Former Apple Retail mastermind jumps ship from Microsoft to Tesla

Posted:
in General Discussion edited January 2014
George Blankenship, the strategic genius behind Apple's booming retail segment, lasted only a year attempting to jumpstart a similar effort at rival Microsoft before being lured away from the software giant to architect the retail experience for upstart Tesla Motors.



It's arguable, in many ways, that Tesla's vision mirrors that of Apple's. The Silicon Valley-based designer and manufacturer of highway-capable electric automobiles prides itself on energy efficiency, environmental responsibility and striking industrial designs. It's hoping to shake things up in the automotive industry in a manner similar to the way Apple altered the landscape for modern computing.



Tesla's primary goal is to increase the number and variety of electric automobiles available to mainstream consumer through the retail sale of its own vehicles, marketing its patented electric powertrain components to other automakers, and setting a positive example for the troubled automotive industry by proving there's a market for vehicles that are not only fun to drive but also socially responsible.



Executives for the automaker have even gone on record to admit that they're modeling their retail showrooms after Apple's and that of Starbucks. The company currently operates 11 retail stores worldwide and plans to launch another 50 or so over the next few years to support the launch of its new $50,000 Model S sedan.



To this end, Blankenship, 57, brings thirty years of international retail and real estate experience to Tesla. Best known as the architect of Apple’s brand building retail strategy, he defined and executed an International “Smart Growth Hit List” that encompassed major cities in Asia, Europe and North America.



Instead of choosing store locations purely to avoid high lease prices or insisting on locating them in technology-centric shopping areas, Blankenship from 2001 onwards insisted on placing Apple stores in high-traffic areas and frequently in locations that were considered upscale shopping districts.



Apple's original Tokyo flagship store, for example, was placed in the fashion district of Ginza rather than in the technology haven of Akihabara. Apple counted on the sheer volume of business to overcome any costs associated with running the store in such an expensive space.



That strategy has helped Apple grow its business to produce $1.683 billion in revenue in just its latest quarter while many of its Windows PC-making rivals have fallen far short of the mark. Gateway, for example, was eventually forced to shutter its stores after both choosing cheap, out-of-the-way locations and never carrying PCs in store; Dell has only produced a small number of similar test-only stores and was eventually forced to offer PCs to third-party retail stores to compete against Apple, Gateway, HP and other top-tier computer makers.



Tesla's Model S sedan, which retails for $50,000 after a tax rebate.



For its part, Microsoft was similarly determined to shadow Apple's example, so much so that it courted Blankenship away from the iPhone maker one year ago to serve as a consultant for its own retail strategy that kicked off last fall with the launch of its Mission Viejo, Calif. location. Since then, the Redmond, Wash.-based heavyweight has managed to launch just three additional stores.



Not much has been said about the success of Microsoft's fledgeling retail effort, though its latest store opening in the San Diego's Fashion Valley Mall -- located just a few slots down from one of Apple's -- was completely overshadowed by the launch of the iPhone 4 on the same day.



One of Tesla's retail stores, modeled after those of Apple.



In addition to closely following Apple's retail placements, as it also did with its first Mission Viejo store, Microsoft has also worked to mimic the look and experience of Apple's outlets, creating viral marketing buzz and high profile launch events patterned after those originally initiated by the iPhone maker's own retail team.



For example, it drew initial crowds at its first retail store launch by giving away hundreds of dollars worth of software, free concert tickets, free merchandise with new PC purchases, and by making significant charitable donations. It's retail employees were also trained to start spontaneously line dancing in the middle of stores to material from music artist Black Eyed Peas.



Many of those employees were similarly poached from Apple with the promise of pay raises and compensation for moving expenses. In one case detailed by AppleInsider, Microsoft was able to court an Apple retail market manager, who had recently left the company. The manager was offered a pay raise and was then reportedly asked to contact the most seasoned Apple employees that he had presided over in an effort to recruit them as well.
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Comments

  • Reply 1 of 56
    elliots11elliots11 Posts: 270member
    Any job that makes you line dance, and isn't Coyote Ugly, is probably one you should think twice about.
  • Reply 2 of 56
    dluxdlux Posts: 666member
    Quote:

    It's retail employees were also trained to start spontaneously line dancing in the middle of stores to material from music artist Black Eyed Peas.



