It was a difficult thing that was made more difficult
by one of our investors who was just an absolute
bastard, nobody should ever take money from them.
From Crunchbase here are my likely sources of bad investor groups (I've excluded individuals and Google):
> Compass Technology Partners 4 investments - from the start (probably not).
Valor Equity Partners 3 investments - from the start (probably not).
> JP Morgan 2 - maybe (unlikely)
Technology Venture Partners US 1 - (unlikely)
> Capricorn Management 2 - maybe (probably not)
VantagePoint Capital Partners 2 - maybe
Draper Fisher Jurvetson 2 - maybe
Now it seems that Musk didn't expect the investor to act like a douche. So I doubt it's JPMorgan (who are have been historically known to be douches).
It was probably one of the VC funds trying to squeeze Musk on TSLA during the GFC - a firm with whom he has dealt with before. I doubt that it was US tech ventures - since they don't have much weight.
It was probably one of the VC firms. I doubt it was the Europeans (once again not much weight).
So it's either DFJ or Vantage. I remember Sameer Bhatia (of hotmail fame) stating that DFJ loves a good squeeze (they tried to screw him by telling other VCs to back off) - so I wouldn't put it past them.
Vantage point has been known to manipulate deals and are probably the most likely along with DFJ.
This is all speculation - someone else help me narrow it down?
Who am I to criticize Elon Musk, but several things in this interview seemed puzzling to me, and concerning if I were an investor in Tesla. And I'm not even talking about the explicit discussions of their corporate finances.
> ... deliver cars to customers who have been waiting for a long time
If the demand for Tesla cars at a given price point exceeds their supply, shouldn't they be charging more?
> Q: Have you had cars come back from customers, where you noticed a mistake ... A: No.
If the CEO is inspecting every single car, sending lots of them back for (what in some cases sound like) extremely minor tweaks, despite the fact that they haven't had any real complaints about quality, while potential customers are on long waiting lists -- might the CEO's well-intentioned perfectionism be hurting them?
I mean, it's great to see someone obsessed about quality, but I want to see Tesla turn a profit and become an established force in the market, and this article makes me continue to wonder if they'll make it.
He is doing the right thing. They start out low volume and are ramping up. Little issues that are ignored can end up being really big issues (and expensive) once combined with all the other little issues at higher volumes. Additionally every single one of them can be learned from. Maybe you need to tweak the design to improve things, maybe a new machine will help, perhaps a supplier is having issues which will blow up as volume ramps.
When you are doing manufacturing there is something they call the learning curve which is roughly the rate at which efficiency improves. The more attention and learning you can do earlier on, the steeper that curve can be which will also affect your profitability. http://en.wikipedia.org/wiki/Experience_curve_effects
For example current estimates are that Boeing are losing $100m on each 787 manufactured. They expect that their learning curve will bring them into profitability down the road, which much debate as to how steep the curve is, whether it will be better than prior planes (eg 777), and if Boeing was the capital to keep this up.
Minor imperfections are very often indicative of bigger underlying problems. We're talking about a physical product here. Variations in the output demonstrate a need to tighten up the process. You can't just redeploy, like with software. I think it makes all kinds of sense to get it right before you ship on a massive scale. Recalls and warranty work erode margins.
How perfect a product is might have an impact on brand perception.
Example: I recently bought a MacBook Pro Retina. From time to time (rarely) it makes creaking sounds. The bottom plate doesn’t sit quite perfectly on the chassis. Do I send it back because of that? No. Does that impact my perception of Apple as a brand negatively? Absolutely.
He creates culture of perfectionism. A car doesn't have to perfect to drive from point A to B. But it has to perfect if they want to build valuable brand.
This is a great article, full of interesting details you wouldn't get from an interview with the CEO of Ford or Toyota. The 'bastard investor'; the knight-in-shining-armour who rescued the company; the big-name suppliers who 'can't get their shit together'; Musk's personal attention to detail and quality of every single car. If he writes an autobiography I'll be the first to buy it.
