If the reimbursements were solely for corporate travel, it might not be a concern.
The CEO here sold his previous company for $6.5 billion [1], so he already owned the jet before starting Canoo. The company reimburses him for corporate travel on it.
What's concerning is that Canoo is stacking big losses and living on the edge...it seems like excessive spending for a company that hasn't even made a dime of profit.
But hold on, this same CEO has spent over $230 million(!) buying Canoo stock from his personal funds [2], so he is significantly in the red no matter how much he gets reimbursed for air travel.
Always dig into the details and avoid getting suckered by clickbait...
I think the real issue here is that a CEO who nobody has heard of and is doing a bad job running the company claims that he needs to fly private as a business expense.
It's one think for Zuck or Tim Cook to claim that flying commercial would be dangerous and a waste of time, but the way that attitude has filtered down to very small companies is astounding (especially given the outsized negative impact private jet travel has on the rest of us).
Any reasonable board for a public company that size and a CEO that unrecognizable should at most reimburse first class fare and if the CEO wants to fly private, the delta can come from personal funds.
I agree. It's one thing for the CEO of a large, profitable company to be flying private, but for a small, loss-making company, it feels off.
The guy is already ultra-rich...he might as well pay for those flights himself to show solidarity with shareholders. But it's up to Canoo shareholders to decide that, not me.
He is effectively paying for these flights by buying Canoo stock. This whole structure is set up to allow him to maximize the tax efficiency of his compensation. The jet travel is realized as a business expense and offsets future potential profits at the company, he also avoids paying the ~60% (federal and state income tax, as well as payroll tax paid by employer) tax that you incur paying high wage w2 employees.
> Aquila Commits Misappropriation Of Solera Assets And Resources
> After execution of the Separation Agreement and Omnibus Agreement, Solera confirmed that prior to his separation from the Company, Aquila had misappropriated Solera’s resources and money by fraudulently claiming that certain flight and hotel expenses were for Solera business, when in fact, Aquila incurred these expenses solely on personal, non-Solera business—including fundraising for his intended new investment venture.
> Specifically, Aquila used a private jet chartered by Solera (Gulfstream IV- SP-N910AF) solely for Aquila’s personal business, but nevertheless charged the flights to Solera, between November 2018 and May 2019—i.e., when Aquila was still Solera’s President and CEO. For example, Aquila had Solera pay over $700,000 for 45.8 hours of flight time for Aquila’s trips to, among other places, Austria, Switzerland, Germany, Bulgaria, Qatar, Kuwait, and France, as well as thousands of dollars for certain hotel expenses associated with certain of these trips. These trips were not for Solera business. Aquila traveled for personal purposes, including in connection with his position as the Chairman of the Board of Sportradar and to fundraise for his new “Founders Select” venture.
> Solera is continuing to investigate Aquila’s pre-separation activities with respect to any further instances of fraud, theft, misappropriation, or other actions of Aquila giving rise to claims that are not released under the Separation Agreement.
It’s actually not fraud because it’s happening in the open with board approval. And, no not every share holder is an equal. A share holders relevance is proportional to their voting power. While you can’t outright fleece a shareholder, it’s not the case that a single share held is worth the same as is given the same rights as someone holding 51% of all shares. At that point they effectively own the company. The company still has residual responsibility by law and regulation to all shareholders but it not nearly as broad as you seem to paint. This structure described is absolutely ok. Further the fact it’s publicly disclosed almost entirely insulates them - if you don’t like it, vote your shares or sell it on the public market.
>He is effectively paying for these flights by buying Canoo stock.
If a CEO is intentionally creating a situation to make a company unprofitable and paying it back by buying shares, that is 100% securities fraud and I'm stunned anyone disagreed with that assertion.
I'm not saying the company is committing securities fraud, I am saying that if the company created a scheme as described by the commentor I was replying to, then that would be securities fraud.
The politicians play us with "eat the rich" and "fair share". Meanwhile they increase taxes on 400k in HCOL areas making it painful to succeed.
Why isn't the slogan "stop the loopholes" (The one in this thread)? Because politicians play us against each other instead of fixing laws they benefit from.
