Thoughts on Tesla’s Risks

Had a chat with a mentor and friend about Tesla recently and he asked about the rising risk profile on Tesla and concerns about the stock and market overall. These were my thoughts:

The current risks (that he mentioned):

  1. Departing Board Members
  2. Outside looking view of change in Autonomous Driving (or “Robotaxis”)
  3. Slumping sales
  4. Federal Tax Credit Ending
  5. Increasing Competition
  6. Quality Issues
  7. Support Problems
  8. Logistic Issues
  9. Convertible Bonds raise of $2.7B

Other risks (I mention):

  1. Macro factors: recession looming
  2. Side effects on Automotive market due to Tesla effect
  3. Labor effects on Automotive market and negative sentiment effect
  4. No effect on global temp change due to Tesla push
  5. Resource crunch due to hindrance by negative forces

Headwinds (2019):

  1. China Gigafactory Completion in May
  2. Buffalo Gigafactory Ramp-up in Q2
  3. Reduced cost to operate for Automotive
  4. Increased sales of FSD (baked in to Automotive Sale)
  5. New paid software features
  6. Multiple quarters of positive new cash flow (thus, incorporation of Tesla into S&P 500)

Considerations:

  • Is climate change real? If agreed upon yes, then entire entire energy consumption to usage lifecycle [ECUT Lifecycle] needs to be rethought towards renewables
  • How much is Automotive and Energy Consumption+Usage Utility Market worth? Both are $3T markets (Tesla is tackling both)
  • Is Tesla the primary leader in the new market? I’d say yes based on demand and execution.
  • Will Tesla continue to be the primary leader going forward? I’d say yes because they have the best lead and they’re moving faster. With even better products likely to be built off of great design and data.
  • What does a market leader generally comprise of in market share? Anywhere between 10-50%.

With all of those laid out (I’m sure I missed some), the simple investment question is, “do you believe climate change is real?”. I’ve believed yes since 2009 and wanted to see someone executing on fixing the problem. I’ve learned that it’s not just a problem to fix, but an innovation cycle that will make things better. Tesla is a safe bet, as long as it has cash, to become gigantic…anywhere from a $600B -> $3T market cap even though it’s sitting on ~$36.7B today. If you take a 5-10 year view out and look at the situation, I’d say Tesla is in the 3rd-4th inning of a fight to completely replace our ECUT Lifecycle against the incumbents that have spent the better part of 100+ years owning it and established companies, organizations, and national powers around it. This all likely affects practically everyone on the planet.

You’re, essentially, betting that Elon Musk and Tesla (and everyone that works and/or roots with/for them) is there in order to fix one question: is climate change real? If so, then that means the likelihood of the entire human civilization being wiped out is possible. It’s very …extraordinary and the stakes sound really dire and out of a comic book. Well, it’s been scientifically proven to be accurate even by Exxon/Mobil back in 1982. That’s the situation that we are in. From the risks outlined, the Tesla strategy seems to be to replace the world’s ECUT Lifecycle and to use the current lifecycle where the weather is increasingly working against them (e.g. Hurricane Maria and Puerto Rico).

So, slumping sales, volatility of board members, “quality issues”, and “support issues” can be put under a stress umbrella under an aggressive worldwide strategy and effort to ECUT products around the world from only a ~$36.7B company (e.g. Facebook is worth ~$529.2B today) right now. Also, this is starting to undercut sales of other very large companies in the same huge and important market as we see in US April auto sales (most unsold ever). As a leader, how do you deal with this situation other than keeping on pushing forward in the 3rd-4th inning rather than throwing up your hands and saying, “oh shit, this is too much and too many problems to deal with!”? I think that’s where Robotaxis have come in after Tesla’s announcement of them in their Autonomy Day.

Tesla’s well-communicated out vision since 2015 has incorporated this concept due to huge under-utilization of the concept of the car of 5% of time being used for anything other than a parked state. I believe Tesla’s going to find out just how much that utilization rate can be increased by deploying the Robotaxis (maybe 1st in Norway) and seeing how profit margins can increase. It’s incorporated into the design of the car/vehicle itself with 1M miles as a design constraint. Why not push the bar?

With every % increase in utilization, the less cars need to be sold (out of 97M+ annual vehicles global sales market). We’re in this massive innovation change and we’re (i.e. every human being on the planet) all a part of it at this point to make sure climate change is averted now that most of the world (and hopefully the entire world) understands that it’s scientifically proven for decades, known, and understood. Hope we figure it out in time.

Anaphylaxis & More @ UC Irvine

Near-death experiences provide a heavy emotional weight…even 16 years later and, generally, the rest of a person’s life.

