I own a Tesla model S, and am also a long term investor in Tesla. I’ve bought shares in them a few times, and traded the volatility a bit, and still hold a decent amount of shares. Of all my investments, Tesla is the largest single company. Why?

Fundamentals

people get can too hung up on price/earnings ratio, profit and market size. If you look at the fundamentals of the company without knowing anything about the product, TSLA is a joke. Its losing money, a LOT of it, and its market share and revenue cannot possibly justify its valuation. Luckily, there are darned good reasons for all of that…

For a very long time, Amazon made no profit, but the share was a darned good bet because it was a ‘get big fast ‘ play. Amazon now have near market dominance and everyone accepts that profitability is a choice, and a matter of when not if. Growing rapidly during development, and ignoring profit is a proven strategy.

Tesla is not losing money in the way people think. They are investing a LOT of money in capital expenditure, and some in R&D. Basically they are trying to copy Ford River Rouge factory in terms of vertical integration and scale. This is catastrophically expensive in the SHORT term. Investing to grow is fine, there is no evidence tesla actually loses money when it sells you a model S/X.

The market share of tesla is awful, but its market share of electric cars is WAY better, and nobody expects this market to do anything but grow rapidly. Most people accept that the Tesla model S absolutely crushes other electric cars (except maybe the more expensive BMW i8), so it already has a killer product. I’d be amazed if their dominance of the electric market does not get more pronounced when the model 3 is released.

Product.

The Tesla model S is incredible. Fast as hell, quiet as a mouse, looks outstanding, mine has a 220 mile real-world range, great range of gadgets, over-the-air updates and bug fixes. Impressive autopilot, incredibly good safety ratings. Cheap to insure, Very cheap to power, Cheap to maintain. It also has a great brand, and the company has a charismatic and visionary leader.

Vertical Integration.

Tesla will sell you solar panels to generate electricity, a tesla powerpack to store it with, and an electric car to use it, all seamlessly controlled by your mobile phone. When you go on roadtrips, you can stop at a tesla owned supercharger to fill up with cheap power courtesy of tesla, at super-fast speeds. When you buy any of the panels, battery or car, you do so in a Tesla store. And that car battery? its made by Tesla too. Even apple depend on samsung for major components o the iphone. Tesla are limiting their dependence on outsiders whilst simultaneously capturing the profit at every part of the sale.

Direct Sales.

All of teslas serious competitors are big old car companies. All of them sell through franchise dealerships. Those dealerships make a big chunk of their money through servicing. Electric cars require virtually no servicing compared to an ICE. Not surprisingly, the salespeople at other car showrooms want to sell you an ICE, something they understand, and which they have a financial incentive to sell. That BMW salesperson doesnt really want to sell you an electric car. All the Tesla sales peoples sell is…electric cars.

First Mover.

Tesla was the first company to bring out a desirable, sexy electric car, and the only one to design one as electric from the ground up (model s). They have no legacy ICE crap to deal with. They are not tainted by emission standards scandals or other nonsense. Their tech, their factories, their designers…all focused 100% on electric cars. The time for competitors to wake up and smell the coffee was the year the model S came out. They didnt notice, and even if they had, they needed to change direction fast. They didn’t. Tesla are way ahead.

Superchargers.

Tesla own the petrol stations as well as the car. Its genius. The experience of other charging networks is awful. You need a phone app to find them, then you need one of several different cables to plug in. You then need a swipe card, and an account, to swipe and authorize on an app, then you need to pay. When I find a tesla charger (which the car will navigate me to) I just stick the cable in my car and go grab a coffee. No passwords, no logging in, no hassle, nothing. Its actually way more convenient than petrol.

Diversification.

Maybe the model 3 will suck. Maybe all the tesla cars will be beaten. Big deal. Tesla is an energy & storage & transportation & battery company. Soon they will announce a tesla truck. In many ways they have a more diverse base than the big auto companies. The chances of ALL of their energy/storage/car bets failing are trivially small.

So there you go. I am not a financial advisor blah blah, but I do read everything I can about a company I invest this heavily in.  FWIW TSLA shares are $351 today. :D

 

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So I tested and released build 1.34 of Production Line today with the following changes:

1) [Bug] Fixed crash bug when dragging production line route placer off the map.
2) [Bug] Fixed bug where queued research could disappear and be untriggerable if requirements not met.
3) [GUI] Various usability improvements to the research queue and R&D screen.
4) [SFX] Factory sounds now controlled by SFX volume, and muted during research.
5) [Bug] Fixed bug where after reloading the same games, some cars were invisible at certain zoom levels.
6) [Tutorial] Hint now given if player has not done any research after producing 10 cars.
7) [Graphics] Added a bunch more machine animations for the metalpresses.
8) [Feature] Pickup truck is a new body style option!
9) [Simulation] Sports Cars, Compacts & pickups now require half as many seats.
10) [Bug] Fixed bug where wingmirror painted layers were not painted the right color.
11) [Balance] Adjustments to AI competition and component price variation.
12) [Bug] Fixed bug preventing dragging scrollbars vertically.

