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Comment by davedx | Hacker News Reader

> Even with hindsight, funding Tesla was a bad decision for investors return wise.

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!

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Investors don't operate charity funding to accrue value for the mutual collective benefit of some global system.

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.

But that's not how VC funding works! Many to most of their investments will fail - that's completely normal. In the case of Tesla, that was also true - and then some of them (e.g. his transformers) resulted in massive wealth creation for Westinghouse's companies at least.

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...

>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!

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 point was Westinghouse benefited immensely from Tesla's patents. His AC transmission network wouldn't have been possible without them.

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?

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