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Amazon took nearly a decade to become profitable, and seven years after its IPO, and that was during the crazy growth of the dotcom era. The article seems to t

by thrill 4y ago

Amazon took nearly a decade to become profitable, and seven years after its IPO, and that was during the crazy growth of the dotcom era. The article seems to try to make something of the company being around since 2009, ignoring that they were on a shoestring for multiple years until they had the idea and raised enough money to build their R1 prototypes which sparked significant interest. They're hardly hurting for orders with over 100,000 reservations still in their queue. The article seems to want to pain as negative a picture as it can, taking the position that the Mercedes partnership may be a negative because Rivian cautiously (and properly) caveated the investment as not factored into their operational capital flow, when ninety percent of the companies I've seen would be fundraising on that fundraise. without shame and without looking back. As for treating their initial reservation holders better, I don't think the CEO will ever be forgiven for the way he sprang the price increase on them, regardless of his quick about face on the matter. The company most assuredly could do better communicating actual useful information instead of warm and fuzzies with nothing actionable. And finally, they need to come-to-Jesus quit shipping at a rate that doesn't allow absolute quality of assembly and requiring multiple service center visits. Whomever convinced the CEO that shipping anything to be repaired later did the company absolutely no favors. I don't see many companies trying to build a multinational manufacturing operation from scratch these days, much less starting just before Covid kicked everyone's asses. Rivian will, eventually, be fine.

runnerup 4y ago
Amazon always seemed to claim they could have been profitable in the years after they IPO'd but simply chose to reinvest in growth and development. Investors believed in high future returns on this re-investment and preferred it over extracting it via dividends. I'm not sure Rivian is making similar claims or investors would believe them if they were. Most likely, investors in Rivian are anxious for them to become profitable now that they're finally producing and selling cars. The "hard/expensive" part should be over for Rivian now that their production lines are operational. These are very different companies operating in very different industries.
- bryanlarsen 4y ago
  Rivian needs something like Tesla's profitable 2H2018 where they showed that they could be profitable just selling S's and X's just before they endured massive losses while ramping up the 3 and Y.
- shalmanese 4y ago
  For a company, making a profit is the company saying across all of our divisions, on all the work that we do, we couldn't find a single initiative that we believe will return a higher risk adjusted ROI than paying down debt/putting money in a bank account/investing in index funds/returning money to shareholders. When you have an order book 100,000 vehicles deep, the last thing on your mind should be making profits. There's obviously thousands of different projects at the company that are going to be returning wildly higher ROI than public markets and you should be spending your money on exploiting those opportunities.
dont__panic 4y ago
> And finally, they need to come-to-Jesus quit shipping at a rate that doesn't allow absolute quality of assembly and requiring multiple service center visits. Whomever convinced the CEO that shipping anything to be repaired later did the company absolutely no favors. Curious, since you seem knowledgeable about this: do you truly think the CEO is choosing to ship products that aren't quite right? Or is someone in the QA space not doing their job thoroughly enough? Or do you feel like those things are indistinguishable, since the root cause doesn't matter and at the end of the day Rivian is shipping broken products?
- _ea1k 4y ago
  IMO, the powered tonneau was an unforced error. They could have shipped a manual one first, but instead went ahead with a finnicky design that has been problematic. Beyond that, I don't have a problem with the decision making. From watching the forums, the issues look like normal growing pains for a startup to me.
- thrill 4y ago
  Choosing might be the wrong word, but I would say "accepting", as I sincerely doubt the CEO is unknowledgeable of product delivered vs (expensive) rework required and demanded. One monkey on their back is the ever short-sighted demands of Wall Street, and they always want (too) rapid return on investment, which is made visible by the quantity of shipping product. A lot of people will be initially accepting of imperfection, happy to be engaging with the newly hot marque. But not all, and not forever, and especially when others may begin delivering that quality. A company targeting quality needs to be delivering it from the outset (shades of Phaedrus). Tesla got away with, and still does to a huge extent because of customer buy-in, in delivering shoddy assembly because of the newness and strong desire for their initially niche product. Those EV manufacturers coming after Musk will not get such customer forgiveness, at least not as for long, and well, Tesla's no longer riding so high in valuation either. My opinion is that to be around for the long run, you need to be trusted and desirable - or to grow too big to fail - i.e. have the right kind of influence invested in your success for reasons other than the company's mission. I absolutely believe the CEO's stated mission of building EVs for a climate focus reason is his actual goals, but he has to juggle delivering ROI sooner rather than later because that's what his early investors demanded, against producing product people will want to buy today and ten years from now. The already limited by $80K price customer base though is slowly becoming more discerning, mostly because they can, and those early company acceptances of unforced errors won't make it easier to become and remain the climate influencer he wants to be. All said, RJ's job is a lot of electrified barbed wire fence straddling.
belltaco 4y ago
Comparing a tech startup/company with a car manufacturing company is a bit much. First of all scaling isn't nowhere as easy as tech. Manufacturing is very capital intensive, and physical recalls are super expensive.
- pkulak 4y ago
  Amazon is almost more of a logistics company than a tech company. I'd bet they own more square feet of infrastructure than any auto company.
  - spywaregorilla 4y ago
    By profit, amazon is a cloud services company that happens to also have a giant ecommerce side gig.
erik_landerholm 4y ago
It’s different. Rivian will have serious issues without all the gov loans and money Tesla got. I expect Tesla to struggle a lot in the future as the more established brands get their EV stories solidified. There is a lot more to a car or truck than a drivetrain. In some ways that’s the easiest part.

