Elon Musk Had a Deal to Sell Tesla to Google in 2013
bloomberg.com
bloomberg.com
http://www.wolframalpha.com/input/?i=31+2008+dollars+in+2015...
Shit, a self-driving Tesla, now that is a car worth saving every penny for...
Don't get me wrong, autopilot is super cool and really useful. The autopilot features that are currently enabled in my Model S are wonderful, and I can't wait until they're all there. But they won't be even close to full self-driving. All it will do is maintain speed intelligently based on the car in front of you, automatically stay in your lane, and switch lanes on command. It won't switch lanes on its own, it won't stop at stoplights, it won't make turns for you, or do any of the hundred other really difficult (for computers) things that are part of everyday driving.
Relevant: http://www.asymco.com/2015/02/23/the-entrants-guide-to-the-a...
I'm pretty sure the opposite has also been seen [0]; what's the basis for concluding a Google acquisition would have put Tesla closer to the "never heard from again" side?
[0] Google's acquisition of Android, for instance.
Google seems like a particularly bad acquirer for this as well, since they have no relevant expertise, market position, interests, etc. They don't manufacture anything, they don't sell physical products, they don't even really sell nonphysical products other than ads.
Look at what happened with Motorola Mobility, for example. Google paid a ton of money for it, basically dicked around for a couple of years with it doing nothing of note, then vomited it back up again. Thankfully Motorola Mobility was not terribly remarkable to begin with so it wasn't a big loss.
Google fairly overtly bought it for the patent portfolio and had the plan to resell most of the rest from day one. The thing Google was buying was the patents, the rest of Motorola Mobility was packaging.
Contrast with Android, YouTube, or anything else where Google wasn't buying patents or doing an acquihire, but actually buying a company for a product.
(Google probably looks worse in some respect for products because it has the kind of reserves that let it spend money for big acquisitions when all it wants is an acquihire or some resource like Motorola's patent portfolio and doesn't have any plan or concern for the main product, but I think that's an indication that it is bad when it actually is buying for product.)
I don't know how big a deal the self-driving cars thing is at Google, but a giant car/battery company sounds pretty complementary to that.
Motorola went from phones I would advise everyone to avoid to phones I actually advised family members to purchase in that time. They're basically the low cost nexus at this point.
If that was the case and with Googles money and power, they might had a better chance of creating a better car as well as adding self driving in the car much faster if we look at google car. ( offcourse that is still years away )
I also find that eight-year guarantee to be rather unimpressive. The Model 3 will be the true start of Tesla's game changing, and the deal was basically that Tesla could be broken up or killed once the Model 3 showed up.
This deal was only on the table because Tesla was in crisis. The moment they recovered, it went away. Clearly they thought that they could do better on their own than they could if they were part of Google, and I see no reason to disagree.
Funnily enough, having loads of cash doesn't always result in a better product. The awful products that cash-rich companies have churned out in the past decade are too numerous to mention (including several examples from Google).
Also, it's not obvious that a software company can build a great car, or a car company can build great software. User-facing car software has been uniformly awful. Google's self-driving car prototypes, while cute (in the so-ugly-its-cute way), aren't particularly inspiring as automobiles. This separation of concerns lets both companies focus on their strengths (which can be combined down the road, as long as the self-driving technology becomes licensable). Although I imagine Tesla will still build its own self-driving technology, and Google will build more buggies. But even that's preferable to acquisition, because it allows cross-pollination of ideas from two separate entities.
There would be a short production run of small cars with cheerful color schemes (not dissimilar from Car2Go styled smartcars) sold as "development" units. Car journalists would have a difficult time getting their hands on them, but google woud ensure that SF tech bloggers would get them. These cars would stand out in public in all of the wrong ways, and soon anyone driving one would be labeled a techie asshole. Future revisions would never materialize.
A. Musk has stated self-driving cars would be essentially finished by this summer, and only the laws and policies are lagging behind and keeping it from being fully released.
B. "How much more they could have been"? They're expanding at a ridiculous pace and are on-track to release a main-stream affordable car within a few years, something the established automakers have evidently been unable to do at all despite all their resources and established infrastructure.
C. "A better car"? What exactly are you comparing it to? Objectively the Model S has gotten the highest scores ever on nearly every single survey it's been part of. If you have a personal quibble with it, don't make out like that's the car's fault. If you're not happy with it "merely" being the best car on the market, I really don't know what you're looking for.
Even a few years would be pretty cool. I hope he's right!
TL;DR name one company Google acquired where they didn't kill that company's awesome product within a couple years, regardless of how awesome / market-leading / profitable it was.
