Ego, unwillingness to think about the "boring" financing stuff, getting off on the adrenaline from having back against the wall, desire to put the company in better position to raise (higher production in TSLA's case) and just naivete are all possible explanations and all explanations quite consistent with the stereotypical "founder" (note, not all founders are like this but many indeed are.).

Agreed, convertible bond makes the most sense.

Damn DOW down 1000 points how does Tesla not tank today wtf.

Today was the perfect example of how dumb this trade is, you have substantial momentum destruction in all the sectors related to TSLA (worst day for the Qs since 2011)... Yet it outperforms the S&P? If you shorted intraday expecting it to follow the market, got destroyed on a relative basis. Technicals maybe "astrology" according to some in this forum but the stock continues to defend that sub $250 level well. Im sure the bears agree with the sentiment, "just break down already."

This, but the opposite

Lots of strategic pump news throughout the day.

T. Rowe price increasing stake which is a big vote of confidence (cf. Ackman and Sequoia with Valent at $120, lol).

"Leak" about James Murdoch, current board member, possibly being the new chairman as Musk steps down. Indicates he (as an outsider who doesn't need the money or prestige) still has confidence in the company and doesn't feel like it's a ship about to go down. At least on the surface.

Nonsense "leak" about China factory moving ahead (cf. 2015)

All nonsense of course but great to get buys in.

The bold is the only slightly credible explanation for someone in Musk's position and it fits a little with his delusion that the shorts will be burned (tweeted at $370 - oops). The others aren't credible.

Human psychology is unpredictable of course. But past behavior predicting future behavior is pretty reliable. And they've raised many times even after saying they wouldn't. Have always kept a healthy cushion and not let working cap go meaningfully negative. Have always paid their bills reliably. Have never acted as if under extreme stress. What's changed? Is Musk putting a meaningless line in the sand and risking the company for it really credible? It's in no way his style. He's a conman - the opposite of principled.

Regardless,

P(they can't raise) >> P(they can but Musk is damaging the business because he's a loon)

And there's the rub.

No, none of them are. People love money cushions when they can get it and the history of Tesla is Musk raising liberally and often.

... I have worked on both the legal (for the firms) and banking sides. I assure you there are a lot of founders who fit what I described.

A lot of founders are morons. But we're specifically talking about Elon Musk, not "founders", "men", "humans", "mammals", "earth-bound life forms" or any other categories.

A lot of venture capitalists and lawyers specifically tell people they look for optimists with conviction. The venture capitalists then do their best to babysit the dreamers.

People who keep their feet planted on the ground don't hit the moon very often.

The capital markets are giving Musk a ton of rope because he's had a pretty solid record of hitting the moon (probably literally if he wanted to with SpaceX) and that he has met/exceeded Wall Street expectations (though not his own projections) for the most part with Tesla's acceptance as a luxury car brand and Tesla's ramp up in production (even with all the issues you like to hark on.)

I've been saying for years this has always been what makes bear thesis on Tesla so difficult. The expectations are so low and so laser focused on some ill defined long term domination of car+battery+??? industries that Tesla just has to keep growing (at Musk must instinctively realize, pretty much at all costs) and the bull thesis would be nearly unfalsifiable in the short/medium term. We saw a similar phenomenon with dot com boom and we're seeing a similar phenomenon in "sharing economy" startups (bike sharing in China for example.)

With the production ramp up and big order book, the bull thesis remains intact. Within a very wide tolerance range, short of accounting fraud (not just sloppy/fudgy, but outright fraud) and/or Musk running his mouth triggering the SEC to a degree that disrupts TSLA's ability to raise capital, the financial/management turmoils are really not that important.

I honestly don't understand why people think Tesla can't raise money. As long as Musk keeps his mouth shut, he'll get his money. Given nobody believes Musk's insistence that he doesn't need a capital raise, the capital raise is already priced into the stocks and bonds. Yeah, it's gonna be junk (convertible) debt but that's still going to be enough to carry Tesla forward for another year or 2 at least.

he's about 70b$ in PP&E short to be a 50b$ car company. how does he get there in your mind?

I don't know. I don't think anyone, Musk included, knows. This is what I was alluding to with "ill defined long term domination..." line.

