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Tesla, Elon Musk, and Steve Jobs


VAL9000
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As you no doubt have seen, Steve is being memorialized all over the internet right now.  It's great to be able to find so much content on a single person in such a short time.  I've watched a number of videos and read articles about Steve and his legend over the past 24 hours and it's really quite inspiring.  This got me thinking about the huge gap that he has left in the world, and who might possibly fill that gap one day.

 

So far I've landed on Elon Musk, former founder of PayPal and current CEO of SpaceX and Tesla Motors.

 

There are a few striking similarities between Steve and Elon:

- Entrepreneurial history with a strong technical background.

- Focus on disrupting industries with new thinking (p2p payment, rockets, automobiles vs. cell phones, entertainment, computing)

- A flair for the dramatic and controversial

- Most importantly: focus on product.  Have you seen the photos of the Tesla Model S?  It is gorgeous: http://www.teslamotors.com/models/gallery

 

I think what Tesla is doing is very interesting.  It reminds me of Apple circa 2003.  Though this isn't a value investing topic, I'm interested in everyone's thoughts on this.

 

Also, anyone care to nominate others who are or could be future titans of innovation?

 

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They differ in that Tesla got a $465M loan from the DOE, and, to the best of my knowledge, Apple did not.  At least the loan will help provide 1500 jobs (note: sarcasm).  [ftp=ftp://lpo.energy.gov/?projects=tesla-motors]https://lpo.energy.gov/?projects=tesla-motors[/ftp]

 

That said, Musk is smart for taking "dumb" money, although I'm not happy as a taxpayer to be supporting both buyers of $100,000 cars as well as the venture firms invested in the company....

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The first person that came in mind for me was also Elon Musk, but I think he leans probably even more toward the revolutionary side of things, and is less pragmatic than Steve Jobs.

I think Elon Musk will be more like Nicolas Tesla than Thomas Edison.  If you look at the Tesla cars, they are niche items and the sports car is priced too low. He is not making a margin on these products, yet they have limited production and their novelty should allow them to command a higher price (their customers are super rich anyhow, also helps with a premium image).

But Musk wants to become the next GM while his products are entirely geared toward the niche, yet he is not commanding a high margin. I don't know how he will reach his goals this way.

I remember someone telling me that if you want to create a great company you have to either be "the best"(apple, farrari, etc commands premium pricing)  or "the standard" (microsoft, toyota).

Musk is trying to reach mass audience with "the best" products among electric vehicles, and he is not commanding a premium pricing. He is in weird position.

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Tesla's strategy makes a lot of sense to me (if the goal is to make electric cars more mainstream -- I'm not sure if it'll be a good business for the shareholders).

 

When they began a few years ago, electric cars were 1) very expensive and 2) seen as unattractive glorified golf carts.

 

Obviously you can't sell a golf cart at a high price.

 

So they changed the image of the electric car in the popular mind to show that it can be fast and sexy and attractive. This meant that enough rich early adopters were ready to pay for their first car, though the 2008-2009 recession put a serious dent in that plan. But even Bob Lutz of GM has said that it was Tesla that changed his mind about electric cars and that the Volt wouldn't have happened without Tesla. And now Ford, Nissan, etc, are coming out with EVs.

 

Their goal is to start upmarket, and as costs go down and the technology improves, to progressively go downmarket.

 

So their first car is 100k+ and very niche.

 

Their second car, the Model S, is closer to 50k and more attractive to a larger audience (a more practical sedan). They'll also make a Model X Crossover SUV on the Model S platform.

 

Their third platform should be around 30k, which is very inexpensive if you factor in lower fuel costs and potential tax rebates.

 

Like cell phones and computers and all kinds of other technologies, at first it's expensive and doesn't quite have all the features people want, and as time goes on the price drops and the performance increases.

 

I can't think of a better business model for a startup electric car company (and at the time they started, no big car company was planning to commercialize EVs)...

 

Personally, I don't really see a parallel between Musk and Jobs. But I think he could turn out to be a kind of Tesla or Edison (especially if SpaceX keeps going on the way it's going right now -- I mean, he's the lead designer on space rockets!).

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Liberty, good videos.  Definitely an interesting guy with vision.  We'll see how it plays out, but I think he's on the right track with his ventures.

 

Menlo, I'm not sure that a government loan vs. other sources of investment are a significant qualifier for what makes a great tech visionary or entrepreneur...

 

Musk also reminds me a bit of Howard Hughes in that he seems to dive headlong into a bunch of unrelated businesses and projects.  Richard Branson is also like this.

 

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  • 1 year later...

Yeah I agree, he shares characteristics with the legendary entrepreneurs like Akiyo Morita, Henry Ford, or Steve Jobs. He clearly has an eye for good design, and the product looks fantastic. Whether this will be like Apple I suppose depends on the margins....

 

 

Any of many talented value investors here buying these cars? :)

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Guest Dazel

 

 

Careful...

The business matters...apple is a Great business with very little capex...so is pay pal...tesla could be a zero as could space x...the capex is unimaginably high with no cash return. There genius' all over the place the ones that are rich got into good businesses not bad ones.

If you had chanos or Einhorn come out and call this the short of the century as it might be...Tesla shareholders could lose an awful lot of their net worth in a hurry...his brother is selling his his shares.

 

 

Dazel

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