It's not yet bad enough to say that they killed YouTube, but I'm afraid they might get there.
But more than half the companies in that range I don't recognize, so maybe their product is still around (or is fully functional, but only within Google Docs or something).
You're also ignoring the fact that many acquisitions wouldn't have survived without being acquired and their products would have shut down (or "pivoted" until they were unrecognizable). Tesla obviously wasn't in that category, but that actually makes it harder to compare to historical data, as few companies really parallel it well.
[1] http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...
Presumably you mean if it's shut down it will be a great example, but right now it's actually a great example of the opposite: improving the products of the acquiring company while keeping the acquired product going. You could put up more walls between the two, but at some point that becomes just investing, not acquisition.
Put the Waze acquisition onto Tesla. Google buys Tesla just as the Model S is coming out, and starts using the technology to benefit their own products. Which products it would benefit I'm not sure, but maybe they improve the batteries for Android phones, or start using the Model S as the testbed for their self-driving cars, or something. Meanwhile the Model S stays as it was in 2013, with some minor improvements. This would be a terrible outcome!
I'm not arguing that a Tesla acquisition would have been better than the outcome we got, there's almost no way it would have been, but I would argue that that would be true for any company doing the acquiring. Acquisitions are just really tough for the identity of a product by their very nature.
Well then, we agree. I'm not saying, "Thank goodness Google didn't acquire them." I'm saying, "Thank goodness they weren't acquired" and it just happens to be in the context of a story about Google doing the acquiring.
I can't think of any company that could have acquired Tesla where the outcome would have been favorable for the things I personally want. There were rumors going around a while ago about Apple buying them, and my reaction was the same there.
She used to tell me stories of how she was constantly asked to work on different teams, doing totally unrelated tasks. She started as a project coordinator but one day she was asked to make sales calls. She also worked on delivering cars as well as give tours to the Tesla factory.
I hope they pull it off - I will buy one of their mainstream cars.
http://en.wikipedia.org/wiki/GM_Financial
The old GM had sold a 51% stake of it's finance corp to Cerberus:
http://dealbook.nytimes.com/2012/08/21/profits-in-g-m-a-c-ba...
But the US Treasury took majority ownership in the bailout.
That entity is now Ally:
http://www.economist.com/news/business/21648681-announcing-c...
Being an AI company is what's pushing them toward the automobile industry. It's easier for Google to get into manufacturing cars than it is for the traditional automobile makers to develop a competency in AI on Google's level.
It's actually not that different than what's been happening with mobile. Google has gotten better at e.g., UI design faster than Apple has been able to replicate Google's competency with the cloud.
The things Google is good at are generally harder problems than the things that they're weaker in. AI is the most important of these.
http://www.businessinsider.com/the-new-york-times-now-gets-m...
Newspapers got the majority of revenue from print ads and classifieds instead of subscriptions. Nevertheless, newspapers were seen in the business of "delivering news". Advertising was the enabler but it wasn't the newspapers' "core competency".
Television networks get most of their revenue from commercials. Nevertheless, they are seen as being in the business of delivering tv shows and movies. Yes, they are also a conduit for advertising but "advertising" isn't what the employees of NBC/ABC/CBS are actually good at.
Yes, in both cases, advertising is the major "revenue" that enables the businesses, but it's not what they actually do. Likewise, saying McDonald's is a "real estate company" can sometimes be an interesting business conversation but on balance, it's still more useful to everyone to say that they're in the business of selling food. They flip burgers much more often than they flip properties.
I think it's best to view Google Inc as a data information company. They are among the top-10 entities in the world to apply algorithms to petabytes of data. At the moment, advertising is a huge enabler of that activity but that shouldn't divert us from understanding what Google thinks they are actually good at.
There's a critical distinction between an advertising agency like Omnicom Inc (that uses technology) vs a tech firm like Google Inc (that uses advertising). Lumping them both together with the meme that "Google is an ad company" doesn't make much sense.
I actually like the "McDonald's is a software company" lens– the idea being that they have miles of code describing how humans are to interact with one another, how to handle disagreements, how to make french fries– all with staggering precision in detail.
More realistically I guess they're in the business of selling convenient-familiar-cheap-ish-food. The "real estate" elements and "software" elements help to achieve winner-takes-all effects re: convenience and familiarity.
Most employees at Newspapers are writers working on stories (journalists), we don't say they are ad companies.