Still remember everything, as much as I can, from that night in Irvine. My most important anniversary thus far in life. Here goes:

It started with a pecan-filled brownie that wasn’t properly listed with its ingredients. After eating it at Mesa Commons, a half hour later I started experiencing all sorts of issues: swollen throat, diarrhea, vomiting, blood-red eyes, swollen forehead (that was red too through my brown skin), a distinct lack of oxygen, inability to walk without support, and an inability to breath or talk. I needed to type out, letter barely after letter, to take me to the hospital by my dorm-mates. I lost consciousness before I got out of the door. My dormmates told me that I fell apart in their arms at the steps leading to the parking lot and fell down a flight unconscious. They called the paramedics and I got a number of Epipen shots to kick my body into gear…ended up 30 minutes to an hour later at the ICU at Irvine Hospital. The docs took awhile on me and tried out some experimental drug to open up my lungs and throat…a last ditch effort before calling me dead, actually.

Thankfully, my lungs and throat opened up. 3/4’s of a day later, I woke up from a coma that the doctors weren’t sure if I’d ever wake up from with a family crying (they drove all the way down overnight not knowing if I was going to be alive or dead by the time they reached there). I was intubated and lying there motionless not able to move a muscle as my body was wrecked and lifeless.

It took another day to move me out of ICU and into a proper bed without intubation or…anything else needed to support me. I couldn’t walk for a day, but I told my parents, well, I had homework I needed to get done by Monday for my Physics class (one of the first things I said after getting out of the coma). I stayed 3 days in the hospital and my parents, incredibly begrudgingly decided to keep me in Irvine (400 miles away and only 4 months being alone for the first time in my life). I went to my physics class in a crutch unable to walk properly, but I was there at 7:30am in the morning with my homework.

From there, I ended up on academic contract a quarter later. I survived that as well taking the toughest grading professors in the Computer Engineering program for 3 straight quarters. Ended up graduating with a pretty decent GPA after it and a lot of discipline built up over the years and through that.

Lean Analytics: Learning Data-Driven Fundamentals

tl;dr…

If you’re interested in building products for the web, Lean Analytics by Alistair Crolll and Benjamin Yoskovitz is an invaluable source & reference material.

A little more….

This is hands-down the best reference material I’ve found on the basic fundamentals of user-focused, data-driven product development on the web. It does a wonderful job advising prospective builders to form solid growth habits that have a habit of sticking around for the long-term, IMO.

On a personal level, its helped me form better data-driven habits. I’m a 1-2 year old product manager; still learning to be great. After reading the book, its pushed me up a level in terms of knowing what to look for and having a solid approach to product-level conversations. My answers are better focused, I receive praise for my insights far more often, my responses are much more analytical and data-driven, and I just feel confident in my responses.

So, how does the book help form good habits? Well, it takes the theory of Lean Startup and applies it into pertinent case studies (e.g. Media/Ad, UGC, SaaS, E-Commerce, Mobile Apps, and Two-Sided Marketplaces sites). From there, Croll and Yoskovitz append those studies with examples from the industry. There’s some good guidelines overlayed throughout the book too. Can’t ask for much more.

Now, I don’t think anyone should completely take Lean Startup & Lean Analytics to be the end-all, be-all to product development on the web. Its an experiment-focused product development process that works well with small, dedicated teams with little to no dependencies. I recommend having your own opinion on what works for you and your team and applying what you learn in the book to your own process. You’ll see a measurable difference in the quality and speed of your team’s work in building product.

Thoughts on Tesla and its growing community of advocates

If you haven’t had a chance to read through the Tesla forums recently, there’s a very interesting thread by current owners detailing issues with going back to driving internal combustion engine cars. The Model S has had phenomenal success. It’s won awards, turned a good majority of their customers into advocates (no easy feat) and recently started validating their product is something people want.

What’s the best part about all of this? The comments are mostly about their electric drive-train. It gives me a lot of hope on a number of levels:

  • A good number of their customers are advocates and are truly engaged into the success of the company.
  • The Model S isn’t just a mix-shift product, but actually an incremental product evolution. It’s generating the power needed to successfully push forward the entire electric motor industry.
  • The ICE car competitors are starting to notice and either partnering (e.g. Toyota and Daimler) or beginning to build their own competitive products.
  • Altruistically, this is saving the planet and the lives of the generations that come after us.

This type of community building doesn’t happen often. I’ve seen it at Mozilla and its extremely powerful. It’s an incredible opportunity to further push their agenda and further the cause. I sure hope the folks at Tesla understand what they’ve found and are building methods empower and foster the growth of their community. The industry and the world sure would be better for it.

Part-time MBA? Full-time job? No sweat!

