Monday, June 23, 2014

"Of Course Tesla Wasn't Just Being Altruistic In Opening Up It's Patents: That's The Whole Point!" (TSLA)

The stock is up $8.50 at $238.09.
From Techdirt:
from the the-velocity-of-innovation dept
We, like many in the media, already wrote up the story about Elon Musk's announcement that Tesla was opening up all of Tesla's patents, promising not to bring any lawsuits against anyone who uses them in good faith. The "good faith" caveat has resulted in some head scratching and reasonable questions -- and we hope that Musk clarifies this position with a clearer explanation. Some have pointed out that with such vague language, it may really be more of an invitation to negotiate a licensing deal, rather than truly opening up the patents (though, I'd imagine anyone looking to challenge that has lawyers boning up on promissory estoppel). However, I wanted to address one of the "criticisms" that seemed to come out repeatedly about this move: that it wasn't a big deal because it's "not altruistic." That line was used over and over and over again in the press, almost always suggesting that people shouldn't be celebrating this move.
  • LA Times: "Even if other competitors copy Tesla’s design, Tesla still gets to sell them batteries, and that’s pretty awesome. Tesla’s decision isn’t entirely altruistic."
  • Seeking Alpha: "The general thinking is that somehow this move is altruistic for the benefit of the EV industry or that this has something to do with parallels like Mac OS X, Wikipedia, and crowdfunding. We disagree. This is simply a strategic move to rapidly expand and monetize the EV market. This move is hard-core strategy and really has nothing to do with altruism."
  • NASDAQ: Elon Musk and Tesla: Altruistic or Ulterior Motive?
  • Forbes: "Of course, Musk may have an ulterior motive in addition to his altruistic one."
  • South China Morning Post: "Tesla’s apparent altruism with its patents is just smart business"
  • ValueWalk: "Tesla Motors Inc's open source approach is far from altruistic."
  • Harvard Business Review: "In sum, Elon Musk’s opening up of Tesla’s patent portfolio might be motivated as much by strategic necessity rather than by altruism."
  • Market News Call: "Musk may not be successful running two industrial firms like online social media or cloud-focused firms, but he’s also not making decisions entirely out of altruism; he’s just using a non-traditional approach to creating value for his shareholders."
  • "I think he [Nikola Tesla] would approve of Tesla Motors’ decision to open its technology to the world, even if the motivation was more business than altruism."
I recognize why everyone feels the need to do this -- especially those sites that claim to be focused on "investors," but it's also somewhat frustrating. Perhaps it's just because we've been writing about this issue for well over a decade, but of course this move is being done because it's good for business: but that's the point. We've become so stupidly brainwashed into believing that locking up and protecting everything is good for business that people seem positively shocked when a company does something that shows that's simply not true. Everyone feels the need to explain what a "crazy" idea it is that not hoarding information to yourself might actually be good for business. 
And the worst may be in that first link up there, in which analyst giant Gartner completely destroys what little credibility it may have had when one of its analysts, Thilo Koslowski, pans the decision: "If you open up all your books to everyone, it means you all are fighting a war with the same weapons." Talk about someone admitting their own ignorance of how business and innovation actually works. Opening up your patents hardly means fighting a war with all the same weapons. Everyone still gets to innovate, and many of those innovations are not in the patents themselves.

A further Musk quote in a Business Week piece further outlines what's happening here:
"You want to be innovating so fast that you invalidate your prior patents, in terms of what really matters. It’s the velocity of innovation that matters."

The stock has done okay since that June 12 announcement: "All Our Patent Are Belong To You"
(TeslaMotors blog)
via Yahoo Finance
Chart forTesla Motors, Inc. (TSLA)