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The headline is relatively clickbait-y. Its double their revenue because their revenue is basically 0. Their actual expenses are hundreds of millions, of which
by dgrin91 3y ago
The headline is relatively clickbait-y. Its double their revenue because their revenue is basically 0. Their actual expenses are hundreds of millions, of which this 1.7 million is a drop in the bucket. Once their upfront expenses are paid they will (presumably) be making hundreds of millions/billions in revenue, which means this 1.7m is not particularly important.
You can talk about standard complaints of CEOs with private jets, and I'd probably agree with you here, but there isn't anything particularly egregious here.
- brandall10 3y agoIt’s also worth noting the projected revenue for 2024 is 50-100M.
- ricardobeat 3y agoI also project earning $20M from my yet-to-be-built SaaS platform in 2025.
- brandall10 3y agoOkay. This is a publicly traded company with a product burning through a multiple of that annually.
- bdcravens 3y agoFrom their recent 10K filing: "Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient additional funding or do not have access to additional capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations."
- vidarh 3y agoAlmost any startup will have periods where there will be "substantial doubt about our ability to continue as a going concern" if they are "unable to obtain sufficient additional funding". This is meaningless when looking at a startup without also looking at whether their burn rate is abnormal relative to how much they raised, and whether or not they're meeting their targets.
- gomox 3y agoThat's just boilerplate that any unprofitable business has in their filings, to prevent lawsuits over undisclosed risks.
- benjlcox 3y ago$1.7 million is 1-3 employees working to ship your product. When you're company is on the edge of collapse you should have your priorities straight. Diverting company resources to your own private jet is a preposterous use of resources and, imo, speaks volumes about where Canoo is headed.
- calvinmorrison 3y ago1.7 million is 1-3 employees? Jesus this place is so out of touch. I've worked at places with annuals between 1 and 5 million and none of them had less than 10 people. most between 15-30
- edmundsauto 3y agoThis doesn’t change the point, which is to put your resources into wise areas. Additionally, I would say that 15-30 people for $1.7M is more out of touch than 1-3, if we’re talking about employees with potential to turn the business around.
- dkjaudyeqooe 3y agoOut of touch with whom? Logically you're also out of touch with those you're talking about. Different places/environments/skill levels have different costs, so what?
- 28304283409234 3y agoMy mom retired at age 55 with 1 million euros after selling the mom and pop shop. She is 78 now. Still living off of that original mil.
- deleted 3y ago[deleted]
- ricardobayes 3y agoPlease drop me a line if you know of any startup hiring for a 500k(ish) comp package.
- Powdering7082 3y agoyes it's clickbait-y, but it also seems a bit like it's burying the lede with the fact that the CEO is self dealing on top of it. > Canoo reimburses Aquila Family Ventures, an entity owned by the CEO, for use of an aircraft.
- Solvency 3y agoImagine if all salaried employees working from an office created a personal LLC to own their car, and then had their work compensate them by reimbursing each employees LLC. Would that pass muster?
- wongarsu 3y agoIf it's cheaper for the company than leasing or renting cars somewhere else, why not? Presumably you hire the employee for their time and expertise, not because they own a car and offer its use for company travel below market rate. (That does happen in many industries, but that's a market distortion we should look down on, not a yardstick for what's right)
- bombcar 3y agoThe difference is it's usually not "worth it" to break it out in the case of an employee (the advantage is the other way, where the company buys a car and lets the employee drive it, and ignores personal use). With $2m on the line, it is worth it even just for the tax savings.
- pjerem 3y agoWell, the article also says that the plane isn't even owned by the company but by the CEOs family holding. So even if it's "a drop in the bucket", it's also not really a company expense, just an outrageous compensation.
- disgruntledphd2 3y agoI think that makes it worse, tbh. Like the guy already has a jet, which presumably he can afford to run. Taking money out of an unprofitable company to pay for (somewhat) unreasonable personal expenses kinda feels off to me. But then, maybe I'd feel differently if I had a private jet ;)
- imzadi 3y agoThe $1.7m is being paid to the family holdings of the CEO to rent the jet already belonging to the CEO for the CEO. Plus an additional $1.7m to the same holdings for "support services."
- ametrau 3y agoThat’s the actual story. It’s a bit boring though. The rest is bs clickbait.
- malfist 3y agoA bit boring? Seems like straight up embezzlement.
- ein0p 3y agoIt’s only embezzlement if board/investors didn’t know. This definitely is something the board would have to approve. As a former exec though I think it’s distasteful to require such things before significant profitability. Business class is fine. Pre-revenue, coach is fine too.
