
Staying Public - simonsarris
https://www.tesla.com/blog/staying-public
======
Animats
Musk still has an "only I can do it" mindset. The guy is working himself too
hard, not getting enough sleep, and making bad decisions. As CEO, he should
not be trying to fix an assembly line. His job is to build a team to do that,
give them enough authority to do the job, get out of their way, and check up
on them occasionally.

Here's Tesla's top management, according to Tesla.[1] There's Musk. There's a
chief financial officer. And there's a chief technical officer who's a battery
electric powertrain expert. Where's the chief operating officer?

There's a VP for manufacturing, Gilbert Passim. But check out his Linkedin
page.[2] He's listed as running Tesla's various operations other than direct
vehicle production. When he was hired by Tesla in 2010, he was relocated from
Pleasanton to southern California. There must be a plant manager and a head of
manufacturing engineering, but they seem to be far enough down that they have
zero Google visibility.

It looks like Musk set this up so that there's him, and then there's a bunch
of people who report to him, none of whom has full authority over
manufacturing. It's not working.

[1] [http://ir.tesla.com/corporate-
governance/management](http://ir.tesla.com/corporate-governance/management)
[2] [https://www.linkedin.com/in/gilbert-
passin-74a36117](https://www.linkedin.com/in/gilbert-passin-74a36117)

~~~
shawn
But it seems to be working, right? Tesla has been hitting their goals, and the
stock price has been going up.

Musk's bizarre behavior is concerning, but his organization structure seemed
to be working.

~~~
yellowapple
"Tesla has been hitting their goals"

My impression from reading HN articles over the last couple years has been the
exact opposite, the Model 3 being the prime example of that.

~~~
greglindahl
Yeah, plenty of people on HN love to repeat that. Check out how Tesla has been
doing with their most recent Model 3 production target, which was announced at
the end of 2017:

[https://www.bloomberg.com/graphics/2018-tesla-
tracker/](https://www.bloomberg.com/graphics/2018-tesla-tracker/)

Here we are, 8 months later, how would you say they are doing?

~~~
yellowapple
Key point there is " _most recent_ production target". Tesla has been
constantly revising its production targets as it fails to achieve prior
targets.

For example, in 2016 [1] Tesla set a target of 100,000 Model 3s produced in
2017 and 400,000 in 2018. End of 2018 is getting close, and Tesla's at less
than 30% of the _2017_ target, let alone 2018.

After that particular failure to achieve production goals, the stated goal for
Q3 2017 was revised to 1,500 new cars built [2]. Tesla built 237 instead.

In other words: yeah, Tesla might look like it's "on target" now, but only
because it shifted the goalposts after having been very much off target for
more than a year now. There are hundreds of thousands of customers still
waiting for their cars because of how thoroughly Tesla missed its original
production goals.

Tesla's on the right track now, but only after a _very_ rocky road getting
there.

\--

[1]: [https://www.reuters.com/article/us-tesla-suppliers-
idUSKCN0Y...](https://www.reuters.com/article/us-tesla-suppliers-
idUSKCN0YB0CA)

[2]: [https://www.bloomberg.com/news/articles/2017-10-02/tesla-
sal...](https://www.bloomberg.com/news/articles/2017-10-02/tesla-sales-climb-
as-model-3-stokes-demand-in-pricier-offerings)

------
tptacek
To understand the hilarity of this statement you really want to have read the
last 3 Matt Levine posts about the saga of Musk's "plan" to take Tesla
"private" while retaining the majority of its existing retail shareholders. I
think Bloomberg has paywalled Levine now; he's worth it (I mean, he is in
supremely excellent form discussing Musk's "going private" plan), but I
subscribe to him via email and get them free. Maybe someone here has a link to
them; they are fantastic.

~~~
pbreit
Sorry, but I have a hard time praising a writer for throwing shade at the most
prolific maker in our lifetime.

~~~
adventured
Keep in mind a lot of makers, inventors, etc. are not very good at the CEO
job.

