Nikola’s founder steps down from board as company faces fraud allegations | Hacker News Reader

Nikola’s founder steps down from board as company faces fraud allegations

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155 pointsjoenathanone164 comments

This told me all I needed to know.

"The entire infotainment system is a HTML 5 super computer," Milton said. "That's the standard language for computer programmers around the world, so using it let's us build our own chips. And HTML 5 is very secure. Every component is linked on the data network, all speaking the same language. It's not a bunch of separate systems that somehow still manage to communicate." [1]

[1] https://www.truckinginfo.com/330475/whats-behind-the-grille-...

He should had went with a 'hexavigesimal chipset'. A base 26 system could be capable of rendering reality with the right enhancements.

https://www.quora.com/Could-you-make-a-CPU-that-processes-on...

Well speaking of trucks and not understanding technology, that is pretty much on the level of: “The internet is not a big truck. It’s a series of tubes...”

Again this is not remotely worrisome.

Tech people, and smart people in general, need to learn how to step out of their own understanding of the world and see their own fields as others do.

Very few people actually know what HTML really is or how it works, and would be hard pressed to describe it.

This quote is an executive mangling the description of some tech that otherwise might make sense. After all, Javascript is part of HTML5 and that could very well be used on various parts of the system, 'linked on the data network, all the same language'. And it is 'a language' that many programmers know how to speak around the world.

The bit I can't figure out is 'lets us build our own chips' which is a stretch.

This is a guy not really knowing what he is talking about, but with a few word changes, it's mostly rational.

The other stuff is far more scary.

Taken in isolation, the statement isn't catastrophically bad. But it does tell me some things about the speaker's character including:

- Has limited understanding of technology

- Is prone to overstatement, if not outright lying

- Is willing to use technobabble to describe his product

Those conclusions, if coming from a normal layman, might just make me roll my eyes, but coming from the CEO of supposedly technology centric company that hasn't yet released a product, it raises massive alarm bells and has me running to sell shares or short the company.

So yes, it does add suspicion in context - but of all the 'suspicious things' - it's the least suspicious.

Most car execs would struggle with this were they to have to read an unprepared statement.

somebody with integrity would just admit they dont know the tech, but point out that he has trusted techies who _do_ know.

Do sales people usually have integrity?

Not understanding what is going on under the hood of software systems is a huge risk for a manager. A Demo could look and feel awesome. But the whole thing could be dependent on a npm package maintainer not disabling his account. And you don't understand that until your entire fleet gets bricked overnight.

Also, how do we know that the quote is even accurate? If the CEO misstates some technical jargon, what’s the likelihood that the reporter from an unrelated field is going to get the misstatement correct?

It's a founder saying dumb things about his own product. That's incredibly worrying since he holds all of the access to all of the employees to get his facts straight - it's obvious he just didn't make use of that. He burned his precious few chances to lead a company in the public eye.

Most of us armchair CEOs would burn our chances just as easily, but it's still important to not be clueless.

The concern with his botched technical statement is not one of technology, it is a concern of managerial competence. It is perfectly reasonable for a CEO to not understand technical details. A sloppy statement like this brings into question whether it was made out of arrogance, overconfidence, or incompetence. A good leader will understand their own limits of technical understanding and will defer to subordinates when appropriate.

I agree with what you are saying - but this is missing my point. Obviously, it's a dumb thing for him to say - but this statement is not much of a 'red flag' regarding fraud.

If you go searching for 'dumb things tech CEO's say about tech' you will find quite a few. My own CEO at one large company I know was actually quite brilliant, and generally knew the tech, but would sometimes mangle some things.

Of all the things this fraudster is going on about, this is not on the list of things I would say points to fraud - possibly just another example of how he doesn't really understand his own tech very well.

The blatant lying about the completeness of the vehicles, lies about solar capacity, lies about customers, lies about actual technical capability, lies about customer orders and deal flow ... all of that is point blank unforgivable.

Rolling the semi down a hill calling it “In motion” in a promotional video is what did it for me.

Original video: https://www.youtube.com/watch?v=IAToxJ9CGb8

Nokola’s admission: https://arstechnica.com/cars/2020/09/nikola-admits-prototype...

When they said “Feels like a luxury car with sports performance” I can only assume they meant it like this: https://www.youtube.com/watch?v=VoeQdse7aLU

the engines had to be running so that power steering and brakes would work. yet they sound designed this to make it sound like the engines were not running.

You can also see the tach idling at 1000 RPM, but the "rolling down a hill" part is accurate.

I wonder if Nikola had their brakes working or not.

Why would the engine be required for the brakes and steeri g to function?

Am i taking crazy pills here?

Ever tried to turn the steering wheel when the engine is not running? Power steering[0] uses a hydraulic system to make steering the car nearly effortless compared to cars without it. The weight of the car and the rubber of the tires on the ground causes a lot of friction (the actual force moving the car down the road). That friction makes it difficult to just move the wheel. Power steering is one of the many pulleys the engine belt is threaded.

Brakes are also hydraulically operated. Ever pump the brakes in your car when the engine isn't running? That gets very difficult as well without the assist of the running engine.

[0] https://en.wikipedia.org/wiki/Power_steering

That is true a parking lot speeds, but power steering is a non-factor above about 15 mph.

Doubly true in a mid/rear engined supercar with only about 35% of the weight on the front wheels to begin with.

Slight clarification: the brakes don't work as well because the vacuum booster isn't operating (no running motor to create the vacuum for the boosting). The reason the brakes get more difficult with each pump (when the engine isn't running) is because you're gradually using what little vacuum boost is left, until there just isn't any.

And if you'll allow me just a teensy bit more pedantry, you are also turning against the power steering pump when the engine is off. Our '81 VW camper doesn't have power steering, and it isn't as hard to turn as a car with power steering but a non-running engine.

