Comment by consumer451
2 years ago
I am not very familiar with this founder and his company, but how does a guy like this make it past any level of due diligence on the part of his investors?
2 years ago
I am not very familiar with this founder and his company, but how does a guy like this make it past any level of due diligence on the part of his investors?
You clearly haven’t raised money from investors with that question. /j
Investors are sheep and follow their peers. There are only a handful of mavericks in investment circles, and they generate the best and the worst returns.
Consider that they all invested without seeing the engine or looking under the hood of the demo vehicle. It’s in the investor lawsuit — they even poke fun at themselves about it.
Bingo. You see this in public shareholder calls all the time. Today, you can't find a tech company that doesn't say something like "We are integrating AI with LLM into our technology to blah". They don't say that because it's a meaningful or good product, they say that because investors give you a 10% stock bump just for saying "LLM".
The same thing happened with crypto, machine learning, web 2.0, etc. Investors love a good buzzword and will reward a company handsomely for using them.
Hell, that's like 90% of the reason FTX became as big as it was.
It was wild seeing companies have their biggest stock jump ever simply by talking about crypto magic beans on an earnings call.
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I'm feeling the "we need to adopt AI because it's the hot new thing/investors want to hear it" pressure at work nonstop, including some annoying mandatory trainings on it. My brother in Christ, I'm still trying to get my teammates to use git and package management, AI is going to have to wait a little bit.
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They did a SPAC in 2020 so his 'investors' were mostly the general public. Actual investors were pretty skeptical of them, e.g. Hindenburg shorted them extensively and called them a fraud.
With a smile on their face and a billion dollar check in their pocket. Investors don't mind the bullshit if they're on the profiting side of it.
Man, I am a one-time failed founder and apparently I put way too much thought into it, as one of multiple failings.
Meanwhile Adam Neumann gets a next go.
Early investors aren't trying to find valuable, profitable, or innovative companies that will make a lot of money. Their goal is to sell to someone else at a higher price sometime down the line. Therefore the actual reality of the business is not useful, and often purposely ignored if the story seems like it can pull in enough bag holders.
Do you think he would have gotten that far in today's interest rate environment? I mean, are investors paying more attention now, or does the bigger idiot theory still work?
It’s about cashflow now, and that’s a lot harder (but not impossible!) to BS around.
A theory I've read on here is that VC returns come from a handful of hyper-successful firms, and the challenge is getting in on the deals in those firms at all, and the way you do that is by building a reputation as a visionary and generous investor by investing in ludicrous bullshit on founder-friendly terms. From this point of view, money given to Nikola isn't a bad investment, it's a marketing expense.
Another one you may not have heard is Elon Musk.. he's been delivering self driving cars since 2015
I am not a Musk fan at all, in fact I despise Musk 4.0, but what he accomplished prior to losing his mind is undeniable. He founded SpaceX, which absolutely accelerated our access to space by 20-40 years. Half of the satellites in orbit belong to SpaceX. SpaceX put more mass into orbit last year than all other countries combined.
He accelerated the adoption of electric vehicles by at least ten years. If the worst of climate change predictions turn out to be true, this could make him one of the most beneficial humans of our time... that's assuming that his naive geopolitical angling doesn't kill us all, and that his brain implants don't turn us into corporate zombies.
My point is, there is much about him to criticize, but he has delivered a lot in the past.
If the worst of climate change predictions turn out to be true, this could make him one of the most beneficial humans of our time...
Not really. Methane from cows causes more harm to the environment than cars do. If he had gotten the world to go vegan, that would have been doing the impossible. Musk made an idea fashionable and sold carbon credits.
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All the scientifically relevant stuff would have gotten into space, Musk, SpaceX or not. All those Starlink satelites? I am still not convinced they provide any actual added value, besides giving SpaceX another product to raise funds against (Elon tried the same thing with FSD, which worked out less good so far).
Also, we were well on our path to EVs, Tesla (not Musk himself alone) accelerated that. Ten years so is bold claim, and attributing that all to one single person is just nonesense.
Edit: Tesla made shit tons of money by selling CO2 credits to legacy car makers, so in reality Musk (rather Tesla, but that distinctions is difficult) had close to no positive impact on climate change and instead profited of others continue to polute. All Musk cares about is his image as being the tech-god savior of mankind, that and money.
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My car drove itself to work this morning, were you trying to be sarcastic?