There's a difference between "doing tech" and what Google does that puts them in a whole other category like Microsoft, Apple, IBM, etc. Are you seriously trying to say that most companies "doing tech" are doing the equivalent of Chrome, Android, Gmail, Maps, YouTube, and Search?
This is the kind of negative, pointless comment that the new HN policy warned about. It's regurgitating a meme that has been posted hundreds of times, it's designed to demean and dismiss the good work of thousands of engineers and researchers working on hard problems.
Non-advertising projects get lots of attention, but below the surface is a hulking mass of engineers supporting new ad formats, new ad optimizations, accounting systems, analysis tools, ad targeters, advertiser support front-ends, etc.
Corollary: If you go to work for Google, the odds are that you will be writing code to support advertising.
(I could be wrong--maybe it's less than 50%. But it's a lot, and my guess is that your "vast majority" is a much less educated guess than mine is.)
If you're trying to say someone working on Bigtable, Spanner, or other infrastructure is "direct related to advertising", I disagree. That infrastructure benefits all Google products, not just ads.
If I add up FTEs for Cloud, Search, Maps, Android, Chrome, Apps, Photos, etc is a several times multiple of those reporting to Ads related VPs.
Also, cars are basically software at this point. Especially tesla.
Really? A lot of the value add is software, but there is still a ton of hardware that goes into a car.
People who immerse themselves in the software world too deeply gain a very distorted view of the world.
No, not at all. In the case of cars with ICE the biggest challenge is still mechanical -- mostly related to environmental protection standards. To keep a BMW M5 Euro5 compliant you have to go a _long_ way. If you mean that you use software to design these cars then well, yes, I can agree. But the onboard software is still a very-very small part of the challenge.
(Ask somebody who's actually in the car industry, especially if he's in the higher-end market, like someone from AMG, BMW M, etc.; just the cooling of these things is an art.)
In the case of Tesla, things are slightly different, but not that much. The big thing here is the reliable electric motor, which -- also according to Tesla marketing -- is simple compared to an ICE, but in reality it's a big challenge to manufacture because high-powered electric motors need to be manufactured with incredible precision, otherwise they break quickyl and often.
to all armchair engineers, you can try out how to create low pollution high power engines in this game: automationgame.com
For example, VW will predictably do really well in the next 10-15 years as they've invested tons of money into optimizing their manufacturing; they use the same basic modules for a large VW and a small Seat.
Why not go the Apple approach - provide a small number of models that satisfy a pareto-split percentage (80%+ including the more profitable markets) and leave the remaining percentage either to aftermarket partners or competitors?
That's the approach Tesla has taken, focusing primarily on the highest margin portion, and filtering down.
Tesla isn't planning to be a "big player in the automotive industry". They plan on creating new product market, which just so happens to be compatible with the existing infrastructure. The incompatibilities (i.e., no ICE/gas) is a feature.
For the same reason that car manufacturers offer different models for the same product (personal transportation): like the A, C, E, S class (in the case of Mercedes). These classes allow a producer to differentiate between consumers with different spending power. If you offer just one product at one price you can't capture the whole market (ie. you sell too little / too cheap to rich people and can't sell to poor people).
Apple recently started going this way as well with the introduction of the Apple watch. If you look at all the models and options they can cover a very broad price range. Differentiating between the watch sport, the watch and the watch edition. Add to this the different sizes (38MM and 42MM) and the different bands and you get a very nice price continuum between 349$ and 17000$.
Add in the fact that it's not millions of variations (really only a couple dozen now). Tim Cook famously said in some conference a while back that all of what Apple sells can be fit in on a table in front of him. I don't think that guiding vision has really changed.
Furthermore, it's not clear if the Apple watch will be successful. I wouldn't use it as a guideline for a successful product strategy - yet.
Usually that's what thing that differentiates >=premium cars from the rest. If you buy a Skoda, you get packages. If you buy an Audi (same conglomerate), you can customize everything as you like.
And work on more charging stations and battery life. Here at the office the guy with the Tesla is constantly mocked cause he couldn't even make it to the team building event, less than a 3 hr drive away (mainly by the guy who had to borrow his mom's Clio to buy some loudspeakers that didn't fit in his own sports car, but that's a different story ...)
Why on earth you'd spend a hundred grand on a car that can't drive more than a couple hours is beyond me, even if it has a big-ass iPad inside.
I've had my car in Austin for a year and a half now and never once been concerned about power, never once been to a charging station (and never been to a gas station). I would suggest that most people aren't regularly taking giant road trips.
The touch screen is not even that awesome (no tactile response), it's less than 1/100th of what makes the car great to own / drive.