It’s been two years into my candidacy as an MBA over at Santa Clara University and, over that time, I’ve been asked by several people how I balance a full-time job, a part-time education and a mid-20’s social life. The usual answer is “poorly” or “terribly”, but that doesn’t help those who are trying to figure out if it’s the right path for them. First things first though, here’s a brief moment of “fud” (i.e. fear, uncertainty and doubt) for those would-be-MBA’ers:

  • You’re going to lose track of one or more friends.
  • Over the course of the candidacy, you’re going to let down your family in some way.
  • Over the course of the candidacy, you’re going to let down your friends in some way.
  • Over the course of the candidacy, you’re going to let down your co-workers in some way.
  • You’ll have less patience with people and it’ll show.
  • You’ll have to either forego a healthy sleep schedule, social life or both.

I’m not trying to scare you away from it; its just important to know what to expect after making the decision to dedicate a big part of your life for the next 3 or so years. Now with that out of the way, let’s get to the real meat and potatoes. I think its pretty manageable if you take the extra onus to schedule and plan your time accordingly and stick to it. The problem is that most, including myself, don’t really understand how to do it until about a year or so of being in the program. So, here’s a little advice that’ll help avoid any or all of those “fud” points from the start:

Before the Quarter Starts

  1. Open up a calendar and notebook.
  2. In the calendar, write down the dates for every homework assignment and project due as well as test dates across every class you’re taking.
  3. With your notebook, write down a list of things you’re looking to accomplish at work AND life over the next 3-6 months, prioritize them and offer a very general time period as to when you think they’ll get accomplish.
  4. Cross-reference with the list back to your calendar and see how that’ll look.
  5. Take out half or more of the things you’d like to get accomplished at work and life. Put it in a backlog. You’re going to go crazy if you try to get everything accomplished.
  6. Inform your manager of time periods of when school work is going to be hectic over the next quarter. This’ll help manage expectations in terms of work.

During the Quarter

  1. Treat free time as an opportunity to actually get a head-start on school work due 2 weeks to a month ahead of time. This’ll help make those expected hectic periods a whole lot more manageable.
  2. Try to do a small portion of reading or homework for ½ – 1 hour everyday.
  3. Take every opportunity to exercise even if it means not hanging out with friends. This’ll really help keep your mind fresh.
  4. Be strict in allocating at least 7 hours of sleep a day.
  5. A week before any hectic period, inform your family, friends and manager that you’re not going to be available through a simple e-mail or two.
  6. Make plans to go out for a fully weekend day with friends or a significant other after each hectic period.

After Each Quarter

  1. Go on a small vacation (i.e. a long weekend trip) with the people closest to you.

Do this every quarter. It may sound crazy, but its tried and true. If you do even half of these things, it’s going to go a long way to make your life a whole lot easier to handle over your time at the institution. Oh, and one other thing: always remind yourself why you’re in the program (i.e. what you’re trying to get out of it). It’s a lot of money, work and time out of your life and doing it without a rhyme and reason is a recipe for disaster. So, make sure you know!

Thoughts from a less, manlier man.

A quick note before the entry: I did this because it was my first month off from school+work for a full month and wanted to do something fun that was anti-MBA. So, it was more of an experiment than anything else. Plus, beards are super awesome and deserve to be grown. I apologize for the lack of pictures.

 

A noticeable length was beginning to form with each strand and the “beard” was beginning to create it’s own little personality. What resulted was a number of quizzical, but pleasant looks from people checking out the “beard” for the first time. It was beginning to get rather itchy especially in 90 degree weather, but it wasn’t as bad as what other bearded and ex-bearded folk explained from their experiences. The one definite logistical positive out of this was not having to spend the time every other day in shaving my facial hair.

At this point, I had a couple of new things to think about that I never had to deal with before: hair growing over the lip, growing in ways that I didn’t expect and what was I going to do when I get one of those “3 on the top and 2 on the sides” haircuts I usually get?

The hairs got in the way while I ate or drank anything if I didn’t trim every other day, so that was a definite priority. This turned into a lot more work than I’m usually accustomed to. Even when I started doing small changes on one part of the beard, I felt the need to take care of the entire beard. An estimated time of 5 minutes ended up taking 15 minutes due to the nature of how my hair grows not only on top of my lips, but also around the jawline and on the neck. It just got kinda nasty after a day or two for that last week.

Past that, the human interaction aspects of how it affected my life started creeping in once it got filled out. It was more than often, the terrorist label came up between friends and family and people in general gave these deer-in-the-headlight stares until they heard me speak to them. It was a bit odd, but certainly not disheartening. Nevertheless, there was this major change in perception of my personality from people, who were at least acquaintances, based on something as arbitrary as facial hair.

In retrospect, my little experiment proved to me that perception continues to be a funny thing. It has a huge part in how we define the way we perform actions in our personal worlds and how others define the way they not only react to our actions, but also supplant those actions with their own personal world. In effect, they create a perception based on something that’s not completely fair, but very natural to the human psyche.

In the end, I’d still love to do it again, but only when I’m in a phase of my life that allows me to do such things with ease.