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> CEO John Foley apologized for not cooperating with the U.S. Consumer Product Safety Commission sooner. What an absolutely baffling strategy for them to have

> CEO John Foley apologized for not cooperating with the U.S. Consumer Product Safety Commission sooner. What an absolutely baffling strategy for them to have originally pursued in response.

AlexandrB 6y ago
This is like the opposite of the 1982 Tylenol recall[1]. Deny the problem. Minimize the impact. Until the outrage reaches such a level that you have to do the recall anyway and your reputation is now dirt. [1] https://en.wikipedia.org/wiki/Chicago_Tylenol_murders#Johnson_&_Johnson_response https://en.wikipedia.org/wiki/Chicago_Tylenol_murders#Johnso...
justapassenger 6y ago
Is it? USA regulatory agencies are only getting weaker, especially in last 5 years. And it pays off to fight with them. Look at Elon Musk and his companies.
- LightG 6y ago
  Hence why I will never buy a Tesla (among other reasons). n=1 ... and you may be right in general.
- ashtonkem 6y ago
  Depends on the agency. Nobody is going to not buy a Tesla because Musk angered the SEC, because the SEC protects an abstract public good. It’s a wildly different case when you get into a fight with an agency that protects public safety in an easy to understand way; even if you win the legal fight consumers might decide that your product is dangerous and to be avoided, a Pyrrhic victory. Someone else here mentioned Tylenol, which is a good counter example. Aggressive and transparent moves in the direction of consumer safety can both save a company in a PR crisis, and actually turn it into a boon for brand good will and loyalty.
  - panarky 6y ago
    He also blatantly defied Alameda County covid shutdown orders to reopen a Tesla factory. Tesla promised workers that they could stay home if they didn't feel comfortable breaking the law. Workers who stayed home then received termination notices. Hundreds of people who returned to work at Tesla were then sickened by the disease. https://www.washingtonpost.com/technology/2021/03/12/hundreds-covid-cases-reported-tesla-plant-following-musks-defiant-reopening-county-data-shows/ https://www.washingtonpost.com/technology/2021/03/12/hundred...
    - enriquec 6y ago
      That was an unconstitutional order.
    - kadoban 6y ago
      Consumers are for the most part ignorant of or indifferent to worker abuses. "This may kill you" is both an easier story to sell in the media and more compelling to consumers.
    - ghufran_syed 6y ago
      hundreds of people who didn’t work at tesla were also “sickened by the disease” - was there a difference in the rate of infection between tesla workers and other people in the community?
      - posterboy 6y ago
        yes. those stayed at home are the ones to compare to.
    - toast0 6y ago
      Honestly, I don't have strong feelings about fighting over the covid shutdown (telling employees they could stay home and then firing them is bad though, and significantly worse than ignoring the county order). IMHO, fighting with the SEC over stupid shit reflects poorly on Elon and the board who refuse to supervise him, but not so much on the company. Fighting with the NTSB has a bad look. Throwing shade on people who died using your product, is also a bad look.
- JohnWhigham 6y ago
  Yup. Many federal agency's budgets continue to swell every year, yet they get more and more sickly and toothless. What the hell are they fucking doing? Not protecting the people, that's for sure.
- nr2x 6y ago
  Hard disagree. US agencies don’t have the resources to pursue many actions, so they are very conservative and really only go after slam-dunks. By the time you get contacted you’re already fucked and need to get with the new program - fast.
- elliekelly 6y ago
  Even taking every potential legal/regulatory consequence out of the equation I think it was a terrible strategy. Their target market is healthy, wealthy millennial/Gen X people who don’t have a lot of free time. Parents don’t have a lot of free time and wealthy people who aren’t parents usually have pets. I would venture to guess 95% of their customers have a child, a pet, or both. To risk being seen as a company that plays fast and loose with the one thing their customers love more than anything else in the world is foolish.
- bko 6y ago
  That's not true. Why do people think this? Because Elon Musk can tweets dumb memes? The size and scope of regulatory agencies has vastly increased over the years. And fines paid out are gigantic. Take banks for instance: > Financial institutions have been hit with $10.4 billion in global fines and penalties related to anti-money laundering (AML), know your customer (KYC), data privacy, and MiFID (Markets in Financial Instruments Directive) regulations in 2020, bringing the total to $46.4 billion for those types of breaches since 2008. https://www.complianceweek.com/surveys-and-benchmarking/report-fines-against-financial-institutions-hit-104b-in-2020/29869.article https://www.complianceweek.com/surveys-and-benchmarking/repo...
  - bigfudge 6y ago
