Dear startups, your developers and engineers are on island

Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single person, think about their work and unpack the rest. This week, Natasha interviewed Lizzie Matusov, the co-founder and CEO of Quotient, which wants to fix the “leaky pipeline problem” in tech onboarding that doesn’t set up engineers up for success. Yes, that’s right, this week we’re talking about the work needs, habits and aspirations of developers.

Here’s a few topics we get into:

  • The stereotype of a coder, and where collectivism contrasts with those characteristics.
  • How Quotient is using research, not just aspiration, to fuel its onboarding process
  • The status quo of tech jobs and if we’re seeing employers question some of their pre-conceived notions
  • Developer resistance to change and if engineers really do want to work together more

For episode transcripts and more, head to Equity’s Simplecast website

As always, the full Equity crew will be back on Friday, but you can keep up with us in the meantime on Twitter @EquityPod.

Equity drops at 10:00 a.m. PT every Monday and at 7:00 a.m. PT on Wednesdays and Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!

Dear startups, your developers and engineers are on island by Natasha Mascarenhas originally published on TechCrunch

Insightly helps engineering teams increase productivity and reduce burnout

Insightly Analytics helps engineering teams stop problems before they happen, like slow release cycles, bottlenecks and uneven workload distribution that can lead to employee burnout. The San Francisco and Hyderabad-based startup announced today it has raised $1 million led by Together Fund, which it will use to expand its product, engineering and marketing teams.

Founded in 2022, Insightly’s target users are chief technology officers and engineering vice presidents who want to analyze their DevOps research and assessment to help make decisions and identify the causes of issues that can potentially lead to less revenue, less productivity or employee attrition.

Sudheer Bandaru, founder and CEO of Insightly, told TechCrunch that Insightly is currently at six-digit revenue and has some unicorns and public companies in its customer pipeline that can potentially take it to a million dollars in annual recurring revenue over the next few months. Its user base includes a total of 12,000 engineers, including teams in the U.S., India, Kenya and Israel. The platform is customizable by company size and its clients range from 50-member engineering teams to multi-billion-dollar organizations that have more than 800 engineers.

Before founding Insightly, Bandaru worked at organizations like AT&T, Merrill Lynch and Hewlett-Packard. Then he moved on to a role as director of engineering at a markets informational resource website publisher that was later acquired by Bankrate. It was at that job, and during his next role as founder of recruiting platform Shortlist Professionals, where Bandaru says he learned the pain points of managing diverse engineering teams across countries and continents. These challenges were exacerbated by the move to remote work during the pandemic.

“There was little to no way for organizations to objectively see how efficient their engineers were,” he said.

As a result, Bandaru began to hack together a solution with data-driven insights to use at Shortlist Professionals. Then, as he started to get interest from leaders at large tech organizations, he realized his hack had the potential to be more than a side project. Bandaru notes a report from Stripe that says $300 billion is wasted per year around the world in software development inefficiency, even though 96% of tech leaders say improving engineering productivity is their top priority.

He adds many engineering leaders try to assess productivity with analytics from Git and Jira, but those processes are manual and time-consuming. Insightly is designed to automate the process of aggregating data to help speed up software development, find bottlenecks and gain visibility into workload distribution. Integrating Insightly takes about five minutes, is no code and immediately aggregates three months of historical data.

Insightly works by pulling in data and metrics from Git and Jita. Bandaru says its insights can help teams release products faster by spotting bottlenecks and distribute workload more evenly to avoid engineer burnout. It also maps business outcomes to tech efforts, helps teams decide if they should rework or do new work on a version, catch bugs and helps reduce tech debt by showing metrics like maintenance percentage to help teams tackle the most pressing issue first.

Insightly's cockpit

Insightly’s cockpit

Some use cases include a multi-billion dollar organization with almost 1,000 engineers that discovered most of their engineering teams were stuck for three to four out of five days because of team structure and release dependencies by using Insightly’s metrics on its release cycle and work distribution. Sendy, a Kenya-based logistics company with less than 100 engineers, discovered that the reason for employee attrition was burnout because of an uneven workload, which company leaders had not been aware of because people worked remotely. Meanwhile, one client realized that the amount of time that went into maintaining legacy applications over building new features as engineers left during the Great Resignation. New engineers had no option but to maintain their old code. Visibility into this problem allowed the company’s CTO to sunset low revenue generating products and build new products stead.

