127 The Electric Vehicle Category: Unpacking The Rivian IPO with Al Ramadan, CoAuthor of Play Bigger

Thanks for pressing play. As you know, the electric vehicle category is a giant new mega category that is emerging right in front of our eyes and it's completely changing the transportation landscape. Now there's a company you may not have heard of called Rivian and it's a startup who has yet to ship a single product and yet somehow is pioneering a differentiated category of EVs and they are on the verge of what will likely be a massive multi billion dollar initial public offering. Our guest today is Al Ramadan and together he and I unpack all of it through a category design lens. You see, Al's been studying what they've been doing and blogging about Rivian lately and there'll be a link in the show notes to what he's been writing. So I asked him to join me for an episode to unpack all of it and that's exactly what we do through a category design lens. And if Al's name sounds familia, that's because he and I co founded a company together called Play Bigger Advisors and we wrote a book together called, you guessed it, Play Bigger. And while I retired from the firm after the book came out, Al and I have remained collaborators and we are brothers from another mother and I am over the top stoked to share his legendary mind with you. Al's been a tech entrepreneur, CEO, investor and advisor for over 30 years. And of course he's a best selling author and today he's been best known for being one of the godfathers of category design. My friends at HaloApp are the world's first real relationship app. Check out H-A-L-L-O-A P.com today or search for HaloApp in your app store of choice on your smartphone. And category Pirates is the newsletter that is sort of like Harvard Business Review if it was written for and by pirates. Check out lockhead.com and click on newsletter for category Pirates today. Now. Hey ho. Let's go.

This is Locketta Marketing, the podcast that helps you develop the lens for what makes legendary marketing legendary. Hosted by Christopher Lockhead, three time CMO Godfather category design and a high school dropout who the Marketing Journal calls one of the best minds in marketing and the Economist calls off putting to.

It. Sure is great to see Al.

So great to see you Christopher. Miss you.

Miss you too. Hopefully we'll be you want to go on a bike ride this weekend maybe?

That'd be great. That'd be awesome. Let's do it.

Excellent. Now Rivian, you've been studying the company and the founder and what implications it has for the broad EV category and the category they're trying to carve out for themselves. And of course, here we sit on the eve of their ipo. So why don't you tell me a little bit about the founder and the company.

Yeah, founder is a guy called rj and I think he's the best of combination of a Steve Jobs and Elon Musk. I really do. He's a remarkable entrepreneur. He has this huge vision. We'll talk about in a sec. And a couple weeks ago they announced that they're going to do this IPO around Thanksgiving is when it's going to happen. And it's an IPO, not a SPAC. All of the other EV vehicles are going out with SPACs, as you, as you know. And the zinger was that the market cap was going to be $80 billion. $80 billion bigger than GM, bigger than Ford and bigger than Toyota. Toyota is the number one SUV provider in the world, as you know. And it's a $56 billion brand value is the way they value that stuff. The sort of the product line. So they're going out, haven't shipped a vehicle, they're going out with the IPO value projected at $80 billion. And it just caught my attention in addition to the fact that I love Rivian, as you know, I pre ordered one and I can't wait to get my hands on one of these things. But it was just this moment in time where you look at this thing. It's like, what, they haven't shipped a vehicle and they're valued more than Toyota's entire SUV line. And Ford or gm, it's, it's, it doesn't make, you know, you immediately look at, that's, that's just crazy. And so, you know, sort of the category designer in me sort of took over and I started dissecting the S1 and all of their filings and everything else. And I, I came up, I came up, you know, together with a few insights that I just, I just, I just think it's worth sharing and talking about and figured you'd be the best guy to talk about with this stuff. So. Happy to roll into any of that stuff with you. Yeah.

Awesome. The thing everybody says, or almost everybody says, particularly outside of Silicon Valley, when something like this happens. Oh, a company that hasn't even shipped a product yet, has no revenue, is worth more than Ford. Well, the only reasonable explanation for that is weed is legal in California. And of course, what they miss always is what the real drivers of market cap are. Which is, number one, what's the potential for this category? Number two, do we believe that this company can prosecute the Magic Triangle product, company and category and earn 76% of the economics? And three, when we look at their numbers, metrics, financials, etc. Are we comforted about the first two things? And if the answer to all of those is you got a company who's designing a market category that right now looks like that has the potential of almost infinity. And it appears, even though they haven't shipped a product, that they're executing the Magic Triangle. Bada bing, bada boom. If you believe in the potential and you believe in their ability to execute the Magic triangle. Ta da. They're worth more than Ford. But I'm curious as to your reaction.

