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Comment by JumpCrisscross | Hacker News Reader

"Sacconaghi pressed ahead with another query about Tesla lowering its 2018 capital expenditure projection to $3 billion, from $3.4 billion. Ahuja said the carmaker would spend less by simplifying its approach to automation and curtailing infrastructure outlays.

'And so where specifically will you be in terms of capital requirements?' Sacconaghi said.

'Excuse me. Next. Next,' Musk said to the call operator. 'Boring, bonehead questions are not cool. Next?'"

https://www.bloomberg.com/news/articles/2018-05-03/elon-musk...

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I'm not defending Elon's behavior here, but speaking more generally: if you're in a place where you need to maintain maximum productivity for a while, because a deadline has slipped for example, meetings can turn into a massive time sink if you don't act like a total nazi during them.

In so many meetings, people just want to hear themselves talk, whether to offer some opinion, reiterate some point, or ask some useless question. If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing", often the other people in the meeting become your careless adversaries.

edit: I regret trying to raise this point in a thread about Elon Musk. :-(

>meetings can turn into a massive time sink if you don't act like a total nazi during them.

Which would explain Elon ending the conference call. Instead he spent 15-20 minutes taking open-ended questions from a youtuber with a TSLA position of 56 shares.

>If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing"

For Elon the 'things that need fixing' are exactly what the investors he cut off were asking about. If he is so focused on fixing those things he should have been able to give easy answers. The dodge is illustrative of how well he's handling those problems.

As well it seems ridiculous that the CEO of a ~$50B company can't spare an hour or two every quarter to explain his own company. Even Elon Musk isn't that busy.

If those are actually the things he is working on then perhaps there is no answer to give?

How long is your piece of string?

Well this morning it was three metres but then we doubled it and it looks like that was too much so come back tomorrow and we will let you know.

Then perhaps Musk could be honest and state explicitly that there is no answer. Instead, he chose to respond in a fashion that has multiple interpretations:

- There is no answer

- Musk does not know the answer

- Musk does not want to admit he does not know the answer

- Musk does not want the answer to be known

see that you are not defending, but this is not a meeting. it is an investor conference call - most if not all of the entire point is to clearly and openly answer their questions about financials...

Yeah, it’s not like a weekly status update meeting. It’s a tad unprofessional IMO. As the CEO of a public company, you are accountable above all to your shareholders.

Are these shareholders he’s talking to, or investment bank analysts trying to get the CEO to fill in their spreadsheets for them? I guess I’d be a bad CEO but I don’t get why an “investor” call should be about the company showing respect, bowing down and kissing Wall Street’s ring.

There is a difference between asking straightforward financial questions from his shareholders with grace and tact and "bowing down and kissing Wall Street’s ring"

Yes his shareholders, you know the people that were specificly invited to this call, own the company and that he has to directly answer to, by law.

Instead musk decided to childishly deflect.

On this specific point, he refused to answer two questions from (Wall St) analysts, and instead got questions from a (retail) shareholder. That would seem to be the right priority, even though his attitude was wrong.

He spent 20 minutes answering softball questions from a youtuber instead.

> He spent 20 minutes answering softball questions from a youtuber instead.

Not just softballs... questions that have nothing to do with Tesla today or the near future... rather... questions about Elon's whimsical dreams of the far future and how Tesla might possibly play into that.

Questions about fully autonomous electric vehicle taxi fleets, etc... but he skipped all the questions about how he's going to get Tesla there or how to survive long enough to see that future.

Yeah, but a conference call with investors is not the kind of meeting you cut short. Maybe a weekly status meeting sure, but your quarterly call with people who if things go south, you'll have to rely on their largess to borrow money from? That's something you treat with care.

Borrow money isn't the right word. They're not creditors, they hold equity. They're the owners Musk is dismissing. The point of these calls is to make sure the executive officers are being held accountable to the owners of the company with thier money Elon is managing on their behalf. It was a PTA meeting and Elon Musk was being a petulant child who doesn't think he should have to do what his parents tell him.

There are plenty of people holding Tesla bonds that are also listening to this conference call intently too.