Which industry could you not hack given you had to switch? Gonna discount your posts on those topics

There are some bigger names, and some fishy spots like #1 and #2 guys leaving at the same time I think (logistics). I don't know enough about the overall turnover to suggest directors leaving is that fatal.

Ok this is total dog****


Gonna pull the "i work in" but i literally work for PE companies as one of the "grown ups" they put in, as you previously described. They 100% dont want crazy optimists to the point of delusion,.especially dont want narcissists and people with no self control. This may have been true in the dot com phase but nowadays its watch where the market is shifting, buy a company with a base and average to above average product that is performing poorly relative to market. Put all your own people in who know how to execute, sell to a strategic or huge fund. Also knowing buyers is a big part.

PE CEOs go from company to company because they show they can execute. PE firms keep them on the payroll because they do exactly that. Has nothing to do with dreams and optimism. Maybe its a real thing in the mom and pops 20m funds were some rich idiot wants to be in VC (ie think dan bilzerian), but the big leagues don't work like that. One of the most interesting things that my first real PE CEO boss told me was "People think PE firms collect companies, thats silly, they buy and sell companies. They collect people". Its 100% accurate.

They do tend to keep founders for awhile and try to put a proper team around them so they can succeed, but thats only because having a founder makes the company worth more on an exit vs a bunch of career operators who know what their job is.

I cant speak to PMs and blackrock is enormous, not really sure how they run at all.


Edit: dont want to discount founders here, some are highly intelligent and perfect CEOs, but over optimism isnt a great sign of it. Confidence is though.

God the "founders mind" posts are all so bad

Does the "founders mind" stuff just mean he is too emotionally tied to the company to make rational decisions?

No it means spurious is grabbing another very very weak branch to hold onto

Musk is an outlier case where the “exit” is farther down the line.

PEs are looking for exits as you describe.

The venture/angel funds I was working with are some of the biggest in the country, not small mom and pop 20m. They definitely prefer people who aren’t totally deluded but unfortunately the amount of optimism to live through what one investor described as the “abyss” phases borders on delusion.

As you must know given your experience, a lot of founders are resistant to growing up. The thing with Musk is due to his cult of personality and track record, he is in a much stronger position to be a petulant child. We see a related phenomenon with Jobs and Gates hoarding way more cash than necessary.

And just as I mentioned before, Musk likely will need to be reined in at some point like Ralph Lauren had to be reined in.

This.

Lol, I wrote up a draft calling out the optimist founder stuff as bull**** that hasn’t been true since the dot com bubble. Good to see syndrome covered it.

Every venture capitalist I've run into talks about finding the founder and "right people" that will go into the venture with "conviction."

They literally ask if the prospective founder can basically give up his/her life for at least the better part of a decade. Having kids is a huge red flag. When you're asked to work like that, you have to be a borderline delusional optimist in your probability of success.

Funds are better at reining that stuff in, channeling the energy, and filtering out some outright frauds, but the borderline delusional optimism is definitely something funds still actively seek out.

When you got Musk's track record, you gonna get a lot of rope. One of the assignments I was working on was someone convinced he could build a sustainable greenhouse only farm business in the middle of a desert. He's still hemorrhaging cash but all he had to do to raise valuations and go into Series A was an endorsement from the governor of his state... then something like A2 when he got a commitment from a distributor. His paperwork and accounting were basically non-existent. He got even more money just for agreeing to hire an office staff.

Reason he got funding? He has multiple 8 figure exits and he was batting 3/3 on companies he founded. None of which had anything with fruits and veggies.

Musk got multiple billion+ exits. He's gonna get tons of rope.

I am 100% syndrome knows people like this just because he works in PE but for some reason got blinders on because Musk is such an outlier and Tesla is just so... out there.

I have consistently said Tesla is almost certainly overvalued. I'm just explaining why the bear thesis in the short to medium term is kind of weak.

Are people ****ing nuts? Do people not understand the difference between Private Equity and Venture Capitalism?

If bears really think that this founder's mind stuff is bull****, then they are in for a ride.

I love the "I work in PE" stuff... it's good that you have anecdotal evidence as a person carrying the suit case (full of money) for people that are literally only good at carrying the suit case full of money.

It's positively absurd Tesla is getting the startup hands-off treatment. It's basically a publicly traded startup with (formerly) a $50 billion valuation.

I understand the absurdity of it but it's just where Tesla is.

Hey, someone needs to carry it!