16 ms·

Ex-SolarCity employees: We were fired after reporting millions in fake sales

279 points by fabian2k 8y ago

Sgt_Apone 8y ago
This tactic allegedly resulted, this person said, in tens or hundreds of millions of dollars in phantom revenue. He added that more than a dozen people reported the practice to the relevant human resources representatives, and CEO Elon Musk himself, who never replied. So employees were pumping up projected sales figures for (at least) personal benefit in the form of bonuses. What happens when these figures don't materialize?
- a2tech 8y ago
  Nothing. Its a pretty common problem in sales. Lots of sales people are constantly moving jobs and pushing their numbers up.
  - sk5t 8y ago
    Who are these poor souls paying out bonuses and commissions on unrealized revenue?
    - pc86 8y ago
      When everyone pays bonuses on unrealized revenue it puts you at a hiring disadvantage to pay bonuses off of realized revenue only, or to cut future bonuses when revenue doesn't materialize.
      - Hello71 8y ago
        Yes, it in fact does put you at a hiring advantage because it will select for employees actually selling products instead of claiming to sell them.
        pc86 8y ago
        Realized revenue will always be a percentage of unrealized revenue less than 100%. So by definition paying off of realized revenue at the same rate means you're going to be paying less in commissions to your sales staff. If I'm a salesperson looking for my next gig you're going to have to prove that you're paying a high enough commission for it to be worth it to me. But most importantly, why would a salesperson who can make a $15k commission immediately work someplace where they need to wait for the sales and billing cycles to complete? That could easily be 30-60 days after start and will put you tens of thousands in commissions behind your competitors. And if a salesperson quits or is terminated do they still get commissions 30-60+ days in the future? Unlikely, especially if there's any bad blood. From a business standpoint it's easier to pay on unrealized revenue and decrease the overall commission amount such that it's still profitable even when you're paying commission on money the company doesn't see.
        mcguire 8y ago
        See also the Ben & Jerry's management salary thing.
        pc86 8y ago
        Which is what?
        mcguire 8y ago
        Back in the early days, Ben & Jerry's had a policy limiting upper management salary to a (small) multiplier of the pay of line workers. They were subsequently "unable to hire qualified management" and removed that policy. It was a minor kerfluffle.
    - Declanomous 8y ago
      Commission typically isn't paid out until the company is paid in my experience. Bonuses are different, but some companies I work for actually tracked how many orders were actually fully paid for vs. how many were entered into the system. A concerning number of salespeople would basically sign people up if anything the customer said could be construed as being interested, and their numbers would look great until you looked at the number of sales that fell through. I never has the most sales in a single month when I worked sales, but I regularly had the highest realized revenue because every single person I signed up actually wanted what they were purchasing.
      - jdo20bbx 8y ago
        This was all over the cell phone industry when I worked networks side. This was pre-iPhone era, just to give an idea how long ago. I traveled around metro areas measuring signal quality, simple upgrades or maintenance, often stopping at nearby retail outlets rather than laptop in the truck. I’d get to know the store staff and they’d talk freely around me about “fake” signups to juice numbers. The trick was sign em up at end of month, cancel them before a bill got sent. That way the store appeared to hit their monthly target. They’d often do fleet style signups; construction company would come in legit looking for 10 lines, the store would sign up 20 phones for construction company. Then return half before the 14-day no questions asked period. This was going on all the time, across multiple stores, as far as I could tell. The details would change, from construction to startup or new business needing phone in a hurry.
        jstarfish 8y ago
        Heh, the same game gets played in retail commissions. Didn't hit numbers for the month? Buy a bunch of your own product, wait a few days until the next cycle starts, then return it all.
    - megaman22 8y ago
      There can be a lot of weird bonus structures kicking around too. For a while, my girlfriend worked in sales at Oracle, and while they were trying to push their cloud offerings, the had some crazy-pants bonuses for any cloud sales; on the order of $4-6000 a quarter if you sold cloud subscriptions. So she got her dad to buy $300 worth of hosting for his auto parts side business, and collected 20x that in bonus.
  - compcoffee 8y ago
    >Its a pretty common problem in sales. Lots of sales people are constantly moving jobs and pushing their numbers up. HackerNews: Wells Fargo presses sales people to fake sales: Send those executives to the guillotine! (this was literally said by a top comment on one of the threads). Tesla presses sales people to fake numbers: Nothing to see here, standard operating procedure. If/when these companies fold, I hope the rabid supporters are held to account.
    - jtx22 8y ago
      SolarCity, not Tesla.
- AdmiralAsshat 8y ago
  The Sales people will survive, with their bonuses. Someone in a "cost center" like Support will get laid off instead.
- wooptoo 8y ago
  The next Enron happens
shashanoid 8y ago
[deleted]
- notdang 8y ago
  How ethical or legal is to divulge this information while working at Shopify?
- shafyy 8y ago
  Pic or it didn't happen.
  - shafyy 8y ago
    Ah come on, a little but of humor.
jerf 8y ago
Kinda hope these accusations are mostly true in a way, since Ars doesn't seem to show any compunction about naming names filed in a lawsuit. Would suck for the named persons if it turns out to be entirely false. I miss when journalists at least pretended to have standards.
