Geert Noels: ‘Is Musk the new Tesla?’
In his column in the newspapers, De Tijd and L’Echo, Belgian economist and founder of Econopolis, Geert Noels, asks himself whether “Elon Musk is to become the new Nicola Tesla”, the brilliant inventor Musk named his company after, but also a failed business person. Noels seems quite convinced Elon Musk might end up the same way.
“History learns that pioneers set out new courses, push progress and are able to inspire generations”, Noels writes. “Unfortunately, their companies never were a financial success, on the contrary. Don’t let your wallet follow your heart, because trail-blazing innovations are seldom a success investment.”
Society is biggest winner
According to Geert Noels, society is the biggest winner and smart copiers take the most advantage from pioneers’ work. Who made the first visionary description of the internet? Not Gordon More in the seventies, neither Bill Gates or Steve Jobs in the eighties, but Nicola Tesla already in 1926.
It’s almost unimaginable he was able to predict this, decades before the micro-chip was developed and even longer before first signs of mobile networks appeared. Tesla was so far ahead of his time, we only understand his geniality at full today.
300 patents developed
Nicola Tesla was Serbian from origin and migrated to the US in 1884. He developed over 300 – some say 700 – patents, among which alternating current, an enormous technological breakthrough. He worked on wireless communication, X-rays, laser beams, radar, robots and so much more.
At a certain time his royalties on the invention of alternating current were worth today’s equivalent of hundreds of millions of dollars. Tesla could easily have been the first billionaire and the richest man on earth.
Burned his fortune
However, it didn’t happen. He burned his fortune in failing inventions and sold his most interesting patent. When he died in 1943, he was ruined, living lonely in a hotel room that was paid for all these years by Westinghouse. It were Westinghouse and Thomas Edison working with Tesla, who turned his most market-prone ideas into flourishing businesses.
History almost forgot Tesla, but it was a certain Elon Musk who changed this drastically by naming his company after the man in 2003. (Actually Tesla Motors was founded by Martin Eberhard and Marc Tarpenning on July 1st, 2003, and Elon Musk joined them as an investor in the first outside funding a few months later. e.n.)
Never reaped the harvest
Unfortunately, there are many examples of fantastic innovators that never reaped the harvest of their creations. In 1842, Samuel Morse began sending messages between two locations using a thread. The American government was so impressed it subsidized the project and had new connections being installed.
Morse started the Magnetic Telegraph Company, servicing the area between New York and Washington. Construction costed more than the revenues and a brutal commercial battle was following. By 1854 the telegraph companies went bankrupt.
Blood, sweat and tears
This kind of stories you can find in almost all major technological breakthroughs: railways, optical cables and, off course, ICT. The pioneer seldom got better out of it. Big winner was society! We all reap the harvest of the genius inventions that courageous individuals created with blood, sweat and tears.
Investors almost never gain something by financing the inventor. Most important reason is that the market sometimes grows slower than expected. An innovative breakthrough encounters a lot of resistance of the status quo.
Seldom a good entrepreneur
An obsolete technology can hold on longer than the capital of the brilliant inventor. Often it takes longer than envisioned to cope with the children’s diseases of the new invention and this also costs lots of money. Most common, however, is that the genius inventor seldom is a good entrepreneur and even less a sly business person.
In this story the shadow of a modern brilliant mind is also passing over it. Elon Musk didn’t use the name of Nicola Tesla by coincidence. Unfortunately, there’s a good chance history will repeat itself. Elon Musk, brilliant inventor, broad-minded and far ahead of his time. Immensely rich at one point, but a mediocre business person.
Keep history in mind
Those who are putting their money in Tesla, would better keep history in mind. They are blinded by the aura of the genius inventor and don’t see how history is repeating itself. Others are copying the concepts of Musk like in Morse’s time.
The car sector fights overcapacity and margins are too small to pay back expensive developments fast. Under-capitalized companies are kept alive in those conditions by enthusiast investors, but not by a business model that is profitable. Until financial conditions get worse, demand decreases or the ‘genius’ of the inventor is going through a bad patch for a moment.
Blinded by a good quarter
Don’t get blinded by one good quarter and polished figures. Fantastic companies, like Microsoft or Edison’s General Electric, were more smart copiers and well-ran companies, than pioneers.
Only now Nicola Tesla gets a statue, while Edison was honored for decades thanks to his business empire. Within 30 years Bill Gates and Steve Jobs will still live by the grace of their successful companies and foundations.
“Musk deserves a statue in Silicon Valley and lots of respect for his visionary ideas, but don’t judge him on his results. He is the new Tesla after all”, Geert Noels concludes.