The board chooses the CEO and his salary; if the board wants to give some of the salary in the form of jet reimbursements it's not really any concern beyond them and the shareholders.
It is a concern for the tax payers if company is paying it as expense and deducting it from taxes instead of paying it as (taxed) salary and him doing what he wants with his money. Don't you have rules what can be expensed in the US?
And personal use is accounted for (if paid by the company) and remanded as salary/perks.
I even got affected by that at a restaurant I worked at; they fed us and we got a small "virtual" payment that would show up on our taxes for that meal.
My recollection (I’m not checking) is that congress passed a law restricting the deductibility of private air flights, but that there’s widespread fraud in the form of “security consultants” advising boards that such flights are necessary for security purposes and so they are deducted anyway.
It’s pretty unreal when you think about it that our culture has not small cadres of credentialed, professional liars for hire. Not just for CEOs either, think about the fake service pets for another example.
it's also sucky because we're in a rightfully very negative EV environment. Fisker Ocean sucks, Cybertruck is good? but rusting?, nobody buys the Lucid, Rivians are great but lose ~80k USD per unit for Rivian, BYD and Evergrande EV cars are filling up junkyards in china...
Canoo is one of a few EV companies that on paper should make it. They have an order book that takes them to profitability. They have alpha vehicles that work (aka the product is not science fiction). Since they're selling these primarily as fleet vehicles, it's pretty valid to believe that the typical consumer EV concerns (range anxiety, nonfunctional/overbooked chargers, I live in an apartment, etc) should apply, their customers have the capital to spend, and can even easily calculate depreciation and expected benefit over existing fleet inventory.
100% of the risk in the company is manufacturing risk + not fucking up the finances e.g. by going too far into debt where the product payout doesn't make sense. That's a pretty nice place to be for being an EV company in the market now.
I actually took a punt on them this week (280 shares), mostly because they're selling something so different from the rest of the market.
It seems like the mainstream American EV manufacturers are very blinkered-- bigger, heavier, longer range, more luxury. Those products might appeal to buyers in the US, Canada, maybe Australia, but for the rest of the world, you're going to have to compete with manufacturers like BYD.
I could see the Canoo product selling in a lot of markets that you'd never sell a Lucid Air or Rivian R1T in. Once they've got a stable base on fleet orders, I could see them acquiring a quirky street cred among consumers-- sort of like Volkswagens of the '60s and '70s.
Let's dispense with the fiction that there is some "need" or "business reasons" for 99% of CEOs except a very small number of examples like you mentioned to fly private. They do it simply because they can. Private jets are probably the last frontier of conspicuous consumption, and small time CEOs flying private lets them feel big and important.
There is a lot of overhead to commercial air travel, even when it's first/business.
You're probably right that it's more reasonable for flying overseas. But for local travel, limitations on timing, connections, and airports served turn into a big waste of time. It's an analysis that has to be made about the value of the CEO or whoever's time, but it's not black and white, and a couple million bucks vs a few 100k for way better scheduling could easily be worth it.
It sounds like he's actually doing quite a good job as CEO. The vid from minute 3 to 7 gives much of his strategy and how he got into it.
He was a billionaire investor with a background in car parts and servicing that looked at 12 or so EV companies to invest in and figured Canoo was the one and then the board asked him to be CEO.
I guess if you are a struggling EV company looking for some billionaire to save you you may have to put up with him using a jet.
Nobody informed is claiming that it's illegal. Even if it's not financially the worst thing, it's a bad look. The CEO's image is important. Already the stock price has tanked likely in part from these revelations.
Obviously, too late for canoo, but if you're running a startup you can learn from his mistakes.
Honestly at this point the reputational damage is enough, that the CEO should probably resign, if for no other reason to boost market confidence in the company and raise the value of his own shares.
How he set it up some he's leasing the jet from his own private family trust LLC fund sounds so sketchy, it reminds me of the WeWork self-dealing by Adam Neumann.
> Under a deal reached in November 2020, Canoo reimburses Aquila Family Ventures, an entity owned by the CEO, for use of an aircraft. In 2023, Canoo spent $1.7 million on this reimbursement — that’s double the amount of revenue it generated. Canoo paid Aquila Family Ventures $1.3 million in 2022 and $1.8 million in 2021 for use of the aircraft.