- shafyy 8y ago
  It does seem like the involved persons' names are public, no?
  - godzillabrennus 8y ago
    Yes but few bother to read lawsuits. Most read news coverage of lawsuits.
    - Sgt_Apone 8y ago
      So, while it's public information, they shouldn't report the names because most people won't read it? I'm not sure I follow.
      - FeepingCreature 8y ago
        The binary categories of "public" and "nonpublic" are just approximations for exposure.
shafyy 8y ago
"This tactic allegedly resulted, this person said, in tens of hundreds of millions of dollars in phantom revenue." SolarCity had revenues of ~$480M in 2016 [0]. "Tens of hundreds of millions" would mean billions of dollars of phantom revenue. Even if that fake revenue would be distributed over a couple of years, it would have been a significant proportion of SolarCity's revenue. Just seems unrealistic that the SEC or any other agency didn't realize that. Or what do they mean by "Tens of hundreds of millions?". Did they mean to write "Tens OR hundreds of millions?". Even then the same logic applies. [0] https://www.statista.com/statistics/505770/revenue-of-solarcity-corp-breakdown/ https://www.statista.com/statistics/505770/revenue-of-solarc...
- adamson 8y ago
  That construction is so weird that I'm going to assume it was a typo and that they meant "tens or hundreds"
  - shafyy 8y ago
    Ok. So it could be either $40M or $400M - that's a huge range. Let's assume something in the middle, like $200m. Does it seem credible to you guys that nobody except the three plaintiffs noticed that SolarCity faked half of their 2016 revenue?
    - tango24 8y ago
      I would wager that anything in a range 10%-50% of missing revenue, for a publicly traded company, would be caught by external auditor. And I’d im not mistaken, external auditors are required. If I’m wrong on either of those accounts, then I’d be seriously concerned about our stock market.
      - TheOtherHobbes 8y ago
        This shouldn’t have me laugh out loud, but it did.
    - mistercow 8y ago
mkirklions 8y ago
Why are we blaming the employees when these kind of things come from high pressure management. Everyone is aware the Elon works his employees to death at Tesla, SpaceX, and apparently SolarCity. I feel like these tech companies are great for consumers and shareholders, but employees are worked like dogs to keep the profit flowing.
- matthewmacleod 8y ago
  That's a shite excuse. "Just following orders" etc.
  - mkirklions 8y ago
    Have you worked at a company before?
    - dang 8y ago
      Would you please stop posting inflammatory comments to Hacker News? The idea here is: if you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - jessaustin 8y ago
    If your neighbor was one of the salespeople, then sure go ahead and slag her for it. If you're a prosecutor with jurisdiction and you think there's a case, jump on it. Since most of us don't personally know any of the people involved, there's not much point in selecting these nobodies for our two minutes of hate. The character we're going to have to deal with again is the dude at the top, so naturally he's the one whose behavior we'd like to affect.
- gipp 8y ago
  There's no reason both can't be at fault.
- compcoffee 8y ago
onepremise 8y ago
Idk, all this hearsay and the saboteur rebranded whistleblower coming out against TSLA/SolarCity with no real substantial proof. Still cant help but wonder if it's just the usual stock shorters creating new opportunities for themselves or fossil fuel supporters and baby boomers looking for new ways to destroy TSLA.
- paidleaf 8y ago
  Certainly a lot of short sellers ( and bulls ) spreading rumors online, but this seems more like the continuation of the war between elon musk and journalists. There have been a surprising number of hit pieces by a number of news companies against musk and his companies lately. I think I've seen more negative news articles concerning elon musk in the past 4 months than the 4 years before that. There seems to be a pattern that whenever someone challenges journalists or their industry, they gang up and pile on. I think it's going to be an interesting couple of months for elon musk as I think these journalists are just getting warmed up with their anti-musk hit pieces.
  - JumpCrisscross 8y ago
    > the war between elon musk and journalists Elon is attempting to maneuver Tesla through a tight operating and financial envelope. He is doing so with public funding. Of course you're going to have a lot of debate about what he's doing. Journalists being critical isn't them launching a war, it's them attempting to leave no stone unturned.
    - ameister14 8y ago
      >Journalists being critical isn't them launching a war, it's them attempting to leave no stone unturned. When you only do your job some of the time, it's reasonable to question your motivation. We've had years of Tesla and Musk puff-pieces and it's only in the last few months that journalists have decided to leave no stone unturned en masse.
      - JumpCrisscross 8y ago
jewpiterjones 8y ago
Totally a coincidence this suit and story drops the day before Tesla announces earnings and most short sellers need to close their positions. TOTALLY.
foxyv 8y ago
My partner worked for various solar companies (But not Solar City) as a canvasser hoping to get some sales experience. As a result we got to see first hand how corrupt and underhanded their sales departments could be. Canvassers were exploited mercilessly and commissions never appeared as new requirements were added to the payouts. Paychecks bounced periodically. Canvassers would be told to go door to door in areas where solicitation was illegal even though the company knew it was illegal and risked getting their employees arrested. Managers would hire friends and use fake leads to make them look good. I kind of hoped that Solar City would be an exception but I'm not surprised. It seems like the entire solar industry is focused more on extracting government subsidies than on creating long term revenue streams. I don't think management is very confident of the long term prospects of residential solar. Especially considering pushback from utility companies.
