Notable tech giants dominate Wall Street’s trillion-dollar club. Apple, Microsoft, Google, Amazon and Teslas of this world have a lot of things in common, but the most important of them is Innovation.
These tech giants are worth trillions because they innovate. They are the forerunners of innovation in their respective industries.
Lesson 1: Startup Must Innovate
Technically, it’s not compulsory for startups to innovate. They just have to find a technological solution that solves a problem or improves the already-made solutions in the market.
It’s normal to find 10, 20, or 100 startups solving the same problem in the same way. However, the biggest winners are often the ones that either;
- innovate
- scaled rapidly or has an efficient distribution
- or the ones with the biggest marketing budget. In that order…
“
To innovate is to produce something new or original”
Innovative startups are outliers, and they are known to expand limits in any industry. It’s perfectly fine to be a successful company. But for a tech startup to join the trillion-dollar club, the most important criteria is to innovate.
Source: https://companiesmarketcap.com/
Tesla spends an average of $2,984 per car sold on research and development (R&D)—and that is triple the amount of other traditional auto manufacturers.
How old is Tesla again? and why are they spending so much on R&D than the grandfather of the industry? – They are simply innovating.
Innovation doesn’t mean necessarily translate to revenue in the short-term
In terms of revenue, Tesla is the 11th highest earner in the auto-manufacturing industry
Caption: Largest Auto-Manufacturers By Revenue
Source: Companies Market Cap
However, Innovative companies tend to be valued higher than others because the market believes their product is superior and they can easily top other earners when they scale production or supply.
In terms of market capitalization, Tesla is ranked top in the auto-manufacturing industry
Caption: Largest Auto-Manufacturers By Revenue
Source: Companies Market Cap
- Tesla is innovating the auto industry
- Apple is innovating lifestyle gadgets. ( Computers, Phones, Watches, etc)
Do you get?
