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BASE104
Social climber
An Oil Field
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May 18, 2018 - 09:37am PT
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I was lucky to see a SpaceX launch last month. I spent a couple of months improving my thermal flying in Florida. I was about 4 hours from KSC.
I paid extra to observe it from the closest point, the LC:9 Gantry 2.3 miles away.
It was awesome. The noise was powerful, and got super loud when it was about 20 seconds into the flight.
Got a free hat and Falcon Heavy t-shirt....
Musk is a visionary. Willing to lose money for a decade in order to place himself in the lead.
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couchmaster
climber
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May 18, 2018 - 11:25am PT
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Great writeup Roger! The numbers at Tesla look bad to me. Moose invested in them, and good luck with it as they seem terribly overvalued now.
However, good news, The Boring Co will be starting to ship flamethrowers in a couple weeks it's been announced. Of interest, it appears that the regular carriers may have reconsidered the delivery of said devices.
http://archive.li/FXb8w
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jstan
climber
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May 18, 2018 - 10:46pm PT
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Great write up Roger. Read it all. When designing a new system we invariably break it into subtasks and assign different groups to do the tasks. The system engineer is concerned mainly with final assembly so in the drawing package that engineer gives most of the tolerance to final assembly; making final assembly easy. The person stuck with making small components has no tolerance and is left to make something perfect. These parts are generally referred to as "unobtainium." This leads to product being shipped with "holes in it."
New products require either giving power to someone who knows everything or to getting people to talk to each other. Homo sapiens are not inclined to do either of these things.
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nah000
climber
now/here
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May 18, 2018 - 11:05pm PT
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yup another couple +1s for Breedlove’s posts above... missed them until now. interesting and well written insights... thanks.
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Roger Breedlove
climber
Cleveland Heights, Ohio
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May 22, 2018 - 05:05am PT
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The Consumer Reports conclusion sucks. I don't know how much sway they have in the market place, but they have excellent test protocols. No one launching a new product needs to have the product itself panned.
Separately, a friend who is in the market for a new car is considering a used Tesla S. He loves the car, but when compared to other luxury cars, it is too expensive. Also, the word is that a Tesla is great if you don't have any issues, but that Tesla's service is not good. This does not surprise me given that their business model, but is probably not such an issue with the luxury S. That said, Tesla S and X models have below average reliability scores, bracketed by Jeep and Lincoln. Not good company for cars which cost as much as a house. Reliability become an issue with more customers and lower cost cars. Tesla should hire old guys from KIA to help them with this issue.
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EdBannister
Mountain climber
13,000 feet
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Tesla's top two, below Musk, quit last year. Right after having 400 million in deposits on undelivered cars, and borrowing 500 million on top of 1.2 billion in existing debt. They are burning through cash faster than they are producing cars.
It will be interesting to see how long before the bubble pops.
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fear
Ice climber
hartford, ct
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Bipolar people can be very productive and if they're intelligent and motivated can take big risks that others might not in their grandiose moments.
But I sure wouldn't bet the farm on 'em like getting on a rocket headed to Mars.
I still don't get the fully-electric car thing when hybrid designs make so much more sense.
The "self-driving" option takes a special kind of stupid to turn on except maybe in emergencies. IMO, if they removed that feature they'd be a lot better off.
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tooth
Trad climber
B.C.
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Man I have enjoyed driving my X this month! Now I can get to Squamish every weekend since it is free to drive the 4 hours - and enjoyable too!
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MikeL
Social climber
Southern Arizona
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(Interesting that there would be a thread on investing in a single company. There are many good (and bad) stories out there that could be discussed. I guess folks need a focus to talk about what interests them. Me, too.)
Roger,
IMO, companies at the stage of development like Tesla (who is also a standard bearer for a technology) must scale. It’s all they really think about. It’s important.
