Hacker News Reader

Comment by tptacek | Hacker News Reader

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.

View on HN

Here are a few of the articles, in order. Bloomberg restricts you to 10 links a month, but you should be able to access them:

https://www.bloomberg.com/view/articles/2018-08-08/elon-musk...

https://www.bloomberg.com/view/articles/2018-08-09/musk-s-mo...

https://www.bloomberg.com/view/articles/2018-08-13/funding-f...

https://www.bloomberg.com/view/articles/2018-08-17/elon-musk...

Again, these are highly recommended and give you a glimpse of this entire farce from the finance perspective.

> Bloomberg restricts you to 10 links a month

(Not if you open them in a private window)

Ooh. That is a fantastic tip. Thank you.

I read most of the last article, and he indicates "harm" must be things like "murder", and since short sellers aren't killing they can't be doing anything that would be equated with causing harm. There's a little more gray area to "harm" than just "murder". Severe logical fallacy here.

His analysis is riddled with such fallacies. The other huge one is a conflation of the general with the specific, i.e.:

> the vast majority of the time, when a public-company chief executive officer complains that short sellers are sabotaging his company, he is talking nonsense

Sure, but we're not talking about the vast majority. We're talking about the most heavily shorted stock on a US exchange, and the one which entrenched players are most interested in seeing fail. Tesla is an outlier in myriad ways; deriving assumptions from the median makes no sense at all.

At any given moment in time, some company's stock will be the most shorted in the exchange. Do you have genuine evidence that Tesla shorts are really qualitatively different from other former "most shorted" title holders?

I think the actors who are eager to see Tesla and SpaceX fail are more powerful and motivated than is typical, but I acknowledge this is an unproven hypothesis.

However, Tesla does not need to be exceptional for the larger point to remain. Former heavily shorted companies have dealt with the same thing. Look at the war between Fairfax and hedge funds in the early 00s (similar claims, similarly evidence (i.e. circumstantial but unprovable), similar results (stock took hits and then jumped as financials improved).

https://www.theglobeandmail.com/report-on-business/fairfax-t...

Someone at TMC wrote up a more thorough and Tesla-analogous explanation if you are curious: https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...

the actors who are eager to see Tesla and SpaceX fail are more powerful and motivated than is typical

Why would they be?

I suppose it's possible to read it as declaring an absolute and exhaustive definition of "harm" to include "murder" and absolutely nothing else. But that feels like A) a reach and B) a deliberately uncharitable one at that.

The more charitable and more likely reading is poking fun at a CEO's hatred of people who bet against the CEO's company. Perhaps try re-reading that way?

I think Levine has been pretty hit-or-miss on this saga. His line of thinking on short-seller narratives misses the point entirely:

> Elon Musk has been banging on for ages about how short sellers are trying to sabotage his company, Tesla Inc. [... examples and citations....] This does seem to be mostly nonsense. If you build lots of good cars and sell them for more money than it costs you to build them, then you will make a lot of money and no amount of desperate pushing of narrative will result in your destruction.

This is only relevant if you evaluate Tesla as a mature company that operates on fundamentals. Nobody sees it this way yet. The entire point of a short seller pushing a narrative is to influence the capital markets, ideally to prevent Tesla from getting funding or more realistically to worsen the terms it gets, to prevent it from reaching a state where it can operate on fundamentals.

It's perfectly fair to question the extent to which short sellers are working to influence things (or how successful they've been), but it's certainly not unprecedented[1], and just yesterday on the front page of HN was an ex-employee (who was highly critical of Musk), who felt Musk "isn't totally paranoid" because they had caught "bad actors" and found "advanced persistent threats in [their] network"[2].

Has Musk overreacted? Perhaps. Has he been wrong in his assumptions in some of the examples he's cited? Almost certainly. But that doesn't contradict the logic of the concern or make it "mostly nonsense."

[1]https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...

[2]https://twitter.com/atomicthumbs/status/1032944615475695616

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

His prolificity as a maker is orthogonal to the practicality of his proposal and the legality of his statements, the things Matt Levine talks about

But an optimist and a pessimist would come to opposite conclusion based on same evidence. But pessimism generates more clicks.

What "clicks"? It's Matt Levine. You can't even click on his stuff easily anymore; you have to subscribe to it.

Don't you find that out _after_ you click?

For sure, we should be careful of biased reporting and also evaluate Matt's arguments critically. But you seemed to be suggesting that Musk's prolificity somehow means we shouldn't take any criticism against him seriously

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-...

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

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.

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.

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).

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.

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

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)"

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.

The writer has an obligation to critique Musk and his company because it is publicly owned and needs to be held accountable.

Your criticism might have been valid if Tesla were a private organization. But it isn't. So it's not.

Reply on news.ycombinator.com