How SpaceX and the Quest For Mars Almost Sunk Tesla Motors 126
braindrainbahrain writes: Elon Musk and his rocket company are well known to Slashdottters. This article and book excerpt tell the story of the creation of SpaceX and how it almost sank Musk's other company, Tesla Motors. Musk recalls, "I could either pick SpaceX or Tesla or split the money I had left between them. That was a tough decision. If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company." But then, at the last moment, years of work at SpaceX finally paid off: "[O]n Dec. 23, 2008, SpaceX received a wonderful shock. The company won a $1.6 billion contract for 12 NASA resupply flights to the space station. Then the Tesla deal ended up closing successfully, on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day." Also, it turns out the inspiration for SpaceX was the idea of sending mice to Mars.
The mice again! (Score:5, Funny)
What would be to point of sending mice to Mars?... unless it was about sending the mice to Mars.
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Re:The mice again! (Score:5, Funny)
Well australia started as a human penal colony. Mars can start a bit smaller as the mouse penal colony. i propose we include all mousketeers too.
I then propose we grant honoury mousketeer status to bieber.
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Dude, there were people living there for quite some time prior to the pohms turnings up (prisoners of her/his majesty). It is bad enough that the Australian government is still in denial, the rest of the world should also not play. The 'adjective' people (the Australian government still refuses to accept their national identities and continues to refer to them as an adjective - aboriginal).
Stop the crap. Just like another group of people, where the history and culture are denied and not accepted as being
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Re:The mice again! (Score:5, Insightful)
Re:The mice again! (Score:5, Funny)
What would be to point of sending mice to Mars?
Because it's hard to type in a space suit.
Re:The mice again! (Score:5, Informative)
When it comes to manned exploration of the Solar system, there's two areas we pretty much have little to no understanding of;
- long term biological effects at other than 1G or 0G.
- long term radiation effects outside the Earth's magnetosphere.
As it turns out, these are the two things we absolutely must have an understanding of to venture long term beyond LEO.
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- long term radiation effects outside the Earth's magnetosphere.
You die.
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You die anyway.
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What has an African river to do with immortality?
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- long term biological effects at other than 1G or 0G.
Although we haven't tested the long term effects of living in gravity between 0G and 1G, it's one of those things where we pretty much know what the outcome will be, even if the exact value is unknown.
Like, we know the effect of not getting hit by a punch. We also know the effect of getting hit by a Mike Tyson uppercut. And although no one has been hit by a Justin Bieber punch yet, we can predict that the result will be somewhere between not getting hit by a punch and a Mike Tyson uppercut.
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There's plenty of evidence to suggest that the long term effects of living at 1G is that you die too.
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However, the evidence isn't significant at p.05. There have been about a hundred billion people born in 1G environments, and about 7% haven't died.
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Mars needs mice so that some of them can be bikers.
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Luck plays a more important role than people know (Score:5, Insightful)
Guy gets lucky and wins the lottery!
But this not the story - not literally or figuratively.
Instead real life works like this:
Guy gets lucky and wins the lottery and ....
1) loses it all within 5 years because he has now idea how to deal with his luck.
2) works his ass off to turn his momentary luck into something long lasting.
Musk, like Gates, Jobs, etc. etc. all got lucky and had to work their asses off to take a bit of luck and turn it into a thriving huge success.
But that hard work they did doesn't mean their success did not depend on their luck as much as it did on their work.
Re:Luck plays a more important role than people kn (Score:5, Insightful)
You've got the order of events reversed. Guy works his ass off so that he is prepared to take advantage of the opportunity when good luck strikes.
You never hear about the guys who worked their asses off but did not get lucky. There are way more of those guys than there are guys who did get lucky.
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It's usually not that luck doesn't strike, because it generally does if you're doing something right. The problem is that you also tend to get struck by bad luck.
Based on the article I would guess that a random unexpected setback could easily have brought Tesla out of business in late 2008. Those sort of things happen all the time.