To be a long-term competitor, firms must find ways to get their costs down. In industries such as this, scale enables it. Scale is necessary. I worked at Cisco Systems for a while, and it was all they could think about. In their time, they made more money than God, and they did everything they could to build scale. Car companies show this understanding since that same God was in knee pants. Scale brings so many benefits to the buyer other than costs, too—like experience curves and customer linkages and the excess capital to increase customer service, etc. In many industries, “size matters” (for you males who could not give up long-necked beer bottles, me included).
Yo, I don’t mean to sell any spirituality here, but almost everything that one sees in business can be explained. Knowing does not mean solving. Almost anyone around the block can see / find problems in organizations. Given that there are scarce resources, the question becomes: what are your priorities (usually 3 or less), and how are you going to deal with them?
I recently read a historian who claimed that it was only relatively recently that work became work. Beforehand, it was the way one expressed himself part and parcel in the community. General managers now must find ways to energize and engaged the people who make up the organization. Vision, charisma, mission are all pretty important. In this regard, Tesla has an audience. However, as I’ve heard (only from a very biased sample), on the inside, all’s not perfect with Tesla.
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Reilly
Mountain climber
The Other Monrovia- CA
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Express oneself? I thought the idea was to make money? Ya goes onto StuporTopo to express yerself, on yer OWN TIME! Course, if yer bankrupt then ya gots lots of time to express yerself.
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August West
Trad climber
Where the wind blows strange
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When all the truth comes out, people are finally going to realize that Musk was a decently talented tech guy, who got exceptionally lucky to make his initial fortune, bought into his own hype and bullsh#t, and is so far from a "visionary" or "genius" it's not even funny.
I'll give Musk more credit than that. He made his initial fortune that no doubt was a combination of skill and luck.
He started a private space company from scratch that, if I understand correctly, is actually profitable. That is jaw-dropping. Rocket science is hard. I would have thought it would have been easier to be the first new car manufacturer in 80 some years.
He created a brand new sports car company with a fanatical, Apple iphone sort of loyalty. Amazing.
His initial sports car seemed to be doing pretty well.
But if you keep betting the company on trying to scale up and the next thing, giga-battery factory, mass produced cars, electric semi-trucks.
I think eventually you are going to roll snake eyes.
I'm not optimistic Musk is going to make it mass producing electric cars on low margins.
It may be too late, but if he really wanted this to succeed I think he should sell Tesla to a large car company. When VW was trying to get out from under diesel-gate, they would have been a good choice. They know how to mass produce cars on low margins and Tesla would have fast tracked their switch to electric. But I'm not sure VW would get as much out of it today.
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Reilly
Mountain climber
The Other Monrovia- CA
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He created a brand new sports car company with a fanatical, Apple iphone sort of loyalty.
Not sure that is a rousing endorsement. The guy recently killed in his Tesla was a 38 yr old Apple software engineer who wasn’t either smart enough to read the manual or pay attention.
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MikeL
Social climber
Southern Arizona
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Moose,
Market domination is most often a result of many factors, most of which are pretty much out of people’s control. History plays a big role, and very little events can end up having an unforeseen effect that creates market winners. There is also market dominance from uncompetitive behaviors.
I think someone once said that every business fortune has some larceny in its history. I can’t think of a market that is really free. One might think farming and commodities markets would appear to be most “open and free,” but there are many things that go on in those markets that tilt the playing field.
I would add that there is also luck, but I don’t really know what that is or really means.
If you want to point to a good business organization, find one that has truly innovated twice in a row.
As for the brilliance of Jobs and the wonder of Apple, there is quite the story how Apple “innovated” the MacIntosh and then essentially squandered an 8 year lead on Microsoft. The story turns on how Xerox created PARC and then ignored innovations that later created new and different industries. The whipping that Microsoft later gave Apple was not lost on Jobs when he returned to the Chief Executive suite. He finally understood how to create what are called “lock-outs.” (There is now a relatively new branch of economics that describe “increasing returns to adoption.”)
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healyje
Trad climber
Portland, Oregon
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Rocket science, despite public image, really isn't "hard".
