Quote: (11-17-2017 04:59 PM)Razor Beast Wrote:
Quote: (11-17-2017 10:23 AM)H1N1 Wrote:
I don't know a great deal about Elon Musk or his ventures, but FWIW, I've met a lot of high net worth guys over the last few years, to fundraise for my business - guys with £100m+ from their own successful ventures - and who are consistently successful investors. I'd say the proportion of them that own a Tesla, and rave about it, is about 60-70%. Make no mistake, these guys aren't just buying a toy. One of the common themes I've found amongst successful entrepreneurs is that they view their customers as investors. By buying into Tesla, they are backing the company, the product, and the future direction that it is looking to take.
That's a naive way of looking at it because automobile production is actually one of the worst industries you could invest in next to airlines. Very capital intensive and bankruptcies (strategic or not) are common. Tesla has already made too many mistakes to avoid a bankruptcy from what I can tell. It's not a tech company. Nearly all of their revenues can be tied to automobiles. They don't have any IP like a tech company would and they don't have access to any tech that other automakers can't easily duplicate. They are behind Waymo and maybe even GM now in autonomous driving. They don't have the money to continue making the necessary investments in this area. They created the appearance of being ahead of the competition by rolling out a product that wasn't adequately tested in the AP1 which was later scaled back after driver deaths. Their business appears to be structurally unprofitable. Solar City is a complete mess. The company may have legal issues in the near future with bailing out the Rives at Solar City which still has yet to make any meaningful financial contribution to Tesla's bottom line. They also have some very questionable accounting methods that the company conceals and refuses to clarify. Some very odd things there that don't make sense like losses increasing proportionally with increasing number of vehicles sold. It's possible they could be doing fraudulent things with the accounting. And we could go on all day about the misrepresentations to company has made related to production that have come up far short of estimates which will certainly bring on an avalanche of lawsuits once the stock begins to fall for good. They should also be worried about any misrepresentations they may have made prior to capital raises. Curiously the two largest underwriters for their prior capital raises (Goldman and Morgan Stanley) appear to have distanced themselves from investment in the stock. Over the last few quarters Morgan Stanley has sold out of about 95% of their original position. It makes you wonder if they saw something they didn't like in the company's internal books.
Elon Musk in a nutshell - a great visionary and stock salesman, unquestionably the worst CEO of any large cap stock in the market today when it comes to execution of the business, which will ultimately be the reason for his downfall.
Razor beast, would I be correct to venture that you are an engineer by training/profession? My impression is that you most likely are. I have employed a lot of engineers over the past few years, and they tend to conform to a type: brilliant, orderly, highly conscientious - great people and the backbone of any business looking to innovate.
However, ignoring the vanishingly rare exceptions like Dyson, there is probably no archetype more at odds with an entrepreneur than that of the engineer. The two are so different in temperament and approach to problem solving as to almost be divergent strains of humanity. Consequently, the one rarely understands the other and the relationship is often strained and uncomfortable despite the essential symbiosis.
All of what you say may be true - I haven't looked into Tesla in that kind of detail, and honestly the numbers would be one of the least interesting indicators of potential to me anyway. However, regardless of how much information may be extracted from your charts, in a sense it would be meaningless anyway, because in anything that is pushing the envelope of what is possible, conventional measures are of limited value. Stability, certainty, upwards trends, all the things that more conservative types (of which the engineer is archetypically one) look for and love, are inconsequential, and indeed perhaps undesirable, to a man trying to force back the boundaries of the possible.
Chaos, and the ability to survive whilst remaining in that chaos, are what the innovator tries to control for (oxymoronic as that may sound). Your trends, your positive correlations between sales and profits - these are of limited value when all the real work is still to be done, some of it quite far off in the future. All that matters to a guy like Musk when he wakes up in the morning is that he is still in the game, still working inexorably towards that idea of what's to come. The product at their current stage of development is pretty much irrelevant. It's a stepping stone, a means of making progress, and a necessary evil - a frustrating nod to our current limitations that must be engaged with before they can be surpassed.
Maybe Tesla do present a favourable impression of where they are currently, but a certain amount of smoke and mirrors is necessary when you are trying to innovate rather than replicate. First products will always be sub-optimal, the spectre of competition and annihilation will always be present, there'll never be enough money, you'll always be skirting disaster, pivoting to turn the latest failure into the next opportunity for success, and a disheartening number of people will always be rubbing their hands thinking it's almost their moment to say 'I told you so'. Through it all, one has to smile, maintain loyalty through successive failures, and continue to attract investment and customers from the world at large by maintaining the impression of competence and progress. It is quite astonishing what investors and customers will forgive when they have bought into you and the vision of progress you have shown them.
There is also a level of truthfulness, and a bond, between company and customer when one is pushing boundaries and the other is supporting that ideal financially. An innovative company's public facade is for people who currently have no skin in the game. It is a mistake to think it is to pull the wool over the eyes of existing investors and customers. An innovative company needs loyal customers and investors much more than an established company. This is because these investors and customers will be asked to endure much more than a business really has the right to ask of them - and they will be asked to pay for the privilege. The only way to retain these customers and investors is through honesty, and a shared understanding of what you are working towards together.
As an aside, I love that Elon Musk has final sign off on everyone he hires. That's something I've always wanted to maintain as my businesses grow. In my view there are few things better that a truly committed entrepreneur can do to invest in the longevity of his idea than to ensure that every single person who works for him is capable of meeting the standards he sets. Personally I see it as an excellent indication that he is a guy who has his priorities in order and is committed to the long term vision for the company. If you know you've hired good people then you can afford to let them just get on with what they are doing, you can take responsibility for their failures, and you can give them the funds, freedom, and just enough chaos to really fulfil their potential - without asking them to shoulder the full burden of chaos and uncertainty that you as the entrepreneur must carry.