Tesla to build new electric sedan in Bay Area

[zete]

Originally Posted by mgescuro

What are you talking about? The Roadster's been on the road since March.
It's sold out for 2008, but you can order a 2009.

I heard of one being out there, in the hands of the CEO or something. I've not heard of any others being delivered. Being sold out and having them delivered are totally different beings.

I'll gladly be wrong. Won't be the first, nor the last time for that!

Volt is expensive because it meant to be a premium roadster. They're not competitors.

Bit of confusion in that first sentence. But I know what you mean, and yes, they're not competitors. I know that.

The Tesla Model S is supposed be be about $60,000. And another car will appear after that at the $30,000 price point.
These cars aren't meant to be taken on long road trips. And that's fine. Drive them about town... or to the country club... or whatever...

As Tesla improves its consumer base, I"m sure you'll see a lot more Tesla related dealer amenities, etc. I wouldn't worry.

To be useful their cars have to have extended range. Someone commented that the sedan will have a range extender ala the Volt. That means instead of teaching Detroit something they had to steal from Detroit. The irony.

Just consider Tesla another domestic car manufacturer. Fact of the matter is... if GM was doing this... you all would be drooling....

I'd still think it stupid. I love the Volt because it can be someone's ONLY car. A full-on electric is only useful in and around town. Useful for some, not for many.

So? We'll probably have exactly 1 Volt built in 2010 too. Big deal?

Please. Tesla has gone on and on about the Roadster and delivered 2. Do you really think that from the first Volt built by GM that it'll take them months to get the next one out?

I don't think you want Tesla to succeed. Your posts towards them are pretty cynical and negative.

I'm just a realist. I'd love for them to succeed. I just don't see it happening. Maybe I'm wrong -- won't be the first time -- but I just can't see them surviving.

So what if Tesla brings a Silicon Valley mentality to the auto industry? What are you afraid of? Perhaps Silicon Valley can teach Detroit a thing or two about innovation and product development? It would behoove Detroit to pay attention. Silicon Valley didn't get to where it is by playing things safe. It's the world's premier locale for innovation and technology and cutting edge business practices. I wouldn't put anything past Silicon Valley.

Silicon Valley has done some amazing things, but of late it tends to just do the same old same old. I'm more than a tad tired of yet another social network, or whatever. The VCs are killing innovation in Silicon Valley as they continue to invest in startups that build things that others are already doing.

And innovation isn't unique to Silicon Valley. Nor is much of what Silicon Valley sells of late that innovative or unique. Much of it is just rehashes of ideas from the 60s through 80s.

I think folks confuse commercial success with innovation. For innovation I used to look to DARPA -- and worked with them at length through the 80s, too. The stuff they were doing was amazing. The only place that came remotely close to DARPA and its projects was Xerox PARC. Unfortunately, they didn't quite do much with their stuff . DARPA today is not what it was 20 years ago ... and that's sad.

Be thankful it's an American company innovating and getting product out there. You'd all be pitchin a hissy fit if it was a Japanese or Chinese company.

In the end I do hope Tesla succeeds for two reasons. First, it will help wean us all off oil. Second, the namesake is one of my heroes and I'd hate to see his name go down in the flames of a failed company with a good idea.

The sad part is that Tesla is not that innovative. The Roadster is just an electric car. And the sedan appears to be a Volt knock-off. Just because they use Li-Ion batteries doesn't mean they're innovative. I still believe they picked a roadster to build first because it had good marketing flair -- look how fast you can go in an electric car! But practicality ultimately wins and if they can't make practical -- and reasonably priced -- vehicles they're not long for this world. Silicon Valley may have a lot of money, but we all know it costs a lot to build a car. Does Tesla have the cash, experience, staff, and time to do that? I'm not so sure. But I'm willing to be pleasantly surprised.

[mgescuro]

Originally Posted by zete

I heard of one being out there, in the hands of the CEO or something. I've not heard of any others being delivered. Being sold out and having them delivered are totally different beings.

I don't know the production speed of Lotus' factories, so I can't say how many are on the road.
But. they are on the road. The CEO of Tesla got the first one. There are 649 others pending delivery. 1,600 or so meant for 2009 with a few hundred allotted for Europe.