Yeah, no, that, that's absolutely right. So that's one of the things that I've been thinking about is so on the, on the category design side of that triangle, the Magic triangle, you're talking about Christopher, I think the thing that's worth noting is, you know, his point of view is clearly stated on his website and I just love to read a little bit of it to you because I think it'll speak to you. And this is, this is in his words. So today we are, we're operating off hundreds of millions of years of accumulated plant and animal based carbon. On our current path, we will fully exhaust this stored energy in only a few generations and in the process carbonize our atmosphere to such a degree that life as we know it will not be possible. If the planet is to continue to sustain life and enhance future generations. We have to change to build the kind of future our kids and our kids kids deserve. Extraordinary steps must be taken to stop the carbonization of our atmosphere. This requires individuals and entire industries to come together in ways we never have before to transition the world towards sustainable energy. This is where Rivian's potential lies. In creating solutions that shift consumer mindsets and inspire other companies to fundamentally change the way they operate. As staggering as this may sound, and as complex as our objective is, we already have everything we need to create change. It starts with harnessing the very thing every human being is born with. An adventurous spirit. There's a reason we're hardwired with curiosity and capacity to invent better ways of doing things. The part of us that seeks to explore the world is the secret to making sure it remains a world worth exploring forever. That Christopher is his pov. There's not one mention of a vehicle it couldn't be further from an SUV pitch from Toyota or Ford. I mean, it is really a giant story that he's talking about. And it's a. That, that right there is the whole point. He's designing the category around this existential threat to human nature and human beings and not, you know, I got a better carbon angulated car. It's phenomenal. And of course, if you keep going with this, you know, sort of. So what did he call his first set of products or the category that his first set of products are going to play in? Adventure vehicles. Not SUVs. Adventure vehicles. It's this concept of getting out into nature and engaging with nature and it's the thing that ultimately will sustain us. And of course, the SUV itself. The product design of the SUV is unbelievable. The R1T and the R1S as they're called. One's a truck, one's an SUV. It's an electric vehicle. 800 horsepower. You'll love that. Zero to 60. 2.5 seconds faster than a Lamborghini. Think about that. An SUV going faster than Lamborghini, zero to 60. And a whole bunch of other stuff that just make you cry. Like just laugh and cry and be excited. So the product design is absolutely phenomenal. And then you think about, okay, what else did he do? To your point about the magic triangle? Well, the company design is absolutely superb. So what's the thing that most people hate about buying vehicles?

Kind of everything.

Yeah, it's the sales guy and the dealership, right? I mean that.

Yes.

That old stupid game is so stupid and sucky. So there are no dealerships, there are no sales guys. You buy online, you configure the whole thing online. It shows up as you configured it. Oh, and by the way, the service, it's done in your own home. There's no service place that you take it to.

How do you test drive one? I mean, obviously they're not ready yet, but will you be able to test drive one? Or they're just saying, fuck it, you either got to throw down the 80 grand or whatever it is or not, and we'll give you a two day money back guarantee. Or how are they dealing with the old, hey, do I actually like the way this thing fucking drives?

Totally, totally. Yeah. And they do they. So they're having, as they're rolling these out. So the first actual. Yesterday, the first vehicle came off the production line. The plant, by the way, is in Normal, Illinois. That's the name of the town and it's in the middle of America, like, I mean, it's so unbelievably good. The story is just like, there's so many dimensions to it that make me really happy. And, yeah, they have these, essentially, a driving opportunity in different towns and cities around the world. Excuse me, around the country. As they. As they're sort of rolling this thing out, you get in their car, you go for a burn, and you bring back just like you would with a dealership. But, you know, there's no one saying, you're going to buy this thing. You're going to buy this thing. Hey, let's haggle on price. And what about this? And, you know, all that shit. None of that like. And if you don't like it in the first thousand miles, you can give it back.

Yeah, that makes sense. The other thing is, you were sort of teeing all that up. Of course, I was thinking about how most cars are marketed in the US so we have these dumb ads of guys driving SUVs. Actually a lot of them along Highway 1 are up in Tahoe. So, you know, you have these beautiful images, but they're all exactly the same. They're completely interchangeable. And then they all have stupid taglines, and it's like, that's the end of it.

Right?

So that's the sort of. At the manufacturer level. But the thing I was really thinking about is at the dealer level, what does dealer at. What are dealer TV ads like? Come on down this weekend. We will not be undersold. We're right on the price. And we got donuts, and we got red ones and we got green ones and matching doorstops, and. And we will not be undersold. We just got a new shipment in here. Come on down. You know, and you know all of that stuff, right? And then it's the carnival barker bullshit that is a race to the bottom on margins, because they're all competing on price and features. Everything you just said as it relates to Rivian is a little bit different.

