Investing

Elon Musk: Tesla Shorts, and Why Big Companies Struggle to Innovate

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In 2011, Tesla CEO Elon Musk came to Motley Fool HQ to talk about the car industry, the struggles that come with innovation, and why big companies have a hard time adapting.

This is a segment from that interview.

Musk: Generally when I told people who short their shares that they’re not shorting it because of anything they know about Tesla, they’re just shorting it because of historical precedent. Its like oh, there hasn’t been a successful car company in ages, so Tesla is not going to succeed. Well how about looking at the fundamentals, you know? The thing is that whenever there’s a big change in technology, whenever there’s a big technology just near to you that’s when opportunity arises in industry.

And if you look at, say, like the computer industry we had, IBM was extremely dominant in mainframes. And everyone thought, they’ll just be extremely dominant in PCs and everything. And they weren’t, they have a hard time when there’s a sharp change in technology, gradual changes they can deal with but sharp changes they tend to not do well with. And you can look at the internet and say, well, why wasn’t Microsoft, the leader in search? Why don’t they beat Google? Why didn’t Google beat Facebook? It’s just tough to deal with big technology change. And what we’re seeing in the automotive industry is the biggest technology change since the moving production line, and the entire Powertrain is changing.

Part of what Akio Toyoda is trying to do with his company is try to push it to be more entrepreneurial. He remembers the days of his grandfather when it was very entrepreneurial. Toyota made sewing machines in the 30s, and then they just decided one day they’re going to make cars. And people were like, they can possibly make a car that anyone would want to buy. Then they made a great car. But they were very entrepreneurial, and Akio Toyoda’s concerned that they’ve become too convinced in their own rightness. And that’s part of what led to some of the issues that he came in to fix. Akio Toyoda is a really great guy by the way, Toyota is really fortunate to have him at the helm there.

He wants to push his team to try new things, because when he went to his team and said, hey, what about electric vehicles? They said it couldn’t be done. And so it’s like, okay, so let’s see if this little company Tesla can do it. And we’re doing it now, like, oh, okay, I guess it can be done.

Bill Mann: Why don’t you think they could do it? They tried for a long time, they put millions of dollars into developing the technology. What’s different?

Elon Musk: I think they will be able to do it over time. But it’s just not very quick. The mindset of trying something new and radical was just not there. People have written books about this, like crossing the chasm and innovators dilemma and all that, about how it’s difficult to do radical innovation at a big company, because if you try to do radical innovation and you fail, you get a huge ding. And also-

Bill Mann: Especially if you have something to protect to start with.

Elon Musk: Yeah. Right, exactly. You’ve got to decide that you’re going to cannibalize your existing business, and take a big risk, and deal with all the issues that inevitably arise when you’re trying to push a new technology. And not get fired along the way. It’s pretty hard.

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24 Comments
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Robert Dunfee

24 Comments

  1. Tatsuo M.W. Nakata
    July 13, 2021 at 10:25 pm

    Aint no body watch this!

  2. Bichon Jerome
    July 13, 2021 at 10:25 pm

    Well yeah, that's what we expected

  3. Bo Herrera
    July 13, 2021 at 10:25 pm

    Hahae so good

  4. Anita Kellum
    July 13, 2021 at 10:25 pm

    Dude, I don't usually comment, but let's just say I had to like and comment this video!

  5. Tien Vu
    July 13, 2021 at 10:25 pm

    A natureza é maravilhosa

  6. Mitchell Blain
    July 13, 2021 at 10:25 pm

    wow, very cool !

  7. Kennedy Harrison
    July 13, 2021 at 10:25 pm

    Dude, I don't usually comment, but let's just say I had to like and comment this video!

  8. esu fonville
    July 13, 2021 at 10:25 pm

    I think i just felt in love

  9. Londa Reynolds
    July 13, 2021 at 10:25 pm

    I think i just felt in love

  10. Gabriel Mylon
    July 13, 2021 at 10:25 pm

    GooooooooooD Job

  11. Margie Dullavin
    July 13, 2021 at 10:25 pm

    I think i just felt in love

  12. nabiddy badiddy
    July 13, 2021 at 10:25 pm

    Gotta say I love the disclosure policy at the end, awesome to see good ethics 🙂

  13. Nolan Abell
    July 13, 2021 at 10:25 pm

    Beautiful, I think that people that short Tesla are trying to be a contrarian and not do the obvious thing. Investing is simple and the obvious choice is usually the right one. Trying to be “unique” by doing the opposite of what most people do is a losers game. Shorts will wake up soon

  14. Nikola Tesla
    July 13, 2021 at 10:25 pm

    very wise words

  15. Tek Powers
    July 13, 2021 at 10:25 pm

    Ponzi scheme

  16. PassionPlanet
    July 13, 2021 at 10:25 pm

    Steve jobs brought me here

  17. WhiteTigerYT
    July 13, 2021 at 10:25 pm

    Show his face!

  18. Investing Education
    July 13, 2021 at 10:25 pm

    Amazn, googl and FB r not struggling to innovate. A good CEO is impt for a healthy innovation culture

  19. rough rough
    July 13, 2021 at 10:25 pm

    Wheres the full podcast!?!?

  20. ValentinoE88
    July 13, 2021 at 10:25 pm

    If americans dont stop shorting and support Tesla, Possibly the greatest innovative American company to actually lead us in to the future, we will fall behind as a leader in the world. The US gov is already selling oil reserves knowing demand will fall drastically within 10 years. The whole saudi/iranian oil concern was staged to raise prices so it can be sold at a premium before its inevitable downfall. Unless we can push enough propaganda to nuke china which we are being fed alot and quite successfully, They will come up as the next world leader which is what all this anti-China rhetoric is for.

  21. Nico P
    July 13, 2021 at 10:25 pm

    Tesla, the most American car on the road, makes the best cars ever manufactured by man.

  22. JR
    July 13, 2021 at 10:25 pm

    Excellent video!!

  23. Jenny Johnson
    July 13, 2021 at 10:25 pm

    Super nice work. Love the Motley Fool!

  24. NuclearNow_SolarLater
    July 13, 2021 at 10:25 pm

    Lol MF getting into the tsla bandwagon and claiming they were all along, without having to throw Nick Sciple, Brian Feroldi & Jim Mueller under the bus.