XPEL is a perfect example of "Business Models Matter"
I have a crazy story about $XPEL, Inc.(XPEL)$ and auto films that show winners and losers in a market aren't always who you think.
First, XPEL is a perfect example of "Business Models Matter".
XPEL sells high-performance films but...
it didn't develop any film technology
it doesn't sell proprietary films
it doesn't manufacture films
XPEL takes stuff other companies make and packages it with patterns to sell to dealerships and mom-and-pop shops. It's a sales and distribution company.
THAT MODEL WON IN THIS MARKET!
Here's what's amazing.
I know the building and the exact line at $3M(MMM)$ that makes a lot of XPEL's high-end products. Because I worked there...
In 2008, 3M had a booming automotive aftermarket business driven by window films. The film I had installed on my car was basically zero tint, but it would block UV and IR rays, plus some shatter resistance.
The car stays cool, I don't look like a fool.
These products were perfect for 3M because 3M is a film company. Some of the films you have in your phone have thousands of layers and very specific adhesives. They leveraged this tech in window film, providing characteristics like UV/IR blocking.
I also worked on protective films as early as 2003. Cool, but from a technology perspective, a healing or protective film is pretty blah.
But these were incredible products.
The problem? 3M SUCKS at selling products. Great at technology, terrible at sales.
I assume 3M makes a large percentage of XPEL's film products and makes way more money than 3M on the films in the process.
The business model of being the distributor is where value is created. And it shows 3M's failure to leverage its advantages.
https://twitter.com/TravisHoium/status/1779179859404595571
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