The Rise and Fall of a Great Inventor

Recently I finished the book “Telsa: Inventor of Electrical Age” by W. Bernard Carlson and I highly recommend this book. I will write multiple blogs about the book and this first one will focus on historical facts and my thoughts on the rise and fall of Telsa.

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Nikola Tesla was born in 1856 in the Austra-Hungarian empire. He came to the US in June 1884 to work for Edison Machine Works and left the company after a short-stay of 6 months. Later, he was approached by businessmen Benjamin A. Vail and Robert Lane to form a company but the two persons abandoned Telsa after a year. In the fall of 1886, Tesla was rescued by two other business partners Peck and Brown, who underwrote Tesla’s efforts to develop inventions into practical devices. On July 7, 1888, Peck and Brown sold the Telsa patents to Westinghouse for a lucrative deal and Telsa started to serve as a consultant for Westinghouse. Tesla left Westinghouse in August 1889 and in 1891 Westington torn apart the contract with Telsa under the pressure of investors. From 1892, Telsa started to give consultation on the Niagara fall powerhouse project, which finished in 1895 and established Tesla’s reputation as one of America’s leading inventors.

During 1895 and 1898, Telsa investigated some other things, like X-ray and radio-controlled boats. In 1899 and 1900, Telsa stayed in Colorado to perfect the wireless transmission system. In Nov 1900, Tesla was able to meet with the most powerful man on Wall Street, J.P. Morgan and to convince Morgan to loan him $150,000 to support his wireless network. Around the same time, the Italian inventor Marconi was also working a competing technology. In Dec 1901, Marconi finished the transmission of Telegraphy through Atlantic. The loss of the competition with Marconi forced Telsa to bet all-in on an even bolder project of wireless transmission of power. After the project failed in 1905, the life of Telsa as a bold inventor came as an end. Telsa spent most of this remaining life as a recluse in a New York hotel and was forgotten soon.

Telsa’s inventor career could be divided into three stages: Rise, Plateatue and Downfall stages. The first phase (Rise) is from when Telsa started to work for the Edison company and ended at the time when his sponsor Peck died. In this stage, Telsa, as a young immigrant, challenged the industry with his innovative thoughts of AC transmission. Telsa built his reputation by showing many magical demonstrations of electricity. Despite the dramatic promotion, Telsa’s work at this stage was pretty practical.

After Peck’s death that marked the start of the second stage (plateau), Telsa struggled to create a project that had commercial potential. Different from the first stage, Telsa at this time had more resources and still did a lot of amazing demonstrations to the public. However, a lot of his efforts like X-ray and Radio-controlled boat went nowhere. The biggest achievement this time is Niagara fall. However, Telsa’s role in the project is only a consultant and this is more a continuation of his work in the first stage. The lack of evidence to bring his innovative ideas to concrete commercial success restricted his ability to find patrons. 

The third stage is when Telsa got into the building the wireless energy transmission. He was able to secure some funding from patrons (like Astron and JP morgan) to pursue his dream thanks to his fame. However, none of his patrons at this stage was as serious and devoted as Peck and Brown were. To make matter worse, Telsa had to make bolder and bolder claims because he couldn’t catch up with new innovators like Marconi. The claims he made (like establishing a global wireless energy network) eventually backfired and cost him the credibility that was essential for him to raise funding.

Like everything in this world, what triggered the rise and falls of Telsa are likely to be very complex. I want to mention two of them in this blog:

A fundamental reason is that Telsa changed from a challenger to be a defender.  The rise of Telsa is because of his great contribution to Alternating Current (AC) technology. When Telsa first came to the US, Direct Current (DC) was more popular because it had a headstart in both research and industry. Notably, Edison was an ardent supporter of DC. Despite the status quo then, AC had technical advantages over DC for long-distance transmission of electricity. Edison probably had also realized the potential of AC. However, as the stakeholder of the Edison electric company (later became GE), which has already invested heavily in DC, Edison had to defend his commercial interests. In contrast, The penniless immigrant Telsa had no such burden so he chose to focus on the less-popular AC technology. In addition, like Steve Jobs, Telsa had the ability to create a Reality distortion field around him and to change people’s views. For example, Peck and Brown initially wanted Telsa to focus on DC because there is already a ready market. Tesla organized a dramatic demonstration of using AC to make a copper egg spin by themselves that turned Peck and Brown into ardent supporters of AC. Through those demonstrations and continuous improvement of the technology, Telsa successfully challenged the status of DC.

The situation became completely different when Telsa was completing with Marconi for wireless technology. Similar to Edison in the 1980s, Telsa has been blinded by the sunk cost. Telsa’s long-term success in using electricity as a medium of energy transmission made him fail to realize the significance of wireless communication. Although he did propose a plan of using his technology for information transmission, it was mostly a strategy to secure funding and energy was still the main focus. Eventually, Telsa failed in the competition because of the complexity of wireless energy transmission. The newcomer Marconi didn’t have this burden and set wireless communication as the primary focus from day one. 

Another reason is that Telsa couldn’t find another strong business partner to fill the gap after Peck’s death. It was Peck who helped Telsa set up the strategy of patent-promote-sell that Telsa used throughout his career. However, the recipe wouldn’t work without any of the three ingredients. Telsa is very good at innovating and patenting. However, Telsa lacks the business acumen to execute the promotion and sales strategies.

Undoubtedly Telsa has a great talent for showmanship. However, the key to promotion in this context is to establish credibility among the professionals and managers in the electrical industry, who are the decision-makers for Telsa’s patents. Peck knew it very well so he tried to secure the endorsement of Professor Anthony, a well-established figure in the community, as the first step of the promotion campaign. After Peck passed away, Telsa relied more and more on mass media, which eventually portrayed him as a magician instead of a serious inventor. The imagine helped Telsa in the beginning but eventually backfired and made him harder to secure financial support. Telsa also lacked sales and negotiation skills. For example, Peck helped Telsa negotiate the deal with Westinghouse, which was very favorable to Telsa himself, but Telsa allowed Westinghouse to tear it apart in 1891 after Peck passed away. Later, Telsa negotiated a very unfavorable deal with J.P. Morgan that allowed Morgan took the majority stake without a clear clarification of Morgan’s duty in the partnership. The ambiguity eventually damaged the partnership and the deal became a blocking stone when Telsa tried to raising funding from other investors.

Despite the enormous legacy he has left us, Telsa was unfortunately forgotten for a long time. It was only in recent years that he re-entered people’s attention thanks to the electric car brand named after him. Interestingly, the founder of Telsa Motors, Elon Musk, shares a lot of characteristics with Telsa. Both are bold innovators and are good at showmanship. As a great example of disruptive innovators, Telsa and his story are still relevant in our contemporary world. 

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