Originally Posted by zete

To be useful their cars have to have extended range. Someone commented that the sedan will have a range extender ala the Volt. That means instead of teaching Detroit something they had to steal from Detroit. The irony.

Why extended range? 220 miles is a pretty decent range. More than enough to circumnavigate the SF Bay Area twice.
It's more than enough for basic city and highway driving. I mean, how many miles do you drive a day? And if you drive more than 100 a day... you need to move closer to your job.

Originally Posted by zete

I'd still think it stupid. I love the Volt because it can be someone's ONLY car. A full-on electric is only useful in and around town. Useful for some, not for many.

What's your point? A roadster isn't meant to be an "everyday car." But it can be. I don't hear you bitching about a Saturn Sky because it can't be someone's only car.

Originally Posted by zete

Please. Tesla has gone on and on about the Roadster and delivered 2. Do you really think that from the first Volt built by GM that it'll take them months to get the next one out?

Yes. I think GM will turn out no more than a dozen or so by December 31, 2010. I'll gladly be wrong.

Originally Posted by zete

I'm just a realist. I'd love for them to succeed. I just don't see it happening. Maybe I'm wrong -- won't be the first time -- but I just can't see them surviving.

Tesla will do fine. And it will be a great niche vehicle. Just wait for Tesla to expand. All they have is a roadster.

Originally Posted by zete

Silicon Valley has done some amazing things, but of late it tends to just do the same old same old. I'm more than a tad tired of yet another social network, or whatever. The VCs are killing innovation in Silicon Valley as they continue to invest in startups that build things that others are already doing.

Same old same old what? VC's aren't killing anything. ARe you aware of the VC "conventions" they set up? Where dozens of people give the 5-10 minute presentation on their idea? They're just large networking events. It's quite eyeopening to see it happen.
If you think the VC's are just into social networking... heh... then you really aren't familiar with Silicon Valley practices.

Originally Posted by zete

And innovation isn't unique to Silicon Valley. Nor is much of what Silicon Valley sells of late that innovative or unique. Much of it is just rehashes of ideas from the 60s through 80s.

Again... you're just not showing a knowledge base of what Silicon Valley is. Come back to me when you actually come to Silicon Valley and do a presentation for VC's. Come back to see the innovative way business is done in the Valley. And I"m not talking about the stalwarts like HP and Apple either. I'm not going to tell you how it's done. I already know how it's done. You tell me and show me your knowledge of Silicon Valley. And remember... I live here.... I worked for a Silicon Valley startup turn giant.... and I have done VC presentations.... and I know the partners at Kliener Perkins.... And I went to B-school at a top Silicon Valley university that feeds the Valley companies.

So... you tell me... What you see publicized in the media doesn't even begin to scratch the surface. Tesla itself is VC funded. Tons of energy companies in the Valley are also VC funded. Social networking????

Originally Posted by zete

I think folks confuse commercial success with innovation. For innovation I used to look to DARPA -- and worked with them at length through the 80s, too. The stuff they were doing was amazing. The only place that came remotely close to DARPA and its projects was Xerox PARC. Unfortunately, they didn't quite do much with their stuff . DARPA today is not what it was 20 years ago ... and that's sad.

Heh... PARC is in Silicon Valley. And DARPA has connections to Silicon Valley companies.

[zete]

Originally Posted by mgescuro

I don't know the production speed of Lotus' factories, so I can't say how many are on the road.
But. they are on the road. The CEO of Tesla got the first one. There are 649 others pending delivery. 1,600 or so meant for 2009 with a few hundred allotted for Europe.

At the pace they're going they won't get the 649 out this year or next. They need to be pumping out 50 or so a month, and they're not. It's a problem.

Why extended range? 220 miles is a pretty decent range. More than enough to circumnavigate the SF Bay Area twice.
It's more than enough for basic city and highway driving. I mean, how many miles do you drive a day? And if you drive more than 100 a day... you need to move closer to your job.

Extended for those that want but one car. I can live with the fact the Roadster was a special case as it's meant to be an in-and-around-town type of vehicle. Any sedan will need to have a range extender otherwise you're asking people to own two cars if they want to go more than 100 miles.

