There has been an oddly unifying message circulating among those who cover Apple (bloggers, analysts, etc.) lately: they’re all asking Apple to buy Tesla, the revolutionary electric car manufacturer (revolutionary in concept – not in sales… Apple makes more from iMacs – a “dying” product – in a quarter ($6.6 billion worth in September) than Tesla does from cars in a year ($4 billion worth).
There are a few reasons why people are suggesting this.
First of all, Apple’s got a truckload of cash in the bank. For the most part, they’ve been using that cash to buy stocks back and pay dividends to shareholders. When they’re not doing that, however, they’re using it to buy other companies (these are far and in between, and for the most part, Apple only acquires a company if 1) they can’t build it themselves or 2) they need the talent/product from the company they’re buying in short order).
Those moves aren’t exactly exciting. They’re mostly under-the-radar stuff, and they’re not much fun to write or talk about.
You know what’s exciting though?
Tesla is at the forefront of revolutionizing the way cars and other technologies work. But there are many things holding Tesla back (capital, manufacturing capability, pricing, etc.). Somehow, people believe that if Apple – a consumer technology company – buys Tesla – an auto manufacturer – all the problems will be gone.
Maybe. It hasn’t happened yet, so I can’t say for sure what will or will not happen. But I do know one thing: those who are suggesting that Apple should buy Tesla are awfully shortsighted.
Buying Tesla will wreck Apple as a company.
Sure, all of Tesla’s ideas and innovations are great to have. But Tesla, the company itself, with all the people it employs, is not.
(Side note: EVEN IF Apple buys Tesla, they’re almost certainly not going to get Elon Musk. Musk, from what I’ve heard, is an average leader (great visionary though!) but a terrible follower. He’ll almost never want to work under/report to Tim Cook. In fact, Musk has said repeatedly that he’s only going to be Tesla’s CEO for the next 3-5 years before stepping down voluntarily).
Confused? Don’t worry. Here comes the explanation.
Apple is a company that thrives on collaboration (remember that this C-word is the reason why geniuses like Scott Forstall got booted out on the company in the first place!). Meetings within Apple are held in small, focused groups. The Apple products that are available today are testaments to that tight nature of collaboration within Apple.
Android smartphones are great, sure. But it can never beat Apple on one thing: tight integration of both software and hardware. While Android – the software – is produced by Google, the hardware is often produced by third-party manufacturers like HTC, Samsung, LG, Huawei, etc. One can be built for the other, but they will never be built for one another.
On the other hand, Apple takes charge of both the software and hardware side of every product they ship.
In order for them to do that, Apple’s marketing, hardware, software, design and other teams need to work together and be comfortable enough to bounce ideas off of each other – and to share the credit of the work they’ve done.
Those who want Apple to buy Tesla never fail to cite the fact that Apple should benefit from Tesla’s revolutionary battery innovations.
Okay, that means that Tesla will have to integrate into Apple (instead of what happened with the Beats by Dr. Dre acquisition, whereby for the most part, Beats is a standalone product (with its own team of engineers, marketers, designers and what not) within Apple).
But… wait a second.
Integrating Tesla into Apple means bringing all of Tesla’s 10,000 employees into Cupertino.
On the other hand, Apple’s got less than twice the number of Tesla employees in Cupertino (~16,000).
If you need an analogy, think about this: forcing that much Tesla employees into Cupertino would be akin to forcing water into a water balloon when it’s already full.
Will it stretch and eventually fit? Sure!
Will it fit well?
The sudden invasion of more than 10,000 Tesla employees into Cupertino will shred Apple’s collaborative nature into pieces.
Many reading this will bring up the fact that Apple recently just acquired another rather big (and expensive) company: Beats by Dr. Dre. But if you really look at it closely, Apple only need to integrate ~500 employees into its culture (considering about 200 of the Beats employees at the time of acquisition weren’t given long-term employment at Apple).
500 employees is about the size of a small division within Apple.
It might be tough to integrate into the culture, surely, but it’s not impossible. And the people from Beats don’t even have to integrate as deeply into the Apple culture as the Tesla team does because while Beats is a standalone product, many are expecting Apple to use Tesla’s battery technology – thus the deeper integration.
But okay, many might argue that if Apple buys Tesla, they may layoff some employees too, just like they had done with Beats and thus the final team that gets integrated into Apple may be much smaller than 10,000 people.
However, my guess is that it’s not going to work too.
Some back of the envelop math…
In the case of the Beats acquisition, Apple laid off 28.57% of its employees.
Suppose Apple lays off 28.57% of Tesla’s workforce when it acquires Tesla – that would mean that they would still have to integrate 7143 outside employees into their culture.
That’s not going to happen!
First of all, 7143 employees – while less than 10,000 – is still a lot of people.
It’s about 14 times the number of people they had to integrate into their culture after purchasing Beats.
Secondly, no one’s going to look at the layoff of 2857 employees too kindly. It’s going to be a slaughterhouse, and it is – without question – going to damage the morale of both Apple’s and Tesla’s employees.
In short, although Apple acquiring Tesla may make for a great story in the media, there’s almost no chance of it working in reality. My guess is that Apple knows this. And that’s why Apple and Tesla are still independent companies (as they should be!).