For sure, there's a wider question about how society can reward more than just the ability to return profit. That would help with a lot of today's issues, like climate change, but it's a much bigger issue than just one of where VCs put their money.
But yeah we shouldn't put onus on VC to make society better. Government should invest more in research which benefits society.
I probably shouldn't have used climate change since it's often a controversial issue, but to keep down that path- Public transport would really help climate change but VC likely to invest in that heavily because return wise it isn't comparable to things like selling electric cars.
Again, I'm not saying that as a criticism of VC specifically, but more making the point that the way our society rewards talent or ideas isn't an exact match with what benefits society the most.
How is it overinvested if no one (government, companies, you name it) come even close to "solving" climate change??
There's a very clear benchmark (CO2 increase) and we're failing spectacularly year-on-year!
The two arent related in any way. Overinvested means that most current investors will lose money. It says nothing about the progress toward climate change
He invented the brushless motor and types of transformers that were instrumental to building Westinghouse's empire. When Westinghouse was running low on money Tesla tore up the patents he'd sold to him to save the company.
Tesla was definitely not a "bad decision for investors", the ROI for his inventions is some significant fraction of the economic value of the global electrical system.
But yeah, a couple of his projects failed at some point. Surely a terrible investment!
Investors MUST accrue ROI to their own account and/or that of their own investors, the limited partners. If they do not, they're done. Going bankrupt personally while providing huge value to the world at large is a TERRIBLE outcome for any investor.
Tesla invented great things that provide huge positive ROI to the global electrical system, yes. Nonetheless, giving Tesla 150k was a rather poor investment for JP Morgan. If Morgan had made many more such bad investments, he'd be bankrupt, and unable to fund any further value for anyone.
JP Morgan understood that as well as anyone. Venture capital is a numbers game.
The world is full of examples of founders whose first few companies failed and they then went on to start companies that were successful. The very nature of the US's system that allows failure is why it has such a booming startup ecosystem...
I feel like this is soo close to getting it. Yes, for those investors it was a bad investment. Their goal isnt global economic value and the success of other projects isnt a consolation.
My second point was not every investment in a founder will yield a huge result - many will fail. It's a game of numbers, and just because some of Tesla's projects didn't work out didn't mean he was a "terrible investment".
Does that make more sense?
Tesla made the rounds in New York trying to find investors for his system of wireless transmission, wining and dining them at the Waldorf-Astoria's Palm Garden (the hotel where he was living at the time), The Players Club and Delmonico's. Tesla first went to his old friend George Westinghouse for help. Westinghouse seemed like a natural fit for the project given the large-scale AC equipment Westinghouse manufactured and Tesla's need for similar equipment.
Tesla asked Westinghouse to "…meet me on some fair terms in furnishing me the machinery, retaining the ownership of the same and interesting yourself to a certain extent". While Westinghouse declined to buy into the project, he did agree to lend Tesla $6,000. Westinghouse suggested Tesla pursue some of the rich venture capitalists. Tesla talked to John Jacob Astor, Thomas Fortune Ryan, and even sent a cabochon sapphire ring as a gift to Henry O. Havemeyer. No investment was forthcoming from Havemeyer and Ryan but Astor did buy 500 shares in Tesla's company. Tesla gained the attention of financier J. P. Morgan in November 1900.
Morgan, who was impressed by Guglielmo Marconi's feat of sending reports from the America's Cup yacht races off Long Island back to New York City via radio-based wireless the previous year, was dubious about the feasibility and patent priority of Tesla's system.
In several discussions Tesla assured Morgan his system was superior to, and based on patents that superseded, that of Marconi and of other wireless inventors, and that it would far outpace the performance of its main competitor, the transatlantic telegraph cable. Morgan signed a contract with Tesla in March 1901, agreeing to give the inventor $150,000 to develop and build a wireless station on Long Island, New York, capable of sending wireless messages to London as well as ships at sea. The deal also included Morgan having a 51% interest in the company as well as a 51% share in present and future wireless patents developed from the project.