I'm sharing it with everyone I know. This might be the most hilarious marketing copy I've ever come across. It's almost like a parody.

The buzzword soup from the snippets reminded me of the scene from CSI where they were "building a GUI interface in Visual Basic to trace an IP address".

at least that CSI scene still makes sense and is possible!

This was new to me so had to Google it. Did not disappoint!

https://www.youtube.com/watch?v=hkDD03yeLnU

Edit: The correct URL!

I was hoping your link was going tot he CSI scene in question. Sad for me.

It most definitely should have been! Edited!

And of course someone built it for real - https://archive.codeplex.com/?p=guivbip

I don't understand what's wrong with that?

IRL that is exactly the type of thing VB is used for. It's easy for non programmers to design interfaces, relatively intuitive to program, and it doesn't require compilation or other fancy or complicated processes to use the completed program.

It's literally WYSIWYG programming.

It's unrealistic that someone would write a GUI interface in response to an active computer attack. The reference: https://youtu.be/hkDD03yeLnU

I don't think you understand how Visual Basic works or how people use it.

The GUI isn't "written", it's drag and drop. You add functionality as needed to the GUI events, like the code you would have put into a console program goes into a button's OnClick event instead.

It's probably faster than writing a console program for anyone who isn't a developer.

I'll raise you:

"It's called Rebo and it's the first bottle that cleans the planet as you drink. One Rebo drunk is one plastic bottle collected as simple as that. Rebo is a smart bottle equipped with a laser time-of-flight sensor and a Bluetooth transmitter that measures and senses the water you drink. The Rebo the app captures the information and records it into the blockchain transforming it into green credits that sponsor the collection of plastic bottles every minute."

Source: https://www.youtube.com/watch?v=KupJgVupEtk

What the heck does this even mean? This is crazier than the stuff my cannabis business clients come up with.

The bottle cap has a laser sensor that measures the water level in the bottle. When you drink all the water, there is a Bluetooth chip (also in the cap) that notifies the app on your phone, which phones home and records that you drank a bottle of water into a DB (apparently a blockchain). The company then has a deal with some other company that for every bottle of Rebo you drink, it funds the collection of plastic waste collection.

I admit they chocked it full of too many buzzwords to make it sound cooler than it is, but at least the concept sort of makes sense compared to the hot air the Nikola CEO blew.

There are a ton of companies doing this "Toms shoes" model (buy one, give one) and it doesn't need to be complex. "For every bottle of water you purchase, we fund the clean up of 1000 bottles". Why bring lasers into it?

Because they couldn't figure out how to credibly add "Machine learning" or "AI" and lasers was the next buzzword on the "What's hot" list?

And the EPA would not approve mounting lasers on sharks' heads.

It looks like it's called "Rebo". Here is a reply on one of the comments on the page.

> Hi Palps, thank you for your interest and time. We generate a green credit that is fully anonymized every time a REBO bottle is drunk and they are certified by the Gold Standard, the most reputable agency in carbon emission reduction certification. Credits are monetized through private sponsors and the funds go to Plastic Bank, an organization that pays people in underprivileged communities in developing countries to pick up plastic dispersed in the environment. We hope this helped you understand better what happens "behind the scenes" to make it possible to clean the planet as you drink with REBO

Its a pretty garbage idea of trying to take peoples sympathies for plastic waste to sell a product. Just donate to recycling non profits or research if you want to support green efforts.

You can’t call and raise. You can only either call or raise. ... Sorry for being overly pedantic but as a poker player that one kinda bothers me :)

That's arguable. A reasonable case could be made for the idea that a call is a required prerequisite for a raise.

True - but in a professional setting if you say "I'll call..." then that's it you're calling. You can't tag "..and raise you..." on the end - they would not accept the raise.

I've often said:

"I see your [bet] and raise you [x]" - would that be accepted?

I suppose it depends on the house, and floor, but I think it might be fine as you're not explicitly saying "call". I always just say "raise" and put in the chips (all at once!), or say "I raise to XXX" with XXX being the total amount (call+raise), after which I can take my time counting out the chips (or put more than the total raise amount if I don't have exact change).

Saying call and then adding a raise is similar to string betting, where you first put some chips to gauge your opponents reaction, and then put in some more. That's not allowed but so many beginners do it.

It can depend on where you are playing, but you run the risk of getting called for a string bet. The way you worded it definitely makes it sound that way because of the "and" combining two actions. If it is a friendly game you are unlikely to face issue, but in a contentious game with unknown enemies, this quote would get you called for a string bet in some of the casinos I've played.

Even most friendly games I play, where the rules are VERY relaxed, do not allow "I see your X and raise you Y" string bets. This pattern is pretty firmly a relic of the past (if it ever existed outside of Hollywood).

Everywhere I've played would call that as a string bet

No that's a string bet. It's generally explicitly not allowed so you can't fish for info after saying "I see your bet....."

Some places may let you do it once, but by rule its not allowed in Casinos.

I've been in otherwise pretty friendly games where string bets were disallowed. Or at best, the first time it happened (generally by a new player), it was accepted but the table agreed not to allow anymore for anyone.

Only on TV. People in casinos can be sticklers when you verbally announce one action and then tack on another. Imagine saying something like, "I call" look for a reaction and if that person looks dejected quickly follow Up with, "and raise you $x". It is sometimes referred to as "Angle shooting"

Naw, any place reasonably serious will have a string betting rule and similar. The reason is that you could start out with "and I call your 500" then pause slightly to see if your opponent starts moving/reacting in some way that signals their likely response before deciding whether to follow up with your raise. Likewise most places have a rule that you have to count out your bet then push it all out at once, or declare the full amount clearly verbally. Even the piddling little $100 buy in tourneys I played in during the poker craze 15 years ago had these rules.