    But both could be true: agencies getting weaker but corporations becoming more instrumental in rule breaking and accepting fines as cost of business. Perhaps the behaviour is getting worse?
  - verall 6y ago
    That's across the whole globe, in the US it was only $4.3B, and it's a record year because of the 1MDB settlement. This is the government clawing back dimes on the dollar from banks that profited massively by aiding illegal enterprises. For the size and scope of regulatory agencies to increase, their budgets would have to increase faster than inflation of wages in their relevant markets. We don't see that in finance (SEC) nor in technology (FCC). The regulators are paid comparative peanuts.
    - bko 6y ago
      Do you have a source? Here's a source that suggests SEC budget has increased 82% over 10 years https://www.heritage.org/government-regulation/report/reforming-the-securities-and-exchange-commission https://www.heritage.org/government-regulation/report/reform...
      - verall 6y ago
        Hard to tell if you're arguing in good faith with a heritage foundation link, but the stats there are fine. A 82% budget increase from 2008-2018. But only a 31% increase in employees since 2004. Markets have gotten much larger with many more trades over the same time period. Certainly technology helps handle the increase but there is an orders of magnitude difference between a 2004 market and a 2021 market. Crypto is a good example. It didn't used to exist. SEC is the only US regulatory body for it.
- slg 6y ago
  >And it pays off to fight with them. Look at Elon Musk and his companies. What benefit has Musk or Tesla received from fighting with regulators? Whether it is spats over securities, unions, or safety it doesn't appear that any punishments handed to Musk or Tesla are lenient when compared with what others have received in similar circumstances. Meanwhile these fights have been a consistent drag on his and Tesla's public reputations. Like with most things Tesla, odds are the company would have been better off if Musk knew when to keep his mouth shut.
  - an_opabinia 6y ago
    > What benefit has Musk or Tesla received from fighting with regulators? Same as Peloton. Let's say there are two kinds of people. People who open Robinhood and buy shares at ask, and everyone else. As long as there are more of the former than the latter, and as long as those Robinhood users like spats, then obviously giant company CEOs will keep getting into them. Buying at ask is as direct as it gets! You don't need this some complicated socioeconomic mechanical theory. It's so frustrating to hear about these indirect effects - how the news might cause an analyst to write something negative months later, that maybe some institution may trade on one month, that goes through a big committee... If many Robinhood users read Elon Musk tweets, open Robinhood, buy at ask, price goes up! Like this is the same energy that got a lot of politicians elected these last few elections. The same energy that's making TikTok personalities real celebrities. VIPs have their hands almost directly on the levers of popularity contests nowadays, through social media and direct to consumer finance, e-commerce and subscription apps. If your theory about regulation and capitalism and economics or whatever does not incorporate "more guys buy at ask than guys sell in spread," nowadays, it might not be wrong, but it's mediocre.
    - bigfudge 6y ago
      Can you Eli5 why buy at ask is the wrong thing to do if you want to buy shares? What is the alternative? Do you mean you should wait/ time buying based on price?
      - sokoloff 6y ago
- chaostheory 6y ago
  > Look at Elon Musk and his companies. The SEC is the only financial regulatory body that is a real public institution. Isn't everything else just private corporations who only give the impression that they're public regulatory bodies? Given Wall Street's lobbying power, the regulatory bodies for Wall Street has always been weak. I don't foresee this changing for the same reason.
- Animats 6y ago
  Here's what the head of the CPSC has to say about that. "But CPSC faces a nearly insurmountable hurdle each and every time the agency wants to warn the public about a hazardous product.Under the gag order of Section6(b)of our statute,the agency must negotiate with companies—often for weeks—before issuing any kind of safety warning."[1] The CPSC can issue a mandatory recall, but that's subject to challenge in court. They rarely do that. But if they do, it looks really bad for the seller. For one thing, it means the recall notice comes from the U.S. Government, not the seller, which looks really bad. [1] https://www.cpsc.gov/s3fs-public/Statement%20of%20Acting%20Chairman%20Robert%20Adler%20on%20the%20Recall%20of%20the%20Peloton%20Tread%20Plus%20and%20Tread%20Treadmills.pdf https://www.cpsc.gov/s3fs-public/Statement%20of%20Acting%20C...
tracer4201 6y ago
Im going on a tangent here, but I’m surprised he hasn’t resigned. I’m more than convinced the company knew the reality when they put out their original statement. Now they’re back tracking, but the lack of ethics is just jarring.
slver 6y ago
You spend all of your time pushing product and ignoring problems, it becomes easy to lose sight of the fact you crossed a thick line recently.