> But if you work for Tesla, the minimum is really a 50-hour week and there are times when it'll be 60- to 80-hour weeks.
And we recently saw statistics here on HN proving that working more than 40 hours/week for long durations is counter-productive. Alas, I'm sorry to see Elon Musk falling for this "tough men work hard" nonsense.
I suspect that people who expect and look forward to working +50 hours/week would perform much better than people who are guilted into it. Also sounds like they're well compensated for it.
Having been through several cycles of burnout over the years I tend to agree with you. These days I take nearly as much time to play as work, and my work is better for it.
That said, I wonder how much the type of work has an impact on diminishing productivity over a duration. Also wonder if EM takes this into account in other ways, like vacation time, etc.
Well at least he's upfront about it. Better than an org that says you should work 40 hr weeks then presses deadlines so hard you have no choice than to go over.
That is looking at it from the perspective of the individual. But the company can choose to not care about its individuals and just try to get the most out of them until they burn out. While not optimal this is pretty common in some startups in my experience.
I must say, I've been on the wall about the Model S, being a hard-core auto enthusiast and really loving my gears (e.g. I only drive stick shift). But this interview, the revelation that Elon Musk is out there personally inspecting each and every car (well, more or less), that the guy designing my cars is even more of an anal-retentive OC-freak than I am who won't laugh and scoff at me like the guy at the Audi dealership did when I pointed out the flaws in the cockpit of the RS5 (which I consider to have one of the best-engineered cockpits of consumer cars, being both practical and well-designed) has really changed my mind.
I just had a chance this week to see the Model S up close at the Washington Square showroom in Portland. Have to say I wasn't all that hyped about it from the pictures (and I'm more of a truck/jeep guy), but in person it is just awesome. Reeks of quality. When Tesla makes a 4x4 I will be first in line!
It's amazing just how real Elon Musk is -- he doesn't sugar coat answers and isn't furtive when describing Tesla's many weaknesses, unlike most other automaker CEOs.
The most important thing is that the stock doesn't fall even when he says these things that shouldn't be said. Indicating approval of his style. Or how insignificance it is compared to missing delivery target.
I really enjoy this article and hope tesla succeeds, but I am always turned off by plug-in EVs. Say for example, he does achieve 30 minutes charging for 3 hours driving. And say I drive from SF to LA. after about 3 hours, there is this one in n out station, that everyone stops at, are we going to have 20 superchargers at that station? in off hours of the day, those will not all be utilized, thus lose money. It seems like a terribly inefficient way to power cars. Even gas stations get lines on 5 and 101, and it only takes like 3 minutes there. EVs will always be niche until you can 'refuel' in 3 minutes or less, and you can't do that with 'chargers' because people will die. Swappable packs is the only way to go, and I hope that Tesla is at least thinking of that.
> ... say I drive from SF to LA. after about 3 hours, there is this one in n out station, that everyone stops at, are we going to have 20 superchargers at that station?
That's a legitimate issue. There's talk of eventually having battery-swap stations -- you drive in and your battery is swapped out for a freshly charged one. There are obviously practical difficulties, not least of which is the size and weight of EV batteries and the fact that there's no standardization right now. But it's expected that these issues will eventually be addressed as the system's advantages become obvious.
You'll probably be able to reserve the SuperCharger from your phone while you're driving, or even from your Tesla dash. That way, when you arrive, you're all ready to charge. If when you try to reserve a charging space from your phone, there aren't any spots... I guess you'll have to reserve the next available time then... unless they do something creative.