    I don't think that meets the definition of the word 'spontaneous'.
  • Reply 3 of 56
    dr millmossdr millmoss Posts: 5,403member
    So Tesla is going to open company-owned retail stores instead of franchised dealerships? If so, it breaks with the auto industry model for selling cars going back about a thousand years. That might be the real news here. They are going to need a genuine retailing genius to make it work.
  • Reply 4 of 56
    bdkennedy1bdkennedy1 Posts: 1,459member
    Would much rather have him at Tesla than Microsoft.
  • Reply 5 of 56
    MacProMacPro Posts: 18,294member
    I guess he's leaving Microsoft because he discovered the hard way that you can't make a silk purse out of a sow's ear.
  • Reply 6 of 56
    paxmanpaxman Posts: 4,603member
    Quote:
    Originally Posted by bdkennedy1 View Post


    Would much rather have him at Tesla than Microsoft.



    Me too. I also imagine Tesla to be a far more interesting proposition than MS. Apple and Tesla are both forward looking innovative companies wanting to stir things up whereas MS just wanted to copy.
  • Reply 7 of 56
    lilgto64lilgto64 Posts: 1,147member
    Quote:
    Originally Posted by paxman View Post


    Me too. I also imagine Tesla to be a far more interesting proposition than MS. Apple and Tesla are both forward looking innovative companies wanting to stir things up whereas MS just wanted to copy.



    And it seems that even with the purported original mastermind of Apple's success that MS fell flat.



    Maybe he was unable to think differently enough to be successful at MS.
  • Reply 8 of 56
    antkm1antkm1 Posts: 1,441member
    Quote:
    Originally Posted by Dr Millmoss View Post


    So Tesla is going to open company-owned retail stores instead of franchised dealerships? If so, it breaks with the auto industry model for selling cars going back about a thousand years. That might be the real news here. They are going to need a genuine retailing genius to make it work.



    Agreed, that is the real news here. I don't know squat about the benefits or pitfalls of franchise ownership vs. company owned dealers...my guess is that by allowing franchising, the company puts all it's financial concerns (start-up costs and anual up-keep costs) of dealer ownership in the hands of some salesman/owner that thinks he/she knows how to sell cars. Then the dealer calls the shots as far as how much to sell them for and competition. Like Best Buy Apple "Geniuses" vs. Apple Store "Geniuses". Or better yet, like the beer guys at ball-games. They put money up-front for the merch. (at a discount/ or cost) and then adjusts the prices to meet their business models.



    Whatever the case may be, if Tesla wants to run the dealerships themselves, more power to them. Perhaps then there will be more control over how the cars sell. Let's face it, unless Tesla starts making low-cost electric cars to compete with the Toyota Prius, Honda Insight or the likes, Teslas are NICHE market cars and probably wouldn't benefit from franchising. People who buy a Tesla will probably pay sticker price for it without a blink.



    Being a mild apple fan, and had the scratch, i'd buy a Tesla. But not at $50g. Plus i'd have to drag an extension cord from my crappy appartment building out to the street to charge it
  • Reply 9 of 56
    substancesubstance Posts: 13member
    Quote:
    Originally Posted by lilgto64 View Post


    Maybe he was unable to think differently enough to be successful at MS.



    If anything I would say the converse is more likely true: he thought too differently for Microsoft's liking.
  • Reply 10 of 56
    antkm1antkm1 Posts: 1,441member
    Quote:
    Originally Posted by lilgto64 View Post


    And it seems that even with the purported original mastermind of Apple's success that MS fell flat.



    Maybe he was unable to think differently enough to be successful at MS.



    that's probably because MS has nothing in their arsenal to sell in a retail environment. They are a software company, save for the XBox, Zune and the up-comming wP7. When i first heard MS was trying to do an Apple Retail Copycat, i just



    I also think it might fall flat because MS has no clear direction other than OS' dev's and MS Office. It's kind of hard to window shop or kick the tires on MS Office unless they hold street-side demo's like the old tonic salesmen from the 1800's.



