[nibab]

“Which company is private investment going to fund - the SaaS co. with 40% margins and rapid growth or the manufacturing co. scraping 10% margins and 5% CAGR?”

2 of the most valuable companies started in the last 20 years in the US are SpaceX and Tesla. You can still build a huge amount of value with non-SaaS margins.

I think part of the problem here is how structurally unfit VCs are to fund such companies (ie investment horizon and fund lifecycle is 5-7 yrs). THat’s where scale-up financing by the government can make a huge impact.

[mdorazio]

These are great examples. SpaceX is an aerospace company and Tesla's price and hype are based on not being a manufacturing company (Elon touted it as a transportation tech company and not a car company from the beginning). If either were valued as manufacturing companies, their valuations would be in line with traditional peers.

My point is, if you want manufacturing to return, we need American FoxConns, and that means literally 2% margins [1]. We can't rebuild onshore manufacturing with overhyped companies alone.

[1] https://www.foxconn.com/en-us/investor-relations/financial-i...

[SyzygistSix]

The price and hype are based in part on not being a manufacturing company but the business model is certainly based on being a manufacturing company. And the manufacturing segment of both that is expanding. Just because the stock price is ridiculous does not mean the business models are unsound. They are a great example of bringing manufacturing and vertical integration back. They have made their factories work in California, Beijing, and Berlin.

[rtkwe]

Going off of the stock Tesla looks incredible but the price is insane and driven by factors other than their actual production outputs. They had a huge lead at the start but the old giants aren't that far behind them any more and aren't hampered by over promised and underspecced self driving claims and the... Muskness of their leadership.

[datavirtue]

Check out the Mach E review by Scotty on YouTube. Ford certainly is not behind Tesla at all. That Mach E is oders of magnitude more exciting than any Tesla I have ever seen.

[rtkwe]

The main thing Tesla still has over their competitors is the charging network. I've watched a couple X vs Tesla roadtrips and the biggest issue in the non-Tesla is there's way worse information about the chargers you'll find at a particular spot. These were a bit ago so maybe they've gotten better but there were a lot of "oh this charger doesn't work hopefully we have the range to get to the next one" where the Tesla chargers provide pretty good information about the number of people already charging there etc.

It's a gap they're losing a bit by other companies adopting their plug choice but there's still the integration to the car infotainment system.

[flybrand]

Yes!

I oversee a portfolio of industrial products that no VC would touch. Now, some long view PE groups do things like this - the margins can be great, growth can be fast.