by thrill 4y ago

runnerup 4y ago

Amazon always seemed to claim they could have been profitable in the years after they IPO'd but simply chose to reinvest in growth and development. Investors believed in high future returns on this re-investment and preferred it over extracting it via dividends. I'm not sure Rivian is making similar claims or investors would believe them if they were. Most likely, investors in Rivian are anxious for them to become profitable now that they're finally producing and selling cars. The "hard/expensive" part should be over for Rivian now that their production lines are operational. These are very different companies operating in very different industries.

bryanlarsen 4y ago
Rivian needs something like Tesla's profitable 2H2018 where they showed that they could be profitable just selling S's and X's just before they endured massive losses while ramping up the 3 and Y.
shalmanese 4y ago
For a company, making a profit is the company saying across all of our divisions, on all the work that we do, we couldn't find a single initiative that we believe will return a higher risk adjusted ROI than paying down debt/putting money in a bank account/investing in index funds/returning money to shareholders. When you have an order book 100,000 vehicles deep, the last thing on your mind should be making profits. There's obviously thousands of different projects at the company that are going to be returning wildly higher ROI than public markets and you should be spending your money on exploiting those opportunities.

dont__panic 4y ago

> And finally, they need to come-to-Jesus quit shipping at a rate that doesn't allow absolute quality of assembly and requiring multiple service center visits. Whomever convinced the CEO that shipping anything to be repaired later did the company absolutely no favors. Curious, since you seem knowledgeable about this: do you truly think the CEO is choosing to ship products that aren't quite right? Or is someone in the QA space not doing their job thoroughly enough? Or do you feel like those things are indistinguishable, since the root cause doesn't matter and at the end of the day Rivian is shipping broken products?

_ea1k 4y ago
IMO, the powered tonneau was an unforced error. They could have shipped a manual one first, but instead went ahead with a finnicky design that has been problematic. Beyond that, I don't have a problem with the decision making. From watching the forums, the issues look like normal growing pains for a startup to me.
thrill 4y ago
Choosing might be the wrong word, but I would say "accepting", as I sincerely doubt the CEO is unknowledgeable of product delivered vs (expensive) rework required and demanded. One monkey on their back is the ever short-sighted demands of Wall Street, and they always want (too) rapid return on investment, which is made visible by the quantity of shipping product. A lot of people will be initially accepting of imperfection, happy to be engaging with the newly hot marque. But not all, and not forever, and especially when others may begin delivering that quality. A company targeting quality needs to be delivering it from the outset (shades of Phaedrus). Tesla got away with, and still does to a huge extent because of customer buy-in, in delivering shoddy assembly because of the newness and strong desire for their initially niche product. Those EV manufacturers coming after Musk will not get such customer forgiveness, at least not as for long, and well, Tesla's no longer riding so high in valuation either. My opinion is that to be around for the long run, you need to be trusted and desirable - or to grow too big to fail - i.e. have the right kind of influence invested in your success for reasons other than the company's mission. I absolutely believe the CEO's stated mission of building EVs for a climate focus reason is his actual goals, but he has to juggle delivering ROI sooner rather than later because that's what his early investors demanded, against producing product people will want to buy today and ten years from now. The already limited by $80K price customer base though is slowly becoming more discerning, mostly because they can, and those early company acceptances of unforced errors won't make it easier to become and remain the climate influencer he wants to be. All said, RJ's job is a lot of electrified barbed wire fence straddling.

belltaco 4y ago

Comparing a tech startup/company with a car manufacturing company is a bit much. First of all scaling isn't nowhere as easy as tech. Manufacturing is very capital intensive, and physical recalls are super expensive.

pkulak 4y ago
Amazon is almost more of a logistics company than a tech company. I'd bet they own more square feet of infrastructure than any auto company.
- spywaregorilla 4y ago
  By profit, amazon is a cloud services company that happens to also have a giant ecommerce side gig.

erik_landerholm 4y ago

It’s different. Rivian will have serious issues without all the gov loans and money Tesla got. I expect Tesla to struggle a lot in the future as the more established brands get their EV stories solidified. There is a lot more to a car or truck than a drivetrain. In some ways that’s the easiest part.