Article ref: https://jalopnik.com/nikola-confirms-what-we-all-knew-1846363345
I could not resist making a comment here because of the mind-blowing foolishness that carries through the entire story. Please forgive my blunt opinion. I just don’t just know a nicer way to say this.
Referring to the recent article (I refuse to say the name of the company for now), some industry experts commented the following:
(1)“found that everything didn’t quite add to a realistically planned, well thought out business model”.
“It was a case of every assumption relying on a top 1% chance of it turning out as they planned.”
(2) With all the SPAC money coming into the industry, I worry that Nikola isn’t the only with lots of sales bravado and sketchy business plans.
What are your thoughts?
Wow!
My thoughts were -
1. It’s a little too late.
2. This kind of speculation is common and typically happens after any catastrophic market event. If you think there will be more — then please name them or describe them indirectly. (maybe you can write about the process in which that market can avoid these kind of pitfalls)
If people have to learn anything from this — here is the start. Everyone talks as if the CEO here is some sort of genius. The way the story is being told will make him exactly that. If anything the story needs to show, it would be the faults and weakness lie on the other-side of this story. The backers. By backers I mean the press, ‘’industry experts’’, investors etc.
My sincere question is — how is it possible that the so called industry experts and investors, plenty of them who gave a lot of time and attention, could not tell there is something wrong with the business plan.
Maybe I have a clue, from my own experience — a few months ago (2020) a NY based VC seriously looked into an investment opportunity in Laureti. They asked us to change the initial milestones so that we can show prototypes and then focus the following quarter on preparing for a SPAC. What about our 100 week that have an extensive engineering strategy and delivery plan — No. Not interested. Here is one — a direct witness speaking: How many do you think out there thinking like this?
Many people I HEARD say this (including this investment firm) — the plans, designs etc — they don’t necessarily tic. People need to see some ‘shiny’, ‘sexy’ prototypes. My uncontrollable response was — you f****** morons and then compose myself and tried to explain that ‘’sir ,we spent a year or more on constantly improvising the plan and de-risking as much as possible because of the design exercise’ (not of the car but through study, contractual relationships etc).
The thing is — if you can’t put money where the growth is, it will go where the hype is.
We all know of stories how a wrong design or a wrong engineering brought down product lines and even companies. On the other hand, there are companies that go further in the interest of their customers. A real entrepreneur acts in the interest of the customer, if the plan is right and the business is viable, investors job is to enable the business with a profit motive in mind. Now it seemed to have changed. It is about shortcuts. These shortcuts will bundle more and more risk and pass on to the next. It’s like playing a music chair game with an awful twist. In this case the one that gets eliminated is a company like this and their backers — the ones that are still playing do not realize that there is a hidden chair waiting to electrocute someone.
When talking about discussing this company — for the sake of honest discussion, let us not say everything happened very quickly. We cannot accept that argument because when you are talking about billions of $ in investment and at least 28 weeks of SPAC prep, this excuse will not qualify.
Articles dating from April 2020 to the day this company’s journey to public trade, I read plenty of articles that are quite publicly available. Without diligence, without a thorough understanding of the delivery plan, the so-called experts called this company as a ‘’landmark success on the road to sustainable transportation’’. I have no idea how that is valued.
If you are going to invest my money in these investment firms for a decent return, what questions do you ask? The VCs capacity to generate this return does not ONLY depend on making safer investments but in recognising potential risks and potential growth opportunities equally if not more on the growth side.
Here is the thing: we have stories of companies that went big and those that went bad. You can read about them all over the internet. You also have companies that brag about their investments in these successful companies. Good. Rightly so.
What about the firms that let go of an opportunity simply because they cannot recognise the potential and only to find out someone else picks it up and next thing you know it’s a great success! The thing is — if money does not go where growth is, it will likely go where the hype is. In the end — it will only yield mediocre results. And some will turn out to be like this company.