- jonathankoren 3y agoTBF boards are famously insular and self serving, with everyone being on each other’s boards.
- drexlspivey 3y agoSo I’m assuming you’re paying for plane tickets out of pocket when going on a business trip. Otherwise it would be embezzlement right?
- malfist 3y agoMy company pays for my plane tickets, but it's not booking flights on my personal airplane, which I get to set the rates for.
- rsynnott 3y agoI mean, it seems pretty bizarre to me for a CEO of a company that doesn't have any revenue to have a private jet paid for by that company. Is that... common? (Honestly, even if they had revenue in the hundreds of millions, it'd still be rather absurd.)
- oytis 3y agoStill, why would you use a private jet if your company is not only not profitable, but also doesn't generate meaningful revenue? You're not spending money you've earned, you're spending borrowed money.
- neom 3y agoIf his net worth is $400MM+, his insurance my very well require him to fly private.
- echoangle 3y agoIs that really a thing? Is private supposed to be more secure because of accidents or because of risk of kidnapping and assassinations? I don’t see a reason why private flights would be less accident-prone than public flights. Edit: looks like private flights are actually much more dangerous than airlines, the insurance would probably prefer if you would fly public… (not my favorite source but the first thing I found: https://www.livescience.com/49701-private-planes-safety.html https://www.livescience.com/49701-private-planes-safety.html )
- neom 3y agoIt is a thing, yes. A friend of mine was discussing how he has to think about the events to go to because his key man insurance on his family office requires him to use his own pilot, so he's contently inventing dumb reasons not to go to things vs admitting his cheap and doesn't want to spend the money. Two things I find amusing about this... rich people being cheap is always funny, and, as you mentioned, insurance companies preferring a private pilot when flying private it less safe. Apple requires this for Tim Cook too, and I always thought it was amusing.
- bombcar 3y agoPrivate is less safe if your grouping includes Cessnas and small business jets, and ignores kidnappings. With a private jet you can be at the airport and direct into your waiting car with security escort without anyone knowing, which can greatly reduce the chance of other issues occurring.
- GuB-42 3y agoSo, we can have both the standard complaints of CEOs with private jets and the standard complaints of companies spending way more than they earn.
- throwawaymaths 3y agoIf you're an already rich CEO that takes over a pre-revenue startup, either pay for jets out of your own pocket or fly coach. Definitely don't subcontract your own family's (edit: your own) "services company".
- woobar 3y agoCEOs get all kinds of compensation. Business jet travel, security, etc. This line item could be just tax optimization for this guy. I am not trying to defend him, he is getting paid a lot: "On May 5, 2023, the Board granted Mr. Aquila an award of 6,884,682 RSUs. These awards vest on May 5, 2024, subject to continuous service." [1] At current stock price it is ~$20M. Getting outraged about additional $1.7M that was negotiated several years ago is strange. It does make a great headline, but would it change anything if he is paid $22M and pays for the jet out of pocket? [1] https://ir.stockpr.com/canoo/sec-filings-email/content/0001628280-24-014075/goev-20231231.htm#i5cf4fcff5f5a4438b15ae9a52ca671ee_112 https://ir.stockpr.com/canoo/sec-filings-email/content/00016...
- axlee 3y agoWell, what kind of world-class engineers could he get for $1.7M a year? How many salespeople ? Seems like the CEO's comfort when travelling should be a lot lower in the company's list of priorities, as it's losing hundreds of millions a year.
- singleshot_ 3y agoIt would make a difference to the IRS, wouldn’t it?
- gangstead 3y agoTotally agree. I'm not usually in the habit of defending millionaires. But I thought there used to be a justification for private jet travel of maximizing the CEO's time. The company is investing $20M per year in this asset and he's probably flying for meetings all the time and if a private jet cuts a couple hours of airport transit / wait time off of each flight it's probably worth it for the increased amount of meetings he can attend. Maybe that can be achieved for less than $1.7M, I'm not informed enough. This source https://simpleflying.com/gulftream-g700-cost-to-own-operate-guide/#:~:text=Capital%20and%20operating%20cost&text=Libertyjet.com%20shows%20that%20the,operating%20cost%20of%20%242.17%20million https://simpleflying.com/gulftream-g700-cost-to-own-operate-.... says it's a little more than $2M per year to operate a Gulfstream G700, I don't know what kind of jets CEOs are using these days.
- deleted 3y ago
- s0rce 3y agoNot a drop in the bucket at all, its a massive waste for a startup on the edge of insolvency. They need to focus on priorities and spend much more carefully. No way does a small startup founder need a private jet.