- api 8y ago
  Such things are common in sales in general. It's absolutely cutthroat. Salespeople, managers, everyone is in a Hobbesian all-against-all fight to the death for commissions. Crime and fraud are abundant. Personal attacks are not even that uncommon. Anyone who doesn't play this game tends to get muscled out. It's obviously worse in some organizations than others, but it's probably harder to create a non-toxic sales org than to create a toxic one. Some organizations encourage toxic sales organizations because unfortunately it works, at least in the short term. It can do damage later but that's long after commissions have been earned.
  - christophilus 8y ago
    I work at Elastic, and can honestly say, this is the second company I’ve ever worked for whose sales team is respectable. They’re a bunch of highly technical consultants, and their goal is to solve customer problems even if the solution doesn’t earn Elastic a dime. It’s refreshing.
- linuxftw 8y ago
  > It seems like the entire solar industry is focused more on extracting government subsidies than on creating long term revenue streams. Some might argue this is the exact nature of government subsidies. People are always going to make choices in their economic self-interest. Either solar needs to be the most cost effective solution for their energy needs, or the government needs to artificially inflate the cost of other energy (or reduce any subsidies to other energy to make solar more competitive). Every time a hurricane knocks out a town's electric grid and federal funds are used to repair it, that's a subsidy. When government authority to exercise eminent domain acquires easements or land to erect power distribution, that's a subsidy. Not to mention utilities being absolved from responsibility for the pollution they create.
cletus 8y ago
Ok, I can write out the script for this knowing only the headline. - Elon defenders will jump in and claim it's all lies - Elon haters will chime in with "j'accuse!" I honestly don't know the truth about this (few would) but let me point some things: 1. I would find it strange if sales people were paid bonuses (let alone commissions) on non-real sales. 2. Even if bonuses were paid when no money was paid by the customer, this would eventually get reconciled and at some point pretty quickly that salesperson would get flagged. 3. Knowing that "tens or [sic] hundreds of millions of dollars" was in nonexistent sales would make an officer of the company guilty of any number of securities infractions. Not that this isn't possible of course but the severity of this has to be weighed against the benefits to make it more or less likely that it occurred given the potential outcomes. 4. Was SolarCity a public (note: "public" != "publicly listed") company? If so, there are financial reporting issues too. As well as any obligations to shareholders or financiers. 5. SolarCity was no stranger to lawsuits or government investigations [1]. 6. The buyout by Tesla is, on paper, suspect. One way to describe it is: one of Elon's companies (Tesla) bought (arguably "bailed out") a second of Elon's companies (SolarCity) that owed a lot of money it would arguably default on to a third of Elon's companies (SpaceX). Not much happened here remotely resembling at arm's length. 7. People who get fired, rightly or wrong, have their own motivations for speaking out and rarely is it ever to say "yeah, I screwed up" but that's the case at least some of the time. Not that I'm saying it is here (again, no knowledge of the specifics) but just bear that in mind. 8. Ex-employees might be suing (or considering suing) their ex-employer for any number of reasons which may or may not be valid. I suspect if they had good counsel they'd say nothing. If they had bad or no counsel they'd speak about this publicly. So which is it? Who knows. Anyway, just take a deep breath and fight your natural (and irrational) instincts to either pile on or defend Elon because none of us really know what happened (yet?). [1]: https://en.wikipedia.org/wiki/SolarCity#Litigation_and_investigations https://en.wikipedia.org/wiki/SolarCity#Litigation_and_inves...
- SmellyGeekBoy 8y ago
  This behaviour is happening in sales departments in companies all over the world. The only reason it's of any interest here is because SolarCity has Musk's name associated with it.
freebs 8y ago
Sounds like they should try to reduce the cost of the shingles and power wall, might be easier to sell :P
rossdavidh 8y ago
So, I have no idea what the truth is, but didn't Solar City get bought out by Tesla? In that case, it would seem like it would have been better to clear the books with an audit of past sales, so as to make the price Tesla would have to pay for Solar City, something easier for Tesla to pay. But, I am not a finance person.
- slivym 8y ago
  The Tesla purchase of Solar City cannot be thought of like a normal purchase- because of Musk's role. Solar City had all sorts of problems before the purchase - it lost >20% of its workforce in 2016 and cut the salaries of it's founders to $1. There was also some really questionable self-dealing like SpaceX buying SolarCity bonds. It makes perfect sense for Musk as a person to use Tesla to support Solarcity - one of his enterprises supporting another. But that's not how public companies work, you can't force Tesla shareholders to overpay SolarCity shareholders for a buyout simply because Musk personally wants to see SolarCity succeed.But when you view it in that context is makes perfect sense to see why Musk didn't try very hard to drive a hard bargain purchasing SC.
- mrfredward 8y ago
  SolarCity was founded and run by Elon Musk's cousins. The conflict of interest has been a topic of discussion for quite some time, and some claim that Tesla intentionally ignored problems at SolarCity when deciding to do the deal.
- dralley 8y ago
  Solar City was founded by Elon's cousin. They got a much better deal than was warranted by the numbers, and Musk is being sued by investors over it.
mikro2nd 8y ago