> Separately, Canoo also paid Aquila Family Ventures $1.7 million in 2023, $1.1 million in 2022 and $500,000 in 2021 for shared services support in its Justin, Texas, corporate office facility, according to regulatory filings.
sound familiar?
> The 11-story office building at 88 University Place was leased to WeWork and co-owned by Neumann, the company's co-founder and CEO. It was one of many buildings that WeWork leased from Neumann. Critics called the leases a conflict of interest for WeWork and an example of self-dealing by its charismatic leader.
I guess the CEO could agree to suspend the contract with his other company until canoo is profitable, and offer to return the 3.4 million, that would be a very nice voluntary move to restore faith in his leadership.
Its concerning the conflict of interest, it can be crystal clear as going to make public pay for playing at your own golf court, but to be is baffling just how public populace is constantly scrutinised for ethics but seem that the rich can crap all over the world and no one cares
Problem is that a large part of the population is practically worshipping people who are / seem rich. Every questionable thing they do is explained away.
"It's just smart business!"
"People are jealous because they didn't think of this!"
"They're only coming after him because he's rich!"
It’s because we live in an uninterrupted feudal society that goes back millenia with only minor cosmetic changes to the system of governance in reaction to the periodic threat of revolution
Isn't this thread of 100's of comments public scrutiny? And this is just one article.
Not defending this guy but I'd say the opposite happens. When you are rich/famous you are looked at with a magnifying glass. Nothing illegal is happening here, but it doesn't "look good".
> But hold on, this same CEO has spent over $230 million(!) buying Canoo stock from his personal funds [2], so he is significantly in the red no matter how much he gets reimbursed for air travel.
He's not the only shareholder. I am not sure the others appreciate paying for the CEO's lavish lifestyle when his company is on the brink of failure, even though the CEO is also in the red. And as you say, if he really wants to travel private, he can always use his own plane and not charge anything for it. The other shareholders are basically bankrolling his plane.
Can someone explain why people try to make new cars from the ground up, rather than "fork" a base platform from GM/Toyota/KIA/whoever with a different design and little features?
This happens in literally every other market and industry. hell, just look at PCs and laptops.
Like why can't a Canoo or Rivian license a base EV platform and come up with their own chassis design, infotainment system, and other little things to differentiate themselves?
Even doing that is going to run you at least $100 million and you still have many of the risks associated with developing your own platform without anywhere near the number of escape hatches due to significant lock in.
This has recently happened to a well known EV company relying on just the electrical platform from a well known and highly respected auto maker that they have a good relationship with. It means they’ve had to go looking at other platforms (again, just the electrical platform) and has put the whole company at risk.
Some companies will use a contract manufacturer to produce their cars for them. For example Fisker (about bankrupt) used Magna Stehr in austria to produce their EVs.
When you talk about a base platform I assume you are meaning an entire drive train? Most pieces of a car are going to be produced elsewhere and then assembled. Canoo isn’t making their own batteries or motors. Those come from battery and motor manufacturers. Canoo or a similar company might even buy structural battery pack built to spec by CATL.
Tesla's original was a fork of a Lotus. They got the whole chassis/etc from Lotus, dropped in their own drive train and other stuff. Other reply mentioned paccar.
Idk why it doesn't happen more often. I suspect most manufacturers aren't willing to license like that.
That wasn't really a fork, they didn't copy the design, they actually bought the chassis from lotus. It's not really that different from a manufacturer buying brakes or wheels from another supplier.
I suspect, starting from the ground up is part of why people are so interested in these companies.
The ICE car market is a massive market, which taking a part of required massive long term investment, and would result in you being relegated to just some minor side note.
Even Toyota one of the longest biggest players is still seen as kinda "new" compared to BMW and VW, let alone hyundai which is basically a massive state backed effort.
Now consider, all of that 100+ year history becoming completely irrelevant. An opportunity to time travel back 100 years and try to become the BMW of the future. I think this is what is exciting people.
when is the last time an entrenched trillion dollar industry with hardly any shakeups in decades suddenly had the ability for anyone to enter and say their biggest advantage is that they are new?
