The competition: Why Tesla is an innovator, and Uber a disruptor

Hyperloop: Great innovators move at breakneck speed, but companies must also change their business models

If you can create transportation that simply takes you from Point A to Point B and a minute later has taken you from Point B to Point A, there’s a $22tn market. If your transportation system will take millions of people for the cost of a ticket on the high-speed London Underground, there’s a $168tn market. And, most importantly, if you can get it in three days (if you’re lucky), you’ve got a $360tn market.

Tesla’s Elon Musk is one of those people. Early on, he saw that there were two sorts of consumer behaviour when it came to technology: early adopters who wouldn’t be without it, and the general public, not yet. Rather than wait for the middle ground, Musk decided Tesla’s future lay in the first category.

He made this approach work by making it simple, using only solar panels and a few core components. Tesla’s presentation of the Model S – an electric car – was relatively simple, too, rather than saying it was amazing, but because the hardware hadn’t been designed and manufactured yet, Musk could use marketing speak rather than explaining the tech that made it possible.

Tesla’s Model S has been a runaway success.

Smartphones – which had been taking over the world for a while by the time Musk joined – were already considered by many to be revolutionary for their simplicity, but Musk’s trajectory saw him try to take smartphones in a completely new direction. Taking them further, while he was also building Tesla to enter that same $180tn transportation market. That approach would see the Tesla computer used to design autonomous driving software. Musk had clearly never run a company before, but he clearly recognised that the IoT business could benefit from a carefully designed software stack.

Musk’s vision was initially backed by Goldman Sachs, which saw the company’s overall product as something that the bank could bet on. Goldman ultimately pushed Tesla into a pre-IPO fundraising period, as they saw the potential of Musk’s vision for both sustainability and value. The company could gain notoriety by getting it right, or it could lose funding because it hadn’t. Elon’s gamble paid off when, in September 2014, he found that Goldman was sticking to its promise. Goldman had committed to buying $500m of Tesla stock at the $24 dollar-a-share IPO price, a deal that valued the company at $20bn.

For a bit, it looked like the whole world was going to love Tesla. But as time passed, attention turned to questions about the company’s transparency and transparency. That grew along with questions about Tesla’s money-making potential. Many commentators saw the company as too focused on achieving Musk’s vision of a new kind of mobility when it should be more focused on profitability and the bottom line.

Just weeks after Goldman Sachs announced its investment, Musk took to Twitter to try to calm concerns about the business.

Elon Musk (@elonmusk) This is in response to some very negative press we’ve received lately. Which is totally normal, though, I guess. Just different. Only so much hysteria when the facts are, umm, a bit less hysterical.

Elon Musk (@elonmusk) A short-term shutdown of the Autopilot service today was made necessary to update an important software component, during which time safety remained our primary concern. Here is a press release explaining further.

Tesla was quick to clarify that neither the software update or its shutdown had anything to do with Autopilot itself, and that the company had received a notice from the Federal Motor Carrier Safety Administration regarding the software update. Tesla made it clear that the ban was only a one-time measure and that its Autopilot safety features were still in place.

Musk’s perspective at this time suggested that the Autopilot crash in Florida was a completely isolated incident, and that any PR damage from it would be worth it to get a newer version of Autopilot.

Leave a Comment