4 lessons from the history of the automotive industry for startup founders

The automotive industry has a long history of innovation, operational efficiency in producing a highly complex product, and customer-centric development. From Henry Ford’s introduction of mass production techniques to today’s advances in electric vehicles and autonomous driving, automakers have consistently faced complex challenges.

Here are some lessons from the automotive industry that can be applied to startup founders across industries, especially in startups where efficiency and scalability are key.

1. Build a strong ecosystem of suppliers and partners

The success of an automotive company is not only about the cars it produces – it is also about the extensive network of suppliers and partners that supply components and materials and deliver the final product to customers. Automakers work closely with these partners to ensure the supply chain runs smoothly. A strong partner ecosystem also helps automakers respond quickly to disruptions such as the recent semiconductor shortage that impacted global production.

Similarly, startups need to build strong ecosystems of partners and suppliers. Whether they are software providers, manufacturers or marketing agencies, having reliable partners is crucial to growth and operational efficiency. This is one of the reasons why, contrary to stereotypes, older startup founders are more likely to succeed. Specialists with many years of experience in the industry have a better-developed network of professional contacts, and ready-made partnerships can significantly speed up the implementation of the project.

2. Innovate within constraints

The automotive industry is subject to strict regulations, especially regarding safety and environmental standards. Despite these limitations, automakers continue to innovate. Electric and autonomous vehicles are a great example of how companies are pushing the boundaries of what’s possible while adhering to stringent regulations. Tesla’s approach to making electric cars not only desirable, but also scalable in terms of production and infrastructure, is a testament to the balance between innovation and regulation.

First-time startup founders will inevitably face constraints, whether they be regulatory hurdles, budget constraints, or limited resources. A key lesson from the automotive industry is that innovation often arises from these constraints. Instead of viewing them as obstacles, limitations can become opportunities for creative problem solving.

For example, many tech startups have found innovative ways to comply with data protection regulations while offering personalized user experiences. Learning how to innovate within certain constraints can help startups stand out from the competition while ensuring compliance and sustainability.

3. Optimize for scalability with lean manufacturing

The automotive industry was transformed by Henry Ford’s introduction of linear manufacturing, which enabled the mass production of cars in a rapid and cost-effective manner. This shift towards lean manufacturing – focusing on reducing waste while improving efficiency – has allowed companies to scale operations without drastically increasing costs. Toyota later refined this approach with the Toyota Production System, emphasizing continuous improvement (Kaizen) and just-in-time production.

For startup founders, scalability is the key to long-term success. While early-stage companies often focus on developing a profitable product, they also need to consider how to scale effectively as demand grows. Adopting Lean principles can help startups streamline operations, minimize losses, and remain agile. By identifying inefficiencies in product development or customer acquisition processes early on, founders can position their company for sustainable growth. Building a scalable infrastructure, whether through automation, strategic hiring, or efficient processes, ensures that when the time comes to grow, the company is ready to meet increased demand without disrupting current operating systems.

4. Understand the power of the brand

Automakers understand the power of brand and user experience. Auto companies invest heavily in creating brand identities that appeal to consumers, from luxury brands like Mercedes-Benz that emphasize quality and premium status to practical brands like Toyota that focus on reliability and efficiency. Additionally, user experience – the driving experience, the quality of the interior, and even after-sales service – are critical factors in shaping the brand image in the minds of consumers.

For startups, building a strong brand and focusing on user experience is essential to attract and retain customers. A product may have cutting-edge features, but if the user experience is poor or the brand doesn’t resonate with your target audience, it’s unlikely to be successful.

Take Apple for example, which has become a technology giant by focusing not only on innovative products but also on providing an exceptional user experience. Slack is another great example of branding, where a unique, fun design language allowed the app to be significantly different from the look and feel of traditional enterprise apps.

First-time company founders should prioritize customer feedback, ensuring that their product or service not only solves a problem, but also provides a smooth, enjoyable and memorable experience. Brand consistency across all touchpoints, from website to customer service, helps build trust and loyalty.