You know Elon doesn't actually like turn wrenches and connect wiring harnesses right? Talking on the phone with investors and making sure the company maintains creditworthiness is his actual core job.

Indeed.

It is obvious to anybody looking at the balance sheets of the company that TSLA will need to raise capital soon. Either late 2018 or maybe early 2019. A company with $3 Billion cash that's losing $1-billion per quarter will need more money. That's just the facts.

Musk is going to be either relying upon institutional investors / the stock market in general for another round of equity offerings, or relying upon banks for a loan. In either case, it seems like Musk just bit the hand that feeds his company money.

Another 300,000 reservations at $1000 per is probably not going to happen. There are fewer and fewer ways for TSLA to raise tons of money.

Linear approximations aren't really the best way to do time series predictions.

Better than Elon's exponential approximations: https://twitter.com/elonmusk/status/881757617416056832

I'm not necessarily saying "TSLA Will definitely run out of money in 3-quarters". I'm saying "TSLA is currently, on a linear-approximation track to run out of money in 3-quarters".

Obviously, the Model 3 rampup will improve profitability. But the Model 3 Ramp-up also requires more resources (more humans in the assembly line. More robots in the assembly line. etc. etc.). So that still requires money.

A linear approximation is basically a quick-but-shitty-approximation. Its really easy to calculate and full of flaws, but full of flaws in a way that almost everyone can immediately understand.

Exponential approximations (ie: Musk's approach) might be more realistic... since production lines can exponentially grow to some degree. But if you are off by even a little bit, then you end up being ... oh I dunno... 8-months to 10 months late with your 5000-cars per-week estimate.

Tesla plans on spending a lot less CapEx in the future compared to last quarter, so they won't burn through as much money.

Given that he was so cavalier here that has these noses bent out of shape, and that he was tweeting April fools jokes about being bankrupt, could it be that he is actually pretty confident in Tesla's credit worthiness and that capital raising will not be required? Seems like a pretty dumb bluff otherwise - particularly on April fools.

It's the second time in a short while that he shows he does not want to run the company like it is a public company. But he does want access to that capital. Those two don't mesh.

> It's the second time in a short while that he shows he does not want to run the company like it is a public company. But he does want access to that capital.

I think that Matt Levine (bloomberg) might suggest there's more & easier money to be had in the private market, anyway (see Uber, pre-IPO Spotify, etc...).

The problem for Musk, if he also shares that view, is that taking the company private seems (to me) like an impossibility at this point.

> Matt Levine (bloomberg) might suggest there's more & easier money to be had in the private market

That hypothesis is, at least so far, not sustained by the evidence of private-market darlings continuing to rise in the public markets.

I have no idea why anyone would ever downvote this, it’s a very non controversial statement. Being a public company is a double edged sword, it most definitely has downsides to go with the upsides. Depending on the company/industry/timeline/economy/etc., for some companies the downsides of being public can become a lodestone dragging them down (see Dell).

I think its too early to say Dell has been a posterboy for why going private makes sense, the company was saddled with massive amounts of debt due to the trasition, and are currently struggling to keep above water.

The situation has a lot in common with why leveraged buyouts almost always end in disaster, dispite the hype surrounding them when they are first annouced.

If Musk has a way to keep investors happy without spending time on these calls, he doesn't appear to have deployed it yet. If he doesn't think keeping investors happy is necessary or part of his job, well I guess we'll find out.

There's nothing to "defend". These articles are entirely misleading and absurd. What he said wasn't even noteworthy.

This is not a very frequent meeting. He is explaining to the public & investors why they should keep backing Tesla, and it happens only once a quarter. It's worth being thoughtful, given the tens of billions of dollars all the non-Elon shareholders have at stake.

I recall reading an interview with musk on wait but why (edit: https://waitbutwhy.com/2017/03/elon-musk-post-series.html ) where the interview mentioned researching musks intolerance for "boring" questions and even trolled him a bit.