It's probably unlikely that Jony Ive (a truly brilliant designer) would have
any business trying to run Apple.

James Dyson, a great maker, isn't the CEO of Dyson (and hasn't been since
2001). He's the chief engineer. (see the nice article below that he wrote
describing how he had to bring in outside operators once they hit scale [1])

Neither Nikola Tesla nor Edison demonstrated good skill at running businesses.
Musk is not a greater maker than those two.

You don't want John Carmack running id Software's day to day operations, nor
do you want Shigeru Miyamoto running Nintendo. At that level, you want to
aggressively focus on what you're best at.

Even Henry Ford, who was a decently skilled business operator, was still not
the best available option for running the day to day operations of his own
company at scale. It's crazy hard to run an extremely large business well, and
the level of skill it demands is every bit as rare as the maker-type talent.

I happen to agree with this Bloomberg article. What Musk needs is Alan Mulally
or the equivalent (a Gwynne Shotwell if you will; an extremely difficult
challenge, given the requirement that the person be compatible with Musk):

[https://www.bloomberg.com/view/articles/2018-08-23/how-
elon-...](https://www.bloomberg.com/view/articles/2018-08-23/how-elon-musk-
can-save-tesla-hire-alan-mulally-ford-s-savior)

[1] [https://www.inc.com/magazine/201203/burt-helm/how-i-did-
it-j...](https://www.inc.com/magazine/201203/burt-helm/how-i-did-it-james-
dyson.html)

~~~
pbreit
Elon has a pretty good track record of CEOing SpaceX (12 years) and Tesla (15
years), two of the most impressive and impactful companies of our generation.

~~~
bdcravens
Tesla has never had a profitable year, yet the company's voting structure
requires almost 90% of shareholders outside of Musk to vote to ever oust him.
He has even more control of SpaceX, having majority ownership and a super-
majority of voting shares. It's virtually impossible to unseat him as CEO, so
pointing out that he's CEO doesn't really establish anything about his quality
at holding that position.

~~~
pbreit
That seems like an odd way to evaluate a CEO. I would evaluate more on what
the company is able to achieve (yes, I understand Tesla's lack of
profitability).

~~~
tptacek
That's a non-sequitur answer. He's refuting your claim that you can evaluate
Musk's ability from his tenure at those two companies, because both are
structured such that he can retain control regardless of his performance. He's
not providing you with a rubric for evaluating CEOs, but rather pointing out
how your own rubric is flawed.

~~~
pbreit
I don't understand. How is his retaining control based on the structure of
voting rights related to his job performance?

~~~
bdcravens
Good question. You're the one that implied he must be a good CEO because he
had been one for so long, which is silly if he can't be fired.

"Elon has a pretty good track record of CEOing SpaceX (12 years) and Tesla (15
years)"

~~~
pbreit
I'm saying he's a good CEO because has been a fantastic one for 15+ years at 2
world-changing companies. He's made shareholders 10s of billions of $$ so
obviously would not be fired.

------
rhema
> That said, my belief that there is more than enough funding to take Tesla
> private was reinforced during this process.

Is this some kind of threat or positioning towards actors somewhere? Is this
like someone in a relationship saying, "I know I be with someone else if I
wanted to, but this is working out for now."?

What's the point of all of this, besides saying that Tesla has lots of funding
options?

~~~
flafla2
I understood this comment as Elon reaffirming to his shareholders that he was
not _trying_ to defraud them, and that there actually was adequate funding to
take Tesla private. This could also be part of a preemptive legal defense
against the SEC in case Elon is formally investigated / questioned. However I
feel that the SEC would be more interested in the specific wording of the
"funding secured" tweet, which was blatantly false in light of Tesla's
previous post [1] (For those who aren't following along: Elon basically only
had a verbal offer to take Tesla private from Saudi investors, not anything in
writing).