Re:Luck plays a more important role than people kn (Score:5, Insightful)
But that hard work they did doesn't mean their success did not depend on their luck as much as it did on their work.
There's a great little (light, easy-to-read) book "The Drunkard's Walk: How Randomness Rules Our Lives" which explains this very well in the last chapter. The truth is that randomness plays a huge role in success and failure of all sorts of endeavors. BUT, as the book points out with extensive examples, that doesn't mean we're powerless and just have to accept whatever the random dice of fate serve up for us. We can work hard to weight the dice a little, but even more important, we control how many throws of the dice we get. Successful people are those who are smart, hard-working and persistent
Had SpaceX not gotten the NASA contract, Tesla would undoubtedly have suffered, and Musk would have been scrambling to save it. I'd give him good odds of succeeding, too, either with alternative financing, or by closing the doors and starting over, or... something. And maybe he wouldn't have managed it, but I guarantee he wouldn't just have given up and said "Well, bad luck, I'm out". Because people who would do that don't get to where Musk is, no matter how lucky they are.
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Good description.
I say that as someone doing startups with the knowledge that the failure rate is over 90%, but that I still have a long career ahead of me and I only need one to work out.
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Successful people are those who are smart, hard-working and persistent
The point though is that there are a lot of UN-successful people with the same traits and less luck. Sometimes their luck isn't sufficient to give them the means to persist. The idea that unsuccessful people are invariably the architect of their own failure is toxic.
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>we control how many throws of the dice we get. Successful people are those who are smart, hard-working and persistent
Which is, in fact, believe it or not the number one advantage of a solid social safety net. If you look at businesses - 80% fail in their first year. More importantly - looking at the successful ones the average owner of a successful business has had 3 failed businesses in the past (remember that's an average so for half of them it's twice that).
What this means is that entrepreneurship is
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Other than blind celebrity worship - I can see no basis for that assumption. Musk got to where he was precisely because he was lucky.
Re:Luck plays a more important role than people kn (Score:5, Insightful)
I believe I read a study a while back about luck. They found that the random 'lucky' events weren't really so random. Usually the 'lucky' people worked hard to put themselves in the position for that lucky break to happen. While something like winning the lottery does take luck, you still have to put yourself in the position to have that chance at luck.
As you point out that one lucky event is a fleeting moment, it takes work to make it last.
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They found that the random 'lucky' events weren't really so random. Usually the 'lucky' people worked hard to put themselves in the position for that lucky break to happen. While something like winning the lottery does take luck, you still have to put yourself in the position to have that chance at luck.
That is a bit of a red herring when trying to limit the role of luck in monumental success stories. No one really thinks they can win the lottery without buying a lottery ticket. And they don't think they can become a billionaire without having ownership stock in a company.
Some people simply understand that a large percentage of people who do take smart risks still end up failing regardless of their level of ability or persistence. Its likely even the majority of persistent and highly skilled entrepreneurs
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While something like winning the lottery does take luck, you still have to put yourself in the position to have that chance at luck.
You gotta be in it to win it; as the saying goes. Lot of people think my girlfriend is lucky, nope, she just enters a lot of competitions. Likewise the successful startup of businesses depend on the same kind of principle. There are very few people in the world who have a roaring success with their first business venture.
Note the key word was "first". A lot of successful people are those who've tried and tried again.
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Luck... oh geeze this again.
So lets assume you chances of becoming a billionaire in a random lucky winner lottery, as something like 1 in a billion.
If we assume Elon Musk became a billionaire because he was "lucky" and won that 1 in a billion chance, then you also have to believe
that he isn't just lucky, but inconceivably astronomically wtf-omg-bbq lucky.
1. Created and sold a company (Zip2) for $307 million
2. Create and sold a company (Paypal) for $1.5 billion
3. Created SpaceX valued at several billion doll
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There is more than JUST luck, but luck is required. Most start by being born on 3rd base and go from there. The key is that the more you already have (often due to luck), the less luck you need to go up from there. At some point, being well known for being successful gives you an effective re-do button.
