Tesla FUD: Tesla Firings #TSLA #Pravduh

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The goal of this series is to examine current topics being written about Tesla [TSLA] that appear to be stirring up “Fear, Uncertainty and Doubt” (or FUD). The plan is to try to provide reasonable analysis about the validity of the claims. I generally do not link to the articles that “inspire” me to write this, as I do not wish to reward analysis I feel is poor with increased traffic. However, I will freely admit that my analysis may contain incorrect assumptions, and will do my best to acknowledge them in future articles if so.

I started this series last month expecting to more or less write an article a week on various FUD statements, and then was surprised to find that while there were still numerous FUD articles, few of them were rehashing and amplifying common “scary” information. Instead, it was a random bit of conjecture here and there, but usually on differing topics.

Then, suddenly, in the last few days, there has been a flurry of articles again on a couple of aspects, so I expect I’ll be back with another one of these soon.

For this article, I’m going to examine the narrative that Elon Musk terminates employees on a whim and what that might mean. This came back up after a Wired article that described “production hell” and how it felt to work at the factory during that time, and then was regurgitated into other articles by other authors.

Before I go on, I’ll note that I remain a Tesla shareholder with a whopping 8 shares, with no intention to add to or sell that stake. I do think that Tesla remains a risky investment for a plethora of reasons that I won’t get into right now (a few people commented that they want to hear that, so I need to think about how to explain it without creating my own Tesla FUD article…), but also one that has the potential to increase astronomically in the future, which is why I decided to purchase and hold a very limited number of shares. I would not suggest anyone use the following article as their sole data point to decide to invest nor sell shares in Tesla.

Having said all of that …

Musk Firing “Rampages”

Before we even get to what the FUD articles said, a scenario to consider:

You are working at a job. You feel like everything is going well. Suddenly and without warning to you, you are told that you are not wanted for your position any more.

Do you:

A) Logically deduce where the shortcoming was, understand the issue that you had, collect your belongings, and go home to tell family and friends that you were fired due to an issue that you had.

B) Feel emotionally wrecked, defend yourself saying that the firing was completely unwarranted, and tell people that your boss was nuts.

If we’re honest, even in cases where an employee is terminated for reasons that have been made clear and have been building for months, it’s extremely rare that we as humans would respond by taking the first choice above.

This makes sense, by the way. If this was you, when applying for your next job, you don’t want to tell the interviewer that you got fired from the past company because you made bad choices, or you weren’t smart enough to solve their problems, or whatever. I’ve interviewed more than a thousand people, and I’ve never heard someone claim that they were let go from a past job because they weren’t a good employee.

And if I had, chances are that would have disqualified them from working for my company.

I have, however, heard many people claim that they had a difference of opinion with a superior, or that their position was eliminated due to restructuring, or that the company opted to change where their resources were.

Hearing that, I would still be open to hiring that person.

In an interview, you have a reason to hold back against your prior employer too. Hearing that you weren’t the right fit sounds fine, hearing that your last boss was a tyrant who you hated talking to sounds like you’re part of the problem. Being interviewed for an article, you have no such pretense. In fact, when you have an article that is looking for the “dirt” on someone, the more that you can embellish it, the more that it’s likely that you’ll be quoted in it.

And, it just so happens to get back at the person or organization that fired you.

Therefore, it seems logical that a person no longer under a non-disclosure agreement because of their termination might describe the job or the boss as a terrible one.

At-Will Employment

The other thing that is important is that both California and Nevada (and most states) are “at-will employment” states.

An at-will employment state means that an employer can terminate employees at any time and without warning without having to establish “just cause” so long as the reason isn’t discriminatory in nature. If you terminate someone, you owe them no explanation.

Controversy over at-will employment tends to be over the belief that it gives employers too much control in what is essentially a lopsided agreement, which is a fair point, but employers also need to be careful with how they wield that power.

In one case that I know of, the boss at a company that I worked for terminated a top financial analyst who had been doing a great job because they were finding things that the boss hadn’t realized, and the boss was worried that he might be made out to look bad because of it.

This was almost immediately followed by other employees of that department leaving for new jobs, and others taking regular interviews. Within a few weeks, human resources had sounded the alarm, and the heads of that department were gone, with the remaining employees getting bonuses to stay.

My point? If you are randomly terminating employees in a low-skill job, you probably won’t have much blow back. In a high-skill job, like engineering, if things are truly so bad, you’re going to lose your workforce quickly. There are lots of other engineering jobs that are in high demand right now.

I’m not going to overly debate the pros and cons of the policy, but I will point out that at-will employment is specifically looked at by many as one of the competitive advantages of Silicon Valley. Like it or not, the ability for a company to immediately terminate someone who they no longer feel is a fit on a project allows those companies to be more nimble.

Conclusion

The concern about firing sprees at Tesla may look alarming if you are studying traditional automakers where union jobs abound and people tend to stay in positions long term, but if we’re looking at Silicon Valley companies that are trying to be nimble, it’s a perfectly reasonable strategy for the company, even if it seems unfair to the employees who legitimately may have no idea why they are being terminated.

To me, it would be far more alarming if during an extremely stressful production ramp, there were no stories of things like this happening.