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For investors, the autonomous vehicle phenomenon presents a different kind of puzzle. Clearly, there's money to be made from this emerging technology, but what's the best way to do it?
Betting on new technology may not be as easy as it seems. In 1999,
Warren Buffett explained why he was sitting out the internet boom, noting that past breakthrough technologies had led to only a handful of winners. Buffett noted that the number of automakers in the country had winnowed from 2,000 in its early days to just three, while in the first half of the 20th century, there were hundreds of airplane manufacturers but only a few left today. Similar patterns unfolded with radio and TV as the nature of new industries is to attract competition, but, like evolution, as the new technology matures, only the strongest companies survive. Buffett was vindicated a couple years later when the tech bubble went bust and the Nasdaq lost more than 75% of its value. A host of companies like Pets.com and Webvan famously imploded.
The car industry carries similar hallmarks to past emerging technologies. There will be winners and losers, but the latter will likely outnumber the former. It's too early to say what will happen, but if the history of emerging industries offers any lessons, it seems to be that betting on smart leadership may be the best way to profit.
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In today's automotive world, no entrepreneur has been more revolutionary than Tesla's Elon Musk. Tesla has bucked long odds to become the first new American automaker in generations, and Musk's other big ideas like the Hyperloop,
SolarCity, and
SpaceX show his ability to think big.
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Like Bezos, Jobs, and Ford before him, Musk is a visionary, and Tesla's track record is a testament to its capability as a disruptor.