Insightly allows customizations at levels including creating teams by squad level, geographic locations, tech stack and business units. For example, Bandaru said one of clients discovered that a team with more reviewers based in Latin America, and the rest of the team in the U.S., had slower release cycles compared to teams who were all based in the same time zone.

Two of Insightly’s competitors are Jellyfish and Bandaru said Insightly differentiates by not only showing analytics, but also why they are happening, and providing context to every metric and data point.

Shift your startup into overdrive and demo at TC Sessions: Mobility 2022

Exhibiting your early-stage startup at TC Sessions: Mobility 2022 in San Mateo, California on May 18-20 is one of the fastest ways to discover new opportunities and accelerate your growth potential.

Hundreds of mobility’s most influential movers, shakers, shippers and unicorn makers will flock to the exhibit floor to see dozens of the latest and greatest startups. Why not make yours one of them?

It’s also a bonafide bargain. Along with demo space, a $725 Early-Stage Startup Demo Package includes:

  • Four event passes to help your team maximize time and opportunities. Individual passes cost $295 each. That price goes up $200 on May 15. You do the math.
  • Networking done right with our AI-powered CrunchMatch platform. It’s a smart, targeted and efficient way to meet the right people — in person and/or online — and maximize your time.
  • An exhibitors-only invitation to the live, online pitch feedback session with TC staff on May 20.
  • A full day of online networking and demos — expand beyond the confines of the San Mateo County Event Center and achieve global reach.

You’ll also have time to explore the show and hear speakers from game-changing companies share trends and insights on air mobility, micromobility, investing, cybersecurity, autonomous vehicles and more. Take a look at the event agenda (we’re adding more speakers every week).

And, if you’re not quite ready for prime time yet, opportunity still knocks. You might just find the co-founder or engineer who can help you put the proverbial pedal to the metal. Networking at TechCrunch is opportunity’s secret sauce. Apply it liberally.

TC Sessions: Mobility 2022 takes place in San Mateo, California on May 18-19 with an online event on May 20. Downshift, power up and drive your startup into the fast lane of opportunity and growth. Buy your Early-Stage Startup Demo Package before prices go up on May 15.

Instacart’s head of talent just joined Pear VC; here’s his take on the market

Earlier this week, TechCrunch reported that the former head of payments at Instacart recently left the grocery delivery outfit for a new adventure. As it happens, Matthew Birnbaum, Instacart’s head of talent acquisition for the past four years, is also out the door, having quietly joined the venture firm Pear VC last month.

What do the moves suggest of Instacart? Birnbaum, who launched his recruiting career in 2010, insists the moves say less about Instacart and much more about the red-hot job market right now, where employees with options that may be “underwater” are particularly susceptible to being poached.

We had a wide-ranging chat with Birnbaum yesterday morning about why he was himself recruitable, and what other outfits should know about what’s happening in the market. Our conversation has been edited for length.

TC: You just made the leap from a growth-stage company to a venture firm. Why?

MB: I’d met with some top venture firms earlier [before joining Instacart], but some of the interviews were a little discouraging in the sense that some of the partners I was speaking with were really just looking to offload the kind of the network conversations they get dragged into, like, ‘My son is a new graduate’ or, ‘My daughter is graduating from XYZ school; can you help her find her first job?’


A lot of the thinking was just how to separate what the partners are being asked to do from a talent perspective so they could focus on more of the partner work. Candidly, too, while if you look around today, almost every venture firm has at least one talent person, their relevance within the firm is something these individuals question a lot. In many cases, [my acquaintances] feel like they were brought in to help the firm stay relevant. If a firm is competing with other venture firms that can roll out a talent function, it becomes harder for the firm that doesn’t have that to compete.

If you don’t believe in the model, why join Pear?

Pear actually wants to make companies self-sustainable. At Pear, we want to be able to hire, say, three to five engineers over 12 to 14 months [as part of our promise] with every seed investment we make. We feel that that’s truly a differentiator, in the sense that most VCs are unable or unwilling to make that commitment as part of their core offering when a founder signs a term sheet. And Pear has the relationships and infrastructure in place to do it, at, especially at the seed stage, when engineers are the most critical people required to take that next step. Pear already has some really cool stuff in terms of dorm programs and industry programs to start building a lot of the networks that are ultimately going to feed into the hires that we need to make for our portfolio companies.