Obviously the appropriateness is different, but this is not new behavior. Anyone trying to draw conclusions about the state of tesla from his behavior here is probably making mistakes (or at least using bad data) unless they thought the same BEFORE this call.

To be fair, he's not entirely wrong. I guess people just don't expect this type of response. But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Interestingly though, markets are reaction to this response emotionally.

But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Truly, this sounds divorced from the reality of anything Elon Musk is involved in. He’s making electric cars, rockets, and solar panels, not fusion power or immortality pills. Let’s be realistic! I think it’s important to separate what he actually does from what you desperately hope he may someday do.

If colonizing a new planet isn't a new era of humanity, I'm not sure what is...

He hasn't colonised a new planet, and frankly my wager is that he never will.

>If colonizing a new planet isn't a new era of humanity, I'm not sure what is...

Do you credit Musk with coming up with the idea of getting to Mars?

He's never going to colonize mars. It's not possible with out current level of technology.

He might kill a bunch of people trying.

Tesla isn't doing that though.

> markets are reaction to this response emotionally

I don't think so. The material takeaway is Tesla will need to raise new capital in 2018. The numbers implied it. The market previously guessed Musk had some genius plan to avoid it. On this call, the lack of such a plan became evident. Dilution and/or increased default risks/interest costs are being priced in.

Er, why is asking for something fundamental to running a business (i.e. "How much money do you have/need?") a partly boring/boneheaded/uncool question?

Because he's Elon Musk and he doesn't care about investor returns, he wants to build rockets, cars, tunnels, and explore space.

No matter what he does he'll more than likely be fine on the money side.

> he's Elon Musk and he doesn't care about investor returns

Then he shouldn't be the CEO of a public company which continues to sell stock and debt to investors on the promise of a return.

Also, Elon Musk very much does care about returns. He has a great track record in that department. He's just learned it's not something that's healthy to focus on in the short-term. Unfortunately, running out of cash forces the compression of time horizons. The latter is what investors are rightfully worried about.

Was he not CEO when Tesla went public in 2010?

Guy has been instrumental in a couple hundred billion $$ in market value and you’re suggesting he doesn’t care about investor returns? Wow.

I'm not sure I'm following you. Creating market value and returning money to the investors as an ROI are not the same things. An earnings call is an opportunity to tell shareholders when - and if - they can expect some of their money back by giving them a more complete picture about how the company is doing. It is part of the role of a CEO in a publicly traded company to continue to inspire investor confidence. Value creation is the easy part, value capture the hard part and without that second bit Tesla's stock will implode. So he will have to talk to those investors to address their worries or the stock value will drop rapidly.

A crazy high valuation is no guarantee that a company can not go bust at some point, though in Tesla's case if they run out of money all that will likely happen is that their next round will be one at a lower valuation and with a group of investors that cares less about the short term.

Elon made the decision to play on Wall Street, that decision comes with some responsibilities and it is downright strange to see him literally bite the hand that feeds him. Without the cash he picked up through the IPO Tesla would be in a completely different position. He's made a couple of boneheaded moves (such as rolling Solar City in with Tesla), which have so far been accepted because of the halo and the promises. But there is a limit to how far that will stretch and I'm confused why he would stretch that on purpose if he has other alternatives (such as simply answering the questions). If he doesn't have any answers, which is one way to interpret his refusal, then Tesla is already in trouble.

He doesn’t want to do those things. He wants people to give him billions of dollars on the promise to do those things. Musk survives on putting in a minimal ammount of effort and having a great marketing team. The guy is a fraud.

Ha. Pretty weak attach. The dude literally sleeps at work at times, and his companies have produced things that have never been done before. Stuff that you can't really do as a weekend warrior, like rockets and the fastest/longest range EVs that people wait in line to buy

Please don't do personal attacks here. It damages the community, regardless of what you think about Musk.

https://news.ycombinator.com/newsguidelines.html

Then he should be fired because he doesn't care about his job.

I am so sick of the cult of Elon. There is no defending his behaviour here.

You've been downvoted but I don't know why. It's clearly true. He wants the power that comes with CEO, but not the levelheadedness to run what is now a large company making large promises.