Yeah, no, you're absolutely right, Chris. You're right. And it is different to any other, at least buying experience I've had. So the company side of this, how they distribute these products and the network they set up for charging and all that sort of stuff is just so different. And I think the most telling thing that's happened since we published an article about a week and a half ago, sort of forecasting some of this stuff that got a lot of airtime. People were like, you're justifying an $80 billion market cap for a company that hasn't shipped a product. And I was like, absolutely. I am. I'm standing behind that. And a guy. So on Twitter. I'm not a Twitter user often, but I did do some searching. And so at the time their IPO was filed, one of the guys who follows those sorts of things is a guy called Sawyer Merritt. And he puts up a breaking news. Rivian Automotive has filed for an initial public offer and he's seeking a roughly $80 billion valuation. Company would like to IPO around November 25th, Thanksgiving. One of the first people to comment get this is a gentleman by the name of Elon Musk. And he says, don't want to be unreasonable, but maybe they should be required to deliver at least one vehicle per billion dollars of valuation before the ipo. Christopher, you're a student of category design. When the category design, when the category king of a adjacent category, electronic vehicles, makes a comment like that, what does it mean to you?

I can explain why, but it means one thing and one thing only. He is afraid of those guys. Because, I mean, look, you and I both know this. There are certain rules about how you win in this game, and there are certain sort of human rules. Number one, you don't punch down, right? Nobody punches down. It's not cool, right? So he wouldn't be whacking him unless he thought he was an equal, which says a lot because nobody at his level doesn't understand that you don't punch down. And the other thing that is shocking, that he would have to know, but his compulsion to tweet overrode his logical brain. His monkey brain must have got his logical brain, because, look, I don't know Elon Musk, but he is smart enough to understand that when you are the category king, you don't acknowledge the others. You let them come after you. When you're the heavyweight champion in the world, people call you out. You don't call anyone else out. And he broke all those rules, which means that in a moment of emotion, he publicly expressed real concern. That's how I interpret it.

Yeah, no, you said it better than I could have, as usual. And that's exactly how I interpret it as well. He's scared. He's scared. And if you were the manufacturer or the creator of this thing called the cybertruck, you ought to be scared. That thing is dumb. Everyone who's looked at, it's like, that doesn't make any sense. So at a product level, it doesn't make any sense. And then. But beyond that, his being Ajay's articulation of the problem we're trying to solve here, which is the existential threat to human nature. And the fact that the adventurous side of us and our connection to nature is actually the thing that's going to solve us is so unbelievably powerful and so unbelievably different. And that's scary too. And just one other thing, because as you start to dig into this, it's like, well, okay, how come he's got so much moxie? Like why? Why would Elon be reacting to a guy who's got no vehicles in the market and a so called $80 billion market cap ahead of him? You dig under the covers, it's like, guess who one of the biggest investors are? Amazon.

Every Amazon. Am I remembering this right? That Amazon. Yeah, go ahead, go ahead.

Yeah, every Amazon truck, Christopher, those delivery vehicles that drop off all of those packages are going to be built by Rivian and are going to be electric and they've ordered 20,000 of them up front and put the money down already.

It's stunning. And the other thing that's stunning is of course Elon starts with cars. And I just looked at it. According to Forbes, January 7, 2021, trucks, pickups, SUVs and crossovers. So non cars purchased by consumers are now 76% of the US market in 2020.

There it is right there.

And somehow Elon, who's of course no dummy, is building cars.

That is the mother load. That is the other scary point that I was going to mention, which is to your three quarters of the true profitability and value associated with the automotive industry comes from those segments that you talked about. And here's a guy just rolling into town redefining those segments in a way that is really, really, really terrifying to them but so inspiring to the consumers. And that's why you see that kind of reaction from Milan. And then there was another fascinating announcement just this week as well. Christopher, since we published this article, which was Rivian announces a Strategic partnership with the Nature Conservancy. Stop and think about that for a sec. A car company announces a strategic relationship with the most respected conservation company organization in the United States. Do you. What's it about? Well, you know, nature, you know, they're driving all over these places and they got to check out all of the lands that they protect and ranges and state parks and everything else. And guess what they're going to be driving.

