Writing for MarketWatch, Paris Kellermann summarizes how the famous mathematician Nassim Nicholas Taleb slammed Elon Musk. Taleb was the author of the book “The Black Swan” which foreshadowed the 2008 global financial crisis. Here is some of what he had to say:
Taleb, a professor and investor whose work has focused on the risks of unexpected events, followed up in a Saturday tweet: “If the word ‘panic’ means ‘exaggerated’ reaction, could be so at the individual level but NOT at the collective one. ... We have survived for zillion years thanks to ‘irrational’ ‘panics.’”—MarketWatch
But is anyone who has watched Tesla or Musk over the years really surprised at Musk’s blasé attitude towards a global pandemic that kills the weak? This is the same man who has championed unleashing his buggy automotive self-driving software on the world’s roads. Tesla is literally killing people by slamming them into concrete abutments, over cliffs, and into trees. According to Musk, there are “edge cases” in which the software needs to improve.
The world could actually use a bit of panic when it comes to self-driving software. Because people are dying because of it. But did you know that Tesla has been collecting thousands of dollars from customers for years now? And Tesla had to set aside and not report it as revenue until the software was deemed finished?. It’s hard not to make the connection between Tesla speeding this software to the public and wanting to recognize that revenue on their income statement. You gotta break a few eggs to make an omelette right?
But is anyone who has watched Tesla or Musk over the years really surprised at Musk’s blasé attitude towards a global pandemic that kills the weak? This is the same man who has championed unleashing his buggy automotive self-driving software on the world’s roads. Tesla is literally killing people by slamming them into concrete abutments, over cliffs, and into trees. According to Musk, there are “edge cases” in which the software needs to improve.
The world could actually use a bit of panic when it comes to self-driving software. Because people are dying because of it. But did you know that Tesla has been collecting thousands of dollars from customers for years now? And Tesla had to set aside and not report it as revenue until the software was deemed finished?. It’s hard not to make the connection between Tesla speeding this software to the public and wanting to recognize that revenue on their income statement. You gotta break a few eggs to make an omelette right?
The similarity between coronavirus and autopilot software is this. In both cases, there will be casualties on the fringe. Musk is dispassionate in his acceptance of collateral damage in order to achieve the greater good.
But what does coronavirus have to do with Tesla’s greater good? I’m glad you asked. Much of the recent run-up in Tesla’s stock price had to do with building their Chinese factory and capturing the Chinese market. Without that, there is no basis for increase in the share price. Tesla turning a profit was already factored into the stock price years ago. If the coronavirus destroys any hope of sales increases in China, Tesla is in huge trouble.
Companies get into trouble when they expand their fixed costs without expanding sales. And factories are one of the biggest sources of fixed costs. Tesla looks like they are track to report a huge sales decrease in Q1 with a huge increase in fixed costs. This probably would’ve been the case even without the coronavirus impact. But the coronavirus is sure to guarantee a huge loss for Tesla in Q1.
Musk is irritated that everyone is so concerned about a few people on the fringe. That’s not the Tesla way.
Musk would love it if everyone simply stopped worrying about coronavirus and just get back to working in his factories and buying his cars. And if a bunch of old and sick people have to die in order to keep his stock price up, so be it.
But what does coronavirus have to do with Tesla’s greater good? I’m glad you asked. Much of the recent run-up in Tesla’s stock price had to do with building their Chinese factory and capturing the Chinese market. Without that, there is no basis for increase in the share price. Tesla turning a profit was already factored into the stock price years ago. If the coronavirus destroys any hope of sales increases in China, Tesla is in huge trouble.
Companies get into trouble when they expand their fixed costs without expanding sales. And factories are one of the biggest sources of fixed costs. Tesla looks like they are track to report a huge sales decrease in Q1 with a huge increase in fixed costs. This probably would’ve been the case even without the coronavirus impact. But the coronavirus is sure to guarantee a huge loss for Tesla in Q1.
Musk is irritated that everyone is so concerned about a few people on the fringe. That’s not the Tesla way.
Musk would love it if everyone simply stopped worrying about coronavirus and just get back to working in his factories and buying his cars. And if a bunch of old and sick people have to die in order to keep his stock price up, so be it.
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