What he's done is remarkable. But he should step down, assign himself a founder/chief scientist title, and move forward with "fixing" his company. No fear of ejection; I suspect he's a major shareholder.

Been running it fine for 10 years. Does sound boring.

But time is a factor, especially in relation to milestones. I think everyone would agree that Tesla's Autopilot and full-self-driving aspirations were going extremely well in 2016 [0], and we can safely assume that progress is still being made into 2018. The more relevant part, though, is the amount of progress relative to Tesla's earlier assumptions [1], and of course, compared to its competitors' progress.

[0] https://twitter.com/elonmusk/status/799908000689336320

[1] https://twitter.com/elonmusk/status/823727035088416768?lang=...

Tesla barely talks about self-driving any more. Their no-LIDAR approach didn't work.

Has he? They still deliver less cars than Henry Ford did in the 1930s.

That's interesting. In 2017 Trek manufactured more than 350 different models of bicyle[0].

I'm not sure how that reflects on Tesla. Tesla is not manufacturing bicycles. Nor are they manufacturing Model As in the 1930s automobile market.

[0] https://archive.trekbikes.com/us/en/2017

Why should Tesla not be compared to historical parallels?

As I wrote, I think that the comparison is interesting.

I'm just not sure how applicable the comparison is. I think you could compare 1930s Ford vs contemporary automakers to 2018 Tesla vs contemporary EV makers. But comparing 1930s Ford vs horse and buggy to 2018 Tesla vs contemporary automakers seems less apt to me. I think the move from horse and buggy to automobile was very different than the move from ICE vehicles to EV vehicles.

I do think that Ford's early success is incredible. It is astonishing to me that Ford could be selling millions of cars a year in 1930. I'd be interested in other transitions involving such a large expense that happened so quickly. It is interesting to wonder what the equivalent would look like today. But I don't think it is exactly fair to label someone a disappointment if they don't measure up to 1930s Ford.

It's also worth noting that Ford Motor company was founded in 1903. They installed their first moving assembly line at the end if 1913. This is the innovation for which Henry Ford is most famous.

By the 1930s, Ford Motor had 30 years of experience. Between 1908 and 1924, Ford built 10 million Model Ts.[0]

I don't know if Tesla will build 10 million cars by 2024. I think that would be incredible if they did. Nor do I know if they will be manufacturing 2 million/year by 2030. If that happens, they will have matched Ford. They will have done it in a mature market, unlike Ford. They will have done it with modern manufacturing technology. They will have done it when owning a car is taken for granted. I'm still not sure how that comparison would reflect on Tesla.

A comparison with 1918 Ford vs 2018 Tesla seems more relevant than a comparison between 1930s Ford and 2018 Tesla. But it still doesn't seem like a very clean comparison.

[0] https://www.history.com/this-day-in-history/fords-assembly-l...

I'm not sure it's "fine" if you're posting record losses, still more than 50% under capacity to make a profit later in the year, and dealing with recent manufacturing problems so serious that you literally had to close the production lines down.

As I write this, TSLA is down about 6% on the day, and it's not as if sharp drops or a general downward trend are unusual over the past year. They're in real trouble, and this doesn't seem like a good time for Musk to let his ego out of its box.

>Er, why is asking for something fundamental to running a business (i.e. "How much money do you have/need?") a partly boring/boneheaded/uncool question?

Some people on HN think Musk is doing us all a favour by allowing us to participate in his projects. Evidence of this is the inevitable, "Elon should take the company private" that seems to surface in these threads. As if going public is a favour from Musk, as opposed to a way to raise capital.

The company is public and the CEO is accountable to the shareholders. Period. The hubris with this company is shocking.

Also, TSLA is basically the kind of company that couldn't even exist as a private company. Access to the broad capital and debt markets is the only reason they still exist.

Emotional responses on both sides then?

The emotion seems to have been mostly on Musk's end of the line.

> But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Tesla is not bringing 'the dawn of a new era of humanity', it's an electric car manufacturer. They came and went and now they're back.

that may bring the dawn of a new era of humanity.

They make cars.

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