Dealers tend to just shut down anyone that plays silly games around delaying or feinting what they're going to maybe do to. I was at Acapulco Joe's one time playing the cheap limit tables with a dealer that was out of patience with this one guy that was acting like he was on national tv for the world series finals. Finally at one point when he was dickering around she just looked at him, said "he calls" took his chips and moved on lol.

rebo had a sick booth at burning man

Not even GPT-3 could be this nonsensical.

But do they use military grade encryption??

And I’d feel more comfortable if a block chain was involved, somehow.

They do use the best stainless steel that they "could find", but not necessarily the best stainless steel full stop.

And of course block chain is involved. Everyone knows that if you want a crowd funded campaign or get VC funding you need to only need to include the phrase "AI", "ML", or "block chain". Or add all three for a triple score combo.

"What people should absolutely have zero concern about, and I mean zero, is that Tesla will achieve a 10,000 unit production week by the end of next year."

1,433 days since Elon Musk started charging Tesla customers for 'self driving' that he said would be able to drive from Los Angeles to New York city with no human intervention by the end of 2017.

Can't you do that now?

Edit: https://www.thedrive.com/news/5273/alex-roy-shatters-electri...

Being late does not make you a fraud.

Tesla does have a real team working on self driving hardware and software and they're shipping it inside cars.

It's not clear that Nikola has much more than powerpoint. They got a lot of impressive-sounding partnerships going but so did Theranos.

>Being late does not make you a fraud.

Then you can literally say anything and claim "just not yet!".

Amazing people say things like this with a straight face.

>It's not clear that Nikola has much more than powerpoint.

Nikola has real teams working on real things, too. They are just nowhere near where they claim to be.

> Then you can literally say anything and claim "just not yet!".

To play a little devil's advocate, then...

Wouldn't that put most startups and Silicon Valley into the "fraud" camp?

Net positive revenue is always coming and funds are continuously raised on that promise...

When did Elon fake a video of a Tesla autonomously driving cross country?

It's extremely common across all industries for projects to be late or underdeliver. How can you claim with a straight face that this is the same as fraud?

> Nikola has real teams working on real things, too.

Their technology claims are all over the place and includes a large lineup of electric and hydrogen-powered vehicles that would be impressive even for GM and Ford.

I don't think their leadership plans to deliver all of any of those vehicles. Insiders (including Trevor Milton) have cashed out already and it looks more like a pump-and-dump scheme than a real business.

> Then you can literally say anything and claim "just not yet!".

> Amazing people say things like this with a straight face.

Then literally everyone who claims breakthrough in fusion, new energy, medicine, AI, robotics, supersonic travel, would qualify as fraud. Fusion has always been X years away after all.

You've just also described many space projects, notably JWST and SLS. Granted, I'll give you SLS.

[0] - https://en.wikipedia.org/wiki/James_Webb_Space_Telescope

[1] - https://en.wikipedia.org/wiki/Space_Launch_System

> Nikola has real teams working on real things, too. They are just nowhere near where they claim to be.

The trouble is Trevor didn't just say "just not yet!". He insisted that the Nikola One on stage at their Dec 2016 presentation is real, with this vivid description: "I don’t want someone to end up doing something and driving this truck off the stage…so we’re going to try to keep people from driving off. But this thing fully functions and works, which is really incredible."

Not to be an apologist for Tesla here, while Elon has made some pretty explicit statements here the ordering page for cars has always said "equipment capability" and pretty accurately described it was the required equipment for when the capability was available.

And yes, there is an implicit problem there where you can't definitively know this is all of the equipment you need until the capability is released, but I suspect Tesla would have provided any additional upgrades for free if and when they release "auto-drive."

I thought of it kind of like "cable ready" TVs (not that most people reading this would have heard of those :-)) that were TVs that could, in theory, use cable. However, the cable standard wasn't finalized and there was a chance that what came out in the standard would not be compatible with these TVs.

Isn't this argument of "technically correct" semantics exactly what Milton argued for the nikola truck rolling down the hill? Why pillory him and not Elon for the same?

Because there is a difference between misleading people that an empty shell is a functioning truck, and perpetually claiming you are on the verge of fully autonomous driving, when you only achieve mostly autonomous driving.

Milton was absolutely, "technically correct": the Nikola truck was in motion (the video was announced as "The Nikola Truck in motion). What you take away and what was said are 2 completely different things, and the message is specifically crafted to do just that.

> Not to be an apologist for Tesla here, while Elon has made some pretty explicit statements here the ordering page for cars has always said "equipment capability" and pretty accurately described it was the required equipment for when the capability was available.

Right, and he's also made explicit statements that you could FSD "by the end of 2016", "by the end of 2018", "by the end of 2020", coast to coast.

I was trying to distinguish between what Elon said vs what the company said in its corporate communications. In Tesla's case the corporate comms types seem to be more honest. In the Nikola case both the CEO and the company comms were misleading.

> I was trying to distinguish between what Elon said vs what the company said in its corporate communications.

The problem with that is that Tesla has declared to the SEC that @elonmusk on Twitter is an "official company communication channel". That's why he's gotten in trouble for past tweets.

> Right, and he's also made explicit statements that you could FSD "by the end of 2016", "by the end of 2018", "by the end of 2020", coast to coast.

That isn't out or character for Musk. He's always set and communicate unrealistic timeline. That doesn't make him a fraud. Take Falcon Heavy:

> By 2008, SpaceX had been aiming for the first launch of Falcon 9 in 2009, while "Falcon 9 Heavy would be in a couple of years". Speaking at the 2008 Mars Society Conference, Musk also indicated that he expected a hydrogen-fueled upper stage would follow 2–3 years later (which would have been around 2013) - [0]

Of course Falcon Heavy didn't fly until Feb 2018, and hydrogen-fueled upper stage never materialized. Still, nobody care about that today. FH is a resounding success and are qualified to be used for NASA's Lunar Gateway and Space Force's National Security Space Launch program, which are as good as stamps of approval can get.