> CEO John Foley apologized for not cooperating with the U.S. Consumer Product Safety Commission sooner. What an absolutely baffling strategy for them to have originally pursued in response.

AlexandrB 6y ago

This is like the opposite of the 1982 Tylenol recall[1]. Deny the problem. Minimize the impact. Until the outrage reaches such a level that you have to do the recall anyway and your reputation is now dirt. [1] https://en.wikipedia.org/wiki/Chicago_Tylenol_murders#Johnson_&_Johnson_response https://en.wikipedia.org/wiki/Chicago_Tylenol_murders#Johnso...

justapassenger 6y ago

Is it? USA regulatory agencies are only getting weaker, especially in last 5 years. And it pays off to fight with them. Look at Elon Musk and his companies.

LightG 6y ago
Hence why I will never buy a Tesla (among other reasons). n=1 ... and you may be right in general.
ashtonkem 6y ago
Depends on the agency. Nobody is going to not buy a Tesla because Musk angered the SEC, because the SEC protects an abstract public good. It’s a wildly different case when you get into a fight with an agency that protects public safety in an easy to understand way; even if you win the legal fight consumers might decide that your product is dangerous and to be avoided, a Pyrrhic victory. Someone else here mentioned Tylenol, which is a good counter example. Aggressive and transparent moves in the direction of consumer safety can both save a company in a PR crisis, and actually turn it into a boon for brand good will and loyalty.
- panarky 6y ago
  He also blatantly defied Alameda County covid shutdown orders to reopen a Tesla factory. Tesla promised workers that they could stay home if they didn't feel comfortable breaking the law. Workers who stayed home then received termination notices. Hundreds of people who returned to work at Tesla were then sickened by the disease. https://www.washingtonpost.com/technology/2021/03/12/hundreds-covid-cases-reported-tesla-plant-following-musks-defiant-reopening-county-data-shows/ https://www.washingtonpost.com/technology/2021/03/12/hundred...
  - enriquec 6y ago
    That was an unconstitutional order.
  - kadoban 6y ago
    Consumers are for the most part ignorant of or indifferent to worker abuses. "This may kill you" is both an easier story to sell in the media and more compelling to consumers.
  - ghufran_syed 6y ago
    hundreds of people who didn’t work at tesla were also “sickened by the disease” - was there a difference in the rate of infection between tesla workers and other people in the community?
    - posterboy 6y ago
      yes. those stayed at home are the ones to compare to.
  - toast0 6y ago
    Honestly, I don't have strong feelings about fighting over the covid shutdown (telling employees they could stay home and then firing them is bad though, and significantly worse than ignoring the county order). IMHO, fighting with the SEC over stupid shit reflects poorly on Elon and the board who refuse to supervise him, but not so much on the company. Fighting with the NTSB has a bad look. Throwing shade on people who died using your product, is also a bad look.
JohnWhigham 6y ago
Yup. Many federal agency's budgets continue to swell every year, yet they get more and more sickly and toothless. What the hell are they fucking doing? Not protecting the people, that's for sure.
nr2x 6y ago
Hard disagree. US agencies don’t have the resources to pursue many actions, so they are very conservative and really only go after slam-dunks. By the time you get contacted you’re already fucked and need to get with the new program - fast.
elliekelly 6y ago
Even taking every potential legal/regulatory consequence out of the equation I think it was a terrible strategy. Their target market is healthy, wealthy millennial/Gen X people who don’t have a lot of free time. Parents don’t have a lot of free time and wealthy people who aren’t parents usually have pets. I would venture to guess 95% of their customers have a child, a pet, or both. To risk being seen as a company that plays fast and loose with the one thing their customers love more than anything else in the world is foolish.
bko 6y ago
That's not true. Why do people think this? Because Elon Musk can tweets dumb memes? The size and scope of regulatory agencies has vastly increased over the years. And fines paid out are gigantic. Take banks for instance: > Financial institutions have been hit with $10.4 billion in global fines and penalties related to anti-money laundering (AML), know your customer (KYC), data privacy, and MiFID (Markets in Financial Instruments Directive) regulations in 2020, bringing the total to $46.4 billion for those types of breaches since 2008. https://www.complianceweek.com/surveys-and-benchmarking/report-fines-against-financial-institutions-hit-104b-in-2020/29869.article https://www.complianceweek.com/surveys-and-benchmarking/repo...
- bigfudge 6y ago
  But both could be true: agencies getting weaker but corporations becoming more instrumental in rule breaking and accepting fines as cost of business. Perhaps the behaviour is getting worse?
- verall 6y ago
