Thursday, September 01, 2016

In Defense of John Z. DeLorean


I worked with John Z. I knew John Z. John Z was a friend of mine. *

Even though John Z DeLorean has been part of my business background since I can remember (I used to work at General Motors), lately two books have kindled old memories:

1. The DeLorean Story by Nick Sutton
2. Ego is the Enemy by Ryan Holiday

The first one is an insider account of what went right and wrong at DMC. It is obvious that the author knows what he is talking about.

In contrast with Mr. Sutton, Ryan Holiday has only very superficial knowledge of DMC and just tries to "prove" the central premise of his book by making gross oversimplifications. Since his book is titled "Ego is the Enemy" he just concludes DMC and John Z himself failed because of only one reason: his gigantic ego.

Not so fast.

Yes, John Z had a gigantic ego, however, without it he probably would have stayed at GM all his life and thus would never have started his namesake company.

Real life is complicated and there is not one simple, clear-cut reason DMC failed, however as a long time automotive industry insider I forward the most probable cause: John Z tried to tackle the impossible.

The last successful American automotive company launched was Chrysler in 1925. However, Walter P. Chrysler did not actually start it from scratch (as did John Z). Mr. Chrysler bought Maxwell Motor Company and named it after himself.

The automotive industry is very capital intensive. John Z just didn't have the capital to launch a full blown car company. Thus the car had to be designed by Lotus, it used a Renault engine, and, worst of all, he had to accept building his factory in what was then one of the most dangerous places on Earth: Northern Ireland.

Almost everything was against him, so the fact that DMC was able to produce more than 8,500 cars before going under was a minor major miracle. What is more, 25 years after the company died close to 75% of all DMC-12s were still in existence!

For DMC to have continued as a going concern, a series of consecutive miracles were needed and this was an unreasonable expectation for a mere mortal to pull through and thus DMC went under.

Today, we have Tesla Motors and even though the odds are not as badly piled up against it as DMC had them then, here is our prediction:

Unless it is bought by one of the giant industry players, Tesla will go under. And it will not be due to Musk's gigantic ego. (Although a future edition of Mr. Holiday book might explain it that way). It would be because, again, a man tried to achieve the impossible.

Still, it is probably a good idea to buy a Tesla now as 25 years from now (long after the original batteries are in a landfill) the cars themselves might still be extant and valuable.


* I never actually met John Z. I was just paraphrasing Senator Lloyd Bentsen during his debate with Senator Dan Quayle. 

Feel free to add to the conversation in Twitter.

@luisbaram










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1 Comments:

At 12:41 AM, Blogger doyleclanperth said...

Good post. I agree, a giant ego is an oversimplification as to Delorean's company going under. Other examples of lack of investment backing are many. H.Ford, N. Telsa, etc. So blaming a big ego is ignorant of the many factors at play...engineering design, manufacturing, marketing.
At the end of the day, Kudos to DeLorean for having a go and making it reality. That is what is remembered as well as how innovative the design was. Most notable (from a woman's perspective) was the Delorean's steel finish. Did it save a lot of paint making it more affordable? It looked so great! Perhaps we can also credit DeLorean for kicking off the global trend in steel finish we see today. ;-)

 

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