Tesla existential threat?
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Quite true... however.
“A specialist is someone who knows more and more about less and less until they eventually know everything about nothing.”
PhDs are by definition specialists. Hiring a bunch of them is the easy part- go to any top university and you can have your pick. Directing that talent is the hard part, which is why top technical founders and CEOs are so sought after. Which is exactly what Musk is... when he’s not smoking crack.
I’m not a big fan of Musk’s. He’s not actually a founder of Tesla (I know one of the originals). I’m intimately familiar with some of his mistakes over the years, going back to needing to re-design 90% of the original roadster’s parts, the three different 2-speed gearboxs debacle, etc. He’s consistently over-promised and delivered two years late.
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You must, by definition, be wildly optimistic to found a startup. The odds against are in the range of 5,000 to 1 for a big exit; they drop to 100:1 at an angel round and 10:1 at a proper VC backed series A. You don’t take those odds if you’re not optimistic, and you’re not going to disrupt an established industry without swinging for the fences. As the company matures you must dial that back, and that’s clearly an issue...
I see much of the criticism leveled at Tesla as fundamentally not understanding the startup company model. Tesla’s in a growth or death situation- until it achieves critical mass there is no “steady profit, slow growth”. This is the Normandy invasion on D-day: you either take the beach and push inland or you die where you stand. Trying to apply typical peacetime economics to that situation, which is much of the criticism I see, is a recipe for disaster.
Run as much risk as is needed in this situation and you’re going to screw things up. At what point does over-optimism become a screwup become a lie? Depends on intent, and that’s something I have not been able to gauge.
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Quite true... however.
“A specialist is someone who knows more and more about less and less until they eventually know everything about nothing.”
PhDs are by definition specialists. Hiring a bunch of them is the easy part- go to any top university and you can have your pick. Directing that talent is the hard part, which is why top technical founders and CEOs are so sought after. Which is exactly what Musk is... when he’s not smoking crack.
I’m not a big fan of Musk’s. He’s not actually a founder of Tesla (I know one of the originals). I’m intimately familiar with some of his mistakes over the years, going back to needing to re-design 90% of the original roadster’s parts, the three different 2-speed gearboxs debacle, etc. He’s consistently over-promised and delivered two years late. He’s pushed the team too hard, leading to huge turnover within the company (look at the revolving door of senior/ chief engineers, part of the reason he’s alone and overworked). He’s clearly out of his depth and his board has struggled to control him for years.
All that said he did not get to where he is by accident. He’s hugely flawed, as nearly all “great” men are, but when he’s on he’s absolutely one of the smartest guys in any room. Dismissing his accomplishments or questioning his intelligence is the worst form of armchair quarterbacking. You might not like the guy, but if you actually think he’s dumb that says much more about you than him.
but I do think he is over rated and not really that innovative. I honestly couldn't tell you whether I like him or not, I don't know him on a personal basis. However, I do not like certain things he has done and in many case not done in a business context.In regard to PhDs - like all degrees - all are not equal.
To build a good team you need a range of skills, talents and viewpoints - what you generally get with a person who has PhD is someone who is very intrinsically motivated and has great attention to detail. You use the right horse for the right course.
It is worth keeping in mind this list: Evolution, DNA, Plate Tectonics, Penicillin, General Theory of Relativity and Special Theory of Relativity, Quantum Mechanics and Quantum Electrodynamics, even the Theory of Computable numbers. The items on this list largely explain who we are, what we are, where we are and allow us to survive and work. The people behind the list, that made the break throughs, either had or were working on PhDs.
Musk from a business perspective, has made some decisions that may prove fateful - these relate to (1) allocation and effective use of human capital and (2) allocation and effective use of working capital and (3) timing and release of material information to the market
Last edited by groundhog; Aug 22, 2018 at 08:04 AM.
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That said if you’re founding a company and passing your hat on Sand Hill Road don’t expect a PhD to help; the VCs are very familiar with those strengths and weaknesses.
Back to Musk, I think I’d give him an 8 out of 10 overall, less recently. He’s able to see the grand vision and how the plot a course to it very early. He’s mildly ADD and has trouble staying focused. He has huge energy and drive. He’s able to convince and lead a team to tackle impossible challenges. He’s able to convince investors (key). I don’t know to what extent he himself innovates or like Jobs he just recognizes and impliments good ideas. He’s falling down as the organization and challenges grow, unable to scale, adapt and give up control where needed. Through his work he’ll end up revolutionizing at least two industries. 9 or 10 as an early stage CEO, struggling to get to 7 as a late stage one is my blink.