Nevertheless, in addition to a talent and a lot of work, Musk is OMFG lucky as well. Musk is one in about 6 billion people, someone had to get the lucky streak.
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I don't see any evidence this is true. I know multimillionaires who didn't get any more or less lucky than average. The difference between them and me (definitely not a multimillionaire) is the spent their 20s and 30s living on someone's couch, working 20 hours a day, and failing over and over until they figured out what you need to do to start a successful business. Most successful businessmen have a few BKs under their belt, and it wouldn't have been s
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So, look carefully around you. Know anyone who spent their 20s and 30s like that who isn't a millionaire? You probably do.
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So if luck is one of the key factors that make people successful, Elon Musk has proven statistics and probability are a completely broken field.
Elon Musk is currently worth about $12 billion. There are about 100 people in the world with a net worth that high. Elon Musk may be more diversified in his businesses than most billionaires, but he is not unique.
And no one is saying it only takes luck to be successful, just that luck is a key factor. Perhaps even the most important factor in becoming a billionaire. That can't be said for becoming a millionaire, which almost anyone can do with just hard work and almost no luck (other than perhaps being born
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I approve of what Elon Musk has done with his wealth.
I cannot say that for the vast majority of billionaires, and I could say the same of millionaires. My question is what do you think he should do? If you cannot come up with a better answer than he actually invested in...
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I'm not entirely sure why this post is modded -1 other than it is from AC. In fact, I think that, although they are incompatible in some way, both AC and GP have said something incredibly valid.
I like the way that the GP described how the process by which people who have a single brilliant idea that nets them capital can work hard with that capital to leverage that into a larger enterprise. Although I'm sure he participates in VC activity, Musk did not simply take his money and "steal" from other's ideas by
So basically we're living in the best timeline? (Score:2)
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> affordable battery packs
Not yet they aren't.
Re:So basically we're living in the best timeline? (Score:5, Funny)
soon they will recombine and give us affordable rocket packs.
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For a home battery pack, $3K is almost nothing compared to a home's total price. The average cost of a home in California is at least $400,000.
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At 7KWh, the battery really wont do anything except for the occassional brown/blackout and really how often does that last. if you dont have solar, there's absolute no point in getting one of these. And if you do have solar it'll just make the payoff slightly better. It'll still take you 3-5 years to pay off the powerwall for little to no gain.
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I pity rose other people living in the worst timeline, without Teslas, affordable battery packs or Dragon spacecraft. Suddenly I feel lucky.
Nah, for all you know there is a timeline where that didn't happen but we've already been living on Mars since the late-80's.
Mice to mars? Wtf... (Score:5, Insightful)
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That's phase2, phase1 is just getting the cat food up there
Re:Mice to mars? Wtf... (Score:5, Funny)
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If musk wanted to make billions off spaceX he should have been sending cats to mars. Because paid access to video feed of cats doing low grav antics would break the internet and his bank account.
You jest but if the ISS had a cat resident that would dramatically increase support for NASA. It would have scientific value too - assuming the cat could adapt there's an alternative mammal physiology in 0G, astronaut psychological effects and experiments of all sorts.
Elon Musk is a hero (Score:1)
He captured Throttle, Modo and Vinnie, and is sending them back home...
s/sunk/sank/ (Score:1)
Sorry, this postmodern English grates on my nerves.
Just mice (Score:1)
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Father of Dragons (Score:5, Funny)
"I could either pick SpaceX or Tesla or split the money I had left between them. That was a tough decision. If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company."
I go through the same mental calculus every morning as my kids eat a week's worth of food in one breakfast.
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Oh, holy shit yes, THIS.
Having just dropped off dragon #2 at his educational containment unit, I have just a few hours to restock the feed lots before the return of #1 early this afternoon. I do not know how long I can keep this up; perhaps they will just eat my remains.
NASA contract (Score:2)
The company won a $1.6 billion contract for 12 NASA resupply flights to the space station.