It's so priceless, isn't it? Well, it's pure genius because he's going and getting the Greenie of the Greenies. Right. And so it, you know, one of the things, of course, we talk about a lot in category design is this concept of influence. The influencers who are the people who set the agenda. And then Eddie calls them super consumers, who are the people who drive any category and therefore are more receptive to change and innovation. And so whichever vector you want to think about it, what he's doing here is clear, is he's endearing himself to that community, which gives him a stamp of approval. It also, you know, I'll be very curious to see what he does with marketing over time. But the greatest marketing. And Elon, of course, understands this was, is and always will be word of mouth. And so what's the word of mouth around this POV that that RJ is creating?

Yeah, people are stoked. I mean, you can measure it on many different levels. If you just look at his, you know, the Rivian postings on Instagram. There's also a number of, you know, sort of Rivian watches on Instagram, all of which I subscribe to. They're all over this thing. They're so fascinated by the idea that we could put our money where our mouth is to really make a significant change to our world and the world of our kids. And not that Elon couldn't do that. And my son Lucas has got a Tesla and he loves it and he bought it because of the same thing. But the point about the mother load, which is that the really profitable parts of the automotive industry are now going to change, and that's where he's headed. So there's a lot of buzz around it. I'd say the other thing, which is, as I said, we published this article and a number of my friends immediately texted me and said, how do I get a Rivian vehicle? Because they weren't aware that this thing even existed. Right. I mean, that's how early it is really. It's the classic technology adoption life cycle where the innovators and the early adopters are the sort of the very tip of the spear. And in this particular case, I just happened to be one and Bitzer called me and said, I can't get on the pre order. They've shut them down. I literally cannot get one. And so if you think about sort of the. What that does, it's the, it's the, it's the velvet rope. It's like you can't even get in even if you wanted to. Right. And that creates and that amplifies this whole notion of excitement and, and Interest and intrigue about this organization. And it's. It's. It's incredible. It's incredible. And what I would say on the other side of that is. Okay, so again to. Yes, I agree with your comment, and I totally was stunned when I saw Elon make that comment because it does, I think, speak to his heart more than his head. For sure, he is scared and he ought to be, and so are everybody else. And by the way, Ford's an investor in Rivian, if you didn't already know. So they've already sort of bet on change. But the thing about the pre orders is that the line is so long and every time you. Every month, essentially, you get an update of what's available with the Rivian. And so I think I've redefined my rivian 5 times so far as new options come out. And so they have adventure option and they have the wheel option. They have the something else option. And so that all creates buzz and everything else.

More speakers, please. More speakers. We need more speakers.

Yeah, yeah. Now it's not all roses, right? So the other side of this is that they published a blueprint, as you know, we call the definition of the solution that the category king imagines for the future, the blueprint. They published one of those. And one of the things in the blueprint was this really cool idea called the tank turn. Never been. Never been talked about before. It was invented by them. It's this idea, Christopher, that you can have a car. You can put your truck on a road and do a 180 inside your wheel space. So it just basically does like a tank does. It can do a 180, 360, 720, whatever you want in the same spot doesn't move. And it's so. It's so different and so compelling that people were like, there's so much buzz around the tank that the Rivian tank turn. So they just came out recently and said, well, not so fast. We're not sure we can actually do it. We did it in the video, but we haven't got it. So they got a little bit of a black eye for that, for sure. And it's like, that's the risk that you take when you're the leader and you start publishing blueprints to say, okay, here are all the things you need to be the king or the queen or the champ. So they got a little bit of a black eye from that. And again, to the point about Elon, he's right. They haven't shipped a vehicle yet. And so the Production side of the automotive industry I can only imagine as being insanely complex. Remember doing a tour around BMW back in the America's cup days and just seeing the just in time manufacturing seats arriving just as they're being put in the car and all that sort of stuff. So I'm sure he's right too. I'm sure he's right. So that is the risk side of the equation. No question can they deliver on the expectation, but at this point in time, I'm, I'm putting my money where my mouth is. I really think these guys are on a roll.

Fascinating. Also, just as a side note on the tank turn thing, you know, with, with the Elizabeth Holmes trial and all the discussion about Theranos, I actually think there's, it's, it's going to change some things in Silicon Valley. And I think one of the things that it's doing is it's crisping up how, when and where entrepreneurs can be over their skis. Right? So a simple example would be you can be over your skis about what you're promising in your product, you can be over your skis about what you believe is the potential for your category, but you can't be over your skis about what your product does now. And you can't be over your skis about last quarter's revenue or profitability or any backward looking financial metric. Right. Because she lied about all sorts of stuff. Anyway. The reason I raise all that is on one hand, they took a risk by announcing a feature that they're now having a hard time delivering on. At the same time, they announced to the world pretty quickly, hey, wait a minute, we got over our skis, we're still working on this. Maybe not film at 11. They didn't perpetuate the lie.