I am not saying I agree with it, I think knowing how to make a luxury car is a skill... But I don't think the goal of these CEOs and investors is to make a good car. Their goal is to make a 100+ year global legacy like BMW. If they could do that without making the car I am sure they would.
Why would anyone think that the current ICE manufacturers will just sit idly by and not get out EV designs at some point? Either on their own, or in collaboration with other legacy manufacturers? They have existing brand loyalty, existing relationships, supply chains, dealership networks etc. etc. that they can make use of even if their designs aren't as good as brand new entrants (and that's assuming brand new entrants can actually scale up quality manufacturing, which so far they haven't been able to).
Because for a long time the ICE manufacturers were making half-hearted play attempts at EVs, and Tesla came in and made real EVs and had a huge stock play related to that.
So now the ICEs are scrambling to catch up, and are doing so, but lots of money is flowing around hoping to be the next Tesla.
ICE is scrambling because ICE has 10 years left of new car sales in California (so the US basically) and Canada before laws prevent them from selling ICE. They aren't chasing Tesla, they're trying to prepare for the outlawing of their 100 year old products.
> Because for a long time the ICE manufacturers were making half-hearted play attempts at EVs, and Tesla came in and made real EVs and had a huge stock play related to that.
And their sales were still dwarfed by legacy manufacturers, who then started paying attention and practically all of them have at least one EV model out there, often with new platforms/models being in the works.
I suspect most of these EV startups are trying for that TSLA bump, and don't really care much that TSLA is almost inevitably doomed to stagnant stock returns for decades now.
Meanwhile the legacy companies will keep moving slowly along and produce vehicles. Some will die, some will merge, some will have wild successes.
But it's much different than Google et al because cars actually cost about as much to make and sell as they do to buy.
I'm not even sure an EV car is the answer for "Green". I remember a Joe Rogan ep where he and his guest talk about the giant holes and bad mining condition in Africa because of the current EV rash to get materials for car battery.
EV cars seem to be the go-between for ICE and the real answer for Green.
You need to separate the concept of EVs from the current state of battery technology. EVs are almost certainly the future, and as our battery and charging technology keeps improving the whole package will become greener and greener.
I'm not aware of any pure platform available off the shelf, though I imagine a big enough checkbook and a conversation with Magna might get you pretty far, but you can buy from Ford the Mustang Mach-E motor https://performanceparts.ford.com/part/M-9000-MACHE
There are lots, but most are not road legal. All privateer racers in many race series use cars that are manufactured by established companies, then heavily modify them.
Alpine makes forks of BMWs.
Braubas makes forks of Mercedes.
RUF makes forks of Porsche.
The other example is when 2+ large manufacturers work together to cost share a platform.
Examples:
- BMW Z4 / Toyota Supra
- Subaru BRZ / Toyota GT86
- Mitsubishi 3000GT / Dodge Stealth
Several Aston Martin coupes were built on Jaguar platforms.
The NUMMI car factory in Fremont, CA was jointly owned by GM and Toyota before Tesla bought it. For a while, it made the Toyota Voltz / Pontiac Vibe.
I think people get the impression from the wording that the “platform available off the shelf” means the consuming manufacturer can just grab some units and modify them, but in practice, there is a massive contractual negotiation. And since car manufacturers are heavily regulated, it makes sense to cost share both the manufacturing and the standards / crash testing.
How enthusiastic do you think those companies would be if someone came to them wanting to license their design perpetually and use it to compete with them? And even if that is something they're willing to do (which they might be), the terms would then make it difficult to ever do something that isn't based on that platform, since the manufacturer whose design is licensed would likely object that the new design was still based in some way on the old one.
The analogy in the PC world would not be "license a design from an ODM like Compal or Quanta", it'd be "license a design from Dell or Lenovo".
That in itself suggests a potential market: perhaps there's room for an ODM in the automotive space?
there isn't a single electric vehicle on the market that looks anything like the international scout, FJ40, or any classic rugged vehicle. Look at how much icon4x4 restorations go for. There are wealthy people out there with great taste, but no big auto manufacturer seems to want to produce a chassis with this aesthetic.
So why wouldn't Ford or GM be cool with letting a smaller label do this and testing the market?
