The brilliant business strategy behind Elon Musk's flamethrowers
Elon Musk, the billionaire entrepreneur and inventor, is known for a many number of things: his attempts to revolutionize space travel with SpaceX; his groundbreaking electric car company Tesla; his foray into solar panel proliferation via his acquisition of SolarCity. But one thing you probably don't associate with Musk? Zombies. Or, more specifically, how you'd survive in the event of a zombie apocalypse. Which is what makes the fact that he's selling millions of dollars worth of flamethrowers so seemingly bizarre. How does this fit in with his bigger business plans?
To understand Musk's thinking here, we have to do a little backtracking. Musk founded something called The Boring Company back in 2016. Its focus, he said, would be on digging underground tunnels (get it? "boring"?). The idea was to link cities, stop traffic congestion, and help weary drivers avoid road rage. Certainly, flamethrowers weren't part of the business plan. And yet, we learned last week that The Boring Company was selling 20,000 flamethrowers for $500 a piece. And sales have been booming. By Tuesday, he'd sold 17,500 units. By Thursday, he'd sold out entirely, raking in $10 million in the process. Who knew there was a market hungry for flamethrowers?
Musk knew. Or at least he knew that by introducing an outrageous off-brand product and marketing it toward an oddball niche market — apocalypse aficionados — he could generate buzz for his fledgling company, and lay the groundwork for some much loftier goals.
Musk started dropping hints about the flamethrower last December. When the pre-order page went live, he tweeted about the benefits of having one at your disposal during a zombie apocalypse. "Works against hordes of the undead or your money back!" he said. You've got to hand it to the guy — Musk knows a lucrative market when he sees one. Americans are obsessed with zombies; the genre rakes in a ton of money. One report from 2011 put the zombie economy's worth at more than $5 billion — and even said that was probably a low-ball estimate.
Musk promised the flamethrowers would "liven up any party." He even used some reverse psychology in an Instagram video to discourage people from buying the flamethrower while clearly having fun playing with one himself. Musk is also selling an accompanying fire extinguisher for $30. The company admits it's overpriced, but hey, it does come with a cool sticker! It seems the low-key, tongue-in-cheek marketing efforts worked. Orders started rolling in.
Back to our original question: Why is Musk selling flamethrowers? Aside from the obvious answers (because he can; because lighting stuff on fire is fun), the first and most obvious reason is money. Making a cool $10 million in a few days is a great way to generate revenue for The Boring Company, which is privately funded. Surely it doesn't cost $500 to make a flamethrower (The Verge aptly describes them as "roof torches strapped to Airsoft rifles"), so the profit margin on these babies should be pretty high. And by limiting the pool of available units, Musk is also forcing people to make a fast shopping decision with a common scarcity tactic: If you don't buy one now, you won't be able to get one later. Smart.
Another reason may be be proof of concept. If Musk can show that his company is able to raise capital with silly products, then surely he'll be able to finance underground tunnels when it's time to build them. This is key. Right now, The Boring Company is busy trying to get approval for a tunnel in Los Angeles. The goal is to build a 6.5-mile tunnel from Hawthorne to L.A., but the Culver City council has to sign off on it first. Getting this approval may be harder than convincing social media fans to buy an overpriced toy. The council has raised concerns about a privately owned company controlling transportation. Nevertheless, The Boring Company made a strong presentation and insisted on its ability to build the tunnels without public funding, and has already started to work on the tunnel beneath Hawthorne.
And then there's the buzz generated by such an off-brand product. Tunnels aren't very exciting on their own, and Musk isn't the only one who wants to build them. So media and public interest in The Boring Company can only help his case. Bravo, Musk.