Right, Right. No, that, that's, and that's the kind, that's the, that's the entrepreneur that he is. That's why I love him so much. And he's a great showman. Just like, you know, Jobs was, which Elon's, you know, definitely got work to do on that side. And, and that's why I really like his ability to sort of stand up and tell the story. And there was a really heartfelt posting from him about the first R1T that shipped off the production line yesterday. And you know, he had his family and his kids there and everybody else. I mean, literally everyone's crying at this point in time. They've been through a pandemic. They were sort of ready to go. And then the pandemic hit and the whole, you know, like, you can just imagine the mess on the company side of this thing. Right? But I. I think it's such a great example of category design and why category design is so important in the context of the other two, the product and the company designs. And it shows you that he didn't go through a course. I'm not even sure he read Play Bigger. He may have. He may not have. I don't know. But he had this innate sense of being a category designer. And I think in our book, Christopher, that's one of the things we found was many of these great leaders didn't know it as such, but they practiced it well.

And so, yeah, I mean, I think for some people, I mean, my favorite experience from a reader is when they say, I read Play Bigger and I finally had a way of describing what I've been trying to do. Right. I love it when intuitive, natural category designers read it and go, oh, fuck, that's what I'm doing and who I am.

Right, right, right.

Anyway, that said, I think. Let me play skeptic with you here for a second, Alan, okay? If we can't fuck with each other, but a skeptic would say to you and I, hey, listen, this is not. He's not creating a new category. Actually, Elon Musk didn't even create the category of electronic vehicle, you dumb assholes. He's just coming out with a better product and he's building a better brand. This as a matter of fact, Alan, this love you have of Rivian proves everything you preach is completely wrong. So how would you respond?

I love it.

I love it.

And I love the fact that you're poking at it and brand is derivative of category design. Said another way, unless you're clear about your category and unless you're clear about the problem you're solving, don't bother even starting with brand. It's not going to help you because you have to have something you stand for. And the stand for is the problem, obviously. And the great category designers have been the ones who have been promoting the problem and become evangelists for the problem. He didn't go out and say, I'm designing. And if you read his point of view, and I read it to you, he didn't say, hey, I'm creating a better car. He didn't say that. In fact, he didn't even mention vehicle. He did mention that industries had to change. So there's a little bit of a hint there, but he never talked about any of that stuff. And so I think. And if you compare that to the brand ads you get for Honda or Toyota SUVs or whatever else, they're speaking to a completely different thing. It's like, oh, we got a new tailgate feature that you can actually sit in while you have your coffee. Like, really? That's like. That's the thing you're actually going to present. It's like, so in the weeds and so down. And people get confused about sort of the role that I think the role that branding has in the development of an enterprise and category design sets. The North Star branding never has and never will. And so it isn't a brand campaign. It is. You just. Just read it. It is a absolutely classical category play with an incredible product design yet to be proven. We have to see it on the streets. We've got to buy it, we've got to drive it, we're all going to agree with it. But incredible product design at this point, and a new company model and a new company design that's so different to any other truck or large, you know, SUV that it's like pizza and ice cream. You're looking at these two things like they're not even in the same place.

Yeah, absolutely.

Did I convince you?

Yes. And, you know, for people who conflate category design and first mover advantage, which of course you shouldn't, but that said, he does have first mover advantage. He's got the first truck, the first EV truck. And with all due respect to Elon and everybody owns one, whatever that fucking UFO thing driving around that they say is that the. The Tesla suv. Have you been in one of those things, by the way?

I have not been in one of those things.

We test drove one of those things. All I had to do was just get in it and sit in it and screamed, I am not the customer of this. Anyway, it's not a fucking su. It's not one you want to go to Tahoe and blast around in 12ft of snow in and off road if you need to. And no, it's some weird Jetson fuck thing. I don't know. It's not. Clearly, I'm not the buyer, but anyway, the point being Rivian by calling it an adventure vehicle and by tying it into the outdoors and nature and greeny and. And of course, it's an ev. Like, the whole thing, it's a completely different conversation. And it's. They're positioning it very differently than sort of this weird UFO soccer mom thing that Tesla's got.

Yeah, no, absolutely. And then in addition to the that vehicle you're talking about, they have this sort of futuristic view of something called the Cybertruck. I don't know if you saw it, but it's this.

Of course I saw it. It looked like it was from the new Iron man movie, but it looked like it looked like you. And I took some metal and banged it together as exactly as we were like. We were like costume designers for our kids play and we had to make a space truck. I don't know. It was crazy looking.

