Tesla Investor’s Enduring Lessons for Cleantech (and Other) Startups

12/5/13Follow @MichaelXBD

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the replacement of a battery pack in place of a gas tank. It built its cars with an entirely innovative approach across a number of dimensions, whether it was using an AC [alternating current] induction motor to using advanced power electronics or creating a new model for our sales and distribution, or setting up fast charging stations. It was all driven by technology innovation, and perhaps most importantly by ‘thinking different,’” Ehrenpreis said.

—The team, the team, the team. All startups try to get the right people. In Tesla’s case, that meant seeking out experts with backgrounds in the established auto industry and also executive talent.

“Getting the team right was of paramount importance. In creating a new car, it was imperative to bring together the best people from Detroit, and the best from Silicon Valley. Really it’s about finding the right marriage between entrepreneurship and executive and domain and industry leadership that often dictates success,” Ehrenpreis said.

—Partnerships really matter. There were a lot of skeptics, and there are a lot of powerful companies that are threatened by Tesla. But the company did make important friends who were crucial to the company’s success, especially as it needed to prove itself and move from research and development to commercial production, Ehrenpreis said.

“Tesla wouldn’t have crossed that chasm without scaling up, and scaling up with the important partnerships forged with Toyota and Daimler [the corporate parent of Mercedes Benz] and Panasonic. These are partnerships we initially think added credibility and know-how as production ramped up,” he said.

Ehrenpreis didn’t mention it, but that $465 million loan from taxpayers also helped.

—Endure and ignore the naysayers. Few of the iconic figures who have succeeded, in any field of life, have not overcome failure.

“Finally, perhaps the most important lesson to this group and this sector overall, is that perseverance does matter,” Ehrenpreis said, citing Michael Jordan, Thomas Edison, and Steve Jobs.

“Today, we’re seeing a similar story of perseverance at Tesla. Even during the toughest times, when most of the world questioned whether this could be done, the company persevered.

“The company that we know today that is producing these award-winning cars and is attracting some of the best and brightest in the industry—I can tell you about some of the times when our company almost ran out of cash. Many times we had extremely challenging product and technical development issues, over and over again. Perhaps most importantly, we faced naysayers and doubters at every turn.

“It was really the commitment of that team to persevere and thrive,” he said.

“These four lessons are echoed through our under-innovated industry throughout history,” Ehrenpreis said.

“With any emerging industry in the short term, it’s easy to say something is too expensive, or something is too hard. It’s only from that broader perspective that we can identify ultimate success. That was true in the emergence of horseless carriages, it was true with the advent of the light bulb, it was true with the PC, it was true with the Internet, and today, it’s true with cleantech.

“We must not allow pessimism to paralyze us, or optimism to blind us. The fact that our industry is experiencing our share of challenges today speaks to the size and magnitude of the opportunity before us,” he said.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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