are simply stopping and watching the digital revolution take place, running for cover, battening down the hatches and hoping that everything will return to the good old days. Well, you will be in trouble. Take some risks, adapt, diversify, and compete.

What do you think?

Thanks for reading.

Kai

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