Elon Musk may be the CEO of Tesla but he didn’t actually start the company. Tesla was founded in 2003 by two Silicon Valley engineers, Martin Eberhard and Marc Tarpenning. They wanted to prove that electric cars could be better than gasoline-powered cars. Although Tesla Motors was incorporated on July 1st of 2003, the seeds of the company go back to 1990 when the original founders met.
Marc Tarpenning was an engineer working for Textron in Saudi Arabia. While visiting home in California, he met his longtime friend Greg Renda. Renda worked for Wyse Technology and had asked Tarpenning to check out some of the work his company was doing. During his visit, Tarpenning met Martin Eberhard, an engineer at Wyse Technology. In no time they became friends and would often have long dinner party conversations.
As their friendship grew both guys would join a group of other geeks every few weeks to play Magic the Gathering (a trading card game). Eberhard was always trying to create a strategy to beat the game. On occasions he was successful and on other times fell apart quickly.
Their friendship soon blossomed into a profitable business relationship. Eberhard and Tarpenning started consulting for disk drive companies and later founded NuvoMedia in 1997. In late 1998, the pair released the Rocket eBook, which sold around 20,000 units.
In 2000, Rocket eBook was acquired by Gemstar-TV Guide for $187 million. With a success story already under their belt, Eberhard and Tarpenning were still eager to start another company.
Eberhard’s passion for cars was rekindled after he went through a divorce and wanted to buy a sports car but he couldn’t buy a car that only got 18 miles to the gallon. The arguments for global warming were becoming undeniable.
This decision fueled his interest in researching high performance electric vehicles which didn’t quite exist at the time. Eberhard went through every power source you can think of and soon discovered that electric cars were the most efficient.
Further research led him to an electric car hobbyist community where he met AC Propulsion – a boutique electric car maker. What was even more interesting was the fact that the company had a superfast electric sports car called TZero.
The TZero proved to Eberhard that an electric car didn’t have to be slow, he invested in the company with the hopes of obtaining a copy of the car. Eberhard even thought of joining forces with the company to build a production level electric car rather than a hobbyist vehicle.
Sadly he soon discovered that his ambitions were not in sync with the culture of the firm. At this point Eberhard considered launching his own company. By 2003 Tarpenning and Eberhard knew that they wanted to start an electric car company, starting with a two-seater sports car with an induction motor and lithium ion batteries.
Eberhard wanted to give credit to the man who patented the AC induction motor, Nikola Tesla. Tesla was a 19th century inventor and his work led to the discovery of alternating current which is a primary way of transmitting electricity today.
On July 1st 2003, the company was incorporated and by August they moved into the company’s first office building in Menlo Park, California. By fall of 2003, Eberhard and Tarpenning started refining their idea in a bid to make formal pitches to investors. The first round of funding came from family, friends and a handful of venture capitalists. The investments were small because there was no one to lead the round.
Earlier in 2001 Tarpenning had dragged his friend Eberhard to see PayPal co-founder Elon Musk to speak at a Mars Society conference at Stanford. They introduced themselves but didn’t reach out until late March 2004. Elon was interested in the idea and in April 2004 the paperwork of their partnership was finalized.
Musk went on to lead a $7.5 million round in 2004 and became the chairman of the board. In 2006 the company unveiled the prototype of its Tesla Roadster which entered production in 2008. The Roadster Tesla brought something entirely new to the car industry, the electric car was produced with specs that could meet consumer needs.
The first model could travel 250 miles on a single battery, its acceleration and speed were also at par with other consumer level sports cars. This was just the beginning of how Tesla started, the company has since moved on to produce other models and has been entangled in a web of many controversies.
Tarpenning left Tesla in 2008 and Eberhard left not after as Elon essentially pushed him out of the company. Musk allegedly fired him for lying about the cost of producing the car. The story of Tesla is still being written but it all started with the curiosity of two engineers – Martin Eberhard and Marc Tarpenning.