    Sure you can kick the tires on the XBox, but then it turns into a mobscene of overweight little kids and fanboys/girls trying to play MOH like it's a free archade. (ie Best Buy)



    If MS is going to compete in any real way now, they need to keep their focus. Not pet projects (table PC, phones, etc...)
  • Reply 11 of 56
    justflybobjustflybob Posts: 1,337member
    Must have been all those "spontaneous" dancing outbursts at the stores that made him think twice.
  • Reply 12 of 56
    Quote:
    Originally Posted by Dr Millmoss View Post


    So Tesla is going to open company-owned retail stores instead of franchised dealerships? If so, it breaks with the auto industry model for selling cars going back about a thousand years. That might be the real news here. They are going to need a genuine retailing genius to make it work.



    I agree. Daewoo tried this in the UK in 1995 and at the time was the only manufacturer not to use traditional dealerships.



    I could be wrong but the US car sales model works similar to over here in the UK and is highly dependent on vehicle part exchange. I can remember working for a Citroen dealership at the time and you couldn't compete with some of the deals Daewoo were offering. Their part exchange values were through the roof. They literally bought customers business.



    Because they had no dealerships and operating out of supermarkets they didn't have proper aftersales facilities and sent people to kwik-fit centers. They also never had the real estate to sell on the part exchange vehicles so were forced to go to auction. They suffered massive losses because their underwriting was so out of tune with the market.



    2-3 years later when customers went back to Daewoo to trade up to a new car, they were either kicked in the teeth with an ultra low part exchange value or told they are not taking these part exchanges back in. Meanwhile the rest of the franchised networks simply boycotted used Daewoo's, partly down to the negative press Daewoo sent out against traditional dealerships, you all know the car salesman jokes, and because if you took one in you couldn't get rid of it.



    Needless to say it was forced to sell to GM 7 years later and rebranded as Chevrolet with a franchised network.



    Car retailers work on extremely slim margins and rely on aftersales and customer loyalty to return a more reasonable ROI.



    Since then we've had internet setups like Virgin and JamJar. All gone now.



    This guys got his work cut out.
  • Reply 13 of 56
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by antkm1 View Post


    Agreed, that is the real news here. I don't know squat about the benefits or pitfalls of franchise ownership vs. company owned dealers...my guess is that by allowing franchising, the company puts all it's financial concerns (start-up costs and anual up-keep costs) of dealer ownership in the hands of some salesman/owner that thinks he/she knows how to sell cars. Then the dealer calls the shots as far as how much to sell them for and competition. Like Best Buy Apple "Geniuses" vs. Apple Store "Geniuses". Or better yet, like the beer guys at ball-games. They put money up-front for the merch. (at a discount/ or cost) and then adjusts the prices to meet their business models.



    Whether it's done for cars or fast food, franchising is a way of spreading out the risk of retail expansion. Franchisees build and own their own buildings, hire their own employees, etc. All they really get from the company is the right to sell their products and marketing assistance. But as we saw with GM, the scheme doesn't work unless the underlying business is at least stable if not growing. One of the main reasons GM went through bankruptcy was to shed unneeded dealerships to which they were contractually obligated.



    Maybe Tesla can break the mold, but it's not going to be easy or cheap. They raised a bunch of money through their IPO a couple of weeks ago, so perhaps this is how they plan to spend it.



    At $50k they might be getting close to a sweet spot for an all-electric car. It will naturally be compared to the Nissan Leaf and the Chevy Volt, but I think Tesla is aiming higher in terms of performance and amenities. This is the real competition, and they are ALL niche cars. In fact most cars are niche market products. Nothing wrong with that. I'm rooting for Tesla. I hope they can make it work.
  • Reply 14 of 56
    ihxoihxo Posts: 562member
    A big part of Apple store (iPad, iPod, iPhone...) is really Steve Jobs' vision.



