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Elon has always seemed to have the attitude of "not everyone should invest in this stock". I find this refreshing. God forbid a CEO do anything except try to dr

Elon has always seemed to have the attitude of "not everyone should invest in this stock". I find this refreshing. God forbid a CEO do anything except try to drive the share price as high as humanly possible. I don't know if this carries the same weight in a public company, but setting expectations with investors is super important in a startup and prevents a ton of wasted time wrangling investors who don't get the true cost/benefit ratio of what you're doing.

paulcole 8y ago
> Elon has always seemed to have the attitude of "not everyone should invest in this stock". Sounds like the CEO equivalent of a movie director saying "I didn't make this one for the critics." Translation, "I know there are problems but I'd rather have my ego stroked by fans than face real criticism."
- moate 8y ago
  "I didn't make this one for the critics" frequently means "I made the movie I wanted" or "I made the movie the studio wanted". That statement could boil down to "I'm not concerned about money, I'm making a movie I wanted to make in service of the fans" or "I made a movie that I knew would make a ton of money, because people go to see this junk even if critics don't like it". CEO's don't have critics in the same sense that movies/art does. The financial/business sector work on completely different axes to judge performance. Elon seems to be more focused on his vision of the Big Picture (solving transportation problems, moving to new planets, fixing the energy crisis, etc) than making money in the short term (which might be over the next 10 years). He appears to be a man convinced he knows how to help fix global problems, and believes in his mission more than making money. You still need money to change the world, so he's also tried to do very well at the business side of it. I'm not convinced Musk will fix humanity. I'm also not convinced he won't. I just feel that this specific statement, that Tesla isn't a business everyone should be involved in, feels like a "we're mission driven, not money driven" proclamation to me.
  - paulcole 8y ago
    > "we're mission driven, not money driven" This is easy to say when it's someone else's money you're burning.
- lev99 8y ago
  To me it sounds like him saying the risk is higher than most investors are willing to accept. I also hold a wildly different interruption of the saying "I didn't make this one for the critics."
- gnode 8y ago
  It's more like a movie director deciding to make something other than a superhero action movie, and telling critics not to expect one. Not all investors have the same aims. Shaking off short-termist investors may be sensible to follow long term strategies. Sometimes public companies even have to become private again in order to pursue the course of action that's best for them.
  - wpietri 8y ago
    There is nothing wrong with making a small art-house film instead of a superhero action movie. There is a lot wrong with getting the budget of a superhero action movie and then making the sort of small art-house film that will never be able to pay off the investors. If this were some quirky, self-funded Musk project, he could do as he pleased. But not only do they have shareholders, they have $1.8 billion in loans due in the next 18 months: https://www.forbes.com/sites/jimcollins/2018/04/02/forget-the-autopilot-crash-and-recall-teslas-daunting-debt-repayment-schedule-is-the-real-issue/#7e95a873113d https://www.forbes.com/sites/jimcollins/2018/04/02/forget-th...
  - phkahler 8y ago
    >> Shaking off short-termist investors may be sensible to follow long term strategies. While I prefer to focus on long-term over short term, you still can't let the short term kill you. A lot of people think Tesla will be out of money within the year and that's a short-term problem that needs to be solved in the short term. If not there will be no long term.
  - adamsea 8y ago
    Or like a director trying to convince a major studio to fund a super expensive non action hero movie ... it would be the major studios more so than the critics who would take issue with a non-blockbustery flick.
zmk_ 8y ago
Actually as a CEO he has a fiduciary duty to maximise shareholder value.
- ceejayoz 8y ago
  In the long-term. "Fuck off, I know what I'm doing, and I'm not chasing short-term single quarter results" can easily be fulfilling that duty.
  - Thriptic 8y ago
    It certainly works for Amazon
- scottmf 8y ago
  Doesn’t he have a duty to be honest to shareholders?
- xkjkls 8y ago
  That's not entirely true. He has duties to run the company in with good faith and care, but not necessarily to maximize shareholder value.
  - garmaine 8y ago
    ‘Good faith and care’ is typically understood by US courts to have a strong emphasis on ROI. But you’re right, it is a little bit of gray area, and can be made purposefully more complicated when, e.g., the prospectus puts other duties first. Google’s “we’re not a typical company and we don’t intend to become one” is a famous example. For benefit corporations are the extreme example of this.
    - xkjkls 8y ago
      Almost all lawsuits regarding the good faith clause involve some sort of corrupt practice that enriched the executives at the expense of the shareholders (in fact, Tesla is currently involved in a similar lawsuit regarding its purchase of Solar City). It would be near impossible to prove bad faith in choosing one business strategy vs. another if there wasn't some corrupt intent or incentive.
dragontamer 8y ago
