The celebrity inventor behind General Electric was the model for today’s technology entrepreneurs
Rivian, the US electric vehicle maker, went public this week with a valuation of $86bn and a compelling story. “For as long as I can remember, I’ve been obsessed with cars,” its 38-year-old founder, RJ Scaringe, confessed in its IPO prospectus. “I had hoods under my bed, windshields in my closet and engine parts on my desk.”
That sounds familiar. “A simple young man, attired in the homeliest manner, using . . . the plainest and simplest language,” was how the New York Herald described the great entrepreneur of the original electric age. A 32-year-old Thomas Edison was showing off his latest invention — the carbon filament incandescent lightbulb — in 1879 at his laboratory in Menlo Park, New Jersey.
As Rivian’s value surpassed those of Ford and General Motors, General Electric said it would break into three parts. The conglomerate founded in 1892 by the merger of the Edison General Electric Company and a power transmission rival conceded defeat after struggling since the early 2000s to regain its former glory. Cause of death: boredom.
This should be an opportune time for a company founded on electrical ingenuity, as sales of battery-powered vehicles surge. But while GE is a world-class maker of wind turbines, aircraft engines and medical equipment, with sales of $54bn in the first nine months of this year, it no longer generates excitement.
GE was once a popular stock with a charismatic leader in Jack Welch, who convinced investors that it ran businesses from media to financial services better than others. Investors could “look forward to the brightest of futures for GE in its third century”, Welch declared in the 1999 annual report, as its valuation neared a peak of more than $480bn. He retired in 2001 and, for GE, nemesis swiftly followed hubris.
Today’s heroes are not management gurus, but technology founders who ignore the doubters and raise billions to disrupt many industries. “We are a company with an extremely limited operating history and have not generated material revenue,” Rivian’s prospectus admits. But it has a mighty vision and investors who do not care.
Elon Musk named Tesla after Nikola Tesla, an employee of Thomas Edison who became a rival inventor and was on the other side in the “war of the currents” that culminated in the General Electric merger. Musk is a master of mixing a cocktail of technology and celebrity: by running a poll among his 63m Twitter followers on whether to sell 10 per cent of his Tesla stock, he made the company’s shares drop sharply.
Edison realised that a founder could be a brand in the mass media era he helped to unleash, and named many ventures after himself, from the Edison Electric Light Company to the Edison Kinetophone Company. He was not a natural performer, but excelled at putting on a show.
He transported his newly invented phonograph to the offices of Scientific American in New York in 1877, set it on a desk and cranked its handle. “How do you do? How do you like the phonograph?” the device asked the editors, who were so amazed that they held the presses and launched his reputation.
“Any sufficiently advanced technology is indistinguishable from magic,” is the third law of the science fiction author Arthur C Clarke, and inventors were feted as magicians in the late 19th century. Randall Stross notes in his book The Wizard of Menlo Park that it was “a time when technology seemed to be both overwhelming and increasingly incomprehensible” so “it was entertaining to view [Edison] as endowed with extraordinary powers”.
Steve Jobs imitated Edison’s phonograph trick at the launch of Apple’s Macintosh computer in 1984, when the machine spoke to the audience. He knew consumers were happy to let the technology remain mysterious if it was marketed with elan: the 1976 Apple-1 computer auctioned for $400,000 in California this week was the first in a line of machines that Jobs made increasingly minimalist and thrilling.
Such wizardry suits the meme stock times, when investors form fan clubs around inspiring companies. It follows that it works best for consumer products: few will line up for the launch of a new wind turbine or medical imaging machine. No matter how innovative a technology, it grabs less attention if it is hidden within a power plant, rather than being on sale to everyone.
GE products, from lightbulbs to appliances, were dotted around many homes, but were overwhelmed by Asian competition. Welch turned it into a conglomerate and told his management story instead. It took skill to sell it, but he kept a line to the public by acquiring NBC (which GE later sold), and appearing on its cable network CNBC.
Musk’s approach is simpler: he makes electric cars and has a Twitter account. Scaringe, who tried to compete with Tesla before switching to pick-up trucks, has absorbed the lesson. Investors love the tale of a humble inventor who overcomes enormous odds to build a magical device. Edison pioneered the formula and it gains power at times when capital is plentiful and excitable.
But excitement eventually begets ennui. The extraordinary thing about GE is not that it came to bore investors, but that it took more than a century to do so. Rivian and Tesla can only hope to remain thrilling for so long.