The fundamentals aren't hard, but significantly lowering manufacturing costs, developing reusable components, and dramatically upping your launch tempo is actually quite hard.
The "hyperloop" is one of the single stupidest things I've ever seen get funded. The scale and cost of infrastructure involved compared to something like standard high speed rail, vs the very small advantages, should have killed that in the conceptual stage.
Interstate and urban permitting issues alone warrant exploring all possible options, particularly on the east coast. And that includes highspeed rail and energy infrastructure like direct-current electrical transmission interties. It's also what forced Google-led Atlantic Grid Development, LLC offshore onto the continental shelf for a new east coast interconnecting transmission line and even it is running into issues attempting to bring power ashore.
Developing a fast, multipurpose tunneling technology really isn't crazy at all.
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August West
Trad climber
Where the wind blows strange
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Rocket science, despite public image, really isn't "hard". Cutting edge medical technology is hard. The "hard" work has already been done in that arena.
The fundamental difference here is that being a new car manufacturer requires scaling a very complicated manufacturing effort quickly, in a notoriously cyclical, intensely competitive, low margin business, before running out of working capital, on top of competing to win enough market share to stay in business at all. Competition is against corps with extensive experience, capital-intensive existing infrastructure, and enormous scale.
Private space launch company is competing against - who exactly? There aren't many alternatives to getting, say, a com satellite into orbit. This while using, for a tiny fraction of the cost of establishing, taxpayer funded launch facilities.
Rocket science, despite public image, really isn't "hard".
It was coined in the 60s. We use it now as a metaphor.
DMT
Sure, we put a man on the moon in the 60s. It is still a low volume, high risk activity. Really expensive satellites regularly fail to reach orbit. It happened last January.
https://www.reuters.com/article/us-usa-satellite/u-s-spy-satellite-believed-destroyed-after-failing-to-reach-orbit-officials-idUSKBN1EY087
January 8, 2018
A U.S. spy satellite that was launched from Cape Canaveral, Florida, aboard a SpaceX rocket on Sunday failed to reach orbit and is assumed to be a total loss, two U.S. officials briefed on the mission said on Monday.
...
Northrop Grumman built the multibillion-dollar satellite, code-named Zuma, and was responsible for choosing the SpaceX Falcon 9 launch vehicle, both officials said.
If multi-billion means "3" billion and if the Model 3 goes for an average price of ~$50,000, you could buy 60,000 Model 3's for the price of one rocket failure. If Tesla could ever, actually, you know, deliver said vehicles.
From the media reports, its not clear if SpaceX is to blame or if "a payload adapter" built by Northrop is to blame, but it still looks like the mission was sunk by "rocket failure". This stuff isn't an off-the-shelf commodity.
Private space launch company is competing against - who exactly? There aren't many alternatives to getting, say, a com satellite into orbit.
I'm not against the US trying to encourage a free market space industry. When the idea was floated, it wasn't clear that a private start-up could ever get enough reliability to compete with government agencies such as NASA, direct contracts (not free-market) from the military, and then there are the Russians, Europeans, and Chinese who will all launch commercial satellites for a fee.
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August West
Trad climber
Where the wind blows strange
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Will his time machine let me know when to short Tesla stock?
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tooth
Trad climber
B.C.
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“If Tesla could ever, actually, you know, deliver said vehicles”.
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Reilly
Mountain climber
The Other Monrovia- CA
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Somebody be playin’ with their numbas! If the Model 3 is already at 30% of market share how come I’ve seen like 3 of them, ever? I could go out and see 3 of any of those others in the next 2 minutes, just within two blocks! Where they hiding ‘em?
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tooth
Trad climber
B.C.
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Share of sales. For the month stated on the graph that we learn to read in grade six. It doesn’t say percentage of cars on the road. It is market share of sales for the month, over 500/day. Or are you just playing dumb? Just laugh it off and pretend you were trying to be funny and top it off by being patronizing.
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