3 ms·

People are blinded by so called conventional wisdom which is what business people built when working with conventional businesses to make it easier for them to

People are blinded by so called conventional wisdom which is what business people built when working with conventional businesses to make it easier for them to understand what is going on, in most cases. Tesla is not a conventional business. It is more of an edge case where you have to put your thinking hat to make sense of it.

verletx64 9y ago
> It is more of an edge case where you have to put your thinking hat to make sense of it. It is far too simplistic to imply that those that are a bit bearish on Tesla's prospects are simply not "wearing their thinking caps". In the end, you can't discount what 'business people' think, because they're the ones on the other end of the table.
maxxxxx 9y ago
"Tesla is not a conventional business. " Tesla is a car and battery manufacturer. That's a very conventional business.
- lmilcin 9y ago
  My understanding is Tesla is development process company focused on learning and iterating with the production being only by-product of that process, necessary to keep the promise of greateness alive and also to support the learning process. My experience, it is neigh impossible to really learn without delivering the product, but you can learn without bringing in profit.
  - mamon 9y ago
    >> development process company focused on learning and iterating with the production being only by-product That's not a company you're describing, that's a research lab. Either they win big by discovering some revolutionary tech that they can patent and sublicense to the established car manufacturers or they go down, because there is only so much people willing to invest their money in a dream.
  - maxxxxx 9y ago
    "production being only by-product of that process," They burn through a lot of money and at some point either have to find more investment or make profits. They are not a research institution.
cbanek 9y ago
> People are blinded by so called conventional wisdom This seems to be the exact kind of thinking that led to the dotcom bust. I've commented before on the whole Tesla valuation thing, and people try to think of it like a tech company, and want to value it like a tech company. Tesla needs to actually produce things in a factory, deal with regulations and supply chain, which are very conventional business problems, and where the trouble is.
- lmilcin 9y ago
  Tesla is not a production company yet. Tesla is a promise of what it can be. The promise is that it can be one of the biggest, greatest and most important companies in the world, sometimes in the future. The current job of Tesla is not to start producing tons of cash, it is to maintain the faith that the promise will be fulfilled. The faith is maintained in few ways: - by constantly kicking ass technologically -- improving the products way outside of what competitors believed was even possible, - by iterating crazy fast on their ideas -- something that conventional car companies will not be able to do. They won't be able to do because they would have to replace most of their management with people that are suited to this pace of change. Conventional car companies may flex muscles, but all their money will not be enough because the biggest problem doesn't lie in having the funds but in people. Funds are easy once you show you can do it, but getting the right people is much more difficult once you have large and established business. - by showing they can maintain exponential growth until they are dominant force in the market.
  - dragontamer 9y ago
    > Tesla is not a production company yet. Tesla is a promise of what it can be. A company that loses $1.5 Billion per quarter? Not even Amazon at "peak investment" had such horrible cash flow numbers. There's very little value in a charity. If Tesla can't correct itself and actually start making money (or at very least: become a sustainable charity and prevent itself from losing money!!), then it simply has no future. It will eventually run out of cash and die. That's the worry. If Tesla dies, then Tesla cars won't have anyone to take care of them, because Tesla's horrible model prevents 3rd parties from learning how to maintain a Tesla car.
aaavl2821 9y ago
A counter argument is that tesla is a conventional business that is packaged by Elon musks masterful salesmanship as a one of a kind company where normal rules don't apply. At my old company Martin shkreli pitched to us a few times, and Elon uses some similar reality distortion tricks to excite investors. For tesla, that is necessary, because no rational investor would invest in an electric car startup. But if you can get investors excited enough about some vague but very promising future, they will overlook short term failures and be guided less by fact than belief
- lmilcin 9y ago
  I guess this "conventional" thinking was due to the fact that electric car startups had bad history of not delivering. Tesla excites investors because they have history of not only delivering but also exceeding expectations. I think as long as they keep delivering on those expectations, they will be immune to conventional valuation methods.
  - dragontamer 9y ago
    > exceeding expectations How many Model 3 cars were supposed to be delivered by now? 5000 per month? Or something? The company, instead of working out its issues with the Model 3, hype up the Tesla Semi and Tesla Roadster, in hopes that people forget about its Model 3 issues. This is a company that's tilting way more in the "hopes and dreams" category than any actual, physical deliveries.
    - aaavl2821 9y ago
      Agreed, and this is where it can get messy. Distracting investors from bad news to buy your company more time to accomplish hard goals is one thing, and a necessary evil that many companies (big and small) face from time to time. But when this practice becomes a regular thing because execution continues to fall short of promises, you fall down a slippery slope where perception matters more than reality this is a large part of what happened with theranos
  - d4rti 9y ago

verletx64 9y ago

> It is more of an edge case where you have to put your thinking hat to make sense of it. It is far too simplistic to imply that those that are a bit bearish on Tesla's prospects are simply not "wearing their thinking caps". In the end, you can't discount what 'business people' think, because they're the ones on the other end of the table.