I assume those went of without a hitch later that day and he was somehow able to get the invoice submitted and paid on the same day, a true miracle for a government agency.
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Probably not, but it would most likely be sufficient to get your bank to extend you an overdraft facility to cover any short term cash flow problems you might be experiencing.
Re:What? (Score:4, Interesting)
How is it legal to not have enough to pay your employees?
Laws vary from state to state. But, in general, companies must pay their employees for time worked. If the company runs out, then principals can be held liable. Smaller company, wealthy principal, employees have a reasonable chance of getting paid, enforced by their state Department of Labor. But of course if what is owed is way more than the principals' assets, then there's not much to be done.
So that's how employees are different than investors, the "corporate veil" does not protect the company owner from liability for their wages.
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Companies must have the ability to meet their liabilities as they become due otherwise they are trading insolvent. Put simply if Tesla had reached pay day and been unable to make the payment then it would have been insolvent and it would have been illegal for them to continue trading.
However I would suggest there is absolutely no chance of that statement being true as you don't get paid for your contracts immediately so there must have been some other finance mechanism in place.
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Payroll is often met by taken loans. A $1.8bn contract from NASA would have presented sufficient collateral for Musk to get loans against.
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Payroll is often met by taken loans. A $1.8bn contract from NASA would have presented sufficient collateral for Musk to get loans against.
Which is exactly what happened. Space-X was about to go bankrupt, with a success record of three failures and one success. NASA awarded them a contract to develop a new rocket for space station resupply, and guaranteed that they would be the anchor tenant for launches. That contract gave them the credibility to attract future funding.
This is an example of the system working right.
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Companies must have the ability to meet their liabilities as they become due otherwise they are trading insolvent. Put simply if Tesla had reached pay day and been unable to make the payment then it would have been insolvent and it would have been illegal for them to continue trading.
True. Being publicly-traded brings that regulatory aspect into it. Of course, halting trading doesn't get employees paid, but it does at least let them know what's coming :-(
Also, I think unpaid wages are a priority claim against assets, so in a bankruptcy reorganization or liquidation, employees would have priority over other creditors, and investors are further back.
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The only thing you pay before employee wages is taxes, although that only applies to w-2 employees.
Anyone with significant ownership is a prime candidate not to be paid (for a few reasons.) 1099 contractors are one of the last though, they come after creditors.
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Put simply if Tesla had reached pay day and been unable to make the payment then it would have been insolvent and it would have been illegal for them to continue *to employ people*.
FTFY. Not being able to make payroll applies to public and non-public companies. Tesla became a public company in 2010 and Elon was discussing these pre-IPO events that occurred in 2008 before they were publicly trade-able.
Insolvent just means the company doesn't have access to enough free/unimpaired assets to operate legally, not that a company doesn't have enough assets (e.g., receivables, contracts, intellectual property, or business goodwill which are not liquid). If a company is bordering on insolven
Re: What? (Score:2)
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I would be surprised if it is that the sum of liabilities had to be lower than value of assets. If you took a loan for $1 million and then bought equipment that equipment is immediately lower in value the second you bought it. This would mean you have a liability of 1 million and an asset worth say 700k. Which would run you afoul of what you described.
More likely it is that your available assets exceed current liabilities. Usually current liabilities are those that come due in this financial year.
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How is it legal to not have enough to pay your employees?
Laws vary from state to state. But, in general, companies must pay their employees for time worked. If the company runs out, then principals can be held liable. Smaller company, wealthy principal, employees have a reasonable chance of getting paid, enforced by their state Department of Labor. But of course if what is owed is way more than the principals' assets, then there's not much to be done.
So that's how employees are different than investors, the "corporate veil" does not protect the company owner from liability for their wages.
You have no idea what you're talking about. Unpaid wages can only be recovered via civil suit if the employer is not in bankruptcy; if the employer has declared bankruptcy, workers simply become creditors in the legal proceeding. In some jurisdictions, workers may become preferential creditors, [wikipedia.org] in others they get in line with everyone else who is owed money. In no case (in the US) are owners personally liable for unpaid wages or any other unpaid creditor.