I work heavily with the sales department at my firm, sort of like a CTO, and that means I do a lot of miles some days. Most days I telecommute, but the days I don't can mean anything from a few dozen kilometers to a few hundred.

What's your point? A roadster isn't meant to be an "everyday car." But it can be. I don't hear you bitching about a Saturn Sky because it can't be someone's only car.

True. It's more the sedan I worry about. The roadster will be a plaything for some rich folks, who can more than afford to have a toy and a practical car to boot.

Yes. I think GM will turn out no more than a dozen or so by December 31, 2010. I'll gladly be wrong.

And in the months thereafter? The last car I heard about from Tesla rolled off the line in March. Since then I've not heard anything. If you want to get 600+ cars out this year and then well more than that next year you need to move more than 1 a quarter down the line.

Tesla will do fine. And it will be a great niche vehicle. Just wait for Tesla to expand. All they have is a roadster.

OK. I'll wait. I'll remain pessimistic. I was pretty gung ho about it when I first heard about it, but the longer I watch the delays the more worried I end up being that it'll end poorly.

Same old same old what? VC's aren't killing anything. ARe you aware of the VC "conventions" they set up? Where dozens of people give the 5-10 minute presentation on their idea? They're just large networking events. It's quite eyeopening to see it happen.
If you think the VC's are just into social networking... heh... then you really aren't familiar with Silicon Valley practices.

I ran -- and presented -- before VCs here in Canada, in NYC, in Silicon Valley and elsewhere and was funded by a variety of them. I know how they operate. But they operate on a herd mentality. It's totally bizarre. It reminds me of TV shows: once you have a success, like Seinfeld, they go and fund more of the same -- sitcoms starring standup comedians. It's rather disconcerting.

We pitched to a variety of VCs, including Hummer-Winblad, Draper, etc. We got more than 5 or 10 minutes, usually an hour or so. They liked our ideas and we ultimately got funded by a consortium of VCs from here and the US -- which is pretty normal. We got pulled down by the Dot Com Implosion when deals just weren't happening anymore. Bummer, really. We had a burn of $5M and revenues of $2. In 2002 that didn't result in good term sheets. Ultimately our VC consortium opted to sell the firm, but due to the various clauses in the original term sheets most of us walked away with a pittance. I won't go into all the clauses, but I learned a lot! And I have no regrets -- disappointment, sure, but no regrets. It was a roller coaster ride.

So, yeah, I know all about VCs. But they do have a herd mentality.

Again... you're just not showing a knowledge base of what Silicon Valley is. Come back to me when you actually come to Silicon Valley and do a presentation for VC's. Come back to see the innovative way business is done in the Valley. And I"m not talking about the stalwarts like HP and Apple either. I'm not going to tell you how it's done. I already know how it's done. You tell me and show me your knowledge of Silicon Valley. And remember... I live here.... I worked for a Silicon Valley startup turn giant.... and I have done VC presentations.... and I know the partners at Kliener Perkins.... And I went to B-school at a top Silicon Valley university that feeds the Valley companies.

I've been to Silicon Valley dozens of times. I've pitched to VCs in Silicon Valley, in NYC, Philadelphia, Ottawa, Washington, Montreal, Toronto, and Chicago -- see above. We had offices in San Francisco and Washington once we got funded. We had clients in California, such as Kaiser and SAIC. In fact, I've been dealing with Silicon Valley since 1985, startups since 1986, and VCs since 1990. I used to help fund companies and then started a couple. I learned a lot, from elevator pitches to one page definitions of what my firm was, is, and why it should attract investment. I've pitched for 5 minutes through one hour, depending on the VCs interest. In fact, I've only had one short pitch. Every other one turned out to be long, which is when I learned that the 5 minutes were there so they could off you if they weren't interested.

We closed three up rounds before things went badly. First one was 2 on 5 pre-money, the second was 5 on 20 pre-money and the last was was 13 on 100 pre-money. It was a rush, and on paper, for a short while, I was wealthy. That didn't last, unfortunately .

Although I don't run or work at a startup right now I still work with local support groups and angels that work with aspiring entrepreneurs. The most interesting change in the past 10 years is that most startups don't need much cash anymore, especially for infrastructure. Where my startup spent millions on hardware and infrastructure in the late 90s you can now get the same infrastructure for pennies on the dollar. I've worked with a few startups that have gotten to profitability quickly and built up their firms with $50 - 100k, a pittance and equivalent to less than a month's burn in the halcyon days of the Dot Com era.