[0] - https://en.wikipedia.org/wiki/Falcon_Heavy

I never said he was a fraud, though I am cynical.

But you can't hand wave away his statements on Twitter as "Oh, that's just Elon, all Tesla's corporate statements have very explicitly (in at times very fine print) said it's contingent on 'capability' and 'regulation'" when Tesla have literally said "Elon's Twitter _is_ a Tesla corporate statement".

> But you can't hand wave away his statements on Twitter as "Oh, that's just Elon, all Tesla's corporate statements have very explicitly (in at times very fine print) said it's contingent on 'capability' and 'regulation'" when Tesla have literally said "Elon's Twitter _is_ a Tesla corporate statement".

Yes and no. His settlement with SEC only requires vetting for tweets that have material impact to investors. Anything else is just his opinion, although I agree that's a very fine line - [0]

Take his tweet sent out today about Battery Day event tomorrow:

> Important note about Tesla Battery Day unveil tomorrow. This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022 - [1]

Clearly a vetted communication. A less serious one in contrast:

> Bitte arbeiten Sie bei Tesla Giga Berlin! Es wird super Spaß machen!! - [2]

[0] - https://www.theguardian.com/technology/2019/apr/26/tesla-elo...

[1] - https://twitter.com/elonmusk/status/1308148212876812289

[2] - https://twitter.com/elonmusk/status/1304175179606695937

> That doesn't make him a fraud.

Why not?

What is the point of deadlines then?

Being a fraud doesn't mean you fail to deliver.

fraud: 'wrongful or criminal deception intended to result in financial or personal gain.'

He promises deadlines to soothe shareholders. I don't see the difference in his behavior and fraudulent behavior, other than that he has a large fan-base to validate the behavior.

He profits from promises that aren't delivered.

> What is the point of deadlines then?

I don't pretend to know his motivation, perhaps his misplaced optimism? or to motivate and set the guideline for his troop? or to indicate Tesla's priority and direction?

Do you think JFK knew for sure that American would reach the moon before the end of 1960s? Or for that matter, I suppose you'd consider NASA to be fraudulent if Artemis program fails to send a crewed mission to the Moon in 2024.

> Being a fraud doesn't mean you fail to deliver.

Fraud usually means all talk and no substance. Can you give a counter example?

> He profits from promises that aren't delivered.

You need to show the evidence of this

Zero days since somebody brought up Musk in a completely unrelated conversation.

Nikola/Milton and Tesla/Musk are inextricably linked. I mean... its even in the name.

>This told me all I needed to know.

How is this any different the nonsense Musk pumps out:

     1. Machines in the factory moving so fast you need a strobelight
     2. Solar tiles that will print money
     3. Full self-driving on all cars since 2016
     4.  A brain chip that will cure autism

and on and on...

Both emperors are naked, one just has a much higher approval rating.

Agreed. I wonder if this will have more people asking questions about Tesla.

Tesla is a tougher one, because they do produce a good product, while exaggerating far more than they produce.

Tesla literally own more then 50% of the US EV market. The own like 18% of the global EV, and 28% of full electric market. And they have been increasing global market share year over year. They have grown the amount of products they sell every year. They have the largest global charging network. The build the biggest battery in the world. The list goes on.

In 2015 Musk said they want to produce 2020 they want to produce 500k vehicles, and even with covid they will come close to this or even hit it.

To compare the two is beyond ridiculous. Nikola literally never deliver a single vehicle or achieved a single significant engineering goal.

If you actually think they are remotely comparable there is something seriously wrong with your perspective on the world.

Milton cannot explain why HTML5 is secure, because it doesn't make any sense. He is just repeating buzzwords.

Musk can explain how he could build a very fast factory. Maybe he is wrong and there is some sort of thermal limit that he is going to hit before getting it to that speed. But it is a real plan. He isn't just throwing out buzzwords to attract investors.

Because:

1. Elon Musk has admitted many times since that point that he was wrong (something Trevor never does) about factory automation.

2. The solar tiles exist.

3. Turns out making super good AI takes more time and Elon is always too optimistic, that is still their goal however that they are working towards.

4. That's still their goal and they're working towards it.

You can't call someone a fraud just because they haven't reached a goal yet and it's taking longer than expected.

Good advice that is applicable towards doomsday cults as well.

Is there any evidence to suggest that a "brain chip" will ever "cure" autism?

What would limit a brain chip from accomplishing that goal?

Current understanding of autism is that it is a developmental disorder, and not something characterized by excess/insufficient hormones. It is hard to imagine how a disorder that challenges information processing in the brain could, with our very limited understanding of how such things actually work, be handled by a chip saying "You should respond to such stimuli in X manner, not Y manner". It's not a case of "X is handled incorrectly, tell the brain to do Y instead".

I could potentially see such a thing working for, say, epilepsy, where we might be able to "mute" or counter a stimuli that causes seizure, but, at least for the forseeable future, I don't see "brain chips" working in contexts other than concrete causal links, stimuli, reaction/response mechanisms - I think one hint is that there's nothing we can do to "medicate" autism. Medications currently used are for "byproducts" of ASD, such as ADHD, anxiety, not the disorder itself. Indeed, the closest (and we're not particularly close) we have come to thinking of how to manage ASD is gene therapy, which wouldn't be manageable by a "brain chip".

Autism is a broad spectrum of behaviors, but one consistent symptom is not being able to “quiet” excess stimuli (as I write this my daughter exhibits her self stimulation behavior by running back and forth across our family room).