When there's a much smaller number of electric cars you can get away with a much smaller number of recharging/swapping stations and "pumps". They can incrementally add more stations as more electric cars are operating. Swapping stations would probably take a greater real estate footprint and require more human staffing than a charging station, which can be fairly small and automated (picture a coin-operated tire air machine). I would not be surprised if somebody at Tesla has already put R&D time into the idea of not only setting up a swapping station, but also automating it and designing a car model that works well with it. But it takes time, and devil in the details. As Elon (or any good engineer would say), there are a lot of constraints and trade-offs involved. For now, for launch, they're confident a network of roadside charging stations will suffice for the number of vehicles they expect, at least the first few years, and for the kind of buyer who will be buying early -- folks that have the most wealth and/or most want the shiny and/or most are about having an electric car rather than having everything work exactly like a gas car. As Elon has said too, I think, they'll have to deliver different features and tradeoffs in long run to be able to sell to a broader mix of customer types. But never let the perfect be the enemy of the better than what you have today. Sell to a certain customer segment. Ship product. Then later expand to other segments with different products. They could launch with what they have now, then later create new models or variants designed to allow battery swapping. That is not mutually exclusive with the charging approach, strategy-wise.
Also since they're following a "we only build what people have actually ordered" approach, they also have the opportunity to forecast, much more accurately, where there's going to be increased demand for charging/swapping stations. But regardless, they can do the cow pathing technique. (Or MIT sidewalk laying technique.) Watch where the cows/students go. Add sidewalks there. More students/cows? Widen paths or add more paths. Put one station in each major city. Add more stations and more nodes to match demand. Add stations along journey mid-points (bisections). Rinse, repeat, scale up.
> Usually, when people say it's the all-new blah-blah-blah, whatever car, that's bullshit. 40 percent of that car, if not 60 percent of that car, if coming from some parts bin. In our case, two percent is coming from the parts bin.
I was definitely not aware of this practice. Recycling material is one thing, but reusing parts is something customerss need to know about, especially if it's about 40-60 % like Musk claims.
I'm pretty sure he didn't mean recycling previously owned/installed/used/worn parts. I think he meant using previously designed parts --- parts that are components because they have been used in other models before. In other words he's saying most of the parts in this Tesla are debutting with this model, for the first time, anyway. So there's going to be teething issues. R&D rather than pure heads-down production.
[+] [-] hinathan|13 years ago|reply
[+] [-] confluence|13 years ago|reply
> Compass Technology Partners 4 investments - from the start (probably not).
Valor Equity Partners 3 investments - from the start (probably not).
> JP Morgan 2 - maybe (unlikely)
Technology Venture Partners US 1 - (unlikely)
> Capricorn Management 2 - maybe (probably not)
VantagePoint Capital Partners 2 - maybe
Draper Fisher Jurvetson 2 - maybe
Now it seems that Musk didn't expect the investor to act like a douche. So I doubt it's JPMorgan (who are have been historically known to be douches).
It was probably one of the VC funds trying to squeeze Musk on TSLA during the GFC - a firm with whom he has dealt with before. I doubt that it was US tech ventures - since they don't have much weight.
It was probably one of the VC firms. I doubt it was the Europeans (once again not much weight).
So it's either DFJ or Vantage. I remember Sameer Bhatia (of hotmail fame) stating that DFJ loves a good squeeze (they tried to screw him by telling other VCs to back off) - so I wouldn't put it past them.
Vantage point has been known to manipulate deals and are probably the most likely along with DFJ.
This is all speculation - someone else help me narrow it down?
Tesla Investors: http://www.crunchbase.com/company/tesla-motors
DFJ: http://www.thefunded.com/funds/show/Draper+Fisher+Jurvetson
Vantage Point: http://www.thefunded.com/funds/show/VantagePoint+Venture+Par...
[+] [-] marcamillion|13 years ago|reply
[+] [-] zachalexander|13 years ago|reply
> ... deliver cars to customers who have been waiting for a long time
If the demand for Tesla cars at a given price point exceeds their supply, shouldn't they be charging more?
> Q: Have you had cars come back from customers, where you noticed a mistake ... A: No.
If the CEO is inspecting every single car, sending lots of them back for (what in some cases sound like) extremely minor tweaks, despite the fact that they haven't had any real complaints about quality, while potential customers are on long waiting lists -- might the CEO's well-intentioned perfectionism be hurting them?
I mean, it's great to see someone obsessed about quality, but I want to see Tesla turn a profit and become an established force in the market, and this article makes me continue to wonder if they'll make it.
