Tesla is finding the limits of "naive innovation"

“If that car was made anywhere else, and Elon wasn’t part of the manufacturing process, they would make a lot of money,” Munro said in an interview. “They’re just learning all the old mistakes everyone else made years ago.”

From an interesting Bloomberg article. A group of analysts tore apart a Tesla 3 and were impressed by the technology, but found the execution lacking.

This is a really common narrative out of Silicon Valley. It’s a place that lauds “naive innovation” – that an outsider can come up with solutions the experts just overlook.

“Munro found that Tesla reduced the amount of wiring snaking through the car by concentrating a lot of the electronics in small circuit boards. That’s knowledge from Silicon Valley that the carmakers don’t have. The trick now is turning this established technological advantage into consistent profits—and to do that Musk needs to hire executives with experience in the nuts and bolts of carmaking…”

In some respects naive innovation has served Silicon Valley well. SpaceX is a perfect example. But it can discount valuable experience.

My favourite is this interview with Spotify co-founder Daniel Ek:

When Google turned him down for a job, he thought, “I’ll just make my own search engine, it can’t be that hard,” he said. “It turns out it’s really, really hard.

It also reminds me of many anecdotes in Bad Blood, the story of biotech startup Theranos. The founder of which has since been indicted for fraud.

Theranos aimed and claimed to have invented a device that could do myriad blood tests on just a drop of blood. But there’s a reason the many well-capitalised and incentivised biotech companies had failed.

From Bad Blood:

“The ability to perform so many tests on just a drop or two of blood was something of a Holy Grail in the field of microfluidics. Thousands of researchers around the world in universities and industry had been pursuing this goal for more than two decades…”

“But it had remained beyond reach for a few basic reasons. The main one was that different classes of blood tests required vastly different methods. Once you’d used your micro blood sample to perform an immunoassay, there usually wasn’t enough blood left…”

“Had Steve Burd been allowed inside the East Meadow Circle lab, a network of rooms located in the center of the low-slung building, he would have noticed that it didn’t contain a single Theranos proprietary device. That’s because the miniLab was still under development and nowhere near ready for patient testing. What the lab did contain was more than a dozen commercial blood and body-fluid analyzers made by companies such as Chicago-based Abbott Laboratories, Germany’s Siemens, and Italy’s DiaSorin…“

The experts quoted in the Bloomberg piece gush about Tesla’s technology. But there’s a reason many of us are bearish about Tesla – 150 years of institutional knowledge isn’t something to be scoffed at.