No, it is, it is. I know it was a prototype and everything. And I just thought the most classic thing was, oh, well, let me show you how bomb proof this is. And they throw a soccer ball at the window and it breaks and he's. Oh, shit. Really live.

Okay.

I mean, just. There's so much about that whole thing that just made me laugh. And it's. The other end of the spectrum is where Rivian are at. And I'm just thrilled also that honestly that they're from Illinois, from Normal, Illinois. That's what I'm most thrilled about. This is the Midwest. This is the heartlands of the automotive industry. And this guy is setting roots there and he's doing the whole thing made in America and from the mother states for automotive engineering. So I'm just thrilled. As you can tell, I'm super excited about the whole thing as an example of category design, great product design, great company design. And he's just a powerful guy and I'm stoked to have him in the industry.

Well, and the other interesting thing, of course, we wanted to touch on is the way category designers IPO is very different than people who think of an IPO as a financing event. And it appears that he is purposely creating everything around the IPO, the S1. The whole quote unquote story, the way legendary category designers do, is he's presenting a vision, AKA a POV about a problem. He's framing that problem. He's making that problem urgent and important. And he's saying we must move from the way it is to a whole other way. And he's doing it with his ipo. Most people make the mistake of thinking it's a financial event. Just the facts present the numbers, when in point of fact, the IPO is a legendary time to A, drive home your category design and B, lock and load your position as the emerging category leader.

Yeah, no, you're absolutely right, Christopher, and you know this as well as anybody. Some of the most powerful strikes, lightning strikes of all time have been IPOs when they're done, right? Because it's a time when there is a lot of light shone on the company, on the product and on the category. And the first thing that investors, in the old days, investors used to say, well, what's the tam? You know, and you'd have to sit there and explain, well, it's this many companies or people times this much price, therefore this is the TAM of the. You know, and you have to justify all of that stuff. Some people still do that. The really savvy investors don't. They actually look at a thing called category potential. What could this be? And that's, that's, that's the, the biggest change, I think, that's happened over the course of the Last sort of five to 10 years is that, you know, our practice, your practice, everybody's practice on category design has helped influence people to write S1s in a way that actually do present the potential. Clearly they're going to have estimates of TAM and all that sort of stuff in there. But it really talks about the potential for what this could be that enables a savvy investor to sort of say, well, you know what? So if the entire SUV market and Toyota is 59 billion, I think number two is Honda, and it might be 30 or something like that, so call it 150 billion. You got to justify market share. They don't look at it like that anymore, honestly, they don't.

And my suspicion is, and you know how much time I spent in financial analyst school, that if they're targeting an IPO price of 80, they'll be oversubscribed. And so they might actually go out north of 80. We'll see. And regardless of where they go out, particularly once they can start showing an ability to execute across the magic triangle and in particular deliver cars that work that people are excited about, that 80 might start looking very, very cheap. There were a lot of people when Apple was at half a trillion 500 billion who thought that was insane. And, man, don't you wish it backed up the truck?

I do, I do. I actually remember Apple when it was seven bucks a share. And I wish I had backed up the truck then. But I did want to speak to this issue of the IPO and sort of perception, because that's what, in many cases, IPOs are actually about, perception of what the opportunity truly is. And we were working with a company, and I think we've talked about it many times before over Uncle Dave's ipa and this company called Qualtrics, and that company at the time we started working with them, was valued at about a billion dollars that were great market research, tool and product. And we built a new category or created or designed a new category called Experience Management, or XM as it became known. And SAP, ironically, because we roasted SAP in our book is it came in and bought them at $8 billion. And there was a classic moment in this whole thing that we got called and they told us, hey, we're announcing that SAP right now. We're announcing that SAP just acquires for 8 billion. Now we're about to go public two days later. So SAP come in at the last minute and someone said to me, what do you think? And I said, 8 billion is incredibly cheap. I think that is a $30 billion category opportunity in a $50 to $60 billion market. And they were like, you're crazy, mate. I was like, I'm not. I honestly believe based on the problem they're solving and the scope of the problem, which of course was what kind of experience you as a company deliver to your employees, to your customers through your products or brands. I mean, pretty much the mother load of what's important is now a top three problem at enterprises. Anyhow, what happened? Well, SAP and they didn't, it didn't work out because people were leaving because SAP's growth, not quite what Qualtric's gross was. So they spun them back out again and they went public for $27 billion. Right. And what was that about? That was about category potential. It wasn't about multiples of revenue or EBITDA or any of that stuff. It was like, holy smokes, this problem is so big inside of enterprises. I think this thing's going to be worth a lot of money and I think they're going to generate a lot of revenue. And of course they have. And history has proven that one. And there's other ones that we can talk to as well. I think that's what' going on with this one. I think I'm going to buy on the day. If I can get them at 80 bucks, I'm going to be stoked.

