The entrepreneur who founded and grew the largest startup in the world to $10 billion in revenue and got fired is someone you have probably never heard of. The guy who replaced him invented the idea of the modern corporation. If you want to understand the future of Tesla, and Elon Musk’s role in it — something many are keen to do, given the spate of negative headlines about the company — you should start with a bit of automotive history from the 20th century.
To Understand the Future of Tesla, Look to the History of GM
By the middle of the 20th century, Alfred P. Sloan had become the most famous businessman in the world. Known as the “inventor of the modern corporation,” Sloan was president of General Motors from 1923 to 1956 when the U.S. automotive industry grew to become one of the drivers of the U.S. economy. If you’re following Tesla, you might be interested to know that Sloan wasn’t the founder of GM. Sloan was president of a small company that made ball bearings, which GM acquired in 1918. When Sloan became president of General Motors in 1923, it was already a $700 million company (about $10.2 billion in sales in today’s dollars). Yet, you never hear who built GM to that size. Who was the entrepreneur who founded what would become General Motors 16 years earlier, in 1904? Where are the charitable foundations, business schools, and hospitals named after the founder of GM? What happened to him? William Durant founded GM and was widely hailed as a visionary. But Durant died managing a bowling alley in Flint, Michigan, in 1947. The question for Tesla watchers is whether Musk is more like Durant or Sloan. As Tesla struggles in the transition from a visionary pioneer to a reliable producer of cars in high volume, one wonders if Musk’s $2.6 billion compensation scheme would be better spent finding the company’s Alfred P. Sloan.