Why Tesla Died Poor

Nikola Tesla, celebrated genius of the twenty first century. Everybody loves his story. It serves as a reminder of the dangers of corporate greed, and how it can ruin the lives of even the most talented. However, that’s not the real reason Tesla died poor, not completely anyway. It’s not only because Edison and General Electric campaigned against him and Westinghouse, but in a way, because he chose to die poor. To understand this, there are some misconceptions that first need to be cleared, and facts stated.

1.) Tesla outlived Edison

Tesla was born in 1856 and died in 1943, 87 years old. Edison was born in 1847 and died in 1931, 84 years old.  Telsa outlived Edison by 12 years.

2.) The War of Currents Happened While he was Young

The war of currents between AC and DC had ended by 1891. Tesla was 35 years old at the time, Edison was 44. What happened for the remaining 51 years he went on to live? For white collar professionals 34 years old is still young, you’ve barely got into the senior levels of management, and have a lot to build up on. The story goes that Edison had promised Tesla $50000 for a redesign of their DC generators. However, when Tesla completed the work, Edison, surprised he’d done it, said, “Tesla, you don’t understand our American humor,” and offered him an insignificant raise. The story might be true, but this was in 1885 when Tesla was 29 and he resigned immediately. From that point he must have known to either not trust Edison or take lessons in American comedy.


3.)    Tesla/AC Won the War of Currents

Without a doubt, Edison did do as much as he could to sabotage Tesla and Westinghouse. However, the rest of the world could see for itself that only one was a mad genius, the other was only mad. By 1891, Germany had already acknowledged that alternating current was the better method of supplying electricity. Westinghouse had also been given a project to build a power station across Niagara Falls to power the whole of Buffalo, and yes the generators had his name on it. The final nail in the coffin came in 1892 when General Electric began to invest in AC current machinery, and Edison’s opinions about the company were silenced. At some point even Edison’s cronies acknowledged his mistakes. At 36 years of age, Tesla had gone head to head with one of the biggest corporations there was, won, and become internationally recognized. The chief executive who was his archenemy had been removed from power. That same company was now buying into his ideas. By fairy tale standards he should have lived happily ever after, or until peasant farmers with pitchforks stormed his premises. History has no account of him escaping from an unruly mob, so what went wrong?

What actually happened?

Tesla is an engineering genius, and without a doubt there are few who could match him. However, an often overlooked shortcoming of his was his poor business strategies.  After the war of currents Westinghouse and GE were financially drained. Even though Westinghouse was given the contract to build the power plant at Buffalo, they couldn’t afford Tesla’s royalties. Westinghouse, the man, decided to ask Tesla to release him from his royalties. Tesla being so happy with Westinghouse for believing in him tore up the contracts and gave his patents for free. Their value then was $12 million, about $300 million today.

Many patent holders only reach this far, breaking the device they were reading from in anger.

Several questions must be asked at this point like:

1.)    What’s wrong with Tesla? Why didn’t he ask to be made a partner instead of employee and then continue working with Westinghouse if he liked him so much?

2.)    Couldn’t he have negotiated either a lower royalty rate, or to only lend them for a period of time such as maybe one or two years. Why didn’t he consult a lawyer?

3.)    Why didn’t he just roll the contracts, stuff them with expensive tobacco, and smoke them up? If we’re going to burn money, we might as well do it in style.

This is just the beginning of a series of bad decisions that highlight Tesla’s poor business skills. The same scenario played out when Marconi was developing a radio. Tesla was well aware that Marconi was using at least 17 of his patents, but at the time he said, “Marconi is a good fellow. Let him continue. He is using 17 of my patents”. It was only after Marconi had completed his design that Tesla sued him, and as early as 1935 the courts had declared Marconi’s patents invalid, but because the compensation case dragged on for another 10 years, Tesla never saw a penny of royalty fees.

Tesla takes a significant amount of blame for his impoverished state. Eventually, Westinghouse was the one that paid for his hotel costs, but why did he give them his patents for free?

His story is quite similar to that of Narcissus and Echo. I can’t go into details about it, because someone already did with a much better explanation than I could ever give. However, to conclude: Tesla was not one to listen to contrary opinions, he knew best. His science was unmatched, but success in life takes more than that, and his view on it was quite distorted. He trusted those who appeared to share his ideals too much, and never once asked if people were only good to him because he had something to offer them. His scientific brilliance meant that he always assumed to know what’s best about all matters not just scientific ones, though there are many times he was explicitly wrong. A second opinion would have told him so if he would listen. Tesla’s is a great story, but with a sad ending. When you gaze into the abyss for too long, the abyss gazes back at you. Tesla stared for too long at the pool of science, and without knowing it, turned into a solitary flower of scientific excellence which the whole world would later admire.