> Elon has always seemed to have the attitude of "not everyone should invest in this stock". This is financial suicide for the company. TSLA needs more money this year or next year. Losing $1 Billion per quarter means he is relying on his shareholders each time he raises another round of equity. The $1.7+ Billion to build the Gigafactory was from the Stock Market (https://electrek.co/2016/05/25/tesla-tsla-stock-offering-proceeds-model-3/ https://electrek.co/2016/05/25/tesla-tsla-stock-offering-pro...). Tesla will need future rounds like this to continue to function. Pissing off shareholders and reducing the value of your stock is financial suicide.
- craftyguy 8y ago
  Not really. Attracting the right kind of investors is more important to him than attracting all the investors. There are folks with dollars who can stomach TSLA, and there are folks who can not. Some might argue that it's better for the company overall (especially in the longer term) to attract the former and ignore the latter. The latter will generate a ton of noise, and cause great instability in the stock price because they frighten easily. Case in point: the price of TSLA today taking a dive because shareholders that cannot stomach TSLA are frightened for no good reason.
  - pvg 8y ago
    Attracting the right kind of investors is more important to him than attracting all the investors. That seems a bit counter to the purpose of an open public market.
    - pm90 8y ago
      Is it really though? An open public market just means that anyone can purchase the stock; not that just anyone should.
      - pvg 8y ago
        The GP was saying how important it was to Elon Musk to have the right kinds of investors rather than merely people who give you money. This is sort of the opposite of what a public capital market lets you do.
mcguire 8y ago
"God forbid a CEO do anything except try to drive the share price as high as humanly possible." If he wants to maximize the amount of money he gets the next time he goes to the trough, while minimizing the dilution, then yes, he needs to drive the price up.
- speby 8y ago
  That may be true but the shorter-term interests (less than a year or two, commonly) of some of these institutional investors is simply not in-line with the longer-term nature of what Tesla is doing. It would not be in Musk's best interests to pander to those investors and compromise the actual long-term integrity of a business that has tremendous opportunity to provide substantial returns by avoiding the mistakes of short-term decision-making.
jacquesm 8y ago
Not answering a couple of questions (to which he should have had the answers) cost him a substantial premium the next time he has to raise. And almost nobody believes that Tesla will not need money again.
- greglindahl 8y ago
  Is this speculation, or are you talking about some previous time where Tesla had to pay a lot more to raise after an Elon comment? Also, can you point out who said "Tesla will not need money again"? Elon is always careful to say something like "We will not need to raise money in <relatively short timeframe>". And then he raises money, says he did it because the price was right but it wasn't needed. Shorts accuse him of lying. Rinse, repeat.
  - jacquesm 8y ago
    If you feel that pissing off institutional investors is going to reduce the price of the next raise I'm fine with that. As for the second part of your comment: The Economist wrote that Tesla would have to raise money this year, 2.5 to 3 Billion $. Elon Musk's response to that: https://twitter.com/elonmusk/status/984705630106673152 https://twitter.com/elonmusk/status/984705630106673152 And as far as I can see it has no qualifiers. The complete text of the tweet: "The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money." Now, that's a pretty strong statement and just like the 5000 vehicles per week production in Q1 that everybody seems to have forgotten about (now it is suddenly good news they do about half that much) it is very much falsifiable. For Elon's sake (and all those employed at Tesla) I hope it works out that way but this could turn out to be a very expensive own goal.
    - greglindahl 8y ago
      Notice that his response to the Economist is in the form that I said -- the word "need" is present. As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing. IIRC the target announced after Q4 earnings was 2,500 Model 3's per week by the end of Q1, and they missed by 500. Honestly, this entire discussion is the kind of thing I'd expect on Seeking Alpha, not Hacker News.
ubernostrum 8y ago
You seem to think, and Musk seems to represent, that for most investors, investment is about ensuring each investment, in a vacuum, carries zero risk. Which is not true. Investors want to know about the risks, in detail, because then they can make informed choices. Maybe they'll adjust how much they invest, or look for offsetting investments (other companies or financial instruments that would go up if Tesla goes down), or do any of dozens of other things. But they can't do that if they don't get accurate information about the company, which is what Musk is supposed to provide. Being bombastic and arrogant instead of providing accurate information might be good PR in certain circles (like HN), but Musk has, well, literally any other venue he's ever spoken in as a place to be bombastic and arrogant. This is the venue where he's supposed to be actually honest with investors, not the venue to be fake-honest through statements like "not everyone should invest in this" (gee, Elon, that's never been true of any other company in history... oh wait).
- erikpukinskis 8y ago
  Musk is providing accurate information about the company: what they’re spending, what they’re doing, what their plans are. What he’s not providing is accurate predictions of how long things will take. And he’s not obligated to do. If investors want to make predictions, that’s their job. The company is only responsible for reporting what it did and what it will do.
  - ubernostrum 8y ago
    “And so where specifically will you be in terms of capital requirements?” Sacconaghi said. “Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?” Yeah. Real helpful there in providing financial information to investors.