Everyone is right now promising access to the same pool of top engineers. Earlier this week, I wrote about an accelerator that is hosting a career fair instead of an investor day this summer to connect founders to engineering talent. 

There are a bunch of firms that are doing the same thing or have tried to do the same thing; Pear is alone in making this part of our core offering. But you’re right, the overall hiring market for engineers is brutal.

What do you have to offer a top engineer right now?

It’s different from startup to startup and from engineer to engineer. Historically, some have optimized for pay, while some for total compensation in the form of pay and equity. Some optimized for long-term potential — the chance to strike it rich by joining a company early on with a larger equity stake — and some optimized for location or prestige or their manager or how easy or difficult the job was going to be.

They still optimize for different things, but one of the big differences today versus five years ago is that it’s less of a binary decision tree. While it used to be that you might take an offer with high cash and lower equity or an offer with high equity and lower cash, in today’s market, you can shop around and get an offer with high cash and high equity. You used to have to optimize for two of five decision criteria and now you’re optimizing for four. That’s what’s making hiring more difficult, because a lot of companies aren’t in a position where they can provide for those things.

A lot of people are leaving Instacart. You were clearly open to being recruited out of there yourself. Why?

It was more of a personal decision for me. I’d been there for four years, scaled the company from 300 to 3,000 [employees], and hired 1,200 engineers over that period of time. I wanted to do something where I was closer to the build stage. My team was 125 [people]. I was managing through managers who manage managers who manage managers.

So there are no other reasons people might be leaving?

I can’t speak for other people. But one of the trends we are seeing — for a lot of companies that grew incredibly quickly during the pandemic and have subsequently [been impacted by a] kind of market correction — is if you look at the value of your equity, you may be underwater.

It’s a bad example because DoorDash is a direct competitor to Instacart, but if someone were to go from an Instacart to a DoorDash, and DoorDash’s equity right now is at 50% or 40% of what it was at its peak, someone can get the best of both worlds where they take their Instacart equity, lock that in, then go get twice as much DoorDash equity as they would have gotten if they joined a year ago.

I think there’s a lot of that going on in the market, where people are picking their head up and looking around and wondering, ‘Hey, what is the opportunity cost of me staying put at one company, versus looking at another?’ I don’t think that’s unique to Instacart and I don’t think this is just happening for engineers. Most companies that are late-stage or pre-IPO or have gone public in the last two years [are going] through the same journey, so I wouldn’t be surprised if we see a lot of movement across that cohort of companies.

The candidates are in the driver’s seat today, where they can really go and ask for everything, and there’s going to be one if not multiple companies out there that are willing to give that.

Turing books $87M at a $1.1B valuation to help source, hire and manage engineers remotely

When it comes to engineering talent in the world of tech, demand continues to outpace supply, a predicament so acute that by 2030, that disparity will balloon to 85 million positions being unfilled, according to research from Korn Ferry. Today, a startup that believes it can stem that tide with a more inclusive, global approach to sourcing, hiring and managing talent is announcing a big fundraise to continue building out its platform.

Turing — which uses AI to source, evaluate, hire, onboard and then manage engineers remotely (including the HR and compliance aspects) in a bigger platform that it calls the “Talent Cloud” —  has raised $87 million, a Series D round of financing that values the startup at $1.1 billion. WestBridge Capital is leading the round, with previous backer Foundation Capital; new investor StepStone Group; and AltaIR Capital, strategic backer HR Tech Investments LLC (an affiliate of Indeed), Brainstorm Ventures, Frontier Ventures, Modern Venture Partners, and Plug and Play Scale Fund all also participating. The round was oversubscribed and so the company also opened up a SAFE note at a $4 billion valuation, which is now also oversubscribed.

The funding comes on the back of strong growth for Turing. Demand from engineers in far-flung parts of the world who could not or did not want to relocate to work ramped up. Jonathan Siddharth, the founder and CEO, told me in an. interview that the total pool of candidates has grown 9x to 1 million engineers and developers from 140 countries in the last year, with that pool either looking for projects or already engaged in them. (Note: last year when the company announced $32 million in funding, it told me it had 180,000 developers on the platform.) It covers some 100 technologies and 15 job titles currently, ranging from entry-level roles all the way up to engineering directors and CTO candidates, he said.

