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One of the interesting things about Tesla is that the company is trying to copy Apple's
business model. As a Silicon Valley entrepreneur myself, and an owner of a Tesla car, I thought I'd write up what that means.
There are two basic business models in the world. The first is cheap, low-quality, high-volume products. You don't make much profit per unit, but you sell of a ton of them. The second is expensive, high-quality (luxury), low-volume products. You don't sell many units, but you make a lot of profit per unit.
It's really hard to split the difference, selling high-volume, high-quality products. If you spend 1% more on quality, your customers can't tell the difference (without more research on their part), so you'll lose 10% of your customers who won't accept the higher price. Or, you are selling to the luxury market, lowering price to sell more units means lowering quality standards, destroying your brand.
Rarely, though, companies can split the difference. A prime example is Costco. While the average person who shops at Walmart (low-quality, high-volume store) earns less than $20,000 per year, the average income of a Costco customer is over $90,000 per year. Costco sells high-quality
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