September 30, 2010

The Value of Face-to-Face Meetings: A Case Study

Conference calls and virtual meetings may be fine for the smaller details but when you need to motivate, inspire, and/or close the big deal, there is no replacement for sharing the same physical space. Business leaders and their meeting planner partners have come a long way in developing metrics to calculate the return on investment of face-to-face conferences. And it’s amazing how many things CAN actually be measured. But there are some powerful intangibles that cannot be captured on a spreadsheet.

This point is brilliantly illustrated in the October issue of WIRED magazine, which features a great article by Joshua Davis about Tesla Motor’s CEO and Founder, Elon Musk, and his push to mass-produce electric cars. But what really caught our attention was the story excerpted below of how Musk secured critical financing from Toyota earlier this year. Although Toyota was already interested in investing in electric cars, the first face-to-face between Musk and Toyota’s leader, Akio Toyoda, was obviously a major reason the deal went down:

Reprinted from WIRED magazine online:

One morning this April, Musk walked out of his Bel Air house wearing a tie covered in fake blood. Deepak Ahuja, Tesla’s CFO, was flabbergasted. For days, the team had been preparing for a breakfast meeting with Akio Toyoda, exchanging emails on the fine points of Japanese business etiquette, including how to bow and the proper two-handed procedure for presenting a business card. Now, minutes before the Toyota president was due to arrive, Musk was wearing a Halloween joke tie emblazoned with pumpkins, skeletons, and fake blood. He was going to ruin everything.

Ahuja glanced nervously at Diarmuid O’Connell, Tesla’s vice president of business development. O’Connell didn’t know what to say. They stood awkwardly for a moment in front of the house while Musk started tapping out an email on his iPhone.

Then Musk looked up at them and broke into a broad smile. “I got you guys!” he blurted and started laughing. Musk wanted to diffuse the apprehension of meeting the president of the world’s largest carmaker, and the bloody tie seemed to do the trick. Ahuja and O’Connell started laughing, too.

Musk took the tie off as a convoy of Toyota Sienna minivans and a Lexus limousine pulled up his driveway. Bodyguards stepped out of the vehicles, followed by a flood of Toyota executives. For a moment, nobody knew what to do. Toyoda had called the meeting to discuss “business opportunities,” but nobody had met him before. Musk fidgeted with his phone while Ahuja wondered whether he should bow.

O’Connell spoke up first and introduced Musk. Toyoda stepped out of the crowd and everyone started shaking hands. So much for bowing, Ahuja thought.

Toyoda noticed Musk’s red Roadster in the driveway, and the conversation quickly turned to the car.

“You want to take it for a spin?” Musk offered.

In a matter of minutes, the 53-year-old Toyoda had the accelerator floored, pinning Musk’s head to the seat. Toyoda was a certified Toyota test driver and had competed at the 24-hour Nürburgring endurance race in Germany. Musk could tell. Toyoda chatted in a relaxed way as he whipped the car around corners in the hills above Sunset Boulevard. Musk tried to focus on the conversation. Toyoda said he wanted his company to be more entrepreneurial. That’s why he had wanted to meet Musk and give the Roadster a try in the first place. He liked the fact that Musk had managed to bring the vehicle to market. Plus, it seemed like a fun car.

When they got back to Musk’s house, they ate breakfast, then Toyoda cleared his schedule for the rest of the morning and got back in the Roadster with Musk. He wasn’t done driving the car.

Toyoda piloted them onto the 405 freeway—the top was off and the wind whipped their hair as they accelerated. They sped south, toward SpaceX, while Toyoda’s limo and a fleet of minivans attempted to keep up. At the rocket factory, the two men hunched over Musk’s computer and gleefully watched rocket-launch videos like a pair of 12-year-olds. Musk asked if Toyoda wanted a frozen yogurt—there was a fro-yo cart in the factory. It sounded good, and a few minutes later they were eating yogurt amid hulking rocket fuselages. It was a lot of fun.

Four weeks later, Toyota decided to invest $50 million in Tesla. The auto giant also signed on to develop prototype electric vehicles with the startup and indicated that it would support Musk’s $42 million offer for the billion-dollar Nummi factory in Fremont.

During the press conference announcing the deal at Tesla headquarters, Toyoda took the microphone and talked about getting to drive the Roadster and how it had impressed him. He decided to work with Tesla, he said, so that Toyota could learn from the small company’s “spirit” and “energy.” When asked by a Reuters reporter why he had chosen to partner with Tesla among all the electric car startups, Toyoda looked over at Musk. “Musk-chan,” he said. “I love him.”

A business partner who publicly says he loves you … priceless! Now that’s a relationship that comes only after spending some time together … in the real world, sharing experiences, face-to-face.  It’s the part of meetings and conferences that we may not be able to accurately quantify but that most definitely affects the bottom line.