Popular requests are for full-stack engineers, those who specialize in front-end or back-end languages, and site reliability engineers. In the near future, Turing will expand into adjacent areas like project management, paving the way for an upcoming product where companies can engage entire teams on Turing, rather than individuals that are then potentially managed as teams.

Demand is also scaling on the platform. Customers span from technology companies through to non-tech companies that still need engineers to help run and build different aspects of their businesses. They include Johnson & Johnson, Coinbase, Rivian, Dell, Disney, Plume, and VillageMD.

“We now live in a remote-first world and everyone is racing to reap the value of that,” Siddharth said.

Turing was founded on some basic premises about hiring and remote work that have borne out in the current market climate, shifted and altered perhaps permanently by Covid-19. Before the pandemic, working remotely was occasionally accepted but in many situations businesses actually built infrastructure not just to enable people to work together in office environments, but to encourage them to stay there for as many hours as possible, with free and excellent food at all hours, pool tables and other diversions, and even nap pods for when you did need a short kip.

This not only played out in entrenched ideas about office culture, but also impacted recruitment and hiring overall: you relocated for your job, and the company and you had to go through a major visa process to do so. And more often than not you were required to relocate to specific tech hubs like the Bay Area. This meant major strain on regional infrastructure, rent and bigger social make-up of cities and towns.

Now with Covid-19 totally changing the game, we’re collectively asking ourselves if all that was really necessary, in order to do work, and do it well.

Turing plays on all of that with a platform that effectively is providing a resounding “no” to those questions.

“Twitter, LinkedIn, Siemens, they are all going remote and the reasons are obvious,” he said. (Note: those are not named customers, just examples of companies going remote.) “You can now tap into a planetary pool of engineers, and smart people are looking where others are not. Also now we have more proven success of distributed teams.”

But that’s not to say that remote management is easy: you need to build pipelines of engineers, you need to figure out how to evaluate them, and you need to stay communicated with them. Turing’s platform has been built, therefore, not just for sourcing but helping those at the company these other hard and soft skills. Most people come on board for fixed-term projects, Siddharth said, but some follow the path to taking on more extended, even permanent, roles at organizations. It’s not the only company addressing the talent gap.

Fiverr, Upwork, LinkedIn, and many others are also making it easier to find engineers wherever they might be, although what Turing has built covers more of the specialized end-to-end needs that arise around engaging them. (In that regard, it’s a little like Superside, which raised money for its designer and creative talent hiring and management platform last week.)

“Turing’s ambitious vision of enabling fantastic opportunities for developers across the globe is inspiring,” said John Avirett, partner at StepStone Group, in a statement. “The Intelligent Talent Cloud truly is a remarkable way to democratize access and make lasting connections beyond inking the contract; they’re cultivating the process into long term career planning for the individual and the companies who use them.”

“Turing is productizing every leg of a massive industry and has forever changed its face and perception going forward,” added Ashu Garg of Foundation Capital.

Andela, which builds remote engineering teams tapping African talent, goes fully-remote and opens to the wider continent

In the wake of the COVID-19 pandemic, remote working has become the name of the game for knowledge workers in the tech industry. Today, a startup that was an early mover on the opportunity of that model is announcing some news to double down on the concept.

Andela, the New York startup that helps tech companies build remote engineering teams while at the same time shrinking the digital divide by tapping talent out of hubs in Africa for those teams, is today announcing a big step up in its efforts. The company is itself going fully remote, and as part of that it’s widening the pool of people that it taps to work and train by extending its reach across the whole of the African continent, while also shutting down its existing physical campuses.

Jeremy Johnson, the co-founder and CEO, said that he believes that the move will extend the talent pool that it can tap to more than 500,000 engineers from the 250,000 that it could reach through its earlier model. To date some 100,000 engineers have applied to and used Andela’s skills training tools (it works in partnership with a number of other tech companies to provide these, including Google, Microsoft and Facebook) and it has connected some 1,000 people to job opportunities.

The news comes on the heels of the company laying off 135 employees in May, with senior employees taking 10%-30% pay-cuts ahead of what the company hinted would be a big change in its business — the news that’s getting announced today. Andela has confirmed that it is not making any more cuts to its staff with today’s news. (It has around 1,200 employees globally.)