paulcole 8y ago

> Elon has always seemed to have the attitude of "not everyone should invest in this stock". Sounds like the CEO equivalent of a movie director saying "I didn't make this one for the critics." Translation, "I know there are problems but I'd rather have my ego stroked by fans than face real criticism."

moate 8y ago
"I didn't make this one for the critics" frequently means "I made the movie I wanted" or "I made the movie the studio wanted". That statement could boil down to "I'm not concerned about money, I'm making a movie I wanted to make in service of the fans" or "I made a movie that I knew would make a ton of money, because people go to see this junk even if critics don't like it". CEO's don't have critics in the same sense that movies/art does. The financial/business sector work on completely different axes to judge performance. Elon seems to be more focused on his vision of the Big Picture (solving transportation problems, moving to new planets, fixing the energy crisis, etc) than making money in the short term (which might be over the next 10 years). He appears to be a man convinced he knows how to help fix global problems, and believes in his mission more than making money. You still need money to change the world, so he's also tried to do very well at the business side of it. I'm not convinced Musk will fix humanity. I'm also not convinced he won't. I just feel that this specific statement, that Tesla isn't a business everyone should be involved in, feels like a "we're mission driven, not money driven" proclamation to me.
- paulcole 8y ago
  > "we're mission driven, not money driven" This is easy to say when it's someone else's money you're burning.
lev99 8y ago
To me it sounds like him saying the risk is higher than most investors are willing to accept. I also hold a wildly different interruption of the saying "I didn't make this one for the critics."
gnode 8y ago
It's more like a movie director deciding to make something other than a superhero action movie, and telling critics not to expect one. Not all investors have the same aims. Shaking off short-termist investors may be sensible to follow long term strategies. Sometimes public companies even have to become private again in order to pursue the course of action that's best for them.
- wpietri 8y ago
  There is nothing wrong with making a small art-house film instead of a superhero action movie. There is a lot wrong with getting the budget of a superhero action movie and then making the sort of small art-house film that will never be able to pay off the investors. If this were some quirky, self-funded Musk project, he could do as he pleased. But not only do they have shareholders, they have $1.8 billion in loans due in the next 18 months: https://www.forbes.com/sites/jimcollins/2018/04/02/forget-the-autopilot-crash-and-recall-teslas-daunting-debt-repayment-schedule-is-the-real-issue/#7e95a873113d https://www.forbes.com/sites/jimcollins/2018/04/02/forget-th...
- phkahler 8y ago
  >> Shaking off short-termist investors may be sensible to follow long term strategies. While I prefer to focus on long-term over short term, you still can't let the short term kill you. A lot of people think Tesla will be out of money within the year and that's a short-term problem that needs to be solved in the short term. If not there will be no long term.
- adamsea 8y ago
  Or like a director trying to convince a major studio to fund a super expensive non action hero movie ... it would be the major studios more so than the critics who would take issue with a non-blockbustery flick.

zmk_ 8y ago

Actually as a CEO he has a fiduciary duty to maximise shareholder value.

ceejayoz 8y ago
In the long-term. "Fuck off, I know what I'm doing, and I'm not chasing short-term single quarter results" can easily be fulfilling that duty.
- Thriptic 8y ago
  It certainly works for Amazon
scottmf 8y ago
Doesn’t he have a duty to be honest to shareholders?
xkjkls 8y ago
That's not entirely true. He has duties to run the company in with good faith and care, but not necessarily to maximize shareholder value.
- garmaine 8y ago
  ‘Good faith and care’ is typically understood by US courts to have a strong emphasis on ROI. But you’re right, it is a little bit of gray area, and can be made purposefully more complicated when, e.g., the prospectus puts other duties first. Google’s “we’re not a typical company and we don’t intend to become one” is a famous example. For benefit corporations are the extreme example of this.
  - xkjkls 8y ago
    Almost all lawsuits regarding the good faith clause involve some sort of corrupt practice that enriched the executives at the expense of the shareholders (in fact, Tesla is currently involved in a similar lawsuit regarding its purchase of Solar City). It would be near impossible to prove bad faith in choosing one business strategy vs. another if there wasn't some corrupt intent or incentive.