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Overrated? We agree, but then much of popular opinion has him as the second coming. I don’t know him personally either but I know people who do, and know better than most what he’s done. He’s egotistical, overconfident, arrogant, but also extremely capable and intelligent. In his shoes a guarantee both you and I would have failed long ago.
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Lied to who? Himself? With Jobs you knew- he actually believed what he said inside his reality distortion field. His employees did too, which is why they accomplished far more than they ever would have believed they could. With Musk I’m less sure...
You must, by definition, be wildly optimistic to found a startup.
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I see much of the criticism leveled at Tesla as fundamentally not understanding the startup company model. Tesla’s in a growth or death situation- until it achieves critical mass there is no “steady profit, slow growth”. This is the Normandy invasion on D-day: you either take the beach and push inland or you die where you stand. Trying to apply typical peacetime economics to that situation, which is much of the criticism I see, is a recipe for disaster.
Run as much risk as is needed in this situation and you’re going to screw things up. At what point does over-optimism become a screwup become a lie? Depends on intent, and that’s something I have not been able to gauge.
As someone who spends half my time doing consulting for tech startups, I can tell you that I fully understand the model. What Musk is doing is not simple startup behavior and, more importantly, Tesla is not a small private company, it's a large public one and has been for eight years. As a public company, Management has a responsibility, both legally and morally, to make accurate statements about the business. Musk hasn't done that and doesn't believe he needs to. And his contention that he wants to go private because he wants to get away from the shorts is utter nonsense. He's smart enough to realize that he's facing a coming wave of competition from major automakers and that he's gonna need a lot of money in the near future. His instant motivation is to take the narrative off of him, the Company's poor execution and the coming competition, and his long term motivation is to lock up funding sources and avoid having to surrender complete, God like control. The question is simply whether stupid money is going to come along and bail him out.
Last edited by Archimedes; Aug 22, 2018 at 07:23 PM.
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Tesla is not a small private company, it's a large public one and has been for eight years. As a public company, Management has a responsibility, both legally and morally, to make accurate statements about the business. Musk hasn't done that and doesn't believe he needs to..
There's a reason Elon and his fellow venture capitalists are billionaires while we're both here on this message board arguing trivialities. I assure you they know more about what's happening inside than either you or I. None of this is their first pony show. True, some large VC backed companies flameout dramatically (like Theranos) but Elon has a pretty good track record so far. Just look for yourself and see how many insiders are dumping their stock? Last I heard, I haven't heard anything major.
Last edited by bdoviack; Aug 22, 2018 at 04:23 PM.
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That's the joke, everyone just brushes it off as optimism and the challenge of forecasting in an uncertain environment. The problem is that he has flat lied, repeatedly, under that guise from the very start. He almost certainly would not have received the public funding support that he did without lying about Tesla's product plans from the beginning and he's told lies at every major turn. He's lied about timing and pricing over and over, when any reasonable person would know his statements were untrue. He lied about when production started on the Model 3 (SEC investigation has already been underway on that one). He lied that the Solar City acquisition was a strategic play not a bailout, and got his crony board of friends and family to rubber stamp it. And the latest, funding secured? Not only was that simply a totally untrue statement, the way he has tried to defend it since is a perfect example of how the guy has no problem bending the truth and spinning whatever tale he wants to in order to further his goals. I won't argue that the guy isn't a very intelligent visionary. He's also a ridiculously arrogant, totally untrustworthy businessman who's gotten a free pass for way too long. By his board, his investors and the regulators. He really, really needs to take Tesla private in order to keep the circus going.
This is where you say it hurts all of us, because as taxpayers we're supporting a folly that will crash and burn. We can't yet say with certainty if that's true or not, but whatever your view on government subsidies I'll lend some perspective. China has invested three trillion dollars into renewable energy in the last decade and a half. Much of that was in PV coming in the form of interest free loans companies were never expected to repay. In return they bought the global PV industry out from under Germany and America, and now that they own the exponentially growing 100 GW per year market China considers that a very sound investment. Consider whatever subsidy number you come up with in this light- as value for dollar to take leadership of a next wave industry (and to accelerate the adoption curve of electric cars by a half decade, conservatively) I personally see it as a steal.
In what capacity, can I ask? Technical, business?
