No Toilet Paper Unless Critical: Musk, CFO to Approve "Literally" Every Expense

Mish

Tesla so badly needs cash that Musk will personally review and sign every tenth payment. The CFO will look at them all.

On May 13, in Tesla Can't Spare a Dime, the Wall Street Journal commented "Elon Musk’s electric-vehicle pioneer is running out of cash and out of time, even after a recent capital increase."

The full extent of that article became readily apparent on Friday in an Email that Elon Musk sent to all employees. MSN posted the Full Email to Employees.

Key Quotes

  • It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month.
  • Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable. That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven.
  • Going forward, all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must be reviewed, confirmed as critical and the top of every page of outgoing payments signed by our CFO.
  • I will personally review and sign every 10th page.

Musk's Time

Tesla is so desperate for cash that every part, salary, travel expense, "literally every payment", no matter how trivial, needs to be signed off by the CFO, with Musk reviewing every tenth Item.

How much time will CFO and Musk spend approving parts, salaries, pencils, and even toilet paper? Shouldn't salaries be set?

Taken literally, but that was Musk's word, no toilet paper will be approved unless it's critical. Presumably, Musk will sign off on every tenth roll.

By phrasing the memo the way he did, Musk shows how desperate Tesla is for cash despite a $2.4 billion cash infusion.

What about the prior lies? Didn't Musk pledge to make money every quarter going forward?

Instead of a profit, Musk is reviewing and approving office supplies including pencils, pens, and toilet paper, literally.

Unless its stamped "critical" there won't be any. That is how the memo actually reads.

Mike "Mish" Shedlock

Comments (23)
No. 1-15
Jojo
Jojo

Sounds like you want to sneak expenses through on pages 1-9 because Musk is only going to read the 10th page! And maybe Musk could move his office to the bathroom so he can personally wipe everyone's arse with his left hand. That should save some money.

Quatloo
Quatloo

It seems like Musk is doing the right thing, albeit a little late. When your expenses are bringing the company down, you try to create a culture that every dollar is important. I think investors should be pleased with this new attitude. Employees less so.

Mish
Mish

Editor

Absolutely micromanagement on a grand scale. The memo should have been simple. Monitor all expenses and eliminate anything not absolutely critical. - something like that - perhaps offer rewards for ideas that eliminate the most - managers not eligible

HubbaBuba
HubbaBuba

I'd think history would bear out that (particularly for a "growth" company) that when the expense side of the income statement starts drawing more attention than the revenue side of I/S a company is in decline. Is it selling like "hot potatoes", or just burning your hands? Musk delcares "no s***"! (puns intended)

Greggg
Greggg

Well, I guess we can knock the "Free fire extinguisher with every Tesla" offer out off the new features list.

ksdude
ksdude

Years ago I worked at a car dealership that was struggling. I decided to quit when things were so bad that the coffee machine and popcorn machine were both removed.

jivefive99
jivefive99

Musk is doing the same thing every business that is living on the financial edge does: tries to find ways to get the loyal employees to use their own money/salary/wealth to buy things for the company instead of the company paying. Uber/Lyft does it by getting their newest drivers (which is all their drivers :)) to donate their vehicle miles to Uber and Lyft. Your car accumulates miles and Uber/Lyft throws you a couple bucks per rider. The $500 bill for new tires is the employees problem. Musk wants to make things sound so desperate that the true-believer employees will pay for company expenses out of their own pockets. All businesses promising the millionaire owners top returns are operating this way now.

Jackula
Jackula

I will be shocked I'm telling you, shocked if Tesla makes it through the next recession without being acquired by Apple or another big player at fire sale prices...

ReadyKilowatt
ReadyKilowatt

And everyone please remember, toilet paper has two sides.

Ebowalker
Ebowalker

Hey they could steal rolls from companies that make profits Have people go into the walmart bathrooms and sneak out rolls here and there. Takes pens from banks. Elon, call me let's talk

bradw2k
bradw2k

The CFO will personally review every expense? What is this, a 50-person company?

Matt3
Matt3

Reviewing the expenses will be eye opening. It's a decent way to change the culture from $ don't matter. I'm sure it can cut costs but this is too little to late. He needs to fold it into something like Uber so he can get back to a "profits don't matter" status. Having to actually make money takes all the fun out of business!!

Casual_Observer
Casual_Observer

Nothing 0% rates cant solve.

KidHorn
KidHorn

I seriously doubt Musk knows what's critical and what isn't.


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