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Self-induced, yes, but not stupid, and there is a reason. Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit (https:/

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.
    - endswapper 10y ago
      If they could convince an oil company to do so they might. Given that, "there is a deep, liquid market for jet fuel," is having Emirates airline and Emirates National Oil Company under the same umbrella poor strategy? You're also omitting the fact/point that the energy industry is evolving very quickly and that calls in to question the established markets. Energy over-supply in general creates opportunities for disruption and new business models.
      - harryh 10y ago
        is having Emirates airline and Emirates National Oil Company under the same umbrella poor strategy? Yes. The only reason it exists this way is because they're both owned by the corrupt government/monarchy of Dubai. Keep in mind that under the same umbrella you also have everything from banks to a cement company to hotels to a mineral water company. This isn't a coherent business strategy, it's just what happens when a single family rules over an entire economy and basically owns everything.
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

[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.
  - endswapper 10y ago
    If they could convince an oil company to do so they might. Given that, "there is a deep, liquid market for jet fuel," is having Emirates airline and Emirates National Oil Company under the same umbrella poor strategy? You're also omitting the fact/point that the energy industry is evolving very quickly and that calls in to question the established markets. Energy over-supply in general creates opportunities for disruption and new business models.
    - harryh 10y ago
      is having Emirates airline and Emirates National Oil Company under the same umbrella poor strategy? Yes. The only reason it exists this way is because they're both owned by the corrupt government/monarchy of Dubai. Keep in mind that under the same umbrella you also have everything from banks to a cement company to hotels to a mineral water company. This isn't a coherent business strategy, it's just what happens when a single family rules over an entire economy and basically owns everything.

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