Also, there are many people who take long road trips far more frequently and for whom range is a genuine issue (between my vehicles, I clock about 30k miles a year--mostly pleasure as I live only a mile from my job.) I don't begrudge those who can make an EV work for them, but it won't for me.
Yes, that is true. People will need different ways of commuting based on what their needs are.
> The problem I have with this argument is that is doesn't eliminate the problem, but merely removes it a step.
Also true, but what is the problem? Again, you need different ways of commuting based on what your needs are.
No one suggests taking cars everywhere. Some people like road trips, but many people fly when the distance is too far and their time too short.
Likewise people in New York take the subway, elsewhere people ride their bikes. No one suggests the fatal flaw with those is that you can't take them to the next state over. You just rent a car or take a bus, or do whatever, or, if you really need it, you pay a decent sum of money (in New York, at least) to keep a car in a parking space for when it is needed.
We're already in a no single size fits all situation, so it's not clear what the problem with that continuing is.
After depreciation and gas, might be cheaper to rent a car for them too.
An ICE vehicle has over 10,000 moving parts.
A Tesla has 20, or so.
Source: http://answers.google.com/answers/threadview?id=387514
So tell me again how "cars are basically software at this point." Other than Tesla, I mean.
This "20 moving parts in a Tesla" meme seems like a really tilted interpretation of the actual numbers. A Tesla certainly has more than 20 moving parts, and an ICE engine certainly has less than 10,000.
Add to that Seatbelts, Climate control, door/window/lock mechanism, headlight adjustment, etc.
Might not get to 10000, but it's certainly much more than 20.
Yes, the "20 moving parts" seems like quite a bit of an underestimate, now. Would love to know the actual figure. It is certainly FAR less than a typical ICE vehicle, which is a welcome reduction in complexity.
This. Google and other companies at its scale don't need to worry too much about focus. They can just use the excessive amount of revenues made via software to throw resources at solving global problems and turning scifi into reality.
There has never been an attempt at a television series depicting Star Trek outisde Starfleet, correct? I mean, something created by the makers of Star Trek.
Check out this video by Hugh Herr about bionics and watch how artificial limbs give people dignity and freedom and joy: https://www.ted.com/talks/hugh_herr_the_new_bionics_that_let...
Minority report's mistake is to assume we'll use old-fashioned police with new tech. But new technology allows us to change society in unimaginable ways.
That's a trade-off that a lot of people are uncomfortable with, because sometimes the technology gets it wrong. And innocent people end up on the no-fly list, arrested, tracked, etc. Or worse, the system confuses political activism with actual criminality, and ends up protecting the status quo instead of just enforcing the law.
I haven't seen Minority Report for a while, but I remember that being a big theme in that movie as well. Wasn't that the dilemma faced by Cruise's character? Go to jail to protect the system, or stand up and admit it is flawed.
Is it possible to build a new non-ad-supported software business that brings in $60 billion a year in revenue? Maybe. And I'm sure Google's trying.
But it could be that their best bet is to invest in areas where the potential rewards are enormous and few others have the resources and organizational will to invest in.
The strategy you outline, and that Google is taking, smacks of desperation, and sends two signals to investors 1) the ad business is declining and 2) the company is desperately trying to find something else that works. However this is based on a false premise. Advertising is not going away. I don't see other media companies making cars -- instead I see them trying to work out new business models in their core area of competence.
I suspect that much of this is founder driven. It's often the case that founders don't really like what their business has become. In Googles's case they want their legacy to be more than ads, so they are throwing money at vanity projects. These projects generate good press, and satisfy their ego, but in the real world they have little chance of success, and little hope of returning much to the company. For example, Google Glass.
2. Not sure how displaying notifications and having a camera with some basic voice recognition is that big of an advantage right now for a smartwatch. Maybe I'm missing something big, but it doesn't seem like Glass did anything that could translate to a smartwatch that smartwatches don't already do better than Glass. Also, they already have Android Wear.
I'm pretty sure they discovered/made things they could leverage with regards to integration with apps/smartphones and voice interaction. They did a lot of work with interactions involving very pared down and minimal visual information. Also, it doesn't have to stop with a smartwatch. What if they had an in-car HUD as well as a background service running on a smartphone that could leverage the HUD, the watch, or any enabled and linked display device? For example, what if he whole system could figure out I was in the living room, then enable a Glass-like interaction through the media PC+remote, with optional voice? (You'd have to activate the voice, of course.)
Re: camera -- I can see lots of potential for far more discrete devices and telepresence devices, especially in corporate and government environments.
