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> Couple this cash crunch for two of his companies along with the Space X rocket explosion today, I can't imagine the amount of stress Musk is under right now!!

> Couple this cash crunch for two of his companies along with the Space X rocket explosion today, I can't imagine the amount of stress Musk is under right now!! Self-induced stress. There is no reason for Tesla to have purchased Solar City. It was an extremely financially stupid and ego-maniacal deal, and the fact that financial institutions want protection against it just proves it. If there is ever a moment that people turn back and ask why Tesla failed, it will be this. I don't think Tesla as a company will disappear, but I can definitely see Musk losing control because of financials spinning out of control, and this would be the jump-the-shark moment.

endswapper 10y ago
Self-induced, yes, but not stupid, and there is a reason. Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit (https://hbr.org/2012/07/narcissism-the-difference-betw https://hbr.org/2012/07/narcissism-the-difference-betw, http://www.psychologicalscience.org/index.php/news/minds-business/is-narcissism-essential-for-success.html http://www.psychologicalscience.org/index.php/news/minds-bus...) entrepreneurs and leaders. The reason is that as a single unit the combined companies are a much more compelling offering as a next-generation energy company managing, both supply and demand of a sustainable, renewable resource. I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale. The article is an interesting example of how entrepreneurship, and any startup battles similar issues with growth, debt and financing, regardless of the financial position, or level of influence of the founder. All the more reason not to be disheartened when facing challenges of a similar nature, though likely at a different scale. Master plans 1 and 2 from Musk have been large in scope, practical, achievable steps towards what I think is the moonshot, which is a renewable energy ecosystem for the future.
- deleted 10y ago
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- harryh 10y ago
  It's not at all clear to me that power generation via solar has anything at all to do with supplying electricity to cars. The power generated can be used for anything. The vast majority will go to things other than cars. Electric cars can consume electricity from any source and, at least for a while, the vast majority will be coming from sources other than solar. Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers. It's pretty clear to me that the merging of the companies is mostly due to cashflow management on the part of Musk and has little to do with any real synergies between their businesses. Stockholders in one or both companies are likely to suffer due to the merger.
  - endswapper 10y ago
    Electric cars represent a substantial demand for electricity. Solar represents a cost-effective renewable supply of electricity. The two do go hand-in-hand. "Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers." Yes, but the point is that there is a reason to combine those two, if the long-term agenda is to create a next-generation energy company, as opposed to simply competing in their respective markets, which was a response to pfarnsworth's comments. I do agree with the likelihood of certain shareholders being negatively affected. You are also probably right about the motivation being cashflow, but that is due to circumstances/timing rather than a lack of synergy.
    - harryh 10y ago
      Airline companies represent a substantial demand for jet fuel but you don't see them merging with oil companies. Because there is a deep, liquid market for jet fuel. Just like electricity.
- Analemma_ 10y ago
  > Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit entrepreneurs and leaders. It's possible that they benefit leaders on average but can also cause black-swan cases of terrible decision-making, which I think is the argument against the SolarCity purchase here. Tragic flaws and all that. > I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale. I mentioned this in a previous comment about the SolarCity merger: most people agree it makes sense strategically. We're wondering whether it's a good move tactically, for a company in a stable-but-iffy cash flow situation to buy another company that was hemorrhaging cash and wasn't expected to continue as a going concern for much longer.
  - endswapper 10y ago
    What are the alternatives? I think we can make an objective judgment on this tactic vs. any other?
    - joshyeager 10y ago
      The safe alternative (from Tesla's perspective) would have been to let SolarCity die. That's why people are questioning Musk's actions on this deal: they look like he's putting his own interests ahead of Tesla's.
      - endswapper 10y ago
        First, my point is that there is a larger objective where synergy between the companies exist and serve a strategic purpose. Namely, each is a component in building a next-gen energy company. So, the tactics Analemma_ 50 and I are discussing are what other sustainable, renewable supply options exist. Because that is what SolarCity represents. Does it make sense to buy troubled SolarCity before they go under, or does it make more sense to buy another solar (or insert renewable here), or does it make more sense to start over on that component. Those are the alternative tactics I am interested in, which I am not aware of.
        10y ago
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nnain 10y ago
> It was an extremely financially stupid and ego-maniacal deal Maybe. But also maybe, it's breaking the conventional wisdom that has gotten him where he is today. > I can definitely see Musk losing control... I am sure investors would be super careful of doing that. Specially now, when we remember what happened to Apple when Steve was expelled.
jaredhansen 10y ago
>there is no reason for Tesla to have purchased Solar City. It was an extremely financially stupid and ego-maniacal deal... I think you're speculating. There are lots of plausible reasons. For example, see S+C's Alex Danco's series on this: https://medium.com/@alexdanco/in-a-world-of-energy-mainframes-our-pc-meet-the-internet-moment-is-very-close-dc3484eb4014#.5edvsqjc2 https://medium.com/@alexdanco/in-a-world-of-energy-mainframe... Could it all go horribly wrong? Well sure, of course. But that doesn't mean that the Tesla board is composed of idiots. edit: See also this thread, related: https://news.ycombinator.com/item?id=12402366 https://news.ycombinator.com/item?id=12402366
- forgetsusername 10y ago
  >I think you're speculating. There are many solar companies. Perhaps there are synergies with Tesla. But why SolarCity, specifically? What was outstanding about them as a target?
  - whamlastxmas 10y ago
    It's silly to expect someone to prove the point for you. Either argue why SolarCity wasn't a good choice or go ahead and assume that Elon Musk isn't a total idiot and had good reasons to buy it.
    - farcical_tinpot 10y ago
      Errrr, it's haemorrhaging cash? There are plenty of other solar companies that don't have those overheads and would be cheaper.
whamlastxmas 10y ago
>It was an extremely financially stupid and ego-maniacal deal Care to provide any evidence of this? Some analysis of the solar industry in general and what made Solar City especially bad? What's the insight you have into Musk's overall strategy and why do you feel like this merger is contrary to that strategy? >There is no reason for Tesla to have purchased Solar City They are releasing giant battery packs for homes. This seems like a pretty good reason to also have a solar solution to work with them, considering that just storing energy from the grid is sort of dumb. There are places with variable pricing but I can't imagine a Power Wall would ever offset those price differences.