I would suggest you read this article [googleusercontent.com] to begin t
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You have no idea what you're talking about.
Uhm, yes, actually I do.
In no case (in the US) are owners personally liable for unpaid wages or any other unpaid creditor.
The article you link to is about FEDERAL bankruptcy law and the FEDERAL Department of Labor. It says absolutely nothing about state laws nor state departments of labor.
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You have no idea what you're talking about.
Uhm, yes, actually I do.
In no case (in the US) are owners personally liable for unpaid wages or any other unpaid creditor.
The article you link to is about FEDERAL bankruptcy law and the FEDERAL Department of Labor. It says absolutely nothing about state laws nor state departments of labor.
Wow. I guess you figured the hole you're in wasn't deep enough, so you decided to keep digging.
FYI, there is no such thing as a state bankruptcy court, and state labor laws play no part in a bankruptcy proceeding. ALL bankruptcies in the US take place in a federal court, and are governed by federal law: [wikipedia.org]
"While bankruptcy cases are filed in United States Bankruptcy Court (units[1] of the United States District Courts), and federal law governs procedure in bankruptcy cases, state laws are often applied
Personal guarantee of company debts (Score:2)
But since you really know what you're talking about, you should easily be able to back up your claims with an authoritative source. Please, show us all one single case in the US where owners of a corporation were held personally liable for any debt - including unpaid wages.
They can be if they signed a personal guarantee which is not unusual in small companies in need of financing. But if there is no personal guarantee of company debt then you are completely correct.
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They can be if they signed a personal guarantee which is not unusual in small companies in need of financing. But if there is no personal guarantee of company debt then you are completely correct.
The #1 reason businesses incorporate is to protect the owner(s) from the liabilities of the corporate entity - that's ALL liabilities, including unpaid wages.
If an owner personally guaranteed a corporate loan to finance the company's payroll, the lender could go after that owner's assets in case of default. But such a transaction takes place outside the corporate veil.
Let me remind you of your original claim:
So that's how employees are different than investors, the "corporate veil" does not protect the company owner from liability for their wages.
Sorry, your statement above is patently false.
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The #1 reason businesses incorporate is to protect the owner(s) from the liabilities of the corporate entity - that's ALL liabilities, including unpaid wages.
Only under certain circumstances. There are MANY circumstances under which the corporate veil does not protect the owners, and wage theft can be exactly such a circumstance--indeed ANY kind of fraud.
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Look, at least one other person here has pointed out that your claims are incorrect, using pretty much the same argument that I have. Apparently you are one of those unfortunates who is incapable of admitting when you are wrong. Good luck to you, sir. You're going to need it.
My understanding came directly from a corporate attorney who was asked the exact question. Yours and his came from reading and interpreting the wrong law.
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Generally, when applying for state IDs, you list officer personal information. States can, and will, go after officers for company debts unpaid. I've seen it happen.
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Wow. I guess you figured the hole you're in wasn't deep enough, so you decided to keep digging.
Right back at you ;-)
FYI, there is no such thing as a state bankruptcy court, and state labor laws play no part in a bankruptcy proceeding. ALL bankruptcies in the US take place in a federal court, and are governed by federal law: [wikipedia.org]
Absolutely true. And completely irrelevant. The bankruptcy proceeding is about the disposition of the corporation's assets, and has absolutely no protections for personal liabilities under state labor laws or anti-fraud statutes.
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Absolutely true. And completely irrelevant. The bankruptcy proceeding is about the disposition of the corporation's assets, and has absolutely no protections for personal liabilities under state labor laws or anti-fraud statutes.
Once again, state labor laws have absolutely nothing, nada, zip, zilch to do with a bankruptcy proceeding. Repeating it over and over will not make it true, no matter how often you try.