A trend that's been growing for quite a (long!) while now is exemplified by this article: "Tesla did not respond to Ars’ request for comment on Sunday." Who in their right minds realistically expects any organisation to respond to some random journalistic enquiry on a Sunday? The other major variant of this shyster tactic is along the lines of, "Company X failed to respond immediately when asked for comment." No company is able to respond immediately, particularly not on an issue that's likely contentious. Any response would need to be run by their PR and legal people at the very least. It's a cheap and nasty way to make companies look/feel uncaring about the issue being reported, but imho it does nothing but reflect poorly on the reporter and publication using these smelly tactics, and leaves me wondering what other agendas they may have running.
- princekolt 8y ago
  > Who in their right minds realistically expects any organisation to respond to some random journalistic enquiry on a Sunday? Jeez. Considering the story was posted today, what this probably means is that they requested commentary on Sunday, waited for the entirety of Monday, and didn't hear back until today, when they decided to post it.
  - Marsymars 8y ago
    In my experience, legit journalistic sources are also open to delaying a story to include commentary if the commentary source asks for some reasonable additional time to respond.
    - theyinwhy 8y ago
      Psht, delaying a story is so 2010.
  - snoman 8y ago
    Far more likely is that it was written on Sunday, didn't get a response by Monday morning, was put into the publishing pipeline/queue right then and there, and cleared the queue and hit the site today.
exabrial 8y ago
Wow I'm surprised to see Ars hey in on the Tesla bashing... Interesting
jsight 8y ago
I think Solar City didn't have a great reputation when they were independent, and I think those problems linger. In Tesla's defense, they have trimmed back sales considerably and it seems like they are moving to a retail model in the future. I think that has the potential to be a lot more sustainable and less ripe for abuse. At least, I hope so.
- vkou 8y ago
  Keep in mind that the only reason for why non-utility deployment of solar makes economic sense was due to extremely generous subsidies, and net meter billing. Which are not going to stick around forever.
elisharobinson 8y ago
so they reached out to tesla on sunday and waited for 1 day before posting the article, named elon personally on 3 occasions in a 3 para article and did not find it wise to reach out to him for comment.and arstechnica is a reputed source i can't help but doubt why they have a new found vendetta against elon. the trends on the comment section of the article are also informative.
megamindbrian2 8y ago
Solar City commits fraud to make Elon's stock look good. Nice. Side note: just watched Back 2 the Future again and saw what 2015 is supposed to look like. I didn't see anything about putting explosive batteries and flammable material next to every house.
mathattack 8y ago
Although this is just hearsay, this is something the company will need to react to. High commission sales orgs frequently create bad incentives. It’s hard to work around this, because the most aggressive tend to thrive in this kind of world, until they cross the line. But if you give up commissions, you will lose the highest producing salespeople to your competitors.
Proven 8y ago
That is hilarious. Tony Stark rocks!
_zachs 8y ago
Seems like nothing more than mud-slinging from disgruntled, fired employees. If SolarCity would have had "...tens of hundreds of millions of dollars in phantom revenue that would put them at over a billion in revenue, which I'll leave to you to look up how inaccurate that statement is.
- PhasmaFelis 8y ago
  The line is "tens or hundreds of millions of dollars." It didn't occur to you that that might be a misprint? Nobody says "tens of hundreds."
67_45 8y ago
In 2012ish the New York times drove a model s in circles in a parking lot and then wrote that the battery had mysteriously depleted the next morning. It was for their review of the then brand new model s. They didn't realize that Tesla was logging everything the s did. The article features a huge picture of the s in the back of a flatbed. Im gonna wait for more than anonymous allegations and "allegedly"s.
neo4sure 8y ago
Does anyone know who owns arstechnica? I have noticed a pattern of negative reporting directed towards anything associated with Elon Musk.
- s73v3r_ 8y ago
  Because he's done a lot of negative things lately.
rconti 8y ago
We just had solar installed (yesterday, actually!) I worked with 3 companies; a local large-ish San Jose company, a much smaller local company, and SunRun (national). Ultimately most of the quotes and sizing came back near identical; the very local company had a really nice guy come out and pitch pretty convincingly and ultimately tell me "even if you don't go with us, don't use SunRun, please.." and showed me some negative Yelp reviews and stuff. Well, I was leaning towards that guy because I liked the idea of using a local company, but after a fair bit of digging I started finding some suspicious stuff.. I had contacted one company, but he presented a business card from another contracting company, and so on. Ultimately there were 3 company names, it was hard to find reviews, the address looked more like a freight forwarding company.. and when you start digging into contractor licenses the guy's associated with companies in SoCal that had been apparently sued out of existence. I think the problem is, there's such a gold rush in solar, that everyone is just jumping in. The margins must be good, and demand is high. I don't actually think the guy was an outright scammer, I just think there are a lot of third rate contractors trying to set themselves up as solar experts and just over-promising and under-delivering. Thankfully, this helped me end up with the larger, reputable local company that seems to have the size and professionalism that comes with it, while still helping me feel like I'm able to support a local company, with real local employees, everything under one roof. But you have to look.

