Wang Tao built a monopoly and became the first drone billionaire. The company that he founded: DJI sells 76% of all the drones in the world! The second place seller has a market share of a mere 4%!
Wang was lucky with his timing as he got into building drones just as the whole industry started booming. But how did he crush everyone else and has no competition to speak of today?
Companies as good as GoPro and Intel have struggled competing against DJI. At one point, DJI was selling drones for $1400 that others could not even make for under $6000! How did Wang build a company that is so far ahead of the competition in terms of product features as well as being priced so low?
The competition killer: compete with yourself
Wang setup DJI to become its own fiercest competitor. DJI is known to launch 4 new models in 6 weeks! They are known to sometimes price their new models lower than their older models! This is unheard of with every other hardware manufacturer. Apple will never sell their new phone at a lower price than their older phones.
But Wang believes that if DJI can out compete DJI itself, then no other competitor can touch them. If DJI’s pricing cannibalizes their own product, he is fine with it!
And so, DJI is set up where internal teams compete with one another! And that’s how they remain ahead of everyone else. Because it’s akin to having multiple drone companies under one roof. The competition keeps everyone more focused, more determined. It drives creativity.
It’s similar to what Charles Schwab had done when Andrew Carnegie asked him to improve productivity in his steel mills. Schwab asked the day shift manager how many heats they made that day. On getting the answer, he wrote a big 6 on the wall.
When the night shift heard of it, they worked their asses off and at the end of their shift, erased the 6 and replaced it with a 7. Within a few days, both shifts had doubled the entire mills productivity!
Wang took a page out of Schwab’s books and stimulated competition throughout DJI.
But that’s not all.
DJI hosts Robomaster competitions. Where more than 132 teams compete in robot battles. DJI helps teams all over the world with part of their equipment. And teams build 7 robots who fight against 7 other robots in an arena. And after multiple rounds, the best team wins!
By organizing their competitive robot battles, DJI has created a great pool of people who they can hire from!
But that’s not all.
Even when it came to raising funds, Wang got investors to compete to get a chance to invest in DJI. Investors had to participate in rounds where they bid: how much money would they loan to DJI for every $ they could invest in them? The more money they promised to give as practically an interest free loan, the better their chances to get to invest in a fast growing DJI!
After every round, the investors who promised the least proportion of loan were culled. And three such rounds were organized! In the end, DJI got investors to loan $1.61 for every $1 they could invest! And the total amount invested was a whopping $1 billion (with $1.6 billion given further as loan!)
By building a layer of competition in everything he touches, Wang has created a monopoly in a fast growing industry – and become a billionaire!
The downside of competition: burnout
You won’t be surprised to know this: Wang had started DJI with 3 other cofounders. But all 3 of them quit within 2 years.
Constant competition can hinder teamwork. It can lead to high burnout. Competition is a flame that has to be managed well – you need enough of it to keep you warm, but not to burn you.
- It’s a good idea to build competing teams within your own company. Some amount of competition can help drive creativity and effort.
- Get people to compete for your goods, and you will get the best of deals.