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“The political, environmental, and financial headwinds Apple faced during its time to create the iPhone were exponentially more difficult than Tesla's.“

I get that you might not be bullish on Tesla, but do you seriously believe this?

Were you around during the 2008 financial recession?

Major US banks were literally going bankrupt, credit dried up. There was almost no opportunity to borrow money, the stock market was crashing, no opportunity to IPO or perform a secondary offering.

Tesla is operating under one of the greatest, and longest, bull markets the US has ever seen. The great 2011 to 2018 (maybe longer??) boom. Tesla has been able to either secondary-offering, or borrow, roughly billion+ each year, every year, since its IPO.

During recent years, its borrowed or otherwise raised over $2 billion / year.

I was. And all that might even be relevant if you weren't comparing Tesla to Apple.

The iPhone actually launched in 2007, the same year in which Apple generated over $24B in revenue and was sitting on $15B in cash at the end of the fiscal year. In 2008, they did $37B in revenue and ended the fiscal year sitting on about $25B in cash.

The claim that Apple's financial challenges with launching a smartphone were "exponentially" greater than Tesla's, is laughable.

> And all that might even be relevant if you weren't comparing Tesla to Apple.

I'm not comparing Apple to Tesla. The parent article is. And I'm trying to point out how utterly silly the comparison is.

Quote the first paragraph:

> When Nokia people looked at the first iPhone, they saw a not-great phone with some cool features that they were going to build too, being produced at a small fraction of the volumes they were selling. They shrugged. “No 3G, and just look at the camera!”

> When many car company people look at a Tesla, they see a not-great car with some cool features that they’re going to build too, being produced at a small fraction of the volumes they’re selling. “Look at the fit and finish, and the panel gaps, and the tent!”

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This comparison is fundamentally insane, and shouldn't be the starting point of any serious discussion.

You said: “The political, environmental, and financial headwinds Apple faced during its time to create the iPhone were exponentially more difficult than Tesla's.“

I brought attention to this and showed how ridiculous of an assertion it was.

And now you're saying: "I'm not comparing Apple to Tesla. The parent article is. And I'm trying to point out how utterly silly the comparison is."

The other quotes you've added are all irrelevant. You're all over the place. Give it a rest and come back when you have a properly thought out point to make with some evidence to support it.

You did say it was ridiculous, but never proved it. Apple may have had money in the bank but selling a luxury product in the middle of a financial crisis was an up hill battle.

Consumer confidence was at all time lows and disposable income saw the biggest drop since the great depression. People were more concerned about whether they'd still have a job and savings rates upticked dramatically while salaries fell.

Have you looked at Apple's performance during that time period? As I pointed out in my previous post, Apple was sitting on $25B in cash in 2008. Additionally, their annual revenue nearly tripled and their profit quadrupled from 2007-2010. That's not an up hill battle.

All your talk about the economic environment during the recession is irrelevant because Apple had $25B cash in the bank and the iPhone was a hit, even though it was a luxury item being sold during the recession. The massive scale of their business and their overall success insulated them from the larger ramifications of the economic downturn. Tesla is operating in the opposite economic environment today, but they are not as financially surefooted as Apple was during the launch of the iPhone. So, to get back to the point, to claim that the financial challenges Apple faced bringing the iPhone to market were exponentially more difficult than Tesla's, just isn't true.

Yes and making the iPhone a hit is a lot harder when your customers don't have any money to spend.

Nobody is saying Apple couldn't afford the R&D to build the physical phones.

It's not harder when you have $25B in cash to spend on fancy marketing, advertising, promotion etc. Do you not understand how massive of an advantage that is? It effectively makes you recession proof. Additionally, you can look at Apple's financials to see that they had no problem selling millions of iPhones through the recession. In fact Q4 of 2009 was their most profitable quarter ever (up until that point) which was the tail end of the recession. It was a radically successful launch by all metrics.

Any way you look at it, launching the iPhone, given Apple's cash, marketing muscle, and hw/sw expertise, wasn't as challenging (even in a recession)as bringing an electric vehicle to market and it by no means was "exponentially more difficult" – in the words of the OP.

I don't have anything more to add to this discussion. I think it's clear that the OP's claim is incredibly uninformed and wildly inaccurate.

> It's not harder when you have $25B in cash to spend on fancy marketing, advertising, promotion etc. Do you not understand how massive of an advantage that is?

Come on. Its Mr. Musk's decision to make a company take advantage of debt markets instead of waiting for a few years for the Roadster or Model S to make some profits. Tesla's current financial situation is 100% the decision of Musk.

Musk chose debt and stock offerings because he wanted to take advantage of bull market conditions. He's received something on the order of ~$10 Billion from investors, either from the debt market or the stock market (IPOs or Secondary offerings).