[+] [-] rogerbinns|13 years ago|reply
When you are doing manufacturing there is something they call the learning curve which is roughly the rate at which efficiency improves. The more attention and learning you can do earlier on, the steeper that curve can be which will also affect your profitability. http://en.wikipedia.org/wiki/Experience_curve_effects
For example current estimates are that Boeing are losing $100m on each 787 manufactured. They expect that their learning curve will bring them into profitability down the road, which much debate as to how steep the curve is, whether it will be better than prior planes (eg 777), and if Boeing was the capital to keep this up.
[+] [-] christiansmith|13 years ago|reply
[+] [-] arrrg|13 years ago|reply
Example: I recently bought a MacBook Pro Retina. From time to time (rarely) it makes creaking sounds. The bottom plate doesn’t sit quite perfectly on the chassis. Do I send it back because of that? No. Does that impact my perception of Apple as a brand negatively? Absolutely.
[+] [-] dgregd|13 years ago|reply
[+] [-] MarkMc|13 years ago|reply
[+] [-] wazoox|13 years ago|reply
And we recently saw statistics here on HN proving that working more than 40 hours/week for long durations is counter-productive. Alas, I'm sorry to see Elon Musk falling for this "tough men work hard" nonsense.
[+] [-] shazow|13 years ago|reply
I liked his "special forces" analogy.
[+] [-] waterlesscloud|13 years ago|reply
[+] [-] pxlpshr|13 years ago|reply
You're counting hours as if the 40 hour ceiling is of importance; no offense but it doesn't seem like you understand passion.
[+] [-] christiansmith|13 years ago|reply
That said, I wonder how much the type of work has an impact on diminishing productivity over a duration. Also wonder if EM takes this into account in other ways, like vacation time, etc.
[+] [-] acgourley|13 years ago|reply
[+] [-] nightski|13 years ago|reply
[+] [-] BasDirks|13 years ago|reply
[+] [-] sixQuarks|13 years ago|reply
[+] [-] autophil|13 years ago|reply
[+] [-] ComputerGuru|13 years ago|reply
[+] [-] christiansmith|13 years ago|reply
[+] [-] mahyarm|13 years ago|reply
[+] [-] vette982|13 years ago|reply
[+] [-] Causalien|13 years ago|reply
[+] [-] guimarin|13 years ago|reply
[+] [-] christiansmith|13 years ago|reply
http://dsc.discovery.com/pdi/files/2012/02/Tesla-ModelS-plat...
[+] [-] lutusp|13 years ago|reply
That's a legitimate issue. There's talk of eventually having battery-swap stations -- you drive in and your battery is swapped out for a freshly charged one. There are obviously practical difficulties, not least of which is the size and weight of EV batteries and the fact that there's no standardization right now. But it's expected that these issues will eventually be addressed as the system's advantages become obvious.
[+] [-] dave1619|13 years ago|reply
[+] [-] mkramlich|13 years ago|reply
Also since they're following a "we only build what people have actually ordered" approach, they also have the opportunity to forecast, much more accurately, where there's going to be increased demand for charging/swapping stations. But regardless, they can do the cow pathing technique. (Or MIT sidewalk laying technique.) Watch where the cows/students go. Add sidewalks there. More students/cows? Widen paths or add more paths. Put one station in each major city. Add more stations and more nodes to match demand. Add stations along journey mid-points (bisections). Rinse, repeat, scale up.
[+] [-] srik|13 years ago|reply
I was definitely not aware of this practice. Recycling material is one thing, but reusing parts is something customerss need to know about, especially if it's about 40-60 % like Musk claims.
[+] [-] mkramlich|13 years ago|reply
[+] [-] skrebbel|13 years ago|reply
In other news, I told my boss that I'm going to be pushing native code in a hex editor until my assembler is done.
[+] [-] hastur|13 years ago|reply
[+] [-] spatten|13 years ago|reply
[1]: http://www.cafepress.ca/+occupy_mars_34_sleeve_tshirt_dark,6...