And I think thank you for that. I think what a lot of people don't realize is for startups, for new companies, by definition, every company going public, they are creating or trying to create a different future. They're not continuation of the past companies, they're have a different future happen companies. And so their value is based on the category potential and people's perception of their ability to monetize that potential. And the companies that are not designing and Creating new categories, products and business models, their companies, by definition, that are betting on the past. So when you want to look historically and you say, okay, well, you know, what's your growth rate normally, what's your margins normally, what are your earnings normally, what are your cash flows normally, and we can build a very simple financial model and bada bing, bada boom. And that's what those companies are valued at because they are extending the past companies, companies that are designing a different future. You either believe in that future or not. And the funny thing about it is they all look like geniuses in retrospect. You know, one of my favorite examples of will always be Airbnb. So context is everything. So when Airbnb, when Brian first shows up and starts running around Silicon Valley, most venture capitalists look at it and go, who the fuck wants to rent their couch? And who would want to stay on the couch? Well, that's one lens. And then there's this whole other lens called a point of view, called don't visit, don't be a tourist, be a local. Well, that changes everything, right? And tomato tomahto, a whole new way of doing this, right? And so. But it's that leap of faith on taking a chance on a different future that seems to get a lot of people caught up and a lot of people in the financial world caught up.

Yeah, no, you're absolutely right. You're absolutely right. It does. And look for good reason, because some people get up and tell a story that's complete bullshit. And we got to better this or the carbon emulators faster or we're going to get more margins or all that sort of stuff. Those things just go by me. I don't really pay attention to them, but many financial people do. But it's the ones that stand up and imagine, to your point, a different future and imagine a different way. And how bold is it that RJ says we have to design a company from the ground up with a mission to fundamentally change an industry. And he means the automotive industry and the petroleum industry and all of the other industries to your point, are in the backward rear vision mirror and don't like it. And I saw that there was a lawsuit from the oil industries against the government for putting carbon free energy creation against them and all this sort of crap. And so how bold is it that he did that and didn't just stand up and say, I got a better car. I mean, that's what I love the most about that guy.

The other thing I think from a category, design and marketing Perspective that's really interesting is we've now started to see a different model for company building, which is long before you ship a product, you start building a community. Because you have a point of view that captures people's imagination and attention and you deputize them in this community, they become, you know, there's the great old line, if you want to sell Bibles, there's gotta be Christians. And so in that sense, RJ's been manufacturing Christians, so to speak, way before he had a Bible to sell. And that is an extraordinary thing. And he goes out and he does a giant deal with Bezos for Amazon trucks to get the party started and so forth and so on. And so there is this new model where if I'm a category designer and I have a compelling enough point of view around a problem that people care about or I can get them to care about. And how long has RJ been out publicly sort of evangelizing his point of view?

Years. Years for sure.

Right.

You know, and the product itself showed up a couple of years ago, really?

So maybe four years. Three. Four years.

Right.

And when did he start taking orders, do you know, Al?

Two and a half years ago. I was one of the first.

Yeah. And so this goes against everything that most of us have been taught, right? Which is you don't market till you have a product. You have to launch the company. Dun, dun, dun, dun. Right. And you sure as hell aren't going to be doing sales before you have a product. And you're not going to be building community because you don't even have anything to sell yet. Well, that's exactly what he's done here to pre build the category. In other words, the category. If you say category design, one of the fundamental things it's about is about demand creation as opposed to demand capture. He's been creating demand for two plus years ahead of shipping his product and officially launching his company.

Yeah, yeah, he was evangelizing this point of view well before he even had a product to show. And that's the power. And that's your point. And that's a little bit of where I also mentioned sort of the brand thing. It's derivative of the category design for that reason, is that you have to create the vision. You have to create this incredible problem in people's mind, anchor it so that our biases start to work towards it as opposed to against it. And that's what he's done, and that's what he's been doing for years. And then on top of that, that doesn't get you there. Just because you did that work doesn't guarantee you're going to be successful. Right. And it's the point you are before you've also got to do the other pieces of the magic triangle. Have a great product and have a great company. Like these three things have to go together. But you can also not. You know, there's so many companies that have done an incredible job on the product and it's been a flop because they didn't do the category design and most likely they didn't do company design either. So he's just done all three. He did it in the right order and it's manifesting in a way that's insanely powerful.

