Tesla announced on Monday that it is laying off 9 percent of its salaried workers, a transfer that was not a whole shock, because it had beforehand introduced a reorganization was coming. And if there may be one Tesla worker apart from Elon Musk who has been via this earlier than and is aware of when layoffs have to be made, it’s Tesla CFO Deepak Ahuja.
A Musk confidant who rejoined Tesla final yr — after having retired — Ahuja first joined Tesla as CFO on the worst doable time: July 2008. Speaking to alumni of the Indian Institute of Technology the place Ahuja himself was as soon as an undergrad in years previous, the Tesla CFO talked about the time when he thought that he might be laid off himself.
Within two months of Ahuja becoming a member of Tesla in the summertime of 2008, the worldwide markets collapsed.
“Those have been the darkish, darkish days — the nuclear winter so to say,” Ahuja recalled.
At the time, Tesla was closing on a $100 million Series E spherical, nevertheless it fell aside.
“It meant we needed to fully redesign our marketing strategy. We let go 30 % of our employees,” Ahuja recalled.
Obviously the corporate was of a a lot smaller measurement in 2008 than its present employee-count over 40,000.
The Tesla CFO was considerably stunned that he survived that spherical of cuts.
“I believed perhaps I will be let go; it made sense. Why have a high-paid CFO when you do not want it?”
That 2008 state of affairs was arguably a lot worse than Tesla’s present monetary state of affairs, though its present money burn and manufacturing challenges have attracted a substantial amount of consideration. The monetary crash was an financial situation by which enterprise capital wasn’t the one cash that vanished: the buyer discretionary spending on which a automotive firm like Tesla lives or dies fully dried up.
Ahuja stated there was a interval in his earliest days at Tesla when it felt like payroll would not be met the following week. “There was no funding, and Mr. Musk was funding the corporate from his personal pocket.”
A foul state of affairs was compounded by the truth that he had moved his household throughout the nation to take a danger on Tesla, leaving a protected job at Ford.
“I really didn’t inform my household. That would have made them fairly upset. Musk was funding from his personal pocket, and I needed to hold that even away from my very own spouse, fairly frankly. But I used to be ready to maneuver in every week if Tesla blew up, and it may have occurred.”
Ahuja stated in these days he solely gave Tesla a 50 % probability of creating it, however the worst of occasions and the cuts Tesla needed to make after the monetary crash did train him a lesson about success:
“There are many many existential threats that come alongside the way in which and generally really feel they’re coming every day or generally weekly or quarterly, however they’re at all times there, and the flexibility to outlive via that’s what’s actually part of being a profitable entrepreneur.”
In asserting the layoffs to Tesla workers, Musk famous:
“Given that Tesla has by no means made an annual revenue within the virtually 15 years since we now have existed, revenue is clearly not what motivates us,” Musk wrote in the company email. “What drives us is our mission to speed up the world’s transition to sustainable, clear vitality, however we are going to by no means obtain that mission until we ultimately show that we could be sustainably worthwhile. That is a sound and honest criticism of Tesla’s historical past so far.”
The firm has suffered massive losses every of the final three years. Tesla misplaced almost $2 billion in 2017, misplaced $675 million in 2016 and misplaced $889 million in 2015. But after a few years of adverse monetary outcomes, Musk in April predicted the company might be worthwhile within the second half of this yr.