279 points by fabian2k 8y ago

This tactic allegedly resulted, this person said, in tens or hundreds of millions of dollars in phantom revenue. He added that more than a dozen people reported the practice to the relevant human resources representatives, and CEO Elon Musk himself, who never replied. So employees were pumping up projected sales figures for (at least) personal benefit in the form of bonuses. What happens when these figures don't materialize?

a2tech 8y ago
Nothing. Its a pretty common problem in sales. Lots of sales people are constantly moving jobs and pushing their numbers up.
- sk5t 8y ago
  Who are these poor souls paying out bonuses and commissions on unrealized revenue?
  - pc86 8y ago
    When everyone pays bonuses on unrealized revenue it puts you at a hiring disadvantage to pay bonuses off of realized revenue only, or to cut future bonuses when revenue doesn't materialize.
    - Hello71 8y ago
      Yes, it in fact does put you at a hiring advantage because it will select for employees actually selling products instead of claiming to sell them.
      - pc86 8y ago
        Realized revenue will always be a percentage of unrealized revenue less than 100%. So by definition paying off of realized revenue at the same rate means you're going to be paying less in commissions to your sales staff. If I'm a salesperson looking for my next gig you're going to have to prove that you're paying a high enough commission for it to be worth it to me. But most importantly, why would a salesperson who can make a $15k commission immediately work someplace where they need to wait for the sales and billing cycles to complete? That could easily be 30-60 days after start and will put you tens of thousands in commissions behind your competitors. And if a salesperson quits or is terminated do they still get commissions 30-60+ days in the future? Unlikely, especially if there's any bad blood. From a business standpoint it's easier to pay on unrealized revenue and decrease the overall commission amount such that it's still profitable even when you're paying commission on money the company doesn't see.
        mcguire 8y ago
        See also the Ben & Jerry's management salary thing.
        pc86 8y ago
        Which is what?
        mcguire 8y ago
        Back in the early days, Ben & Jerry's had a policy limiting upper management salary to a (small) multiplier of the pay of line workers. They were subsequently "unable to hire qualified management" and removed that policy. It was a minor kerfluffle.
  - Declanomous 8y ago
    Commission typically isn't paid out until the company is paid in my experience. Bonuses are different, but some companies I work for actually tracked how many orders were actually fully paid for vs. how many were entered into the system. A concerning number of salespeople would basically sign people up if anything the customer said could be construed as being interested, and their numbers would look great until you looked at the number of sales that fell through. I never has the most sales in a single month when I worked sales, but I regularly had the highest realized revenue because every single person I signed up actually wanted what they were purchasing.
    - jdo20bbx 8y ago
      This was all over the cell phone industry when I worked networks side. This was pre-iPhone era, just to give an idea how long ago. I traveled around metro areas measuring signal quality, simple upgrades or maintenance, often stopping at nearby retail outlets rather than laptop in the truck. I’d get to know the store staff and they’d talk freely around me about “fake” signups to juice numbers. The trick was sign em up at end of month, cancel them before a bill got sent. That way the store appeared to hit their monthly target. They’d often do fleet style signups; construction company would come in legit looking for 10 lines, the store would sign up 20 phones for construction company. Then return half before the 14-day no questions asked period. This was going on all the time, across multiple stores, as far as I could tell. The details would change, from construction to startup or new business needing phone in a hurry.
      - jstarfish 8y ago
        Heh, the same game gets played in retail commissions. Didn't hit numbers for the month? Buy a bunch of your own product, wait a few days until the next cycle starts, then return it all.
  - megaman22 8y ago
    There can be a lot of weird bonus structures kicking around too. For a while, my girlfriend worked in sales at Oracle, and while they were trying to push their cloud offerings, the had some crazy-pants bonuses for any cloud sales; on the order of $4-6000 a quarter if you sold cloud subscriptions. So she got her dad to buy $300 worth of hosting for his auto parts side business, and collected 20x that in bonus.
- compcoffee 8y ago
  >Its a pretty common problem in sales. Lots of sales people are constantly moving jobs and pushing their numbers up. HackerNews: Wells Fargo presses sales people to fake sales: Send those executives to the guillotine! (this was literally said by a top comment on one of the threads). Tesla presses sales people to fake numbers: Nothing to see here, standard operating procedure. If/when these companies fold, I hope the rabid supporters are held to account.
  - jtx22 8y ago
    SolarCity, not Tesla.
AdmiralAsshat 8y ago
The Sales people will survive, with their bonuses. Someone in a "cost center" like Support will get laid off instead.
wooptoo 8y ago
The next Enron happens

shashanoid 8y ago

[deleted]

notdang 8y ago
How ethical or legal is to divulge this information while working at Shopify?
shafyy 8y ago
Pic or it didn't happen.
- shafyy 8y ago
  Ah come on, a little but of humor.

jerf 8y ago

Kinda hope these accusations are mostly true in a way, since Ars doesn't seem to show any compunction about naming names filed in a lawsuit. Would suck for the named persons if it turns out to be entirely false. I miss when journalists at least pretended to have standards.