endswapper 10y ago

Self-induced, yes, but not stupid, and there is a reason. Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit (https://hbr.org/2012/07/narcissism-the-difference-betw https://hbr.org/2012/07/narcissism-the-difference-betw, http://www.psychologicalscience.org/index.php/news/minds-business/is-narcissism-essential-for-success.html http://www.psychologicalscience.org/index.php/news/minds-bus...) entrepreneurs and leaders. The reason is that as a single unit the combined companies are a much more compelling offering as a next-generation energy company managing, both supply and demand of a sustainable, renewable resource. I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale. The article is an interesting example of how entrepreneurship, and any startup battles similar issues with growth, debt and financing, regardless of the financial position, or level of influence of the founder. All the more reason not to be disheartened when facing challenges of a similar nature, though likely at a different scale. Master plans 1 and 2 from Musk have been large in scope, practical, achievable steps towards what I think is the moonshot, which is a renewable energy ecosystem for the future.

deleted 10y ago
[deleted]
harryh 10y ago
It's not at all clear to me that power generation via solar has anything at all to do with supplying electricity to cars. The power generated can be used for anything. The vast majority will go to things other than cars. Electric cars can consume electricity from any source and, at least for a while, the vast majority will be coming from sources other than solar. Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers. It's pretty clear to me that the merging of the companies is mostly due to cashflow management on the part of Musk and has little to do with any real synergies between their businesses. Stockholders in one or both companies are likely to suffer due to the merger.
- endswapper 10y ago
  Electric cars represent a substantial demand for electricity. Solar represents a cost-effective renewable supply of electricity. The two do go hand-in-hand. "Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers." Yes, but the point is that there is a reason to combine those two, if the long-term agenda is to create a next-generation energy company, as opposed to simply competing in their respective markets, which was a response to pfarnsworth's comments. I do agree with the likelihood of certain shareholders being negatively affected. You are also probably right about the motivation being cashflow, but that is due to circumstances/timing rather than a lack of synergy.
  - harryh 10y ago
    Airline companies represent a substantial demand for jet fuel but you don't see them merging with oil companies. Because there is a deep, liquid market for jet fuel. Just like electricity.
Analemma_ 10y ago
> Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit entrepreneurs and leaders. It's possible that they benefit leaders on average but can also cause black-swan cases of terrible decision-making, which I think is the argument against the SolarCity purchase here. Tragic flaws and all that. > I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale. I mentioned this in a previous comment about the SolarCity merger: most people agree it makes sense strategically. We're wondering whether it's a good move tactically, for a company in a stable-but-iffy cash flow situation to buy another company that was hemorrhaging cash and wasn't expected to continue as a going concern for much longer.
- endswapper 10y ago
  What are the alternatives? I think we can make an objective judgment on this tactic vs. any other?
  - joshyeager 10y ago
    The safe alternative (from Tesla's perspective) would have been to let SolarCity die. That's why people are questioning Musk's actions on this deal: they look like he's putting his own interests ahead of Tesla's.
    - endswapper 10y ago
      First, my point is that there is a larger objective where synergy between the companies exist and serve a strategic purpose. Namely, each is a component in building a next-gen energy company. So, the tactics Analemma_ 50 and I are discussing are what other sustainable, renewable supply options exist. Because that is what SolarCity represents. Does it make sense to buy troubled SolarCity before they go under, or does it make more sense to buy another solar (or insert renewable here), or does it make more sense to start over on that component. Those are the alternative tactics I am interested in, which I am not aware of.
      - 10y ago

deleted 10y ago

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nnain 10y ago

> It was an extremely financially stupid and ego-maniacal deal Maybe. But also maybe, it's breaking the conventional wisdom that has gotten him where he is today. > I can definitely see Musk losing control... I am sure investors would be super careful of doing that. Specially now, when we remember what happened to Apple when Steve was expelled.

jaredhansen 10y ago

>there is no reason for Tesla to have purchased Solar City. It was an extremely financially stupid and ego-maniacal deal... I think you're speculating. There are lots of plausible reasons. For example, see S+C's Alex Danco's series on this: https://medium.com/@alexdanco/in-a-world-of-energy-mainframes-our-pc-meet-the-internet-moment-is-very-close-dc3484eb4014#.5edvsqjc2 https://medium.com/@alexdanco/in-a-world-of-energy-mainframe... Could it all go horribly wrong? Well sure, of course. But that doesn't mean that the Tesla board is composed of idiots. edit: See also this thread, related: https://news.ycombinator.com/item?id=12402366 https://news.ycombinator.com/item?id=12402366

forgetsusername 10y ago
>I think you're speculating. There are many solar companies. Perhaps there are synergies with Tesla. But why SolarCity, specifically? What was outstanding about them as a target?
- whamlastxmas 10y ago
  It's silly to expect someone to prove the point for you. Either argue why SolarCity wasn't a good choice or go ahead and assume that Elon Musk isn't a total idiot and had good reasons to buy it.
  - farcical_tinpot 10y ago
    Errrr, it's haemorrhaging cash? There are plenty of other solar companies that don't have those overheads and would be cheaper.

whamlastxmas 10y ago

>It was an extremely financially stupid and ego-maniacal deal Care to provide any evidence of this? Some analysis of the solar industry in general and what made Solar City especially bad? What's the insight you have into Musk's overall strategy and why do you feel like this merger is contrary to that strategy? >There is no reason for Tesla to have purchased Solar City They are releasing giant battery packs for homes. This seems like a pretty good reason to also have a solar solution to work with them, considering that just storing energy from the grid is sort of dumb. There are places with variable pricing but I can't imagine a Power Wall would ever offset those price differences.