It's also worth mentioning that the idea of breaking long-term financial news
for a Fortune 500 company via _Twitter_ of all places is highly unorthodox and
suspect in its own right, so I doubt this comment would have much effect in
practice.

[1] [https://www.tesla.com/blog/update-taking-Tesla-
private](https://www.tesla.com/blog/update-taking-Tesla-private)

~~~
freerobby
> It's also worth mentioning that the idea of breaking long-term financial
> news for a Fortune 500 company via Twitter of all places is highly
> unorthodox and suspect in its own right, so I doubt this comment would have
> much effect in practice.

Elon can't have this both ways, though. Tesla has disclosed that it will use
social media for financially material announcements, and Elon has embraced
this. It can't be legitimate most of the time and illegitimate when it makes
for a convenient defense.

Personally, I don't think Elon's intention was to defraud -- I think he was
impulsive and careless, and I expect the SEC will reach the same conclusion.
But I think if he's going to use Twitter to talk about such things, his tweets
need to carry the same weight as an equivalent SEC filing.

~~~
zaroth
> _But I think if he 's going to use Twitter to talk about such things, his
> tweets need to carry the same weight as an equivalent SEC filing._

A tweet is not an SEC filing and it can never be one. It’s 140 characters
typed on your phone. It is not reviewed by corporate counsel. It is not
reviewed at all.

I’m going to step out on a limb and say this is an important mode of
communication. I like having this window into Musk’s operations.

But a tweet is just a tweet. It’s never the whole story. Here we are
dissecting two single words, and some people are saying jail a man.

I say no two words on Twitter can jail a man. Fine him a million dollars a
word if you have to.

~~~
taneq
> I say no two words on Twitter can jail a man. Fine him a million dollars a
> word if you have to.

By convention, with two words you're 1/3 of the way to a hanging.

------
redisman
Elon needs a vacation. Any employee would've been fired for this kind of
behavior.

~~~
zaroth
I agree, both true. But it would be a terrible shame if Tesla lost Elon.

His is a tremendous asset, even though he doesn’t always make the best
choices.

------
minimaxir
The SEC will _definitely_ not be amused.

------
fermienrico
There is not a shred of apology for his tweet that caused havoc on Wall Street
- but big and small investors were totally taken aback.

~~~
fredch
It's a lot of trouble to go through to get people to forget you called some
Thai firefighter a pedo on Twitter...

------
hendzen
Love that this was posted at 11PM EST on a Friday. Almost like they wanted it
to go unnoticed :D

~~~
habitue
This is the responsible thing to do, and what he should have done with the
original "announcement". If you announce it after market close on a Friday,
there's plenty of time for traders and institutions to chew on it before the
opening bell Monday.

------
sidcool
I am surprised this did not remain on the front page long enough.

------
a13n
Any particular reason this thread is getting pushed off the front page? It has
twice as many votes as something else above it that is 5x older.

------
Cyph0n
Is it normal for a public company to be so beholden to the whims of its CEO?

~~~
twunde
Fairly often, especially for founding CEOs since so much of the company tends
to be tied to the founders. And generally when a founder CEO is ousted there's
two reasons: 1) there's an incredible amount of bad press (think of Uber and
Travis or Papa John's John Schnatter) or 2) the board/investors think that
they need to replace the founder with an experienced CEO (think Google). Here,
only the first applies.

~~~
Rainymood
Elon Musk wasn't/isn't the founder of Tesla ...

~~~
twunde
Well crap. Thanks for pointing that out.

------
karpodiem
$TSLAQ it is.

[https://news.ycombinator.com/item?id=17836641](https://news.ycombinator.com/item?id=17836641)