We’re seeing a huge shift right now to remote working due to the persistent existence of COVID-19 and the need to keep more social distancing in place, and a byproduct of that has been people actively moving out of expensive tech hubs now that it’s been accepted that being in them isn’t a fundamental requirement to do work.

At the same time, a lot of companies have either slowed down or frozen hiring of full-time employees but are continuing to tap people for project-based work because their businesses are no less in need of talent to operate.

Both of those trends are an endorsement of the model that Andela helped to pioneer with its remote teams concept, and they more pointedly spell opportunity for companies like it that already have networks in place to speak to those demands.

All the same, it’s a major shift for the startup, not least because it’s closing down its physical campuses.

Founded in 2014 out of Lagos, Nigeria, and backed by investors like Generation (Al Gore’s fund), the Omidyar Network, Spark Capital and Chan Zuckerberg Education and valued at $700 million as of its most recent funding round last year, Andela has for the last six years focused on building a network based around the biggest tech hubs on the continent, building physical spaces in Nigeria, Kenya, Uganda, and Rwanda, that helped source, vet and further train talent to become part of remote company teams for some 200 customers, with a large proportion of those in the US, including Cloudflare, Wellio, ViacomCBS, and Women Who Code.

As Andela started to scale that model, starting with a pilot in Ghana in 2018 and a second in Egypt last year, it saw that the more efficient route was to forego the physical hubs completely for virtual ones.

Indeed, Jeremy Johnson, the CEO who co-founded the company with Christina Sass, said that its move was not a direct response to the pandemic per se, although global events have definitely given a fillip to the concept

“What we’ve done historically is go and build campus in each location and in early days that made a ton of sense because that was helpful for training and from an infrastructure standpoint it was what we needed to do,” he said in an interview.

“But as we’ve transitioned to focus more on the breadth and depth of talent and diversity across the continent, we opened satellites in Egypt and Ghana where we didn’t require a campus. It’s actually worked really well and some ways feels like it’s opening opportunities for even greater growth.”

Our own interview was via Zoom, with me in London and Johnson in New Hampshire: Andela’s New York office (where he is normally based) closed for the moment.

“Our headquarters has technically been the internet, but we’ve had a big presence in NYC,” he said referring to its US base. He added that the expansion in Africa using the satellite/remote concept is the limit to how it apply the remote concept, with the question of what will happen in the future to even its US offices still not fully answered.

“We announced a few weeks ago we are going to be a remote-first company overall going forward,” he said. “It lets you think differently about where to live and more. I don’t know what it means longer term but for now we are all living on Zoom.”

While Andela is obviously expanding its talent pool with this move, and potentially giving a huge boost to providing more job opportunities for technology talent on the continent, the interesting next step for all of us will be to see how that connects with the other side of the marketplace — that is, the big tech companies themselves and how much they need to and are willing to invest in growing their own workforces. That is not a minor issue, considering the millions that have been laid off so far in the last few months.

Andela, Johnson said, has no plans to raise more capital at the moment with money in the bank and revenues continuing to come in. Last year, it confirmed that it was on an annual revenue run rate of $50 million, but it’s not updating that figure at the moment.

Hot Wheels made two remote-controlled Tesla Cybertruck toys

Hot Wheels will ship you a Cybertruck long before Tesla is likely to make any deliveries on their electric retro-future wheels trapezoid: The toy maker just unveiled two different RC Cybertruck models, including a 1:64 scale model at just $20 – and a much larger 1:10 scale version for $400.

These are available to pre-order now, but like most of Tesla’s cars, just because they’re introduced doesn’t mean you can go out and buy one immediately. They’re set to ship in time for the holidays, however, with a December 15, 2020 estimated availability date according to the Hot Wheels website.

These look like very faithful representation of the Cybertruck that Tesla unveiled at a special event back in November, and the large version includes a “reusable cracked window vinyl sticker” that you can use to recreate the on-stage flub that happened at the actual reveal. You’ll have to supply your own large metal medicine ball.

[gallery ids="1949609,1949608,1949607,1949606,1949605,1949604,1949602"]

Other features of the 1:10 scale Cybertruck including functioning headlights and taillights, all-wheel drive, true to form ‘Chill’ and ‘Sport’ modes, a removable tonneau cover, a working telescopic tailgate and more.