Kleiner is one of the more interesting VCs, as is Hummer-Winblad and Draper. But it also depends on who you talk to at each VC. Some of the partners are simply more in tune with what will or won't work, while others seem disconnected to reality -- or partake of a reality all their own. I also dealt with the flood of MBAs that the VCs hired in the late 90s and early 2000s that were, well, less than literate in high tech.

I've also been burned by VCs. I won't go into details save to say that they acted more as espionage for one of their portfolio companies milking us for information, telling us they were going to invest, effectively waiting us out until we ran short of cash. It was disheartening to see, but I learned a lot from that experience. We got a B-round elsewhere at great terms, but that experience made me wary of some VCs. The ones I mentioned were all above board, at least in my dealings with them.

And I've watched acquisition deals fall through courtesy of the dot com collapse. I got burned on that big time, but I fully understood the situation. Every week that went by everything was cheaper to buy as companies failed left, right and centre. The worst cases were where the acquirers were hurting for cash as they watched their share price drop and didn't have the leverage to buy firms with stock as they did a few months prior. It was ugly and being caught in that maelstrom was something else. If I ever do it again I know what I will and won't do.

So... you tell me... What you see publicized in the media doesn't even begin to scratch the surface. Tesla itself is VC funded. Tons of energy companies in the Valley are also VC funded. Social networking????

I appreciate all that. Maybe I am just too cynical. Maybe it's simply my age. But I see a lot of the same-old-same-old. Sure, Khosla's doing some interesting things, but overall there's not much that I see that I can get excited about. Maybe my expectations are simply too high. Who knows.

In the end, I hope I'm seriously wrong. I prefer being wrong on things like this since it's all upside. If I'm right, I'll take zero pleasure in it. Trust me.

Heh... PARC is in Silicon Valley. And DARPA has connections to Silicon Valley companies.

No? Really.

I have a lot of friends at PARC and elsewhere in the Valley. I've seen some awesome things, especially during my visits there in 1985, 1986, and 1987. Some of what I saw still hasn't seen the light of day and other things have seen the light of day, but in a pale imitation kind of way. The email/voicemail/IM technology I saw back in 1985 was amazing. I'd love to have that now to help deal with the glut of information I deal with daily. But it's no where to be seen. Instead what I see is twitter, Facebook, and a slew of other "social" technologies that do nothing but create more information, doing nothing to assist me in keeping it all sorted, organized, etc. It's disheartening after what I've seen at PARC.

And, yeah, I know DARPA funded (funds) a lot of SV companies. But the funding isn't as robust now, they are struggling for project managers, and I think DARPA has lost its way. It's sad. I dealt with DARPA regularly from 1985 through 2000 and it was a pleasure to deal with them. I also dealt with NSF, which also funded a lot of great technologies. All that government funding is lacking.

In fact, I think the US needs to be seriously funding battery technology. Tesla shouldn't be solely funded by VCs as electric (or electrified) vehicles are not only the future, in my opinion, but in the national interest of the United States. As such both the NSF and DARPA need to fund research into that area big time.

Sure, VCs have money but not one VC has as much money as any of the G8. I personally think a lot of the disappointment I feel about technology is because the push from my old colleagues is missing. They were willing to take a flyer on technology on the hope it'd be useful 5, 10, or 20 years out -- they had grand visions. I remember using the DARPANET/ARPANET back in the early 80s, something no company would or could have funded. I just don't see the same far thinking anymore and it saddens me. The security research and companies I helped fund in the 80s and early 90s was amazing, but those groups don't do that anymore for a variety of political reasons -- most of them stupid, in my opinion. It results in near-term thinking, which is ultimately dangerous for the US and Canada.

As Lee Iacocca said in his book: Where have all the leaders gone? There are some in Silicon Valley, but VCs don't take huge flyers on technology, they look near term. They simply have to. A fund has a specific window within which it operates. It can't tell its investors/limited partners that they'll have to wait 10 or 20 years to see a return, which results in a lot of me-too investments and also in a conservative bent in many cases.