Awesome. Anything else you want to touch on before we wrap? Alright.

Well, I'd like to say that, you know, the surf's been pretty good here in Santa Cruz and I'd like to let everyone know I've been doing some kite boarding and kite surfing. I'm really enjoying that. And you know, for a guy that's not too bad for his age. As someone famously said to me, you.

Know, you know, you're a very good looking man for a guy your age.

Yes, I do think that was what the statement was. And my statement to everyone is get out there and be adventurous. It is a great way of life.

Well, it is pretty cool to watch you learn to kiteboard right now. I think that's. And as I've watched you learn to kiteboard, A, I'm stoked you're having a good time and B, I won't be learning the kiteboard with you. It's just there's a lot of knowing north and south and east and west and right and left and that you have to have to do that.

Yeah. And what I'd say about all of that's true, Chris. There's a kite thing, which is the source of power and then there's a board thing that is you're riding that power and then there's a wave thing that you're channeling that wave thing. But the greatest thing about honestly is that being a kook again is so powerful for us humans. Like I went and started doing that, it took me eight months. I'm a pretty quick learner on most athletic things. It took me eight months to get it. And that period where you are a coop and you have to be humble, you have to learn, you have to put in the time, it's so powerful and it's something. I'm a lifelong learner. I Love doing those sorts of things to test myself and move myself and develop myself. And for anyone out there who wants a great challenge and has maybe done some sailing or some surfing, I'd highly recommend starting. It's a fun thing to do. And the coolest thing is the guy, my hero for kiteboarding. His name's Woody and Woody is 91 years old and he's still kite boarding. And that's, that's, that's the coolest thing.

When did he learn? How old was he? When he learned 60.

60. And the guy who taught me was actually the one who taught Woody, you know, and so long, long time ago. It was like in the, in the, you know, sort of turns in 90s kind of time frame, late 90s I think is when he first started. And Woody shows up and I was in Hood river and Woody and a group of others who were between 75 and 85 were there, all doing kiteboarding. And it's one of those sports that you can, like skiing, you can do forever, because in that case skiing, cave gravity, in this case, wind is the source of power. And all you have to do is finesse. And you can do that until you're much older. It's cool. It's really cool. I love it.

Well, I'm very, very stoked for you, Al. And I don't know why it took us so long to do this, but now that we've done it, will you come back sometimes relatively soon?

Yeah, absolutely. Absolutely. And for those of you who don't know, Christopher and I do gym together at Paradigm here in Santa Cruz. And he's actually a pretty good athlete. And he might, he might sort of not tell you that, but he's actually a pretty good guy. And I always sweat a lot more than he does in the workouts.

All right, Al, I love you. Thank you so much. And please come back soon.

Love you too, brother.

Well, there he is, my buddy, my dear friend, my brother from another mother, Al Ramadan. And of course, he is the co author of Play Bigger and the co founder of Play Bigger Advisors. Also wanted to let you know we don't have many guests on Lockhead on marketing, as you probably know. But coming up soon, we do have another guest episode with one of my favorite people on planet Earth. She's a legendary author and PR executive named Dushka Zapata and her partner Dan Rome, who's also a legendary author. And we have a riveting conversation about why presentations suck and what to do about it. That's coming up soon. All right. We would like to thank Al Ramadan. Play bigger advisors. Check out playbigger.com today. Also our friends at Otranet building legendary B2B websites in Silicon Valley for over 20 years. Check out atre.net and don't forget to go to lockhead.com and subscribe to Category Pirates. You can now get a 20% discount on group orders of four or more@lockhead.com on category pirates. I need to remind you that today's information is provided to you solely for informational purposes and this Oddcast is a sole property of the Lockhead Oddcast Network. Don't forget to consult your lawyer, doctor, shaman, mystic and yoga instructor, and of course, category designer before acting on any of today's information. Also, I want to let you know your spouse called and she said it was okay. You can go ahead and subscribe to Category Pirates. Also need to warn you that the creators of this Oddcast may have been consuming libations and every episode does contain nuts. We are produced and edited by the goat, Jason DeFilipo. Check out his podcast, Grumpy old geeks Sarah Knox and Jamie J Do legendary technical execution and they build lockhead.com show notes by the handsome and talented GM Simon. And the thought I'll leave you with today comes from the great the Goat, Peter Drucker himself, who said, if you want something new, you have to stop doing something old. All right, that's it. Thank you so much. Please stay safe, stay legendary, and until we're together again, follow your different.