The smaller and much more affordable version is just 3-inches long, which is basically what you’d expect from a traditional Hot Wheels mini model, and it can achieve a “up to 500mph scale speed” which someone who is better than me at math can figure out what that translates to.

These are available now, to people in the U.S. and Canada, but I expect them to be pretty hot sellers based on the general fervor and interest around all things Cybertruck to date.

Damon Motors targets Tesla owners with its 200 MPH hyper-safe e-moto

Damon Motorcycles doesn’t want to become the Tesla of e-moto companies. But the startup does believe its EV two-wheeler is the first to capture the ethos of Tesla owners.

That’s the target market for Damon’s new $24,995 Hypersport, according to CEO Jay Giraud.

The Vancouver-based startup unveiled the e-motorcycle today at the Consumer Electronics Show in Las Vegas, after offering a teaser in December.

Damon’s Hypersport has a 200 mph top-speed, 200 miles of highway range, 147 ft-lbs of torque, charges to 80% in 20 minutes and weighs less than 500 pounds, Giraud told TechCrunch on a call.

The company’s new EV is cloud-connected, manages performance through digital riding modes and will get riders from 0-60 mph in less than 3 seconds.

These specs alone would make the Hypersport impressive in an increasingly competitive e-moto market, but they’re only part of the Damon package. The seed-stage company also creates proprietary, digital safety technology engineered to overcome (what it sees as) common flaws in motorcycle design.

Damon Motorcycles Hypersport Sensors

“We’re trying to change the industry by addressing the issues of safety and handling and comfort and the problems that have persisted with everyone in the industry, including all the e-moto companies today,” Giraud told TechCrunch in December.

To that end, Damon has positioned its Hypersport as an ultra-fast, smart and safe motorcycle by infusing it with unique tech features. To start, the EV is equipped with the company’s CoPilot system, which uses sensors, radar and cameras to detect and track moving objects around the motorcycle — including blind spots — and alert riders to danger.

Damon Motorcycles CoPilot

Damon has also addressed the one-size-fits-all problem in motorcycle design, integrating a system on its Hypersport for adjustable ergonomics. The startup’s debut EV allows riders to electronically shift the motorcycle’s windscreen, seat, foot-pegs and handlebars to accommodate different positions and conditions — from upright city riding to more aggressive high-speed runs.

Damon is taking pre-orders for its Hypersport and will enter a stagnant American motorcycle market that’s becoming crowded with EV offerings.

New motorcycle sales in the U.S. have dropped by roughly 50% since 2008 — with sharp declines in ownership by everyone under 40 — and have never recovered, according to Motorcycle Industry Council stats.

In a bid to revive sales and the interest of younger riders, in 2019 Harley-Davidson became the first of the big gas-powered manufacturers to offer a street-legal e-moto for sale in the U.S. — the LiveWire — which is a forerunner to an HD product-line of electric-powered two-wheelers.

Harley Davidson Livewire static 1

Harley-Davidson’s LiveWire

Harley followed several failed electric motorcycle startups — Alta Motors, Mission Motors and Brammo — into the market and joined existing EV ventures, such as Zero  — which debuted its $19,000, 120 mph SR/F in 2019.

High-performance Italian EV company Energica has expanded marketing and sales in the U.S., and 2020 should also see e-moto debuts by California-based Lightning Motorcycles and Fuell, a French and American-founded company that plans to release the $10,000, 150-mile range Fllow.

Hows does Damon Motorcycles scale in a contracting U.S. motorcycle market with expanding EV entrants?

The company’s CEO, Jay Giraud, believes the startup’s melding of superior performance and safety features will give Damon a comparative advantage over other offerings.

He also sees Damon’s Hypersport (and planned subsequent models) as the first motorcycles that can sell to an existing but largely untapped e-moto market segment: Tesla owners.

“They know electric drive…they know what insane acceleration feels like…and they appreciate tech that makes the safety of the EV, on top of the unbelievable performance,” said Giraud — who co-founded Damon with fellow Canadian Dominique Kwong.

Damon Founders Jay Giraud and Dominique Kwong

Jay Giraud and Dominique Kwong

But are four-wheel Tesla owners really potential motorcycle buyers?

“Sure they are,” said to Giraud. “Tons and tons of Tesla owners own motorbikes and over 1,700 people who filled out an interest form on our website told us they were [Tesla] owners.”