dragontamer 8y ago

> Elon has always seemed to have the attitude of "not everyone should invest in this stock". This is financial suicide for the company. TSLA needs more money this year or next year. Losing $1 Billion per quarter means he is relying on his shareholders each time he raises another round of equity. The $1.7+ Billion to build the Gigafactory was from the Stock Market (https://electrek.co/2016/05/25/tesla-tsla-stock-offering-proceeds-model-3/ https://electrek.co/2016/05/25/tesla-tsla-stock-offering-pro...). Tesla will need future rounds like this to continue to function. Pissing off shareholders and reducing the value of your stock is financial suicide.

craftyguy 8y ago
Not really. Attracting the right kind of investors is more important to him than attracting all the investors. There are folks with dollars who can stomach TSLA, and there are folks who can not. Some might argue that it's better for the company overall (especially in the longer term) to attract the former and ignore the latter. The latter will generate a ton of noise, and cause great instability in the stock price because they frighten easily. Case in point: the price of TSLA today taking a dive because shareholders that cannot stomach TSLA are frightened for no good reason.
- pvg 8y ago
  Attracting the right kind of investors is more important to him than attracting all the investors. That seems a bit counter to the purpose of an open public market.
  - pm90 8y ago
    Is it really though? An open public market just means that anyone can purchase the stock; not that just anyone should.
    - pvg 8y ago
      The GP was saying how important it was to Elon Musk to have the right kinds of investors rather than merely people who give you money. This is sort of the opposite of what a public capital market lets you do.

mcguire 8y ago

"God forbid a CEO do anything except try to drive the share price as high as humanly possible." If he wants to maximize the amount of money he gets the next time he goes to the trough, while minimizing the dilution, then yes, he needs to drive the price up.

speby 8y ago
That may be true but the shorter-term interests (less than a year or two, commonly) of some of these institutional investors is simply not in-line with the longer-term nature of what Tesla is doing. It would not be in Musk's best interests to pander to those investors and compromise the actual long-term integrity of a business that has tremendous opportunity to provide substantial returns by avoiding the mistakes of short-term decision-making.

jacquesm 8y ago

Not answering a couple of questions (to which he should have had the answers) cost him a substantial premium the next time he has to raise. And almost nobody believes that Tesla will not need money again.

greglindahl 8y ago
Is this speculation, or are you talking about some previous time where Tesla had to pay a lot more to raise after an Elon comment? Also, can you point out who said "Tesla will not need money again"? Elon is always careful to say something like "We will not need to raise money in <relatively short timeframe>". And then he raises money, says he did it because the price was right but it wasn't needed. Shorts accuse him of lying. Rinse, repeat.
- jacquesm 8y ago
  If you feel that pissing off institutional investors is going to reduce the price of the next raise I'm fine with that. As for the second part of your comment: The Economist wrote that Tesla would have to raise money this year, 2.5 to 3 Billion $. Elon Musk's response to that: https://twitter.com/elonmusk/status/984705630106673152 https://twitter.com/elonmusk/status/984705630106673152 And as far as I can see it has no qualifiers. The complete text of the tweet: "The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money." Now, that's a pretty strong statement and just like the 5000 vehicles per week production in Q1 that everybody seems to have forgotten about (now it is suddenly good news they do about half that much) it is very much falsifiable. For Elon's sake (and all those employed at Tesla) I hope it works out that way but this could turn out to be a very expensive own goal.
  - greglindahl 8y ago
    Notice that his response to the Economist is in the form that I said -- the word "need" is present. As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing. IIRC the target announced after Q4 earnings was 2,500 Model 3's per week by the end of Q1, and they missed by 500. Honestly, this entire discussion is the kind of thing I'd expect on Seeking Alpha, not Hacker News.

ubernostrum 8y ago

You seem to think, and Musk seems to represent, that for most investors, investment is about ensuring each investment, in a vacuum, carries zero risk. Which is not true. Investors want to know about the risks, in detail, because then they can make informed choices. Maybe they'll adjust how much they invest, or look for offsetting investments (other companies or financial instruments that would go up if Tesla goes down), or do any of dozens of other things. But they can't do that if they don't get accurate information about the company, which is what Musk is supposed to provide. Being bombastic and arrogant instead of providing accurate information might be good PR in certain circles (like HN), but Musk has, well, literally any other venue he's ever spoken in as a place to be bombastic and arrogant. This is the venue where he's supposed to be actually honest with investors, not the venue to be fake-honest through statements like "not everyone should invest in this" (gee, Elon, that's never been true of any other company in history... oh wait).

erikpukinskis 8y ago
Musk is providing accurate information about the company: what they’re spending, what they’re doing, what their plans are. What he’s not providing is accurate predictions of how long things will take. And he’s not obligated to do. If investors want to make predictions, that’s their job. The company is only responsible for reporting what it did and what it will do.
- ubernostrum 8y ago
  “And so where specifically will you be in terms of capital requirements?” Sacconaghi said. “Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?” Yeah. Real helpful there in providing financial information to investors.