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Remind me- is Tesla a for-profit corporation or are they a non-profit organization? Making a profit is sort of the main point, though obviously not the only po

Remind me- is Tesla a for-profit corporation or are they a non-profit organization? Making a profit is sort of the main point, though obviously not the only point. They've been around since 2003 so it's not like they're a scrappy Y-Combinator incubator company.

chongli 10y ago
scrappy Y-Combinator incubator company. Right. What Tesla is attempting is orders of magnitude more difficult than your typical YC app shop with an exit strategy. I think they deserve a bit more slack than you seem willing to cut them. If it all blows up in their faces you can have your day with a smug "I told you so" but you won't be able to deny the benefits they've already provided to society via Musk's aggressive strategy and the effect that's had on the wider industry.
- radiorental 10y ago
  I agree with you but there is a very important difference. They're a publicly traded company and all that entails.
Hermel 10y ago
Musk founded Tesla with a vision to make the world more sustainable, and not with the vision to become obscenely rich. Being profitable is a means to an end for him, and not the other way around. And that's fine. The founders of a company are free to specify its purpose in the company's articles. There is no legal requirement that says corporations must seek profits.
- nchelluri 10y ago
  I hope you don't consider this a nitpick, > Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning who financed the company until the Series A round of funding.[37] Both men played active roles in the company's early development prior to and after Elon Musk's involvement, with Eberhard the original CEO of Tesla until he was asked to resign in August 2007 by the board of directors. Musk didn't found Tesla. That's from wikipedia.
- paul_milovanov 10y ago
  Are you kidding me? Fiduciary duty ring any bells?
  - lkbm 10y ago
    I'm a fiduciary serving on a board of directors, so yes, it rings a bell. We talk about our duty of care, our duty of loyalty, our duty of good faith. Now, I'm on the board of a non-profit, but I can tell you that even for for-profit corporations, fiduciary duties consists of those three duties. There is no duty of maximizing profits. There's not even a duty of maximizing share prices, which is probably what you're thinking about. To quote the US Supreme Court: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind."[1] Tesla needs to state their goal as "make the world more sustainable" so people becoming owners can do so with understanding of that goal. Shareholders need to back this goal. But fiduciary duty means they have to serve the interests of their principals, not that those interests are profit over all else. Let's not play this game of "there is only one legitimate goal for a corporation". That's not true, de facto or de jure. [1] http://caselaw.findlaw.com/us-supreme-court/13-354.html http://caselaw.findlaw.com/us-supreme-court/13-354.html
krschultz 10y ago
Making a profit is absolutely not a goal of Tesla's right now. If they were trying to and missing that would be a cause for alarm, but clearly they're not trying to do that at all. http://avc.com/2015/06/profits-vs-growth/ http://avc.com/2015/06/profits-vs-growth/

chongli 10y ago

scrappy Y-Combinator incubator company. Right. What Tesla is attempting is orders of magnitude more difficult than your typical YC app shop with an exit strategy. I think they deserve a bit more slack than you seem willing to cut them. If it all blows up in their faces you can have your day with a smug "I told you so" but you won't be able to deny the benefits they've already provided to society via Musk's aggressive strategy and the effect that's had on the wider industry.

radiorental 10y ago
I agree with you but there is a very important difference. They're a publicly traded company and all that entails.

Hermel 10y ago

Musk founded Tesla with a vision to make the world more sustainable, and not with the vision to become obscenely rich. Being profitable is a means to an end for him, and not the other way around. And that's fine. The founders of a company are free to specify its purpose in the company's articles. There is no legal requirement that says corporations must seek profits.

nchelluri 10y ago
I hope you don't consider this a nitpick, > Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning who financed the company until the Series A round of funding.[37] Both men played active roles in the company's early development prior to and after Elon Musk's involvement, with Eberhard the original CEO of Tesla until he was asked to resign in August 2007 by the board of directors. Musk didn't found Tesla. That's from wikipedia.
paul_milovanov 10y ago
Are you kidding me? Fiduciary duty ring any bells?
- lkbm 10y ago
  I'm a fiduciary serving on a board of directors, so yes, it rings a bell. We talk about our duty of care, our duty of loyalty, our duty of good faith. Now, I'm on the board of a non-profit, but I can tell you that even for for-profit corporations, fiduciary duties consists of those three duties. There is no duty of maximizing profits. There's not even a duty of maximizing share prices, which is probably what you're thinking about. To quote the US Supreme Court: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind."[1] Tesla needs to state their goal as "make the world more sustainable" so people becoming owners can do so with understanding of that goal. Shareholders need to back this goal. But fiduciary duty means they have to serve the interests of their principals, not that those interests are profit over all else. Let's not play this game of "there is only one legitimate goal for a corporation". That's not true, de facto or de jure. [1] http://caselaw.findlaw.com/us-supreme-court/13-354.html http://caselaw.findlaw.com/us-supreme-court/13-354.html

krschultz 10y ago

Making a profit is absolutely not a goal of Tesla's right now. If they were trying to and missing that would be a cause for alarm, but clearly they're not trying to do that at all. http://avc.com/2015/06/profits-vs-growth/ http://avc.com/2015/06/profits-vs-growth/