Damon is banking on what Giraud referred to as the Tesla-effect. “Within about six months of owning a Tesla…people start looking around for what else in their home and garage should be electric. And those are the customers we’re going after first,” Giraud said.

So time and sales stats will tell if Damon can attract affluent four-wheel EV owners to buy $25,000, 200 mph electric motorcycles.

We’ll also see if the company’s innovative design can create a Damon effect — shifting market expectations on OEMs and e-moto startups to offer both high-performance and extensive digital-safety features on motorcycles.

Tesla reports back-to-back profitable quarters

Tesla reported Wednesday a profit of $139 million, or $0.78 a share, and better-than-expected sales, yet failed to meet analysts expectations for earnings in the fourth quarter. Shares fell after the markets closed and are down 1.7 percent as of 2:30 pm PT.

Tesla has managed to string together two profitable periods in a row thanks to sales of the Model 3 and despite several headwinds in the fourth quarter, including a non-cash charge of $54 million attributable to non-controlling interests, higher import duties on components from China, a price reduction for Model S and Model X in China, and the introduction of a lower-priced mid-range version of Model 3.

In October, Tesla reported its first profit after seven consecutive quarters of losses. It was only the third time in its history that it had achieved this milestone.

Tesla’s profitable fourth quarter lies in stark contrast to its financial position in the same period last year when it reported a loss of $675 million, or $1.75 a share.

Perhaps, just as important as the automaker’s income is its cash position. Tesla reported that its cash position improved by $1.45 billion despite the scheduled repayment of a $230 million convertible bond in the fourth quarter.

“We have sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019,” the shareholder letter to investors said.

Here are a few of the highlights:

  • Tesla’s Q4 revenues were $7.2 billion, up from $6.8 billion in the third quarter
  • Tesla’s Q4 operating cash flow less capital expenditures improved to $910 million
  • Cash and cash equivalents increased by $718 million to hit $3.7 billion at the end of fourth quarter
  • Model 3 production volumes in Fremont should reach a sustained rate of 7,000 units per week by end of 2019

Analysts took a measured tone in reaction to Tesla’s fourth quarter earnings report, noting the company’s accomplishments as well as the challenges that lie ahead.

“Things really aren’t going to get any better for Tesla in the U.S. than they did at the end of 2018,” Jessica Caldwell, executive director of industry analysis at Edmunds, said in an emailed statement. “Turning a profit, creatively addressing production challenges and getting the Model 3 to the masses were huge milestones, but keeping up this momentum is going to be virtually impossible. Tesla’s product lineup is starting to get stale, and now thanks to the elimination of the federal tax credit, buying one has never been more expensive. While there’s still a cool factor to owning a Tesla, it may not be enough to convince buyers to choose one over brand new models from Audi, Porsche and Jaguar. Tesla’s in an awkward purgatory between being a startup and a mainstream automaker, and the biggest open question heading into 2019 is where the company really goes from here. Tesla is used to owning the spotlight, but for the next year we might see a lower-key Tesla as the company takes baby steps to keep things moving along while it plans for the future.”

The challenges will be for Tesla to improve, or at least maintain, margins even as the federal tax credit continues to wind down.

Looking ahead

Tesla is forecasting that Model 3 volumes will “grow substantially” in 2019 due to a full year of high production rates at its facility in Fremont, California.

Tesla said it plans to start producing Model 3 vehicles at its “gigafactory” in Shanghai by the end of the year. The automaker says they intend to slash the cost of producing Model 3s at the factory in China, a bold prediction that if successful will help boost margins.

“We expect the capital spend per unit of capacity for this factory to be less than half of that of our Model 3 line in Fremont,” the company said.

Tesla is also targeting cost reductions in the U.S and expects operating expenses will grow by less than 10 percent in 2019. The automakers says that restructuring actions taken in the first quarter — that includes layoffs that occurred this month — will reduce costs by about $400 million annually.

Tesla’s first quarter financials will reflect a one-time restructuring cost, the company forecasted.

As a result, Tesla says it’s remaining optimistic that it will post a small profit in the first quarter if it can successfully keep costs down, handle logistics and delivery challenges in Europe and China.

Tesla reported January 2 that it delivered 90,700 vehicles during the fourth quarter, just shy of what analysts expected. The company said at the time, that it delivered 13,500 Model S sedans, 14,050 Model X SUVs and 63,150 Model 3s.