maxxxxx 9y ago

"Tesla is not a conventional business. " Tesla is a car and battery manufacturer. That's a very conventional business.

lmilcin 9y ago
My understanding is Tesla is development process company focused on learning and iterating with the production being only by-product of that process, necessary to keep the promise of greateness alive and also to support the learning process. My experience, it is neigh impossible to really learn without delivering the product, but you can learn without bringing in profit.
- mamon 9y ago
  >> development process company focused on learning and iterating with the production being only by-product That's not a company you're describing, that's a research lab. Either they win big by discovering some revolutionary tech that they can patent and sublicense to the established car manufacturers or they go down, because there is only so much people willing to invest their money in a dream.
- maxxxxx 9y ago
  "production being only by-product of that process," They burn through a lot of money and at some point either have to find more investment or make profits. They are not a research institution.

cbanek 9y ago

> People are blinded by so called conventional wisdom This seems to be the exact kind of thinking that led to the dotcom bust. I've commented before on the whole Tesla valuation thing, and people try to think of it like a tech company, and want to value it like a tech company. Tesla needs to actually produce things in a factory, deal with regulations and supply chain, which are very conventional business problems, and where the trouble is.

lmilcin 9y ago
Tesla is not a production company yet. Tesla is a promise of what it can be. The promise is that it can be one of the biggest, greatest and most important companies in the world, sometimes in the future. The current job of Tesla is not to start producing tons of cash, it is to maintain the faith that the promise will be fulfilled. The faith is maintained in few ways: - by constantly kicking ass technologically -- improving the products way outside of what competitors believed was even possible, - by iterating crazy fast on their ideas -- something that conventional car companies will not be able to do. They won't be able to do because they would have to replace most of their management with people that are suited to this pace of change. Conventional car companies may flex muscles, but all their money will not be enough because the biggest problem doesn't lie in having the funds but in people. Funds are easy once you show you can do it, but getting the right people is much more difficult once you have large and established business. - by showing they can maintain exponential growth until they are dominant force in the market.
- dragontamer 9y ago
  > Tesla is not a production company yet. Tesla is a promise of what it can be. A company that loses $1.5 Billion per quarter? Not even Amazon at "peak investment" had such horrible cash flow numbers. There's very little value in a charity. If Tesla can't correct itself and actually start making money (or at very least: become a sustainable charity and prevent itself from losing money!!), then it simply has no future. It will eventually run out of cash and die. That's the worry. If Tesla dies, then Tesla cars won't have anyone to take care of them, because Tesla's horrible model prevents 3rd parties from learning how to maintain a Tesla car.

aaavl2821 9y ago

A counter argument is that tesla is a conventional business that is packaged by Elon musks masterful salesmanship as a one of a kind company where normal rules don't apply. At my old company Martin shkreli pitched to us a few times, and Elon uses some similar reality distortion tricks to excite investors. For tesla, that is necessary, because no rational investor would invest in an electric car startup. But if you can get investors excited enough about some vague but very promising future, they will overlook short term failures and be guided less by fact than belief

lmilcin 9y ago
I guess this "conventional" thinking was due to the fact that electric car startups had bad history of not delivering. Tesla excites investors because they have history of not only delivering but also exceeding expectations. I think as long as they keep delivering on those expectations, they will be immune to conventional valuation methods.
- dragontamer 9y ago
  > exceeding expectations How many Model 3 cars were supposed to be delivered by now? 5000 per month? Or something? The company, instead of working out its issues with the Model 3, hype up the Tesla Semi and Tesla Roadster, in hopes that people forget about its Model 3 issues. This is a company that's tilting way more in the "hopes and dreams" category than any actual, physical deliveries.
  - aaavl2821 9y ago
    Agreed, and this is where it can get messy. Distracting investors from bad news to buy your company more time to accomplish hard goals is one thing, and a necessary evil that many companies (big and small) face from time to time. But when this practice becomes a regular thing because execution continues to fall short of promises, you fall down a slippery slope where perception matters more than reality this is a large part of what happened with theranos
- d4rti 9y ago