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Once again, state labor laws have absolutely nothing, nada, zip, zilch to do with a bankruptcy proceeding. Repeating it over and over will not make it true, no matter how often you try.
Once again, principals' legal liability for wage theft HAS ABSOLUTELY NOTHING TO DO WITH BANKRUPTCY LAW. Bankruptcy for the CORPORATION deals with the disposition of the CORPORATION'S assets. It has nothing at all to do with personal assets, and how those personal assets might be attached in a suit for FRAUD.
Claims for wages not protected under FLSA (Score:2)
But, in general, companies must pay their employees for time worked. If the company runs out, then principals can be held liable.
That is only true if the company is a sole proprietorship or partnership structure where there is no corporate veil. Claims for wages due to insolvency do not fall under the Fair Labor Standards Act [shrm.org] unless the principle willfully filed for bankruptcy in an attempt to avoid paying wages. Employees are considered creditors during a bankruptcy and may be paid according to their priority as a creditor but generally they will have no claim on the personal assets of the shareholders unless there was a personal
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That is only true if the company is a sole proprietorship or partnership structure where there is no corporate veil. Claims for wages due to insolvency do not fall under the Fair Labor Standards Act [shrm.org] unless the principle willfully filed for bankruptcy in an attempt to avoid paying wages. Employees are considered creditors during a bankruptcy and may be paid according to their priority as a creditor but generally they will have no claim on the personal assets of the shareholders unless there was a personal guarantee of some sort or malfeasance
Again, that is only FEDERAL law. Laws pertaining to "wage theft" vary from state to state.
And, by the way, how is allowing employees to come to work after you run out of money, but not telling them until payday, not malfeasance???
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Uhhhh... In general, it's not legal to not pay your employees, but when a company has run out of money, it's run out of money. This is how going bankrupt works...
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A law guaranteeing success would be awesome.
Re:What? (Score:5, Insightful)
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Are you mad? Do you know how many businesses struggle with payroll? Where owners take loans (or are late paying other bills) in order to cover payroll. This is SOOOOO fu*king common. Start a business and see how often it happens to you.
Large companies routinely get short-term loans to meet payroll. As far as I can tell, that was a major reason for the idea that banks were judged too big to fail: if a bunch of banks had all gone under, immediately thereafter a large number of fortune 500 companies would also have gone under because they needed those banks for day-to-day financial obligations.
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That just strikes me as bad business.
I know it's common to "maximise the use of your money" and that a valuation can be based on some income to asset ratio which encourages debt, but when multi-million and billion dollar companies don't have actual cash to pay their staff they're doing it wrong.
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If you believe your position is significantly more secure than an investor you are deluding yourself.
If a company is solvent it must pay its employees, but as a company goes bankrupt it will fail to do so. An attempt to retain employees with promises will ensue, but if it should fail you will usually get in line with the rest of their creditors. In some cases you will get priority over cash only creditors, but you should realize that the company has few assets at that point, and those will be leveraged, s
Re:How much did it cost him for slashdot? (Score:5, Insightful)
It cost him enough money to live a life of luxury spent on founding companies intent on improving the condition of the human race instead of islands, yachts, and hookers.
Slashdot does not get much if any of that, but it regularly qualifies him for "news for nerds" and "stuff that matters".
Re:How much did it cost him for slashdot? (Score:5, Insightful)
And it was a very good article (book excerpt actually, now I want the book). Actually worth reading...
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There is no reason to continue to upvote this... I have been at the karma cap for a long while, and at this point nobody is going to make this less than full score without a fuckton of sock puppets.
Save your mod points. No matter how awesome Elon Musk is and how eloquent I am in my drunken postings, it is not going over +5.
My genius self would take a pay cut to work for him on the basis of the advancement of the human race... but there is just no point in continuing to vote it up.
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First, they needed women. [wikipedia.org]
Maybe you should apply... [youtube.com]
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Do you understand the laws of the universe?
I am beginning to I think I do in my most arrogant moments, and it terrifies me what the consequences are when I realistically evaluate that.