It's a niche market. I love Icon's stuff but they sell very low numbers of vehicles. I would love to have an ev FJ40 or Scout, but I'm skeptical the general populace wants these as much as enthusiasts think they do.
I find this take to be so outrageously wrong. Do you think the public "wants" the new hummer? Do you think they want any of the garrish looking cars that are literally all over the roads? People will literally buy anything and everything that's put out there as the numbers have proven time and time again. This is what brands and marketing does. It shapes public opinion and public perception. There are countless generic, soulless, lifeless car bodies being sold every day. and icon can't put out big numbers because there's numericallyonly so many of those vintage cars left to restore, and they are a small operation.
Using an ICE base platform for EVs doesn't make sense, and there is no EV base platform for sale/license. Companies building the EVs are holding their cards tightly to their chests for competitive advantage.
> Using an ICE base platform for EVs doesn't make sense,
Kind of. Renault's small sized EVs share parts of the platform as some ICE models (e.g. Clio/Renault 5 E-Tech) which allows them to reduce costs of the EV model. Considering their target audience and market segment (small city-focused EV with city-scale range) the tradeoff is perfectly acceptable.
> and there is no EV base platform for sale/license
How do you know this? Renault for instance are in a pretty specific spot, market wise, and they were trying to merge with Fiat-Chrysler before the latter ended up with PSA (Peugeot, Citroen, Opel) in Stellantis. They have some EV tech, especially on the cheap city-focused side (Dacia Spring, Renault Zoe, Renault 5 E-tech), and would probably be open to collaborating / sharing risks. This is purely conjecture of course.
There are EV base platforms for sale and license. For example Nio licensees it's platform. 60% of EVs are made/sold in China so that's where you should look for a platform.
It’s a classic make vs buy decision. What base platform is offered by GM/Toyota/Kia/etc?
There are some examples where car makers (both EV and ICE) will sell components to competitors but in general this is pretty rare. Most companies want to control key aspects of their supply chain.
Rivian did use motors from Bosch but is now in the process of using their own internally designed motors. This allows them to build exactly what they need and avoid relying on Bosch for a key component of their vehicles.
It does happen, for example Paccar is a truck designer and sells licenses (apparently they also manufacture trucks but I think they used to only design them, although I'm not sure). I think some european makers do that as well and I would be surprised if Ford or GM doesn't. At least GM planned to buy (not sell) designs to Nikola if they ever managed to finish one (which I think they didn't in time for the deal to go through).
Paccar builds and sells trucks, not a license to build them. Other companies buy those add their own equipment (cranes, concrete mixers, etc) and resell them.
Light duty truck and van builders e.g. Ford and GM do the same thing but mostly for companies building RVs rather than commercial equipment.
> Like why can't a Canoo or Rivian license a base EV platform and come up with their own chassis design, infotainment system, and other little things to differentiate themselves?
I imagine anyone willing to license one at the moment only has a crappy one to sell you or it is some Chinese EV, which creates political problems.
>
Can someone explain why people try to make new cars from the ground up, rather than "fork" a base platform from GM/Toyota/KIA/whoever with a different design and little features?
That's sort of what Tesla did with the Roadster. It was a Lotus that they put an electric motor into.
Do any of the car manufactorers want to sell you their base model? Even if they did, how would Ford dealers feel about Ford selling rivian the rights to make better Ford cars?
Most of these businesses are actually fronts. They siphon money from Africa and other third world countries with poor laws and wash it with money from private equity firms.
With all due respect, this is rubbish. Private equity LPs are overwhelmingly local pension funds, institutional investors, and high net worth individuals.
The headline is relatively clickbait-y. Its double their revenue because their revenue is basically 0. Their actual expenses are hundreds of millions, of which this 1.7 million is a drop in the bucket. Once their upfront expenses are paid they will (presumably) be making hundreds of millions/billions in revenue, which means this 1.7m is not particularly important.
You can talk about standard complaints of CEOs with private jets, and I'd probably agree with you here, but there isn't anything particularly egregious here.
$1.7 million is 1-3 employees working to ship your product. When you're company is on the edge of collapse you should have your priorities straight. Diverting company resources to your own private jet is a preposterous use of resources and, imo, speaks volumes about where Canoo is headed.
