Rivian: A Classic Category Play

I am a huge fan of RJ Scaringe, the Founder and CEO of Rivian. In my mind, he’s half Steve Jobs, half Elon Musk. He incorporates the best halves of each of these two legends of category creation. And what he is doing at Rivian is an astonishing example of category, product, and company design. 

In our book PLAY BIGGER we call it “the magic triangle” and it is used by some of the greatest category creators of all time. 

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In case you missed the announcement last week, he is planning on taking his company public at Thanksgiving 2021, and the estimated market cap for his company is a staggering $80 billion. 

Stop and think about that for a second. 

His first cars are going to compete against the worldwide “SUV” category. The number one player in that category is Toyota. Toyota’s total SUV brand value is $52.29 billion.

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So, this brand-new company – Rivian -- is valued at 150% of the number one player in a category that has existed since Jeep launched the first “modern” SUV back in 1984. And more than the market cap of General Motors or Ford.

Remember, Rivian has yet to ship a single vehicle. 

What the @%# is happening here?

Let’s start with RJ's legendary Category Design.

The value of a category is directly proportional to the size of the problem it solves. We call it category potential and savvy investors spend a lot of time figuring out the potential of a category. In the past, people used TAM (Total Addressable Market), but investors found this measure too restricted.

So where did RJ start the category potential conversation? Like the greats, he started with the problem. Here’s his point of view:

"Today 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 enchant 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 toward 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 a 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.”

This reminds me of the moment Steve Jobs returned to Apple and wrote a whole new POV for Apple Computer. His POV was equally broad and compelling, and he used the famous Think Different Campaign to change the playing field with Microsoft, IBM, and the other “computer” companies at the time. 

RJ is using the same playbook. He is starting with a much higher-level problem -- carbon dioxide and the existential threat it poses to humanity. 

This creates BIG CATEGORY POTENTIAL!

Not a word about automobiles. Nothing about electric power. Zero about existing categories such as Sports Utility Vehicles. 

Just a vision for a future our kids deserve by tapping into our adventurous spirit as humans. 

And the category name? Drum roll, please...

ADVENTURE VEHICLES

Now that’s a legendary name. His marketing speaks to humans enjoying the outdoors, loving life, being adventurous. Watch this video for the R1S vehicle.

But he doesn’t stop there, he executes the two remaining sides of the magic triangle. 

Second, Product Design:

The company’s two launch products, the R1T and R1S, provide an unmatched combination of performance, off-road capability, and utility. They absolutely kick ass -- 800HP, 0-60MPH in 2.5 seconds. Electric power, 300+ mile range and eight seats. Luxury but with a bunch of features built to make adventurers weep. These SUVs are insane -- check out the flexible skateboard platform architecture. And the price? Cheaper than a Chevy Suburban or a Mercedes GLS at US$75k.

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Finally, Company Design:

Not to mention, RJ listened to us, we the people. Question: What’s the thing we hate the most about buying a new car? The sales guy and the dealership. That whole stupid song and dance routine. So, what did RJ do? He eliminated the BS. No dealers and no dealerships. Check out the Rivian Plant + Adventure Test Track drive experience.

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The company is designed around a vertically-integrated electric B2C model similar to Tesla. And this same model will be used for their B2B products, as well, such as the Amazon last mile delivery vans. Pre-orders, online configurators, in home service, digital downloads, in-vehicle updates, and even tailored insurance. The whole relationship lifecycle is at your fingertips. 

Keep an eye on RJ, I predict he is going to become the Category Champ of his massive new category. 

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And about that $80 billion dollar evaluation? Cheap, I reckon. I’m putting my money where my mouth is and already have my R1S configured and ordered – no doubt a perfect compliment to my lifestyle. And I will be buying their stock on opening day…

Al Ramadan

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