Ultimately, I'll wait and see what Tesla accomplishes. I'm not going to lose sleep over it one way or another. But they need to move more iron out the door or they won't deliver their products into customer hands, which will cost them dearly. How will they deliver 2009 models if they've not ramped up sufficiently to deliver 2008. These things can quickly snowball. Software has the advantage of ease of copying, but cars aren't like software. I sometimes wonder if they've underestimated the difficulty of actually ramping up car production to meet even their modest initial goals.

As one VC told me years ago: you're only as good as your last deal. Tesla has to worry about that, too. If they keep missing deadlines and can't deliver the cars folks will wonder if it's worth buying the cars and about the very viability of the firm.

In closing, let's just say here's hoping they succeed wildly. It'd be a good thing.

[mgescuro]

Originally Posted by zete

At the pace they're going they won't get the 649 out this year or next. They need to be pumping out 50 or so a month, and they're not. It's a problem.

I don't see it as a problem at all. I'm sure Tesla has production milestones embedded in their contract with Lotus to protect them.
Lotus knows how to build these cars. I'm confident here.

Originally Posted by zete

Extended for those that want but one car. I can live with the fact the Roadster was a special case as it's meant to be an in-and-around-town type of vehicle. Any sedan will need to have a range extender otherwise you're asking people to own two cars if they want to go more than 100 miles.

People can always rent a car or go with something like ZipCar (which is also VC funded).

Originally Posted by zete

True. It's more the sedan I worry about. The roadster will be a plaything for some rich folks, who can more than afford to have a toy and a practical car to boot.

$60,000 is still something for "rich folks." It's more attainable... but certainly not at that affordable barrier. It's the $30,000 car a few more years down the road that will truly make or break Tesla.

Originally Posted by zete

I ran -- and presented -- before VCs here in Canada, in NYC, in Silicon Valley and elsewhere and was funded by a variety of them. I know how they operate. But they operate on a herd mentality. It's totally bizarre. It reminds me of TV shows: once you have a success, like Seinfeld, they go and fund more of the same -- sitcoms starring standup comedians. It's rather disconcerting.

I don't think it's bizarre. It's just a way of business.

Originally Posted by zete

I won't go into all the clauses, but I learned a lot! And I have no regrets -- disappointment, sure, but no regrets. It was a roller coaster ride.

Yup. It certainly is a roller coaster ride. And that's the price of doing business in the Valley. There's a certain way of doing things. Just as there's a certain way of doing things in New York. It's easier if you have access to the "network" or know people.

Originally Posted by zete

The most interesting change in the past 10 years is that most startups don't need much cash anymore, especially for infrastructure. Where my startup spent millions on hardware and infrastructure in the late 90s you can now get the same infrastructure for pennies on the dollar. I've worked with a few startups that have gotten to profitability quickly and built up their firms with $50 - 100k, a pittance and equivalent to less than a month's burn in the halcyon days of the Dot Com era.

There's an innovation in Silicon Valley that allows these initial startups to "start up" at a low cost as well, while providing full office facilities. Sort of a "communal" office. I've seen them become established at at least break even with about $20K.

Originally Posted by zete

Kleiner is one of the more interesting VCs, as is Hummer-Winblad and Draper. But it also depends on who you talk to at each VC. Some of the partners are simply more in tune with what will or won't work, while others seem disconnected to reality -- or partake of a reality all their own. I also dealt with the flood of MBAs that the VCs hired in the late 90s and early 2000s that were, well, less than literate in high tech.

Some of the Kliener parters are asses. And there's no beating around the bush with that. I know them. I've worked with them. But they're asses. What happened in the early 2000's doesn't happen now, especially since a number of business schools have caught up with how the tech sector works and how Silicon Valley is run. My B-School runs a top entrepreneurial studies program that the VC's keep a very close eye on.

Originally Posted by zete

I appreciate all that. Maybe I am just too cynical.

Kind of the point of this... Jaded might be a better word?

Originally Posted by zete

In the end, I hope I'm seriously wrong. I prefer being wrong on things like this since it's all upside. If I'm right, I'll take zero pleasure in it. Trust me.