1.7 million is 1-3 employees? Jesus this place is so out of touch. I've worked at places with annuals between 1 and 5 million and none of them had less than 10 people. most between 15-30
This doesn’t change the point, which is to put your resources into wise areas. Additionally, I would say that 15-30 people for $1.7M is more out of touch than 1-3, if we’re talking about employees with potential to turn the business around.
The $1.7m is being paid to the family holdings of the CEO to rent the jet already belonging to the CEO for the CEO. Plus an additional $1.7m to the same holdings for "support services."
It’s only embezzlement if board/investors didn’t know. This definitely is something the board would have to approve. As a former exec though I think it’s distasteful to require such things before significant profitability. Business class is fine. Pre-revenue, coach is fine too.
He’s buying air travel from himself. Unless he’s undercutting the commercial carriers, that means the company is spending more than it needs to with the difference going to his pockets.
It’d be much cleaner ethically for him to get reimbursed the cost of a business class ticket and pay for his jet out of pocket if he can’t abide flying with the little people.
If the company requires a private jet they can either pay for a lease from some other vendor or pay the CEO to lease his jet. Unless they are paying way above market price I don't see how this is embezzlment or even fishy.
CEOs get all kinds of compensation. Business jet travel, security, etc. This line item could be just tax optimization for this guy.
I am not trying to defend him, he is getting paid a lot:
"On May 5, 2023, the Board granted Mr. Aquila an award of 6,884,682 RSUs. These awards vest on May 5, 2024, subject to continuous service." [1]
At current stock price it is ~$20M. Getting outraged about additional $1.7M that was negotiated several years ago is strange. It does make a great headline, but would it change anything if he is paid $22M and pays for the jet out of pocket?
Totally agree. I'm not usually in the habit of defending millionaires. But I thought there used to be a justification for private jet travel of maximizing the CEO's time. The company is investing $20M per year in this asset and he's probably flying for meetings all the time and if a private jet cuts a couple hours of airport transit / wait time off of each flight it's probably worth it for the increased amount of meetings he can attend.
Maybe that can be achieved for less than $1.7M, I'm not informed enough. This source https://simpleflying.com/gulftream-g700-cost-to-own-operate-.... says it's a little more than $2M per year to operate a Gulfstream G700, I don't know what kind of jets CEOs are using these days.
Imagine if all salaried employees working from an office created a personal LLC to own their car, and then had their work compensate them by reimbursing each employees LLC.
If it's cheaper for the company than leasing or renting cars somewhere else, why not?
Presumably you hire the employee for their time and expertise, not because they own a car and offer its use for company travel below market rate. (That does happen in many industries, but that's a market distortion we should look down on, not a yardstick for what's right)
The difference is it's usually not "worth it" to break it out in the case of an employee (the advantage is the other way, where the company buys a car and lets the employee drive it, and ignores personal use).
With $2m on the line, it is worth it even just for the tax savings.
Still, why would you use a private jet if your company is not only not profitable, but also doesn't generate meaningful revenue? You're not spending money you've earned, you're spending borrowed money.
Is that really a thing? Is private supposed to be more secure because of accidents or because of risk of kidnapping and assassinations? I don’t see a reason why private flights would be less accident-prone than public flights.
Edit: looks like private flights are actually much more dangerous than airlines, the insurance would probably prefer if you would fly public… (not my favorite source but the first thing I found: https://www.livescience.com/49701-private-planes-safety.html )
> Looks like private flights are actually much more dangerous than airlines
Most of the accidents involve small one-engine aircraft that owners personally fly. They're technically "private," but what's relevant here is large private planes like Gulfstreams, Bombardier Globals, Dassault Falcons, Boeing BBJs, and the like..they're safer than airlines.
It is a thing, yes. A friend of mine was discussing how he has to think about the events to go to because his key man insurance on his family office requires him to use his own pilot, so he's contently inventing dumb reasons not to go to things vs admitting his cheap and doesn't want to spend the money. Two things I find amusing about this... rich people being cheap is always funny, and, as you mentioned, insurance companies preferring a private pilot when flying private it less safe. Apple requires this for Tim Cook too, and I always thought it was amusing.