Musk delivers late. But he does deliver. At this point, any question on Musk's engineering/business acumen cannot stand. He's weird, too ambitious and optimistic. But not a charlatan. The hundreds of thousands of Teslas being driven worldwide and the astronauts flying to and from the ISS are a testimony. But he is weird.

Musk is overly optimistic and makes marketing claims and predictions about the future. I think Musk's worst estimates could actually be false advertising (e.g. the claims about Autopilot). But in most cases they are understood to be within some bounds of possibility, even if it's a 95th %ile best-case estimate.

Milton made fraudulent claims about the existing technology that they had built, which is I think categorically different than most of Musk's futurology. There's no sense in which Milton's claims might be true; they were objectively false statements at the time they were made.

Nikola direct listed their stock so they faced no scrutiny. It opened at $10 and then went up to almost $80 due in part to massive FOMO-inducing posts on Tikok and WallStBets.

If the founder doesn't have the self-awareness not to say non-sensical quotes like that knowing he will be fact-checked, it's a bit concerning.

I don't understand how GE invested and didn't find anything in Due Diligence. They really couldn't see the Robinhood effect? Is FOMO that fervent in the space thanks to Tesla? Reminds me a lot of the crazy multiples RX Bar, Dollar Shave, and Native Deodorant got as all the incumbents got freaked out about losing fractional market share to "digitally native" brands.

1 https://www.emerson.com/en-us/catalog/ams-csi-555-vibration-...

With people like you it always blows my mind how one can have such a restricted mindset.

You are nip picking a few things and vastly distorting the actual claims to make your point, while totally ignoring everything that actually was accomplished. Elon gets asked about 50 things every day and he gives his median prediction.

If you actually go back 10 years and look at his prediction for Tesla and SpaceX he is remarkably accurate, far, far, far more then literally anybody else.

Tesla underestimated the difficulty of mass production. That happens to basically every company that has extreme growth and the handle the problem and are now in very profitable production and own a huge market share in that cars market. They are massively improving manufacturing as was confirmed by independent experts.

They have 28% of global full EV market thanks that production system that you dismiss. The are outselling BMW, Mercedes and Lexus combined in the US. But of course instead of saying that, lets point out that they had 1 year of production issues.

> Solar tiles that will print money

Can you actually provide a source for that statement? Solar roof was to expensive and didn't sell well, so they made them cheaper and they are mass producing them now. They are not printing money, but they are increasing the numbers they sell and it should turn into a nice buissness.

> A brain chip that will cure autism

Again, nobody ever claimed they would have this right now. Its technology with lots of potential and that's how it was communicated. Elon is literally spending his private money on long term development project that has the potential to help many people and wouldn't get funding otherwise. And people like you shit on him, its baffling to me how somebody can have this reaction. Yeah fuck him for trying to work on some of the hardest problem in the world.

He is to optimistic on self driving, that is literally the only valid argument people have.

Truly baffling to me.

> > Solar tiles that will print money

> Can you actually provide a source for that statement? Solar roof was to expensive and didn't sell well, so they made them cheaper and they are mass producing them now. They are not printing money, but they are increasing the numbers they sell and it should turn into a nice buissness.

"They" who? Not Solar City.

I haven't paid a lot of attention to Nikola and was surprised when a friend said they had gone public and saw their valuation.

This one always felt like a fraud when it was private. How was it able to go public? Isn't that supposed to root out these things?

Hearing about their revenue was an eye opener for sure.

Side note, I always wonder about the WeWorks and Nikola's of the world. The founders, who are obvious frauds in retrospect, still probably walk away with hundreds of millions if not a few billion. Sometimes it feels like being a decent human being doesn't pay off. Doesn't help that our current political environment is also rewarding the worst in us too

It was able to go public view a SPAC

Thanks for clarifying. I didn't know they used a SPAC. For sure going to see more and more fraud via those until some new mechanisms are introduced.

I think this whole debacle really brings into focus how poor of a job our bloated financial markets do at allocating capital. Literally their one purpose that justifies their existence, and they are comically bad at.

The US market is eventually correct (which is exactly what you're seeing with Nikola getting properly dismantled), not efficient on every trade or even short-term. I think your premise fundamentally misunderstands how very large, liquid markets with huge numbers of participants like the US stock market actually function.

To paraphrase a famous quote from Ben Graham: short-term the market is a voting machine (prone to trends, mania, over-reactions both directions), long-term it's a weighing machine (value will out). That's still spot on all these decades later.

There is about $36 trillion in value in the public US markets. Can you support your premise that Nikola is somehow relevant as a point of evidence that the broad financial markets do a poor job of allocating capital? Nikola is barely a rounding error in the scheme of the US financial markets.

Financial markets grossly misjudged risk and caused the 2008 financial collapse. The recession previous to that was caused by a tech bubble that saw Pets.com with a greater valuation than GE. These incidents of irrationality have huge long-term effects on the real economy. The middle and lower class never recovered from 2008.

Those were on markets and their irrationality. We are currently in giant asset bubble (enabled by the Fed, but still) in the middle of the worst recession since the Great Depression. It will crash, and take the economy with it.

As far as allocating capital, the markets have systematically discouraged investment and encouraged stock buybacks and other uses of money that not only don't promote the real economy, but increase risk (necessitating more bailouts). Our finance industry systematically pushes industries into rent-seeking instead of production, as well as increasing financialization.

Sure, Nikola isn't significant in things, but it is a microcosm of how the market as a whole operates.

Why do you say they misjudged the risk? They got bailed out, the regulations that were enacted in 2008 with big fanfare were/are being slowly but surely rolled back, metrics are good, business has been booming for 10+ years until COVID, but even now "the assets are safe".

The middle class is being displaced by automation and capital consolidation: [pdf] https://economics.mit.edu/files/11563 and https://economics.mit.edu/files/12979

Since yields/returns are so low, it's no wonder rent seeking is the "new" hot shit. Returns are low because there's no aggregate demand, because the middle class disappears, see above. And so the vicious cycle does what it does.