I believe Tesla's got a ton of upside here, so long as they stay on track and don't lose focus. But I don't see any danger in that at this point. It's only got 1 car on the road.

Originally Posted by zete

In fact, I think the US needs to be seriously funding battery technology. Tesla shouldn't be solely funded by VCs as electric (or electrified) vehicles are not only the future, in my opinion, but in the national interest of the United States. As such both the NSF and DARPA need to fund research into that area big time.

I agree. But I think the general attitude is to let the private sector do it. And to an extent, I agree with that method. Getting Federal funding would be too time consuming. VC's are heavily funding alt-energy and storage technologies in the Valley and greater Bay Area right now.

To an extent the attitude is more of a "now now now" mentality. There are very few that are willing to take the risks. But Tesla isn't one of them. They are taking a risk.

Personally, I still believe that the VC funding and structure in Silicon Valley is stronger than in any place in the world. It is a place of innovation and forward thinking. And it is not only nurtured, it's encouraged. And the worker base is some of the most educated in the country. That is the only way that America is ever going to stay ahead in the game. And if Silicon Valley is going to drag America into the 21st century and beyond... so be it.

Originally Posted by zete

As Lee Iacocca said in his book: Where have all the leaders gone? There are some in Silicon Valley, but VCs don't take huge flyers on technology, they look near term. They simply have to. A fund has a specific window within which it operates. It can't tell its investors/limited partners that they'll have to wait 10 or 20 years to see a return, which results in a lot of me-too investments and also in a conservative bent in many cases.

Leaders don't lead anymore. Nor do they have any vision for the company they run. Very few have the vision of a Gates or Jobs. But there are a few -- like Fanning and Zuckerberg and Omidya. Not household names, but they're recognized.

Originally Posted by zete

Software has the advantage of ease of copying, but cars aren't like software. I sometimes wonder if they've underestimated the difficulty of actually ramping up car production to meet even their modest initial goals.

Why? They're initial strategy is sound. They licensed a core technology from AC Propulsion, engineered new technology around it, contracted the only automaker in the world capable of building a small roadster profitably, and actually shares about 10% of parts with them too.

I don't see why they won't be able to succeed as a competent niche player in 5-6 years, once they expand their product portfolio. And who know what other types of R&D they have going on at Tesla too.

[emh]

Originally Posted by zete

I think my standards are just higher than most when it comes to software (and hardware). Being a security researcher I have to deal with poor -- and poorly thought out -- software all the time. Sure it makes Pen Testing, etc. easy but it also makes securing things a nightmare because software -- the world over -- is just poorly built and tested. Most of the testing still seems to happen at the hands of the end-user.

There is, and always will be, a tradeoff between innovation and reliability. You either wait until everything's fully debugged -- and never really ship anything, or you get things reasonably tested and get the products out to customers. If you think things are bad now, wait till you start seeing more transient hardware faults that may need to be tolerated in software on a regular basis a few years from now... The reality is, most people aren't willing to pay for reliability in software.

Personally, I'm fine with dealing with innovative products that may not be rock solid. Unfortunately, that's the cost of innovation. Imagine if everyone was scared of a vehicle that relied on controlling the combustion of a highly flammable substance... we'd all still be going around in horse-drawn carriages.

[emh]

Originally Posted by zete

Silicon Valley has done some amazing things, but of late it tends to just do the same old same old. I'm more than a tad tired of yet another social network, or whatever. The VCs are killing innovation in Silicon Valley as they continue to invest in startups that build things that others are already doing.

Social networking gets a lot of media attention -- doesn't mean it's the only thing going on. Even if it were, "others are already doing" isn't a good enough reason to not invest in something. Should Google have been killed because Yahoo, AltaVista etc. were "already doing" web search?

[zete]

Originally Posted by mgescuro

I don't see it as a problem at all. I'm sure Tesla has production milestones embedded in their contract with Lotus to protect them.
Lotus knows how to build these cars. I'm confident here.

People can always rent a car or go with something like ZipCar (which is also VC funded).

There is that. I have friends with no cars, and rent when they need them. It's a viable way of doing things.

$60,000 is still something for "rich folks." It's more attainable... but certainly not at that affordable barrier. It's the $30,000 car a few more years down the road that will truly make or break Tesla.