This is a fairly content-heavy update, with new animations and a new car body style. Who would have guessed that in the USA 18% of vehicle sales are pickup trucks? Anyway… its more stuff to research and sell, and hopefully people will be pleased to see the extra content.

I have a big list of minor things I really need to get fixed/changed/tweaked for the next build, and then eventually it will be time for me to tackle the big hybrid./electric power-train thing. In-between all that we have our super artist working away on steam trading card art, which is going to be AMAZING, so with any luck we will have those in the next update, for people who like that sort of thing. I’m also thinking that there should be a bit more variety in the games factory equipment. I would love to be able to tell from a distance which slot is which, and the re-use of a lot of components throughout the factory makes that tricky. Some items, like the Tyre-press or glass-cutter are distinct to specific slots, but a lot of it isn’t and I think its about time I addressed that and got some more little factory things made so that I can create more distinct looks for each slot. Plus that gives me an excuse to look at factory videos :D

I’ve set the new price to be $17.99 but valve have to ‘approve’ it before it changes, so if you are on the fence, buy NOW :D.

Or buy it now at full price from us direct … :D

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Balancing games is really HARD. I’ve posted before twice about using stats to fine tune Production Line, mostly because I ma better with hard numbers than I am with reading forum comments, reddit comments, facebook comments, emails, reviews on steam and everything else the community has to say in order to draw conclusions. people generally dont comment on a game, so the 1% that do can give you a very skewed view of what is going on, and I want to ensure I am working to effectively improve the game for everyone. With that in mind lets look at some stats.

Here is a graph showing the progression within games from 50-500 game hours, expressed as the median value.

It looks like I kinda screwed up with build 1.32 and it was too generous(easy) in the long run, with the median player having buckets too much cash. I prefer the way things are now, although TBVH cash accumulates too much at the end anyway. This may be the effect of outliers running cheats though? If I look at the distribution for the current version I get this:

Which has a log scale and shows that we definitely have some people cheating at the top end, but a fair few people who have more than $100mill in hour 500. A cluster seems to be around the 1-10 mill level which is fine. overall, I dont see any major balancing issue here. Now looking at profit margins:

I really dont want the player to have significantly negative profit margins over the course of the game. Its fine in the short run, as loans can allow it, but not indefinitely. It looks like the last two builds did a decent job of preveting catastrophic meltdowns over the 100-400 hour mark, but I could still do with tweaking the marketplace to stop that negative margin being so low. it looks like the system is good at preventing excessive profits, but can resulty in unsustainable losses, so I’m going to need to tweak that a bit.

This chart is showing how strongly the AI competitors compete with the player. it looks like I made no noticeable impact on this in the last build. The AI basically runs on maximum from when you reach the 200 hour mark. This is probably related to it over-punishing the player and causing that negative profit margin. It looks like I just need the AI to back off a bit quicker once it starts having an impact on the players profit margins.

All fun stuff for me to think about today, and then tomorrow I’ll just be doing final testing before releasing build 1.34 to the wild. Talking of which…

I am increasing the price of Production Line tomorrow from its current $15.99 to $17.99. I thought this was a good time to do it, as I’ll be adding the new exciting Pickup Truck to the game:

As well as lots of new animations, and we are getting closer to the eventual point where it gets described as ‘beta’ and then eventually ‘released’. The games price has been the same all through Early Access so far so I thought it was about time. if you want to save yourself $2 you can grab it from the link below. (or steam/Gog). If you are enjoying the game, positive reviews are always nice to have :D

A few thoughts I’ve been mulling over for the last few weeks, concerning steam, and most relevantly, the steam review system.

I like the idea of product reviews. So many people try to sell you crap with a lot of marketing bullshit and vague promises. Reviews are a powerful weapon which allow little-known but great products to rise to the top, and punish the superficial, poor-quality crap with big marketing budgets. Done correctly, reviews are a win for the consumer and for the developer. Consumers get unbiased purchasing advice, (and lots of it), and also a voice for their opinions, and developers get a free marketing department for good products, and constructive feedback on why some customers are unhappy.

Of course, that is all theoretical, the real impact of reviews depends vastly on their implementation. In many ways, the steam implementation is extremely good, and actually better than the implementation you see on some other websites. Firstly, you have to actually have bought the product to review it, which eliminates 95% of dubious reviews. I could easily go and review my neighbours B&B on google and say it sucked, if he is someone I don’t like, but with steam, if I wanted to maliciously give bad reviews to every other developer’s strategy games, I’d have to buy them all, which acts as a powerful brake on people just acting like dorks.