Agreed on Nikola just being a small symptom. See also WeWork.

I would argue that public markets very much DID do their job here. Once you are public, people can go long or short your stock, unlike private companies where the latter is hard. In this case, someone took a large short position and then went public with accusations against the company. Now the stock is down. Assuming that the accusations are at least partially credible, sounds like a functioning market to me.

It's a good start, but their market cap is still 11 billion. For reference, Ford is 27 billion.

The idea seems sane. Maybe GM will execute it. Or some new management.

11 billion for an "idea" isn't sane. The hydrogen tech doesn't exist and possibly never will. Other auto manufacturers are struggling with it. As to the electric truck? Others are far ahead.

Well, when the VC market quickly put together 40 billion for renting office space, so 11B isn't that much nowadays.

There are already around 40 fuel cell stations just in CA, there's similarly around 45 in Germany.

I watched a youtube video on the subject, and I was easily left with the impression that it's a very shady company. And I am not an investor in startups in any stretch of imagination.

Yet, people still invest millions, if not billions of dollars into this company.

Everything in the Hindenburg Report could have been exposed without the Company going public.

Going public via a SPAC they didn’t have to go through all the rigor associated with a traditional IPO. I’m not sure this is the public markets doing their job so much as exposing a new loophole in the market.

> Everything in the Hindenburg Report could have been exposed without the Company going public.

Yes, but it went public and that gave someone the incentive to expose it. The fact that this stuff wasn't exposed earlier is a failure of the private markets, not the public

Being a decent human being pays off at least in terms of self respect. I guess for certain people it does not matter how they earn money, be it through fraud or honest work. But I don't think I would be happier if I was a fraudulent multi-millionaire.

I'd definitely be happier being a fraudulent multi-millionaire.

How do you know?

With enough money, I'm like 99% sure I could put some fraud to bed in my conscience. From what I can tell, success tends to help people justify their actions in hindsight. So maybe there's something psychological there to help me forget, anyway.

If nothing else, as a billionaire, I could afford to do extremely good works to help people forget about how awful I was in the early days (remember when Bill Gates was the devil? I do).

Thanks for the reply! Yeah, I vividly remember how people were constantly reminding each others about the evils of M$ and Gates. But even his ruthlessness wasn't fraud, right? Usually enterprise software simply stifles software engineering because of the very short-term oriented for-profit approach. Which leads to burnout, but ... still not exactly fraud.

Agreed, I don't think Gates can be descibed as fraudulent. He was like you say a ruthless businessman. But that is different than what this Nikola founder seems to have been.

I guess, to me, fraud and unethical management/business practices are the same thing. If you can live with getting ahead by stepping on the backs of the people beneath you, why not commit a little fraud? Is there a difference, outside of legal differences?

I guess, maybe for me, it's; 'in for a penny, in for a pound' kind of thing. If you're going to be unethical, why not just commit fraud as well?

I have no idea about Gates' early personal beliefs, but at that time they were competing with big corps like IBM. They were the underdog. They played the game on hard mode (even though most of us never had or will have the opportunity to get into Harvard and casually just drop out to start some crazy venture), and when they made it big, they were doing the same aggressive deals and the market eat it up, the whole company was basically built on this aggressiveness (quick and dirty software, that runs anywhere coupled with expensive licenses, strong copyright enforcement campaigns to force you to buy those expensive licenses, cater to enterprises, increase market share at any cost [vertical integration in IE, Office and Windows], dominate the market).

I have some minimal/passing familiarity with the previous cutthroat mindset. And I know that fraud is when you cross a line. When you explicitly promise one thing and deliver something else. The importance of willfully making false statements with the purpose of profiting off the victims' action(s).

I know some people test the ropes/limits so many times that the line disappears for them.

Now, that said, unethical management might be simply working the shit out of your team for some deadline (which regularly happens in game development) or it might be lobbying against workplace safety regulations like a few special asshole coal mine owners do.

MS treated contractors as second class citizens, they got sued and the contractors won. Plus MS had (has?) a tendency of demanding long hours. Are long hours unethical in software engineering when there are so many opportunities for engineers? Or it's just an option for those who prefer that kind of work-nolife balance? I don't know.

However, what Amazon does seems (is!) very troubling (overworking pickers to the point of causing them permanent joint damage/pain), especially considering that the low-skill labor market segment is words apart from the aforementioned velvet sweatshop problem of long hours for 6 figures.

...

Anyway. I've worked with guys who clearly have a warped sense of ethics (plus entitlement, self-importance, ego), and the line is usually crossed when later the fraudster cannot account for the money. That's a clear breach of fiduciary duties. Because even the shittiest explanation of why and how you had to spend weeks at a 5-star resort to "make deals" might be defendable, but the clear lack of any explanation is not.

>How was it able to go public?

Plenty of people talk about the cancer present in VC culture. Engineering doesn't matter as long as you can tell a good story.

Let’s just say most technology folks in Arizona had little belief in this company after their tech lead gave a talk/presentation at a meet up where their programming paradigms & setup just didn’t make any sense.

Not like didn’t make any sense because folks didn’t like the programming stack choices or anything it just literally didn’t make sense what they were trying to do.

I feel like that every 3rd article on the Netflix tech blog and AFAIK netflix is real

I'm curious what he said. Any links or recollection? How could GE not have done this simple due diligence? Even seeing the HTML5 quote at the top comment here is startling.

Posting Siconik's comment on arstechnica: https://arstechnica.com/cars/2020/09/nikola-admits-prototype...

To address some of the "how will GM react" question:

- GM has conspired with Nikola management to, for the lack of a better term, rob Nikola investors. The chances are great that GM knew exactly what Trevor Milton and Nikola really are, and price they extracted for playing along reflects that.

