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Great Article. A lot of people don't understand how important cash flow is. Even Elon pointed out that having factories close to customer is very important for

Great Article. A lot of people don't understand how important cash flow is. Even Elon pointed out that having factories close to customer is very important for a fast growing company like TSLA because if you grow too fast you'll be putting so many cars on boats before they are paid for that you will have no cash. I disagree with the framing of both articles somewhat. The question should be "What is limiting your growth?" Is raising money going to distract you from making a product customers need and love? Then skip it. If being too small for enterprises to take you seriously is a blocker then you'll need to raise money.

kgwgk 6y ago
Musk definitely understands the importance of (incoming) cash flows. Being paid upfront for functionality that may or may not be ever available is genius. Edit: /s
- bigbubba 6y ago
  Genius, like selling a bridge you don't own.
  - twic 6y ago
    See, that's illegal. But creating cash-settled bridge derivatives and selling those, now that's perfectly fine.
    - nceqs3 6y ago
      Matt Levine would be proud.
- ashtonbaker 6y ago
  Is it really genius? Especially when you put it quite so bluntly? I've been wondering if a class action lawsuit around this could end up being a significant risk to Tesla. edit: woosh
orky56 6y ago
"What is limiting your growth?" is a myopic view of this problem. An injection of capital provides runway at a minimum and leverage in many cases regardless of a company's situation at nearly every stage. Your suggestion of "growth" as the metric to be maximized is the main issue. If an enterprise wants to generate maximum short-term profits for the owner, establish a large market share initially, or generate maximum cash flows long-term, each presents a very different view of when and how capital can solve problems.
hinkley 6y ago
Similarly, he doesn’t want his space ships to be in transit or grounded for repairs for a long time because that represents inventory. There were some old ideas about how an interplanetary civilization would work, and in particular shipping, and now I understand better why we are still stuck on the ground. We are a long way from having ships so cheap that we can have them just floating around on ballistic orbits.

kgwgk 6y ago

Musk definitely understands the importance of (incoming) cash flows. Being paid upfront for functionality that may or may not be ever available is genius. Edit: /s

bigbubba 6y ago
Genius, like selling a bridge you don't own.
- twic 6y ago
  See, that's illegal. But creating cash-settled bridge derivatives and selling those, now that's perfectly fine.
  - nceqs3 6y ago
    Matt Levine would be proud.
ashtonbaker 6y ago
Is it really genius? Especially when you put it quite so bluntly? I've been wondering if a class action lawsuit around this could end up being a significant risk to Tesla. edit: woosh

orky56 6y ago

"What is limiting your growth?" is a myopic view of this problem. An injection of capital provides runway at a minimum and leverage in many cases regardless of a company's situation at nearly every stage. Your suggestion of "growth" as the metric to be maximized is the main issue. If an enterprise wants to generate maximum short-term profits for the owner, establish a large market share initially, or generate maximum cash flows long-term, each presents a very different view of when and how capital can solve problems.

hinkley 6y ago

Similarly, he doesn’t want his space ships to be in transit or grounded for repairs for a long time because that represents inventory. There were some old ideas about how an interplanetary civilization would work, and in particular shipping, and now I understand better why we are still stuck on the ground. We are a long way from having ships so cheap that we can have them just floating around on ballistic orbits.