But can they last that long. VCs are notoriously fickle. Will they back this long enough for it to succeed? That's another of my worries.

I don't think it's bizarre. It's just a way of business.

I understand that that's the way they do business, I still find it bizarre. What one finds bizarre has little to do with how someone does business or conducts their lives. It works, but it is bizarre as it precludes some interesting concepts from getting funded. It's a strange barrier for some interesting products. Of course, you can argue that it ensures those who are passionate about their ideas get through and those that aren't, don't.

Yup. It certainly is a roller coaster ride. And that's the price of doing business in the Valley. There's a certain way of doing things. Just as there's a certain way of doing things in New York. It's easier if you have access to the "network" or know people.

It's why we had offices in San Francisco. We hired locals who knew the landscape. We did the same in DC and New York. Got us into clients we couldn't otherwise get into. Folks can talk as much as they want about being able to fly in and do business, but you need local talent to truly get into the fabric of the market.

There's an innovation in Silicon Valley that allows these initial startups to "start up" at a low cost as well, while providing full office facilities. Sort of a "communal" office. I've seen them become established at at least break even with about $20K.

We have those up here, too. They were tried back in the 90s, too, and failed. I think they're a great idea since a lot of ideas can be quickly vetted, without a major outlay. Some of what Y-Combinator is interesting, too. I know a few folks who've gone down for that.

Some of the Kliener parters are asses. And there's no beating around the bush with that. I know them. I've worked with them. But they're asses. What happened in the early 2000's doesn't happen now, especially since a number of business schools have caught up with how the tech sector works and how Silicon Valley is run. My B-School runs a top entrepreneurial studies program that the VC's keep a very close eye on.

I'm glad things have improved. Some of what I went through was not fun. My least favourite ploy from a VC that will remain nameless was writing up term sheets and then modifying them, delaying due diligence, etc. all in the hope we'd run out of cash and he'd get a better deal. Another VC, again nameless, claimed to be scouting us out for an acquisition by one of their portfolio companies. It appeared to be more of a fishing expedition, or a gathering info. expedition. Left a bad taste in my mouth.

Kind of the point of this... Jaded might be a better word?

Point taken. Jaded it is.

I believe Tesla's got a ton of upside here, so long as they stay on track and don't lose focus. But I don't see any danger in that at this point. It's only got 1 car on the road.

Three things continue to worry me: VC funding, only the one car out so far, and what happens if the price of oil plummets. Americans are a fickle lot and if prices drop will they go back to their old ways and effectively kill Tesla? Hard to say or know.

I agree. But I think the general attitude is to let the private sector do it. And to an extent, I agree with that method. Getting Federal funding would be too time consuming. VC's are heavily funding alt-energy and storage technologies in the Valley and greater Bay Area right now.

Sure, but use federal funding, too. DARPA funded the precursor to the Internet via corporations. It's a tried and true solution. It allows for both long and short term views and R&D. When both VCs and things like DARPA work together they cover the gamut from "here and now" until "far future". Right now we've only got the "here and now" covered as governments bail on funded research, which is a deadly stupid thing for them to do.

To an extent the attitude is more of a "now now now" mentality. There are very few that are willing to take the risks. But Tesla isn't one of them. They are taking a risk.

And more power to them. But I remain nervous when the majority of funding is VC based. Their horizons are simply too short.

Personally, I still believe that the VC funding and structure in Silicon Valley is stronger than in any place in the world. It is a place of innovation and forward thinking. And it is not only nurtured, it's encouraged. And the worker base is some of the most educated in the country. That is the only way that America is ever going to stay ahead in the game. And if Silicon Valley is going to drag America into the 21st century and beyond... so be it.

The VC funding is no big deal in my opinion. There's money in a lot of places. What's unique in Silicon Valley is their acceptance of failure. In many areas if you fail you're tarnished as a loser. In the Valley a VC is more likely to ask "What did you learn?" That's a huge difference and in my opinion what differentiates Silicon Valley from other places. Failure in Silicon Valley isn't a death warrant, it's a badge of honour. You learn more from failure than success. And because of that those that do succeed tend to try again to see if it was fluke or that they actually knew something. And that breeds a virtuous cycle, which is good.

