How To Nuke Your Reputation: The Nikola Edition

from the going-downhill dept

This isn’t so much in vogue as it was in the past, but it still remains true that one’s reputation is a scarce resource that can be frittered away easily. And, on these pages at least, it is often equal parts perplexing and funny to watch some folks in the tech space torpedo their own reputations for various reasons. The more shrewd don’t always seem to care about this sort of thing, which is how you get the MPAA pirating clips from Google to make its videos, or a law school taking a critic to court only to have the court declare said critic’s critique was totally true. Good times.

Which brings us to Trevor Milton, the founder of Nikola Motor Company. Nikola is playing in the electric truck vehicle space. In 2016, Milton announced in an official video that the Nikola One Semi was “fully functional.” In fact, one of Milton’s chief public concerns at the time was ensuring that nobody could come by and drive away with one of the trucks. The companion video for the Nikola One was posted to YouTube in January of 2018. This video shows the Nikola One chugging down a lonely one-lane road.

Despite all of the fanfare, it’s worth noting that the Nikola One never made it into production. Why? Well…

Hindenburg Research published a bombshell report claiming that the Nikola One wasn’t close to being fully functional in December 2016. Indeed, Hindenburg published a 2017 text message exchange in which a Nikola employee stated that the company didn’t resume work on the truck in the months after the show.

Even more incredible, Hindenburg reported that the truck in the “Nikola One in motion” video wasn’t moving under its own power. Rather, Nikola had towed the truck to the top of a shallow hill and let it roll down. The company allegedly tilted the camera to make it look like the truck was traveling under its own power on a level roadway.

Now, on the one hand, that’s objectively funny. It’s sort of an Adam West’s Batman approach to product demonstration. But, on the other hand, now that Milton has admitted the charges above, he’s likely in a whole world of trouble. The company has tried to weasel out of this in fairly absurd fashion.

“Nikola never stated its truck was driving under its own propulsion in the video,” Nikola wrote. “Nikola described this third-party video on the Company’s social media as ‘In Motion.’ It was never described as ‘under its own propulsion’ or ‘powertrain driven.’ Nikola investors who invested during this period, in which the Company was privately held, knew the technical capability of the Nikola One at the time of their investment.”

Not everyone seems to think that’s true. The SEC and DOJ are reported to have opened investigations into the company’s behavior after these revelations. And, as to the point of Milton’s reputation personally, he’s out at Nikola.

Milton’s resignation came just 10 days after a bombshell research report revealed that Milton wasn’t telling the truth in 2016 when he unveiled the company’s first product, the Nikola One, and claimed that it “fully functions.”  Over the weekend, Milton offered (voluntarily, he says) to resign as executive chairman, and Nikola’s board accepted his offer. Milton will also relinquish his seat on Nikola’s board.

Now, a few items of note. First, Nikola does now have a functioning prototype, the Nikola Two. It’s also partnering with several automobile companies and has contracts in place with them.

But for Milton, he loses his position at the company he founded, millions in stock and consulting fees, and has gained infamy as someone who is willing to, at best, mislead the public about his companies’ products. Your reputation is a scarce good. Frittering it away by turning the camera on an angle probably isn’t the best move.

Filed Under: , , , ,
Companies: nikola

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “How To Nuke Your Reputation: The Nikola Edition”

Subscribe: RSS Leave a comment
17 Comments
This comment has been deemed insightful by the community.
That One Guy (profile) says:

... and like that, it's gone

Reputations are funny things.

They can take months if not years to build up, slowly but surely showing by word and deed what kind of person or company you are, demonstrating that your word can be trusted, your claims about your products taken at face value, but get caught lying even once on the wrong thing and all that work goes up in smoke, your reputation reduced simply to ‘liar’ and ‘not to be trusted’, and if you thought it was hard work building it up the first time that second time is going to be exponentially worse.

In short, if you’re going to sell your reputation do not do so lightly, as it can be one of the most valuable commodities you can get and all but impossible to regain once lost.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Before the effluent hit the aerial impeller...

There have been a number of youtube videos purporting to show that TM is a long-time fraudster. For instance: https://www.youtube.com/channel/UCJHObTFu75LOjJcmeAU5THA

Meanwhile, this is the same Nikola that sued/is suing Tesla over the door placement on its upcoming semi. For over a billion. Seems they got a design patent on their semi design. Which, if I recall correctly, was mocked up after Tesla publicly revealed their design. Nothing sketchy there.

Anonymous Coward says:

Nothing unique there: there’s a whole body of "old sociopaths club" members in high places in a lot of political organizations and corporate boards, who are all too willing to hire their own. Remember the HP sex predator who hired on at Oracle before the semen was dry on his old desk? Or the stock scammer who leaped from the burning stock values of his old company into a comfy position as a price gouging exec in big-pharma? The other HP executive who slipped off her second-best cruiser-sized yacht, or the faux-inventor of email fresh out of baseless litigation–both into state-level politics?

Federico (profile) says:

Hardly surprising

Matt Levine wrote a series of funny articles on Nikola. It’s the kind of company that would probably never have managed to get that valuation with a real IPO.

Obviously Nikola is an exception! People talk about companies that were founded in garages and then grew and went public and became multibillion-dollar companies, but Nikola is a multibillion-dollar public company that is just puttering around upgrading its founder’s garage. God bless them, this is such an endearing 10-Q and now I hope it works out for them. I hope in 10 years all goods travel via Nikola trucks and they’re a trillion-dollar company and in the Dow and an American institution and there are occasional wistful, incredulous articles in the financial press being like “little-known fact but back when it went public Nikola’s future was so uncertain that it actually made money installing solar panels on Trevor Milton’s house.”

https://www.bloomberg.com/opinion/articles/2020-08-06/it-s-a-good-and-bad-time-for-ipos

When I formally introduced the boredom markets hypothesis last month, we talked about how retail traders loved Tesla Inc. even before the pandemic. The closer a company is to Tesla in its combination of social mission, high volatility, general drama and business of making cool toys, the more appealing it will be to bored retail traders.

https://www.bloomberg.com/opinion/articles/2020-06-09/the-bad-stocks-are-the-most-fun

Annonymouse says:

Trucks

Still it is funny, like last month’s leftovers at the back of the fridge funny, that the big 3 are major investors.
You would think that since they already build such vehicles as well as electrics that they would have the knowledge and experience to build one of their own.
But who are we kidding, they just want to kibosh the new kid on the block any way they can through any means available.

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...