Google's core area of competence is not advertising, advertising is just the means which, so far, has been most efficient to monetize their core competence, but its also a means which has limited range for continued growth.
> In Googles's case they want their legacy to be more than ads, so they are throwing money at vanity projects. These projects generate good press, and satisfy their ego, but in the real world they have little chance of success, and little hope of returning much to the company. For example, Google Glass.
Viewed a different way, there is a limit to how much money Google can pour into its established lines of business with a good return, and one of the things they use the surplus for is high-risk, long-term, high-potential (but low-probability) return projects. Which it can afford to miss on virtually all of, because if it hits even a couple, it'll provide more return than more sedate uses of that money would, and it can afford to throw money at enough projects that it is likely to hit some winners.
Which is why they tend to become incompetent at taking R&D and turning it into product.
search with ads is their core product, ages old. gdocs for enterprise makes some money.
wave, glass, car - pie in the sky, detached from any real product or monetization strategies.
once search tanks, and the trends in mobile are pointing in that direction, how will google finance their DARPA? PARC did not save Xerox, HP Classic is broken up and gone, MS R&D is another sinkhole with no output...
They can't even handle acquisitions. Android is slipping away, Nest is a disaster, etc.
Focus is really hard once you scale.
>>once search tanks, and the trends in mobile are pointing in that direction
That won't happen any time soon, not even in the foreseeable future.. The nearest competitor to Google is Bing, and that is joke.
>>They can't even handle acquisitions
Which ones? Youtube, Maps, Android ...
>>Android is slipping away
Android is going to put Google in the position Microsoft was in the 90's and early 2000's. Android is running away with the market in countries like China and India.
Google has a lot of time at their hands. Unless they start making very big mistakes over years consistently, they will do fine.
yup, China and India totally will save Google, AOSP is no issue at all.
Correct me if I'm wrong but isn't the only subdivision that makes any significant money for Google the Adwords business?
Although it isn't hard to come up with other ways for them to extract more money out of android, I can't imagine a lack of willing buyers for all sorts of information they could harvest from the billion or so deployed devices.
That may be the interesting bit of cars for you, but hardware is still a pretty important part of cars.
Example: I own a synthesizer and a motorbike from the same company.
In the next decade computing will extend in both directions, to physical and virtual realms. I.e. people will enter computer world and computers will enter our world. Google is trying to be a forerunner in this change. These are the next big form-factors.
Obviously their core competency is giving away the stuff for free and put ads on it.
It looks like they have a very bright future, with classic automakers playing catchup. No need or benefit to sell.
"Please log into Google+ in order to unlock your car."
I am yet to find another high level forum like this. So, to me, those community guidelines are working pretty well.
So, although I sometimes laugh a little with those comments, I prefer them to be downvoted to oblivion so we continue to keep having amazing and informative comments from others.
We can do the G+ jokes on Reddit. Getting to substance requires a certain rigor and discipline that can seem a little draconian, but makes all the difference.
Anyone who has been on reddit for more than five or six years has seen this. It used to be on par with hacker news for discussion. I'm not sure if it has been happening since day one, or if the site reached a critical mass and started going downhill from there. But I definitely saw it happening before the Digg migration.
How doesn't it? When your whole company IP range is flagged for "suspicious activity" and cannot use Google's search, your only option is to suck it up. No appeal process, nothing. You're not even told what "suspicious activity" so you could, you know, fix it.
Contacting Google's support brought the expected results and in the end I had to get a new IP assigned to the machine.
I have no idea how the IP got flagged as an Iranian one. Every geolocation service and whois stated clearly it's a dutch IP managed in the Netherlands. I only found out what was going on when I logged into my normal non-apps gmail account and looked at the activity list (I assumed I have been hacked). It showed one active session: my IP with origin "Iran".
/story time
This wouldn't be that bad, except Google is aggressively anti-user when it comes to this stuff, overriding both your headers and OS settings. (And alt text on things like Google Doodles always show up in the "geo" language, regardless of any overrides. Fortunately I bounce all my Google queries via disconnect, so this doesn't impact my search experience, just other Google sites usage.
Inspite of the fact its main business relies on advertisement, Google believes it is entitled to be a monopoly in technology(any sector).
One could use Thiel's argument of 'monopolies are good' until they are not. Being a monopoly in tech means being the god of tomorrow. In the end, what in the future will not be an outcome of current technology?
Can you imagine if such publications decide to hire their own doctors/travel-agent/etc to resell their service and push their products over others? That is essentially what's happening.