~~~
TaylorAlexander
I saw that comment before, and I disagree with it. I don’t care what some
sample of their first pass yield is as long as it’s improving and that it hits
or exceeds industry norms before they go bankrupt. The mere fact that they
have a bad FPY is more indictative of how fast they are scrambling to get this
production line going, but if they catch the errors before the cars go out the
door then it’s simply an expense they’d damn well be reducing as time goes on.
Tesla has had shaky launches on every other platform they’ve released but now
they manufacture the S and X platforms effectively. If they can get past the
rough period with the Model 3 they will have three high demand platforms they
are producing in volume. That’s something I believe they can do, which is why
I’m a shareholder.

~~~
karpodiem
"they will have three high demand platforms they are producing in volume."

This is false. S & X sales are flat/slightly decreasing -
[http://carsalesbase.com/us-car-sales-data/tesla/tesla-
model-...](http://carsalesbase.com/us-car-sales-data/tesla/tesla-model-s/)

Tesla is in awful financial shape -
[https://seekingalpha.com/article/4195452-bulls-may-
noticed-t...](https://seekingalpha.com/article/4195452-bulls-may-noticed-
teslas-growth-story-dead)

Tesla is on the verge of bankruptcy.

~~~
yread
Main issue seems to be quality of Model 3s and

> Tesla’s pitch for several years has been that the company will grow to 1
> million unit in sales in 2020. With a potential future China factory not
> producing any meaningful quantities of cars until 2021, investors need to
> downgrade the growth prognosis from 1M cars in 2020 to 600K cars in 2021.

------
neom
Knock a bunch of shorts over and take a slap on the wrist, wonder if this was
a calculated business move?

~~~
minimaxir
Any outcome of an _SEC investigation_ isn't a slap on the wrist, and that's
not even counting civil investor lawsuits.

~~~
neom
[https://www.cornerstone.com/GetAttachment/2cd97eeb-1a32-4b51...](https://www.cornerstone.com/GetAttachment/2cd97eeb-1a32-4b51-83ba-7c5624e77318/Securities-
Lawsuits-Settlement-Statistics-for-10b.pdf)

~~~
minimaxir
I'm not sure why you linked a _1997_ PDF.

~~~
neom
To give you an idea of what a 10b-5 violation looks like. I assure you, there
isn't a cost of living increase for SEC violations since 97, this is precedent
and having spent the day trying to understand if I'd make this business move,
I still hold firm that a 10b-5 violation won't run more than $20-50mill very
worst case. a wrist slap.

~~~
zaroth
How much does that work out to per word?

~~~
neom
Depends on how much you value getting 1.3bill in shorts off your back (and
into court, I'd suppose)

------
dia_ton_dia_ton
What does this mean for the stock price? Sell off?

------
IBM
The Tesla episode on Dirty Money is going to be lit.

------
zerealshadowban
Many opine that Musk deserves punishment at the hand of the SEC. I disagree,
profoundly. His post appears to have been ill-considered, may have been
wishful thinking, was possibly driven by spite, and/or even written under the
influence of drugs. So what? the government has no constitutional power to
threaten or punish people for what they say nor for what they think apart from
what they say, except for a few extremely limited instances such as a direct
threat of force or libel.

The SEC embodies the modern drift of the administrative state at its worst;
its many regulations are not laws passed by Congress, which is the only branch
empowered to write legislation. One of the most famous and often used SEC
rules is Rule 10b-5, which "prohibits fraud in securities transactions as well
as insider trading." Fraud is a form of crime, but trading on one's knowledge
involves neither force nor fraud and is simply a manifestation of our basic
rights to talk and trade, regardless of what others may or may not know.

The proper rule of markets since Roman time is "Caveat Emptor"; don't rely on
nor seek to control or punish the morass of conversations at the local inn or
at Twitter. Many thoughtful economists and political philosophers suggest that
by and large all of the federal securities laws (originated as part of the New
Deal in the 1930s) should be abolished. It may be worth considering, when one
small online comment becomes fodder for public calls to have the government
severely punish a CEO.

~~~
ewoodrich
He is the CEO and made a materially false statement, while the market was open
and investors who believed him bought at a high of $380 based on a promise of
a buyout at $420, only to have it plummet days later. The odds are pretty good
that it will dip further when markets open Monday.

Actions have consequences.