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I
This is where you say it hurts all of us, because as taxpayers we're supporting a folly that will crash and burn. We can't yet say with certainty if that's true or not, but whatever your view on government subsidies I'll lend some perspective. China has invested three trillion dollars into renewable energy in the last decade and a half. Much of that was in PV coming in the form of interest free loans companies were never expected to repay. In return they bought the global PV industry out from under Germany and America, and now that they own the exponentially growing 100 GW per year market China considers that a very sound investment. Consider whatever subsidy number you come up with in this light- as value for dollar to take leadership of a next wave industry (and to accelerate the adoption curve of electric cars by a half decade, conservatively) I personally see it as a steal.
In what capacity, can I ask? Technical, business?
This is where you say it hurts all of us, because as taxpayers we're supporting a folly that will crash and burn. We can't yet say with certainty if that's true or not, but whatever your view on government subsidies I'll lend some perspective. China has invested three trillion dollars into renewable energy in the last decade and a half. Much of that was in PV coming in the form of interest free loans companies were never expected to repay. In return they bought the global PV industry out from under Germany and America, and now that they own the exponentially growing 100 GW per year market China considers that a very sound investment. Consider whatever subsidy number you come up with in this light- as value for dollar to take leadership of a next wave industry (and to accelerate the adoption curve of electric cars by a half decade, conservatively) I personally see it as a steal.
In what capacity, can I ask? Technical, business?
But my point in terms of hurting all of us isn't about finance, it's simply that I think it's a problem for our society when we put arrogant liars up on a pedestal under the premise that the ends justify the means because the stock price is up. Or we defend guys like him simply because 'everybody does it'. Robert Reich's second Gilded Age article captured my thoughts on Musk and guys like him perfectly. Not that I think there's much of anything we can do about the direction things are heading as a society, it's just a bit sad IMO. Truth and objectivity are a lost art it seems.
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In the case of Musk and Tesla there is little weasel room - when you make a statement along the lines of going private at $420, funding secured - you are stating you have the funding locked and loaded and ready to go with a fully formulated plan and with Board approval. As it has transpired none of this is remotely true.
I think Archimedes nailed it, there is a mentality associated with "silicon valley" and "start ups" that equates to a free pass where lying has become over promising and the norm. The end point is something like Theranos. Perhaps part of the reason for this is the glory days are over. What do I mean by this?
(1) Go into an apple store, what do you see - some nicely designed laptops and desktops along with what has become the ubiquitous iphone and an unloved watch. People are no longer excited by these devices, they have become normalised.
(2) Google, in a nutshell a search engine that sells advertising
(3) Facebook, an organisation that collects your data in order to sell targeted advertising
(4) "apps" largely games of little merit
People aren't dumb, this is not wow factor stuff (the first iphone was) I suspect Tesla was the great hope in many peoples minds e.g. revolutionary new vehicles that would save the planet developed by a charismatic "product architect" Elon Musk - unfortunately the reality has proved somewhat different.
Last edited by groundhog; Aug 23, 2018 at 12:02 AM.
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I think Archimedes nailed it, there is a mentality associated with "silicon valley" and "start ups" that equates to a free pass where lying has become over promising and the norm. The end point is something like Theranos. Perhaps part of the reason for this is the glory days are over.
The rule is that 8 of 10 VC backed startups fail, 1 goes sideways, the last pays for all the failures plus interest. Theranos was a massive fraud and failure, but failure is a required part of the system. The glory days are not over, it just seems like it as the next wave of startups evolves both inside and outside the valley.
A.I. and robotics are about to accelerate the next revolution. The self-driving cars I dodge daily will soon begin to replace the jobs of the roughly 5 million Americans who drive for a living, funneling more dollars from other areas of the country. Digital assistants and voice recognition are already replacing secretaries, medical transcription, receptionists, etc. Combined with robotics this will hit like a hammer.
Apple has the largest US market cap ever, Amazon’s taking over the world and Google’s printing cash while leading the self-driving car revolution and buying every robotics company in sight. The glory days are not over at all, it’s simply perception and the fact that perception has turned against the Valley. Other parts of the country are waking up to the fact that they are not only getting left out of the boom, it’s actually going to hurt them. And that has them understandably concerned.
Love it or hate it the model has been hugely successful, not just for Musk but for many like him. And I still see many crying foul without fully understanding what and why. Like I said- the SEC will deal with Musk if he’s crossed the line, as they should. It’s still a diversion at the end of the day. To see past it you must first understand the big picture and ask the right questions. I don’t see much of that perspective here.