Leaders don't lead anymore. Nor do they have any vision for the company they run. Very few have the vision of a Gates or Jobs. But there are a few -- like Fanning and Zuckerberg and Omidya. Not household names, but they're recognized.

And that's sad. What does it portend for the future?

Why? They're initial strategy is sound. They licensed a core technology from AC Propulsion, engineered new technology around it, contracted the only automaker in the world capable of building a small roadster profitably, and actually shares about 10% of parts with them too.

I don't see why they won't be able to succeed as a competent niche player in 5-6 years, once they expand their product portfolio. And who know what other types of R&D they have going on at Tesla too.

I'l remain jaded . However, I'll keep holding a deep down desire for them to succeed. Time will tell. I just hope the investors have the stomach to wait and don't pull the plug prematurely, which I've seen done too many times in the past. Way too many times.

[mgescuro]

Originally Posted by zete

There is that. I have friends with no cars, and rent when they need them. It's a viable way of doing things.

It certainly does work. My company has a corporate rate with Zipcar. A few VP's here use them because they don't own cars.

Originally Posted by zete

But can they last that long. VCs are notoriously fickle. Will they back this long enough for it to succeed? That's another of my worries.

I don't see why not. California still has their zero-emissions regulations in effect. CA alone is enough to support a company. CA plus the 13 other states that adopt CA emissions regulations will be more than enough. Plus Tesla is expanding in Europe.

Originally Posted by zete

I understand that that's the way they do business, I still find it bizarre. What one finds bizarre has little to do with how someone does business or conducts their lives. It works, but it is bizarre as it precludes some interesting concepts from getting funded. It's a strange barrier for some interesting products. Of course, you can argue that it ensures those who are passionate about their ideas get through and those that aren't, don't.

It does work. And it's worked quite well. It also weeds out those that aren't up to par and forces them to rethink and improve.
It's not really a barrier.... just a high wall to scale....

Originally Posted by zete

It's why we had offices in San Francisco. We hired locals who knew the landscape. We did the same in DC and New York. Got us into clients we couldn't otherwise get into. Folks can talk as much as they want about being able to fly in and do business, but you need local talent to truly get into the fabric of the market.

That's typical of any business situation.

Originally Posted by zete

We have those up here, too. They were tried back in the 90s, too, and failed. I think they're a great idea since a lot of ideas can be quickly vetted, without a major outlay. Some of what Y-Combinator is interesting, too. I know a few folks who've gone down for that.

Yeah... but it's successful in Silicon Valley and San Francisco.
Maybe it's a cultural difference between the Bay Area and the rest of the world?

Originally Posted by zete

Three things continue to worry me: VC funding, only the one car out so far, and what happens if the price of oil plummets. Americans are a fickle lot and if prices drop will they go back to their old ways and effectively kill Tesla? Hard to say or know.

Fickle yes. But they all want money. And if this method is doing that, then it won't change back.
I don't think oil is going to plummet. Sure, some of it is speculation. But no one knows what percent is speculation and what percent is actually increase in demand from China and India. I mean, we are talking about a 2.5B combined populace between those 2 countries, right??

Originally Posted by zete

The VC funding is no big deal in my opinion. There's money in a lot of places. What's unique in Silicon Valley is their acceptance of failure. In many areas if you fail you're tarnished as a loser. In the Valley a VC is more likely to ask "What did you learn?" That's a huge difference and in my opinion what differentiates Silicon Valley from other places. Failure in Silicon Valley isn't a death warrant, it's a badge of honour. You learn more from failure than success. And because of that those that do succeed tend to try again to see if it was fluke or that they actually knew something. And that breeds a virtuous cycle, which is good.

And that's why everyone gravitates to Silicon Valley. Not only is the money here, but the talent is here, and the right attitude is in place.
Yes. Failure is a Badge of Honor. One doesn't have to look further than Steve Jobs for that. But man, has his 2nd coming been simply spectacular! He certainly learned from his mistakes, hasn't he??

Originally Posted by zete

I'l remain jaded . However, I'll keep holding a deep down desire for them to succeed. Time will tell. I just hope the investors have the stomach to wait and don't pull the plug prematurely, which I've seen done too many times in the past. Way too many times.

Tesla will be fine.