In just 10 years, Tesla Motors has become a symbol of automotive excellence and an iconic company for risk-taking and determined entrepreneurs everywhere. But according to director and early investor Ira Ehrenpreis, it wasn’t always that way.
Ehrenpreis is a general partner at Technology Partners, a Palo Alto, CA-based venture capital firm. He specializes in cleantech, and he has been with Tesla almost from the start.
Ehrenpreis delivered the keynote speech this week at the National Renewable Energy Laboratory’s annual industry growth forum in Denver. The federal laboratory runs the conference to bring together startups, entrepreneurs, researchers, and investors.
You can read Ehrenpreis’s thoughts about the state of the industry in this Xconomy story. He also spoke about his time working with Tesla and its struggles and successes.
A lot of people thought Ehrenpreis’s and Technology Partners’ bets on Tesla were misguided—if not crazy—and they weren’t afraid to say it.
“When we made our first investment in Tesla, the pundits said the idea of investing in an EV [electric vehicle] company was completely preposterous. General Motors couldn’t make EV work, so nobody else could either—that was the conventional wisdom of the time,” Ehrenpreis said.
Tesla co-founder and CEO Elon Musk—an entrepreneur with no experience in the auto or cleantech industries—and his team had to overcome skepticism and, in some cases, ridicule. Tesla had to prove its vision for an electric vehicle was technically feasible, and then had to bring it to the commercial market. That meant Tesla’s cars had to be vehicles people wanted, meeting performance and safety standards and dispelling doubts about performance that have plagued electric cars. Finally, Musk and his team had to build a company that could last.
They’ve succeeded, at least so far. Tesla vehicles have been the first unanimous pick for Motor Trend Car of the Year in more than six decades. They’ve earned the highest rating ever from Consumer Reports. Government testers have given it the highest safety scores.
“It was a transformational innovation, it was a breakthrough technology, that’s begun to upend this very cul-de-sac and challenge the status quo, and more importantly started to change some of the incumbents’ thinking,” Ehrenpreis said.
But the accolades and achievements go beyond the vehicles. Tesla is thriving as a company (NASDAQ: [[ticker:TSLA]]), and for now it is the darling of Wall Street and the business media.
Tesla has also made good on its promises to U.S. citizens, repaying a massive $465 million loan from the federal government nine years ahead of schedule. Ironically, the company’s done so well some commentators complain the government should have demanded a better deal and received equity.
It’s an amazing record for a company with goals that many people found overly ambitious, or even laughable. Ehrenpreis showed everyone in the Tesla family is proud of its achievements, but he didn’t want to place Tesla in the pantheon of legendary innovators quite yet. The company has reported profits that have left some analysts skeptical of its accounting methods, and the occasional spectacular accident such as a recent fire always gets attention.
Still, the company can teach startups a lot.
“As an investor and a board member of Tesla, I’ve had the privilege of seeing the successes, but I also saw the challenges up close, particularly in the early days,” Ehrenpreis said. “While it’s premature to give Tesla a place among some of the great companies in some of the great industries I’ve mentioned, there are nonetheless some really important lessons I take into other ventures I’m involved in that really defined some of Tesla’s early successes.”
—Innovation matters. Tesla could have taken shortcuts that would have been cheaper and seemingly safer, but that would have led to an inferior product. It also would have stifled the company’s culture of innovation.
“Tesla built vehicles from the ground up. The car isn’t just simply