shafyy 8y ago
It does seem like the involved persons' names are public, no?
- godzillabrennus 8y ago
  Yes but few bother to read lawsuits. Most read news coverage of lawsuits.
  - Sgt_Apone 8y ago
    So, while it's public information, they shouldn't report the names because most people won't read it? I'm not sure I follow.
    - FeepingCreature 8y ago
      The binary categories of "public" and "nonpublic" are just approximations for exposure.

shafyy 8y ago

"This tactic allegedly resulted, this person said, in tens of hundreds of millions of dollars in phantom revenue." SolarCity had revenues of ~$480M in 2016 [0]. "Tens of hundreds of millions" would mean billions of dollars of phantom revenue. Even if that fake revenue would be distributed over a couple of years, it would have been a significant proportion of SolarCity's revenue. Just seems unrealistic that the SEC or any other agency didn't realize that. Or what do they mean by "Tens of hundreds of millions?". Did they mean to write "Tens OR hundreds of millions?". Even then the same logic applies. [0] https://www.statista.com/statistics/505770/revenue-of-solarcity-corp-breakdown/ https://www.statista.com/statistics/505770/revenue-of-solarc...

adamson 8y ago
That construction is so weird that I'm going to assume it was a typo and that they meant "tens or hundreds"
- shafyy 8y ago
  Ok. So it could be either $40M or $400M - that's a huge range. Let's assume something in the middle, like $200m. Does it seem credible to you guys that nobody except the three plaintiffs noticed that SolarCity faked half of their 2016 revenue?
  - tango24 8y ago
    I would wager that anything in a range 10%-50% of missing revenue, for a publicly traded company, would be caught by external auditor. And I’d im not mistaken, external auditors are required. If I’m wrong on either of those accounts, then I’d be seriously concerned about our stock market.
    - TheOtherHobbes 8y ago
      This shouldn’t have me laugh out loud, but it did.
  - mistercow 8y ago

mkirklions 8y ago

Why are we blaming the employees when these kind of things come from high pressure management. Everyone is aware the Elon works his employees to death at Tesla, SpaceX, and apparently SolarCity. I feel like these tech companies are great for consumers and shareholders, but employees are worked like dogs to keep the profit flowing.

matthewmacleod 8y ago
That's a shite excuse. "Just following orders" etc.
- mkirklions 8y ago
  Have you worked at a company before?
  - dang 8y ago
    Would you please stop posting inflammatory comments to Hacker News? The idea here is: if you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- jessaustin 8y ago
  If your neighbor was one of the salespeople, then sure go ahead and slag her for it. If you're a prosecutor with jurisdiction and you think there's a case, jump on it. Since most of us don't personally know any of the people involved, there's not much point in selecting these nobodies for our two minutes of hate. The character we're going to have to deal with again is the dude at the top, so naturally he's the one whose behavior we'd like to affect.
gipp 8y ago
There's no reason both can't be at fault.
compcoffee 8y ago

onepremise 8y ago

Idk, all this hearsay and the saboteur rebranded whistleblower coming out against TSLA/SolarCity with no real substantial proof. Still cant help but wonder if it's just the usual stock shorters creating new opportunities for themselves or fossil fuel supporters and baby boomers looking for new ways to destroy TSLA.

paidleaf 8y ago
Certainly a lot of short sellers ( and bulls ) spreading rumors online, but this seems more like the continuation of the war between elon musk and journalists. There have been a surprising number of hit pieces by a number of news companies against musk and his companies lately. I think I've seen more negative news articles concerning elon musk in the past 4 months than the 4 years before that. There seems to be a pattern that whenever someone challenges journalists or their industry, they gang up and pile on. I think it's going to be an interesting couple of months for elon musk as I think these journalists are just getting warmed up with their anti-musk hit pieces.
- JumpCrisscross 8y ago
  > the war between elon musk and journalists Elon is attempting to maneuver Tesla through a tight operating and financial envelope. He is doing so with public funding. Of course you're going to have a lot of debate about what he's doing. Journalists being critical isn't them launching a war, it's them attempting to leave no stone unturned.
  - ameister14 8y ago
    >Journalists being critical isn't them launching a war, it's them attempting to leave no stone unturned. When you only do your job some of the time, it's reasonable to question your motivation. We've had years of Tesla and Musk puff-pieces and it's only in the last few months that journalists have decided to leave no stone unturned en masse.
    - JumpCrisscross 8y ago

jewpiterjones 8y ago

Totally a coincidence this suit and story drops the day before Tesla announces earnings and most short sellers need to close their positions. TOTALLY.

foxyv 8y ago

My partner worked for various solar companies (But not Solar City) as a canvasser hoping to get some sales experience. As a result we got to see first hand how corrupt and underhanded their sales departments could be. Canvassers were exploited mercilessly and commissions never appeared as new requirements were added to the payouts. Paychecks bounced periodically. Canvassers would be told to go door to door in areas where solicitation was illegal even though the company knew it was illegal and risked getting their employees arrested. Managers would hire friends and use fake leads to make them look good. I kind of hoped that Solar City would be an exception but I'm not surprised. It seems like the entire solar industry is focused more on extracting government subsidies than on creating long term revenue streams. I don't think management is very confident of the long term prospects of residential solar. Especially considering pushback from utility companies.