Nikola's supposed USP was this "amazing, decades-ahead" technology that somehow made hydrogen-based propulsion not just competitive, but a non-brainier. They were going to drive everyone out of the market! But don't take my word for it:

https://nikolamotor.com/pdfs/Nikola_Pre-Sale_June13_FINAL.pd...

Quote:

“Our technology is 10-15years ahead of any other OEM in fuel efficiencies, MPGand emissions. We are the only OEM to have a near zero emission truck and still outperform diesel trucks running at80,000 pounds. To haveover7,000reservationstotaling more than 2.3 billion dollars, withfive months remaininguntil our unveiling ceremony, is unprecedented,”said Milton.TheNikola One truck leasing program costs $4000 to $5000 per month,depending on which truck configuration and options the customer chooses. The first million miles offuel is included with every truck sale, offsetting 100% of the monthly lease for every owner. An average diesel burns over $400,000 in fuel and racks up over $100,000 in maintenancecostsover 1,000,000 miles. These costs are eliminated with the Nikola One lease.“We believe we will pass the current market leaders likeDaimler, PACCAR, Volvo and Navistar in sales orders within the next 12-24 months.Just imagine the orders that will come in once we begin taking dealer applications. We have shown other OEMs and their shareholders why they should be nervous about NikolaMotor Company. Some of the top class 8 dealerships in America have reached out and are willing to either add our brand or move away from their existing brands,” he added.

So, with this amazing tech at hand, let's look at the terms GM was able to secure from Nikola:

- $700M in cash to build a production line that GM retains full ownership of.

- $2B to design a vehicle platform that GM retains full ownership of.

- Profit on the front end, as an exclusive major drivetrain component supplier

- Profit on the back end, thanks to a cost-plus nature of the contract

- Profit off all of Nikola's alleged other products (Class 7/8) trucks, as exclusive drive train supplier

- Most of Nikola's ZEV credits

That's quite a haul from the company that claimed to have breakthrough technology, which, funny story, they appear to have discarded as part of this deal. The cost-plus contract on top of being an exclusive supplier is also a head-turner: GM would be ordering parts from.. GM to build a truck for Nikola and then charging cost+margin back to them. Nice arrangement if you can get it!

Equally interesting is what GM is not getting involved in:

- Distribution and sales

- Support, Service and Warranty

You are free to draw your own conclusions, but if Nikola was actually a legitimate company, this would have been one of the most fundamentally terrible deals in the history of North American capitalism.

What it instead appears to be GM's deal with the devil: They managed to extract such inordinate toll from Nikola (precisely because, I would argue, Nikola is build on fraud and was willing to do anything to gain some legitimacy), as to feel comfortable to ignore the ethical end of it.

It’s been a hot minute but basically the talk was about the programming language that they’re using which the lead was one of the main writers/collaborators for and how it was a secure language among other things that just weren’t really making sense.

Overall, I got the sense this was a person who aligned with their founder in selling themselves as badasses.

I think you mean GM.

Anyways, I'll preface this by saying: while a member of my former team handled acquisitions and divestitures, I've never participated in one.

Most due diligence processes I've heard or discussed never remotely focus on the functionality of the technology. Even the guy on our team doing the auditing couldn't tell us what the company/product did until it was publicly announced. The process focused on data and compliance like verifying revenue, profits, patents assigned, tax records, SOX audits, data access logs, are these transactions valid, are there weird or flagged wire transfers, do all engineers involved have a wavier signed writing over all IP, does everyone have a non-disclosure signed, etc.

I could see how "does this product actually work" getting overlooked in the process, because their supporting and underlying data is probably valid.

However, I'll again mention that I have never actually done an acquisition audit (just worked close to someone who did), so maybe someone else can chime in and tell me about some process I just don't know about.

SEC is nowhere to be seen. What I'm interested in is to see who actually bought into this scam? Is there a list of all the (smart money...cough) hedge funds, retirement funds and others who invested significantly in this scam? A clown basically masquerading as a visionary founder/tech with everything outsourced to other companies is literally walking away with billions by scamming the so-called "smart money".

Nowhere to be seen? Wasn’t it their investigation being opened that forced him out?

>SEC is nowhere to be seen.

Really?

>The U.S. Securities and Exchange Commission is examining Nikola Corp. to assess the merits of a short-seller’s allegations that the electric-truck maker deceived investors about its business prospects, according to people familiar with the matter.

https://www.bloomberg.com/news/articles/2020-09-14/sec-said-...

To be honest, SEC has not been doing its job for the past four years since this admin took control.

Not that it did much before that, since it lacked funding. Just like the IRS, CFTC, and FinCEN. And it lacked funding mostly because regulatory capture / special interest groups successfully lobbied to keep them "simple", to keep costs down. Of course keeping them simple sounds great but they are all very much in need of reforms, serious investment to modernize and to catch up with the market, which became very complex.

> What I'm interested in is to see who actually bought into this scam?

/r/wallstreetbets - As usual some big winners and big losers on both sides on the way up and the way down.

Its not quite "Pin the suicide hotline to the top of the sub" levels yet (bitcoin 2017) but there are some people losing their shirts over this.

So last week there were posts about how major players were scraping wsb for data to aid in their trades? Is that accurate? If so, it just ASTOUNDS me.

I love that sub, even though I absolutely do not invest. It's like a daytime tv drama, except the characters are even dumber sometimes.

> So last week there were posts about how major players were scraping wsb for data to aid in their trades?

Are you sure this wasn't a parody article? I recall something similar but it made a reference to your wifes boyfriend in the final paragraph which gave the game away.

Worth mentioning, Milton has made Billions on Nikola. Even if he's convicted of fraud, he's unlikely to serve any time and will still have billions he fleeced off of people.