If Tesla were to try its strategy of "IPO to get a ton of money each year, every year" during any other time in US history, it would have literally come across a recession and run out of money.

The Gigafactory was literally built on top of debt and stock offerings. Tesla never had that money to begin with.

come on, apple was never suffering under financial constraints like tesla has been. That is just a sill comparison.

"Suffering" ???

Tesla has received $1+ BILLION a year over the past few years from the stock market, and roughly $3.8 Billion from the debt / bond market so far.

A lot of companies would be able to survive if the market magically came up with $2 Billion / year for that company to spend every year.

You might say that its Musk's advantage that he's cultivated the cult of personality. And you'd be correct about that. But I wouldn't call Tesla's financial situation to be "suffering", not by a long shot.

The correct description is "wasted". Musk WASTED the tons, and tons, and tons of money he received from investors. He's not cash flow positive, even after all of these billions of dollars have come in.

$0.813 Billion in 2013: https://www.thestreet.com/story/11924981/1/elon-musk-invests...

$2 Billion in 2014: https://www.ft.com/content/2f2387a0-a00a-11e3-9c65-00144feab...

$0.738 Billion in 2015: http://fortune.com/2015/08/20/tesla-stock-sale-cash/

$1.45 Billion in 2016: https://www.cnbc.com/2016/05/20/tesla-raises-146b-in-stock-s...

$262 Million Stocks + $850 Million Bonds in 2017: https://www.investopedia.com/news/what-market-thinks-about-t...

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Etc. Etc. The financial markets have been very, very kind to Tesla. Any failures on Tesla is 100% Musk's fault at this point. No other company raises billions of dollars every year under normal situations (where "normal" is defined as, any period outside of the 2011 to 2018 bull-run of the current market)

This comparison is flat out ridiculous. Jobs returned to Apple 10 years before the iPhone and launched a series of successful and profitable products: iMac, iPod, and iTunes leveraging an existing rabid fanbase, and putting them in prime position to design and launch a category changer like the iPhone. I'm not particularly impressed with Musk or Tesla, but you can't compare bootstrapping an automobile company to leveraging a decades-old vertically integrated consumer electronics behemoth to disrupt UX in a $1000 hand-held device. The financial crisis was probably the optimal time to launch such a product.

They are two different companies. Apple had its share of turmoil during the 30 years it was a company prior to the success of iPhone. For instance, having around six months of money left to burn when acquiring NEXT in 1996. Tesla has been around for ~15y. Sure, tech cycles are getting shorter, but still, it's a long slog over many years to scale any vertically involved hardware company.

I mean, if you want to compare the current state of Tesla to the state of Apple in 1996, I think that more or less solidifies my point?

Tesla cannot be compared to the 2000-era Apple company. There are simply too many differences.

Then we agree.

Do you know how to read a financial statement? They have 26% gross margins on the Model S. Model 3 just turned gross margin positive in Q2. Your response is boring and boneheaded. Next.

I'm not talking gross margin. I'm talking raw and simple profits. If I wanted to talk about margins, I would have said "margin" in my post earlier. I said profit.

To be more specific, how about the words "Cash Flow Positive" ?? In any case, Tesla has only had ONE profitable quarter since its IPO, and has never had a profitable year.

Tesla is not a company that wanted to nor needed to be cash flow positive until now. They raised cheap capital and applied it to grow their business faster than bootstrapping would have allowed.

Which is why the point about margins is so crucial. No one anticipated such great margins on an electric car. The tear down analysis demonstrates that the $35k standard-range Model 3 is not a unicorn, but will be profitable to make and sell once the production lines have any slack at all at the higher price points.

But the point of tesla is they are making investments long term. Yes, they definitely need to produce those new products that justify all that money (like the model 3). They don't have dozens of different car products where they can trade off their current cash flow against future development costs - they have had just the S & X. How can you evaluate any company if you can't think about these separately - how much profit they make on one widget, and how much they spend on developing infrastructure and the next things, how much value will that have.

> But the point of tesla is they are making investments long term.

What definition of "long term" do we have here?

How many years did it take for Apple to become profitable from the iPod? The iPad? The iPhone? It was profitable throughout all of those years.

That's the very point of technology gadgets: they don't require huge upfront costs like Tesla. Apple does have innovations (see their custom ARM chip, which is consistently superior to Snapdragon in benchmarks every year). But even with the billions of dollars needed to custom-make an uncore from scratch, Apple remains profitable.

https://www.statista.com/statistics/267728/apples-net-income...

https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc...

Since 2005 (and maybe earlier), Apple has made a profit every quarter. Since 2009 (before Tesla's IPO), Tesla has NEVER made a profit.

Its completely insane to compare these two companies. They're run completely differently, aside from both being California based.