api 8y ago
Such things are common in sales in general. It's absolutely cutthroat. Salespeople, managers, everyone is in a Hobbesian all-against-all fight to the death for commissions. Crime and fraud are abundant. Personal attacks are not even that uncommon. Anyone who doesn't play this game tends to get muscled out. It's obviously worse in some organizations than others, but it's probably harder to create a non-toxic sales org than to create a toxic one. Some organizations encourage toxic sales organizations because unfortunately it works, at least in the short term. It can do damage later but that's long after commissions have been earned.
- christophilus 8y ago
  I work at Elastic, and can honestly say, this is the second company I’ve ever worked for whose sales team is respectable. They’re a bunch of highly technical consultants, and their goal is to solve customer problems even if the solution doesn’t earn Elastic a dime. It’s refreshing.
linuxftw 8y ago
> It seems like the entire solar industry is focused more on extracting government subsidies than on creating long term revenue streams. Some might argue this is the exact nature of government subsidies. People are always going to make choices in their economic self-interest. Either solar needs to be the most cost effective solution for their energy needs, or the government needs to artificially inflate the cost of other energy (or reduce any subsidies to other energy to make solar more competitive). Every time a hurricane knocks out a town's electric grid and federal funds are used to repair it, that's a subsidy. When government authority to exercise eminent domain acquires easements or land to erect power distribution, that's a subsidy. Not to mention utilities being absolved from responsibility for the pollution they create.

cletus 8y ago

Ok, I can write out the script for this knowing only the headline. - Elon defenders will jump in and claim it's all lies - Elon haters will chime in with "j'accuse!" I honestly don't know the truth about this (few would) but let me point some things: 1. I would find it strange if sales people were paid bonuses (let alone commissions) on non-real sales. 2. Even if bonuses were paid when no money was paid by the customer, this would eventually get reconciled and at some point pretty quickly that salesperson would get flagged. 3. Knowing that "tens or [sic] hundreds of millions of dollars" was in nonexistent sales would make an officer of the company guilty of any number of securities infractions. Not that this isn't possible of course but the severity of this has to be weighed against the benefits to make it more or less likely that it occurred given the potential outcomes. 4. Was SolarCity a public (note: "public" != "publicly listed") company? If so, there are financial reporting issues too. As well as any obligations to shareholders or financiers. 5. SolarCity was no stranger to lawsuits or government investigations [1]. 6. The buyout by Tesla is, on paper, suspect. One way to describe it is: one of Elon's companies (Tesla) bought (arguably "bailed out") a second of Elon's companies (SolarCity) that owed a lot of money it would arguably default on to a third of Elon's companies (SpaceX). Not much happened here remotely resembling at arm's length. 7. People who get fired, rightly or wrong, have their own motivations for speaking out and rarely is it ever to say "yeah, I screwed up" but that's the case at least some of the time. Not that I'm saying it is here (again, no knowledge of the specifics) but just bear that in mind. 8. Ex-employees might be suing (or considering suing) their ex-employer for any number of reasons which may or may not be valid. I suspect if they had good counsel they'd say nothing. If they had bad or no counsel they'd speak about this publicly. So which is it? Who knows. Anyway, just take a deep breath and fight your natural (and irrational) instincts to either pile on or defend Elon because none of us really know what happened (yet?). [1]: https://en.wikipedia.org/wiki/SolarCity#Litigation_and_investigations https://en.wikipedia.org/wiki/SolarCity#Litigation_and_inves...

SmellyGeekBoy 8y ago
This behaviour is happening in sales departments in companies all over the world. The only reason it's of any interest here is because SolarCity has Musk's name associated with it.

freebs 8y ago

Sounds like they should try to reduce the cost of the shingles and power wall, might be easier to sell :P

rossdavidh 8y ago

So, I have no idea what the truth is, but didn't Solar City get bought out by Tesla? In that case, it would seem like it would have been better to clear the books with an audit of past sales, so as to make the price Tesla would have to pay for Solar City, something easier for Tesla to pay. But, I am not a finance person.

slivym 8y ago
The Tesla purchase of Solar City cannot be thought of like a normal purchase- because of Musk's role. Solar City had all sorts of problems before the purchase - it lost >20% of its workforce in 2016 and cut the salaries of it's founders to $1. There was also some really questionable self-dealing like SpaceX buying SolarCity bonds. It makes perfect sense for Musk as a person to use Tesla to support Solarcity - one of his enterprises supporting another. But that's not how public companies work, you can't force Tesla shareholders to overpay SolarCity shareholders for a buyout simply because Musk personally wants to see SolarCity succeed.But when you view it in that context is makes perfect sense to see why Musk didn't try very hard to drive a hard bargain purchasing SC.
mrfredward 8y ago
SolarCity was founded and run by Elon Musk's cousins. The conflict of interest has been a topic of discussion for quite some time, and some claim that Tesla intentionally ignored problems at SolarCity when deciding to do the deal.
dralley 8y ago
Solar City was founded by Elon's cousin. They got a much better deal than was warranted by the numbers, and Musk is being sued by investors over it.