  That's across the whole globe, in the US it was only $4.3B, and it's a record year because of the 1MDB settlement. This is the government clawing back dimes on the dollar from banks that profited massively by aiding illegal enterprises. For the size and scope of regulatory agencies to increase, their budgets would have to increase faster than inflation of wages in their relevant markets. We don't see that in finance (SEC) nor in technology (FCC). The regulators are paid comparative peanuts.
  - bko 6y ago
    Do you have a source? Here's a source that suggests SEC budget has increased 82% over 10 years https://www.heritage.org/government-regulation/report/reforming-the-securities-and-exchange-commission https://www.heritage.org/government-regulation/report/reform...
    - verall 6y ago
      Hard to tell if you're arguing in good faith with a heritage foundation link, but the stats there are fine. A 82% budget increase from 2008-2018. But only a 31% increase in employees since 2004. Markets have gotten much larger with many more trades over the same time period. Certainly technology helps handle the increase but there is an orders of magnitude difference between a 2004 market and a 2021 market. Crypto is a good example. It didn't used to exist. SEC is the only US regulatory body for it.
slg 6y ago
>And it pays off to fight with them. Look at Elon Musk and his companies. What benefit has Musk or Tesla received from fighting with regulators? Whether it is spats over securities, unions, or safety it doesn't appear that any punishments handed to Musk or Tesla are lenient when compared with what others have received in similar circumstances. Meanwhile these fights have been a consistent drag on his and Tesla's public reputations. Like with most things Tesla, odds are the company would have been better off if Musk knew when to keep his mouth shut.
- an_opabinia 6y ago
  > What benefit has Musk or Tesla received from fighting with regulators? Same as Peloton. Let's say there are two kinds of people. People who open Robinhood and buy shares at ask, and everyone else. As long as there are more of the former than the latter, and as long as those Robinhood users like spats, then obviously giant company CEOs will keep getting into them. Buying at ask is as direct as it gets! You don't need this some complicated socioeconomic mechanical theory. It's so frustrating to hear about these indirect effects - how the news might cause an analyst to write something negative months later, that maybe some institution may trade on one month, that goes through a big committee... If many Robinhood users read Elon Musk tweets, open Robinhood, buy at ask, price goes up! Like this is the same energy that got a lot of politicians elected these last few elections. The same energy that's making TikTok personalities real celebrities. VIPs have their hands almost directly on the levers of popularity contests nowadays, through social media and direct to consumer finance, e-commerce and subscription apps. If your theory about regulation and capitalism and economics or whatever does not incorporate "more guys buy at ask than guys sell in spread," nowadays, it might not be wrong, but it's mediocre.
  - bigfudge 6y ago
    Can you Eli5 why buy at ask is the wrong thing to do if you want to buy shares? What is the alternative? Do you mean you should wait/ time buying based on price?
    - sokoloff 6y ago
chaostheory 6y ago
> Look at Elon Musk and his companies. The SEC is the only financial regulatory body that is a real public institution. Isn't everything else just private corporations who only give the impression that they're public regulatory bodies? Given Wall Street's lobbying power, the regulatory bodies for Wall Street has always been weak. I don't foresee this changing for the same reason.
Animats 6y ago
Here's what the head of the CPSC has to say about that. "But CPSC faces a nearly insurmountable hurdle each and every time the agency wants to warn the public about a hazardous product.Under the gag order of Section6(b)of our statute,the agency must negotiate with companies—often for weeks—before issuing any kind of safety warning."[1] The CPSC can issue a mandatory recall, but that's subject to challenge in court. They rarely do that. But if they do, it looks really bad for the seller. For one thing, it means the recall notice comes from the U.S. Government, not the seller, which looks really bad. [1] https://www.cpsc.gov/s3fs-public/Statement%20of%20Acting%20Chairman%20Robert%20Adler%20on%20the%20Recall%20of%20the%20Peloton%20Tread%20Plus%20and%20Tread%20Treadmills.pdf https://www.cpsc.gov/s3fs-public/Statement%20of%20Acting%20C...

tracer4201 6y ago

Im going on a tangent here, but I’m surprised he hasn’t resigned. I’m more than convinced the company knew the reality when they put out their original statement. Now they’re back tracking, but the lack of ethics is just jarring.

slver 6y ago

You spend all of your time pushing product and ignoring problems, it becomes easy to lose sight of the fact you crossed a thick line recently.