It was recently
revealed from an upcoming book by Ashlee Vance titled “Elon Musk: Tesla,
SpaceX, and the Quest for a Fantastic Future” that Tesla’s owner, Elon Musk,
was in negotiations to sell Tesla to Google for $6 billion. For better or
worse, the deal eventually fell through and now, only 2 years later, Tesla is valued
at roughly $25 billion. We hear these stories all the time, with large companies
trying to buy out the little guys. However, every now and then we are surprised
to hear that some companies don’t “sell-out” as they are confident they can
turn their businesses into something more. Just a few examples of this besides
Tesla were when Microsoft and Google tried to buy Facebook in its earlier years
to no avail and more recently with Google offering the creator of Snapchat $3
billion. For both Facebook and Snapchat, things turned out more than alright as
Facebook was quoted to be worth more than $200 billion in 2014 and Snapchat a
cool $10 billion, which is much more than either company was initially offered.
So why don’t we see this more often, why are some companies so quick to hand
over control?
Well that’s a
difficult question to answer, and it depends on countless variables. Disregarding
the smaller companies choices, my personal stance for the bigger companies, is that
large corporate entities such as Google, Facebook, Microsoft, Apple, etc… should not be allowed to buy out smaller
companies if they have reached a certain “value cap,” otherwise I feel they too
closely resemble monopolies. As of 2014, Google and Apple’s net worth were
estimated to be roughly $365 and $599 billion respectively. They are the first companies in history to be
racing towards the $1 trillion value mark and I find it concerning. Earlier
this year, it was discovered that Apple spent huge sums of money to hire the
best battery engineers in the world to help them build their own electric car.
This especially worried Tesla, for they feared if Apple bought their lead
engineers out (along with the other best), then their company would surely be unable
to compete in the electric car market.
While I don’t
discredit large companies for innovation in their core markets, I do think that
making the majority (or at least a hefty sum) of their money from the companies
they acquired is sort of like cheating. I wish there were more David and
Goliath cases where companies like Tesla were able to stick with their gut and
push through tough times without selling out. As such, I see Tesla becoming a
powerhouse in the electric car industry (which is likely to become more and
more popular as time progresses) due to the fact they stayed independent,
versus if they had been acquired by Google and reduced to say a side project. While I don’t doubt Google could make Tesla
even more profitable, I feel that Google especially has more than reached a
peak and should no longer be allowed to purchase smaller entities and instead
focus on its own intellectual property.
References:
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