mikro2nd 8y ago

A trend that's been growing for quite a (long!) while now is exemplified by this article: "Tesla did not respond to Ars’ request for comment on Sunday." Who in their right minds realistically expects any organisation to respond to some random journalistic enquiry on a Sunday? The other major variant of this shyster tactic is along the lines of, "Company X failed to respond immediately when asked for comment." No company is able to respond immediately, particularly not on an issue that's likely contentious. Any response would need to be run by their PR and legal people at the very least. It's a cheap and nasty way to make companies look/feel uncaring about the issue being reported, but imho it does nothing but reflect poorly on the reporter and publication using these smelly tactics, and leaves me wondering what other agendas they may have running.

princekolt 8y ago
> Who in their right minds realistically expects any organisation to respond to some random journalistic enquiry on a Sunday? Jeez. Considering the story was posted today, what this probably means is that they requested commentary on Sunday, waited for the entirety of Monday, and didn't hear back until today, when they decided to post it.
- Marsymars 8y ago
  In my experience, legit journalistic sources are also open to delaying a story to include commentary if the commentary source asks for some reasonable additional time to respond.
  - theyinwhy 8y ago
    Psht, delaying a story is so 2010.
- snoman 8y ago
  Far more likely is that it was written on Sunday, didn't get a response by Monday morning, was put into the publishing pipeline/queue right then and there, and cleared the queue and hit the site today.

exabrial 8y ago

Wow I'm surprised to see Ars hey in on the Tesla bashing... Interesting

jsight 8y ago

I think Solar City didn't have a great reputation when they were independent, and I think those problems linger. In Tesla's defense, they have trimmed back sales considerably and it seems like they are moving to a retail model in the future. I think that has the potential to be a lot more sustainable and less ripe for abuse. At least, I hope so.

vkou 8y ago
Keep in mind that the only reason for why non-utility deployment of solar makes economic sense was due to extremely generous subsidies, and net meter billing. Which are not going to stick around forever.

elisharobinson 8y ago

so they reached out to tesla on sunday and waited for 1 day before posting the article, named elon personally on 3 occasions in a 3 para article and did not find it wise to reach out to him for comment.and arstechnica is a reputed source i can't help but doubt why they have a new found vendetta against elon. the trends on the comment section of the article are also informative.

megamindbrian2 8y ago

Solar City commits fraud to make Elon's stock look good. Nice. Side note: just watched Back 2 the Future again and saw what 2015 is supposed to look like. I didn't see anything about putting explosive batteries and flammable material next to every house.

mathattack 8y ago

Although this is just hearsay, this is something the company will need to react to. High commission sales orgs frequently create bad incentives. It’s hard to work around this, because the most aggressive tend to thrive in this kind of world, until they cross the line. But if you give up commissions, you will lose the highest producing salespeople to your competitors.

Proven 8y ago

That is hilarious. Tony Stark rocks!

_zachs 8y ago

Seems like nothing more than mud-slinging from disgruntled, fired employees. If SolarCity would have had "...tens of hundreds of millions of dollars in phantom revenue that would put them at over a billion in revenue, which I'll leave to you to look up how inaccurate that statement is.

PhasmaFelis 8y ago
The line is "tens or hundreds of millions of dollars." It didn't occur to you that that might be a misprint? Nobody says "tens of hundreds."

67_45 8y ago

In 2012ish the New York times drove a model s in circles in a parking lot and then wrote that the battery had mysteriously depleted the next morning. It was for their review of the then brand new model s. They didn't realize that Tesla was logging everything the s did. The article features a huge picture of the s in the back of a flatbed. Im gonna wait for more than anonymous allegations and "allegedly"s.

neo4sure 8y ago

Does anyone know who owns arstechnica? I have noticed a pattern of negative reporting directed towards anything associated with Elon Musk.

s73v3r_ 8y ago
Because he's done a lot of negative things lately.

rconti 8y ago

We just had solar installed (yesterday, actually!) I worked with 3 companies; a local large-ish San Jose company, a much smaller local company, and SunRun (national). Ultimately most of the quotes and sizing came back near identical; the very local company had a really nice guy come out and pitch pretty convincingly and ultimately tell me "even if you don't go with us, don't use SunRun, please.." and showed me some negative Yelp reviews and stuff. Well, I was leaning towards that guy because I liked the idea of using a local company, but after a fair bit of digging I started finding some suspicious stuff.. I had contacted one company, but he presented a business card from another contracting company, and so on. Ultimately there were 3 company names, it was hard to find reviews, the address looked more like a freight forwarding company.. and when you start digging into contractor licenses the guy's associated with companies in SoCal that had been apparently sued out of existence. I think the problem is, there's such a gold rush in solar, that everyone is just jumping in. The margins must be good, and demand is high. I don't actually think the guy was an outright scammer, I just think there are a lot of third rate contractors trying to set themselves up as solar experts and just over-promising and under-delivering. Thankfully, this helped me end up with the larger, reputable local company that seems to have the size and professionalism that comes with it, while still helping me feel like I'm able to support a local company, with real local employees, everything under one roof. But you have to look.