It's worth noting that Madoff made billions from his fraud, had to return all of the remaining money to his victims... And will die in prison.

Very very few super-wealthy people serve prison time. Most don't even get convicted.

"The advertisement said the truck was 'In Motion', nothing more"... It's clear this is something they've thought out in advance.

True, but the ones who became wealthy because of their criminal acts are the ones who get convicted and end up in prison. In large part, this is because the government(s) can and do freeze assets related to financial crimes and frauds.

The ones that used their wealth to avoid conviction for non-financial crimes (see the UK sex scandal ongoing right now) generally avoid conviction by spending lots of money on legal defense, which they can do because their assets were not frozen.

In this case, if the guy's wealth comes from securities fraud, he won't be able to use it to defend himself because his assets will be frozen.

Milton's was already fairly well off due to his previous smoke and mirrors/ failure to deliver dHybrid.

"dHybrid landed a truck-conversion deal with Swift Transportation, leading to a mid-2012 lawsuit predicated on dHybrid's failure to deliver on its agreement.[6] dHybrid would eventually be purchased by Worthington Industries in 2014[7] and, in 2015, Milton founded Nikola Motor Company with his brother, Travis, as the director of operations with a background in construction and remodeling."

He has plenty of assets to defend himself and clearly knows how close to the edge of the truth he can get and get away with it.

I've always been super skeptical of this company namely because of the founder (and their wholly unoriginal name). A look into his background reveals no prior engineering accomplishments let alone experience. His Wikipedia page says he dropped out of college to pursue sales and marketing. Yet, despite his lack of any professional track-record, he is one of the richest people in all of Utah and a member of the Mormon Church. I guess it's too early to tell if the company is fraudulent, but if the founder is, it's usually a tell-tale sign.

I grew up in the Mormon church. His career bio is all too common, unfortunately. If you think about it, it starts to make sense:

1. Missionaries spend 2 years trying to "market"/"sell" Mormonism. This might be a harsh way of putting it, but they are trying to recruit and retain members. Naturally, security/alarm sales are a natural summer job for them when they finish. This labor force was likely indispensible to Milton for his first company, "St. George Security and Alarm".

2. Mormons have a very tight social network. We REALLY trust one another. Its actually one of the great things about the religion. However, this makes us very vulnerable to fraud. There are lots of scummy MLMs in Utah that exploit the already established social circles in Utah.

In other words, it doesn't have much to do with the religion's tenets per se, but from the byproducts of it. I personally hope we produce more "Clayton Christiansens" and fewer "Trevor Miltons" for the tech world in the future.

>> "St. George Security and Alarm".

isn't this why Vivint has been so successful? I thought they pioneered converting recent missionaries into DTD alarm sales...

and converting DTD alarm sales into DTD solar sales.

That's exactly why Vivint has been so successful.

> "2. Mormons have a very tight social network. We REALLY trust one another. Its actually one of the great things about the religion. However, this makes us very vulnerable to fraud. There are lots of scummy MLMs in Utah that exploit the already established social circles in Utah."

https://en.wikipedia.org/wiki/Affinity_fraud

Only 6 days ago I opened a massive short position on this company, wish I shorted even more.

Reference: https://news.ycombinator.com/item?id=24473631

Nice. I still can't believe there's anyone that thinks there's anything serious behind this company. People want a crazy volatile play stock, goes up fun, goes down fun, etc. I get it, fun game. But actual products etc? Who believes that?

Might I ask how (as in which platform/bank/etc) you shorted NKLA stock?

I tried shorting it on alpaca.markets, although on a paper trading account, with no luck: "asset NKLA cannot be sold short".

If you're serious about getting in, I'd recommend you NOT to short this stock and instead buy some Puts (options) on it. Short selling leaves you totally exposed if this stock pops up, Kodak or Hertz style. This is the 2nd favorite stock over on /r/wallstreetbets so you can never be sure where the stock price is headed.

While what you said is true, puts are offered by market makers who have the expected price action priced in and so they have huge premiums right now to the point where it's just a -EV gamble. While shorting will still be able to sell to irrational investors.

Puts also have a risk that if there is a trading halt, and your puts expire within them, they will expire worthless if you cannot short the stock to exercise them.

I wish you a great fortune, but one thing that scares me (for you) is that the stock is up a lot in regular trading hours after this news! I have an open mind and I did well on Tesla stock, but I can't make any sense of this stock, especially today.

Given that the only thing they had seems to be a truck that goes downhill that's how I think their stock will behave.

So this is basically Theranos but for automobiles. Have we learned nothing?

duplicate: https://news.ycombinator.com/item?id=24539684

he just got arrested

https://twitter.com/sttbreakingnews/status/13080528194301091...

unsourced twitter rumour

Stock manipulation attempt?

This is probably not true & the tweet was deleted:

https://twitter.com/QTRResearch/status/1308054293254152194

He made $70 million already. What's the likelihood he keeps it?

In cash? Or loans with his stock as collateral? He was taking loans with his stock as collateral to buy more stock. I'm not sure he actually has any money at all once everything rinses out.

They did produce a truck didn't they? So what happened? Did they run out of cash? Was the product never built? What's the deal?

They've not yet produced a functioning truck. The one they made can't actually move and might not be anything more than a mostly empty shell.

How did they get GM to invest $2 bn?

> The tie-up sent Nikola’s shares surging by 51% and GM’s by 10%. Credit Suisse called it “a crucial validation datapoint on the GM EV strategy.”

That's 4bn of share price return for a 10 yea, 2bn partnership.

Presumably they'll now parachute there own execs in there to try and salvage something.

GM didn't invest 2 billion. GM got 2 billion in stock, 700 million in cash and a bunch of other stuff mentioned here for the deal: https://news.ycombinator.com/item?id=24546221

Guilt

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