Private is less safe if your grouping includes Cessnas and small business jets, and ignores kidnappings.
With a private jet you can be at the airport and direct into your waiting car with security escort without anyone knowing, which can greatly reduce the chance of other issues occurring.
Not a drop in the bucket at all, its a massive waste for a startup on the edge of insolvency. They need to focus on priorities and spend much more carefully. No way does a small startup founder need a private jet.
"Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient additional funding or do not have access to additional capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations."
Almost any startup will have periods where there will be "substantial doubt about our ability to continue as a going concern" if they are "unable to obtain sufficient additional funding". This is meaningless when looking at a startup without also looking at whether their burn rate is abnormal relative to how much they raised, and whether or not they're meeting their targets.
I mean, it seems pretty bizarre to me for a CEO of a company that doesn't have any revenue to have a private jet paid for by that company. Is that... common?
(Honestly, even if they had revenue in the hundreds of millions, it'd still be rather absurd.)
> Under a deal reached in November 2020, Canoo reimburses Aquila Family Ventures, an entity owned by the CEO (Tony Aquila), for use of an aircraft. In 2023, Canoo spent $1.7 million on this reimbursement — that’s double the amount of revenue it generated. Canoo paid Aquila Family Ventures $1.3 million in 2022 and $1.8 million in 2021 for use of the aircraft.
I'm surprised there are any employees left at the company. If I saw that the CEO is actively funneling funds out of the company where we work, to their family's company, I'll be long gone.
New Zealand is the most amazing country I've ever visited. Scenery wise, but also super nice people and politically sane (Andern in particular was great, too bad she left)
I'd live there too if it wasn't literally on the other side of the planet for me and I don't want to cause hundreds of tons of CO2 every time I want to see my family :'(
Earthquakes - so far so good, but I grew up in LA and lived through multiple large-ish quakes (Northridge). One big difference is that many small rural towns only have one road in or out, so a quake could block the road, leaving you stranded, possibly without power. This is the case along the west coast of the South Island.
Food - groceries are pricey! It was surprisingly expensive given the lower wages here. CA seems to be catching up though!
Mosquitoes - comparable to LA, less than Sonoma County. Smaller too. But here on the South Island we also have sandflies. They vary by region. West Coast has them bad in some remote spots.
All of those countries have societal norms that are vastly different with respect to illness.
Japanese people voluntarily, proactively wear masks when sick in public, for example.
Notwithstanding some of the later research about the efficacy of masks, there was a lot less those governments HAD to CHANGE to minimize disruption, because their populations were already not generally selfish about their needs versus those around them.
No, they're not, but when you have a population that already is (let's be real) significantly more selfless and conscious of the wider impact of infectious disease (or even the perception thereof), you're going to be able to enact other public policies that are consistent with that goal with a lot less disruption or opposition.
I felt Thailand, where I live, handled it fine. I didn't feel like we got pressured here into getting the COVID vaccination and life could go on quite as normal for me as an unvaccinated person in our village (in the city it might have been different).
Though my girlfriend did get the COVID vaccination eventually, due to her being afraid of not being able to visit venues, restaurants and such. She regrets now that she got the COVID vaccination. We know of many people in our neighborhood who've gotten health issues related to the COVID vaccination (e.g. blood clotting, strokes, Guillain-Barré syndrome, etcetera).
I felt that NZ handled it great! I lived through a year of American lock down and then a year of Kiwi lockdown (we emigrated from the US while on lockdown - it was nuts). IMO Ardern handled it beautifully, at least compared to the misinformation train wreck happening in the states, but that is of course only my opinion.
I'm not fan of the guy by any measure, but how is this any different than the government paying to make any president's existing properties places where a president and his massive entourage can stay? It's been done by every president I can remember aside from maybe Clinton because I don't remember him having any significant places.
What other President profited from government employees being forced to rent rooms at his hotels? You really have to be deep in the cult to not see a problem with this.
I'm not following. Do you think Obama and Bush were charging rent to the government for their personal residences or something? What other Presidents owned business entities that billed the government for services? It is mind boggling that the ethics of this need to be explained.
It's different because other presidents didn't then bill the government for the entourage to stay on a per-night basis for each stay.