    You won't have the same Apple (or Google lol) without Steve.
  • Reply 15 of 56
    justflybobjustflybob Posts: 1,337member
    I guess, in the future, kids that play with toy cars will go "Whooosh, whooosh" instead of "Vrooom, vrooom".
  • Reply 16 of 56
    Quote:
    Originally Posted by AppleInsider View Post


    Instead of choosing store locations purely to avoid high lease prices or insisting on locating them in technology-centric shopping areas, Blankenship from 2001 onwards insisted on placing Apple stores in high-traffic areas and frequently in locations that were considered upscale shopping districts.



    Putting stores where there are lots of people with money is rocket science? Wow. Says a lot about the marketing biz if anything less passes for competence.



    Quote:

    For its part, Microsoft was similarly determined to shadow Apple's example, so much so that it courted Blankenship away from the iPhone maker one year ago to serve as a consultant for its own retail strategy....



    ...Microsoft has also worked to mimic the look and experience of Apple's outlets, creating viral marketing buzz and high profile launch events patterned after those originally initiated by the iPhone maker's own retail team.



    For example, it drew initial crowds at its first retail store launch by giving away hundreds of dollars worth of software, free concert tickets, free merchandise with new PC purchases, and by making significant charitable donations. It's retail employees were also trained to start spontaneously line dancing in the middle of stores to material from music artist Black Eyed Peas.



    Was that dance the Whiskey Tango Foxtrot?



    Which was more embarrassing for MS, that or the Win 7 "host your own launch party" video?:

    http://www.youtube.com/watch?v=1cX4t5-YpHQ



    That mimics Apple about as well as the clown-colored Windows mimics OS X. Emulating Aqua by calling it "Glass" was pretty obvious, but unfortunately that's about as far as they were able to take it.



    MS fits the definition of Cargo Cult perfectly:

    http://en.wikipedia.org/wiki/Cargo_cult_programming



    They kinda see how a good thing works when it washes up on shore, but just don't understand the underlying principles well enough to do anything useful with it.



    If the line dancing was one of Blankenship's contributions, perhaps his departure from both Apple and Microsoft was not entirely of his own choice.
  • Reply 17 of 56
    tundraboytundraboy Posts: 1,617member
    Quote:
    Originally Posted by digitalclips View Post


    I guess he's leaving Microsoft because he discovered the hard way that you can't make a silk purse out of a sow's ear.



    Oh, the guy is no dim bulb. He knew that from day one, he just couldn't resist the pay package. Then left before he stayed long enough to get the blame pinned on him.
  • Reply 18 of 56
    dluxdlux Posts: 666member
    Quote:
    Originally Posted by justflybob View Post


    I guess, in the future, kids that play with toy cars will go "Whooosh, whooosh" instead of "Vrooom, vrooom".



    Unless you're a clueless gurl* messing with your electrical system, in which case it's "*FTTT!!* WAAAK! SPARKY!!"





    *playing on stereotypes, although in this case it's warranted in the (humorously) self-deprecating story thus linked.
  • Reply 19 of 56
    rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by AppleInsider View Post


    In addition to closely following Apple's retail placements, as it also did with its first Mission Viejo store, Microsoft has also worked to mimic the look and experience of Apple's outlets, creating viral marketing buzz and high profile launch events patterned after those originally initiated by the iPhone maker's own retail team.



    MS didn't follow too closely! Where are the mass crowds lined up for blocks and camping out for days in order to obtain the latest must have product release, the Kin One and Kin Two? What about those huge profits from selling all of those Zunes, Windows Vista, etc?



    You can put lipstick on a pig, it's still a pig!
  • Reply 20 of 56
    Quote:
    Originally Posted by ihxo View Post


    A big part of Apple store (iPad, iPod, iPhone...) is really Steve Jobs' vision.



    You won't have the same Apple (or Google lol) without Steve.



    The key is "genuine product differentiation", without it, no one can create a retail strategy that will sustain the cost. If Tesla's car does not catch consumer's heart, it does not matter whether they have a retail outlet or not.
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