Also, steam lets you rate reviews as helpful or unhelpful, which is cool, but AFAIK this has no impact on the extent to which a review is counted towards the review score. This is a tough line to walk, because AFAIK anyone can rate a review without being a customer. If steam allowed review ratings to influence review scores, then you are back to square one with the malicious review-manipulation issue. The review-rating system is presumably a nudge towards¬† encouraging thoughtful reviews, which probably works to an extent, but you still have a problem that people may leave a bad review for the wrong reason such as ‘Developer is a woman/gay/nazi/non-white…’. How can this be combated?

I think the solution is pretty simple, and obvious when you go back to first principles and ask yourself what a review is supposed to be. let me put forward this assertion:

“A review is an objective measure of the collective opinion of customers as to the quality of the product they have bought”.

That sounds pretty fair to me, and when you put it like that you realize that we try to collect such measure all the time in the real world, with question like this:

“If an election were held tomorrow, which candidate would you vote for?”

Yup, opinion polls are basically trying to do the same thing. They are trying to work out what people think of products, in this case politicians and parties. The key thing I’ve realized, is that there is a wealth of expertise and knowledge gained from such systems about ‘how to do it right’, where ‘right’ means predict the real opinion of everyone from a small subgroup. With this in mind, lets look at everything game reviews on steam do wrong:

Problem #1: A self-selecting electorate.

You don’t have to review a product on steam, and you get NOTHING for it, if you do. No steam points, no gems, no chance of a discount coupon, nothing. You take up your own time. As a result, steam reviews are basically like holding an opinion poll where people have to choose to take part, and then take their own time and effort to participate. Any pollster would laugh you out of the room if you tried to predict an election result by waiting for the public to come to you and tell you how they would vote. You get the activists, the extremists, the angry, and also more relevantly, you get people with time on their hands. You would have huge over-representation by the unemployed, the teenagers and the retired. The result is worthless.

Problem #2: A small sample size.

Ask 10 people who will win the next election and you will get a pretty useless result. Ask 100 and its closer, but for a really close election (48/52% style) you are going to need thousands, even assuming that you have carefully ensured its not self-selecting and that the gamers have been randomly polled.

Problem #3: People lie to themselves.

Some political opinions are widely held but publicly frowned upon. In the US, saying you supported trump would be unpopular in some circles, in the UK, supporting UKIP can be seen as signifying racism. In working-class towns, saying you vote conservative is downright dangerous in some places, and a labour sticker in some conservative villages will exclude you from dinner-parties. Pollsters try to find out what people really think and will do, not what they claim to think and do. In gaming, we dont have much in the way of ‘shame’ although its interesting that all reviews are public and non anonymous. How many people dont want to have a positive review of a gay-dating sim visible on their profile? How many gamers wont post a glowing review of a game they love when the developer gets hate due to their political views? Its probably not *that* many. However, we do have a problem where gamers routinely plough hundreds of hours into a game, then give a negative review. This seems…. weird. To some extent, steam should be able to factor this in. Maybe some fudge factor needs to take players median play time into account when computing a score? This is the trickiest area to fix.

 

So the first two problems are EASILY fixed. You just get more people to review a game. Don’t leave it to the bored (mostly young) or the incredibly outgoing, happy to write comments everywhere (again, mostly young) crowd, or the angry mob (people are more likely to review badly when something goers wrong than they are happily when something goes right). Steam needs to do a simple thing… Raise the percentage of gamers leaving reviews above 1%.

Proposal 1 (Meek). Make it easier to leave a review

You can see a big ‘write review’ box on the store page. So whats the problem? NOBODY visits the store page after they bought the game. Why on earth is that big box not on the games page within the steam app itself? This would be easy to do. Also…on the page for a game right now, ‘write review’ is TINY. I couldn’t find it the last time I looked. Even a different color or a bigger font would help. The current UI design for this is incredibly meek. There is a big fat piece of prime estate next to the play button where it could go instead!

Proposal 2 (Bold) Incentivize reviews

The minute you add any reward for anything on steam, you get side effects, so for now lets ignore the idea of giving out steam points, or gems or anything, and just keep it really simple. When you quit a game session lasting more than 30 minutes, if the player has not reviewed the game , pop up a dialog (like the screenshot uploader) asking them if they want to leave one. 95% of them will hit escape, but even if the other 5% leave a review, we have boosted the accuracy of steam reviews by 500% immediately. Concerned about the 30 minute hard limit? fine, make it random for each player/game combination between 30 minutes and 8 hours, so you get a random sampling of play-times.

I’ve been thinking about this a lot, and these are the solutions that I think are a) hard to cheat and b) easy to try. You can even A/B test steam users and see what the effects are before rolling out to everyone. I’m interested to hear peoples opinions on this, and think its always worth discussing this sort of stuff. It applies of course not just to steam, but GoG, Humble, Itch and everyone else. Its in everyone’s interests that game reviews are fair and accurate for all.