An added bonus for Trump was that his properties were also accessible to the public, so he got to make extra $$$ from people who wanted to stay close to where the President was. No previous president had that kind of an arrangement.
I have no interest in defending the man, but this argument triggers me. Do you also make sure to regularly remind people that those football players with Superbowl rings never won the world series?
Edit: the point is that the win condition is electoral votes. A rational actor will optimize for that, potentially at the expense of the popular vote even, and they will be more likely to win for it. In other words, don't have your quarterback spend his practice time in the batting cages if you want to win the super bowl.
If he actually uses the jet for Canoo-related business, this is not unreasonable.
Assuming those trips may eventually lead to business deals, and that the amounts reimbursed are in line with free market prices, it is advantageous to Canoo.
Their CEO could be x% "more effective" (I know how abstract that sounds), ultimately benefiting the company, and maybe they even got a good deal ("hey, I own a jet, and it has to fly at least 200 times per year to cover its maintenance costs. If you allow me to use it for Canoo-related trips, which are anyway needed, and reimburse me, I'll charge you less than what netjets wold cost us. Deal? Y/N")
The real world tends to be more nuanced, but in principle it stands, at least until proven guilty/shady.
Ethics in the 21st century I guess. No, conflicts work the opposite way - assumed shady until cleared. Virtually every business works this way, especially ones with investors. Conflicts can of course be legitimately cleared, but not with just some hand-waving. It is no different than my company not allowing me to direct business to entities owned by myself or my family.
This is no unheard of. I worked at a company where the CEO got an interest-free loan from the company to buy his own jet, then charged the company to use it.
Of course that individual later pled guilty to a variety of federal crimes, so :shrug:
It may also be part and parcel of the market they're trying to play in.
If every other "car company" has a private jet ready to whisk the CEO anywhere in the world, you might look really silly to other companies who expect you to be able to make a near last minute meeting.
And if you're an employee, as long as you get paid you're likely not to care much about it.
In what way is he funneling money into the company?
> The company generated $886,000 in revenue in 2023 compared to zero dollars in 2022 [...] In 2023, Canoo spent $1.7 million on this reimbursement — that’s double the amount of revenue it generated. Canoo paid Aquila Family Ventures $1.3 million in 2022 and $1.8 million in 2021 for use of the aircraft.
Tony Aquila is the CEO of both companies - Canoo and Aquila Family Ventures. I'll never understand why it's okay for CEOs to have multiple concurrent jobs, while one of the biggest fervors of the pandemic was when employees were found to have... multiple concurrent jobs.
Do you manage your own money and finances in addition to having a day-job?
That's what he's doing, albeit in a more complex situation and likely higher wealth bracket given he sold his last company for $Bs. The only thing that strikes me as odd about it is calling oneself "CEO" of the family office. I don't know what title is customary but CEO seems out of place. If it said he was "Chair" of the Aquila Family Ventures family office or something it would stand out far less.
Being a CEO of your family office shouldn't really be a "real job" - it should take up maybe a day or two out of your month if it's being run correctly. To me this would be the same as if a product manager had a side hustle doing some accounting for friends and family. It's fine.
The selling services back and forth thing, I get it, it probably saves some people some work and it might even work out better economically for the company, but the optics are never going to be solid and people are always going to question it, so imo it's not worth it, but... it is quite common.
It’s fine for anyone to have multiple concurrent jobs as long as all their employers know about it. Hiding things is where people get into trouble (and not just with jobs).
This is a totally fair point. The incongruity arises for me in that if I said in a job interview process that I'd be continuing to hold another position while adding this one, I'd get laughed out of the room. If it's critical that rank and file guys don't have divided time or loyalties, why is the standard different for the single person most responsible for success or failure of the company?
The last three jobs I've held, I've had to state up front in writing that I will continue to act as the paid IT support for my spouse's one-person consulting firm. Hasn't been an issue yet.
Three jobs ago I also had a very small side consulting gig that came along after I'd been hired, so I had to get it cleared. It was at the behest of one of their board members though, so it really wasn't a hassle...
Aquila Family Ventures is basically a family office that the CEO likely just oversees but doesn't run day-to-day. It's a different thing than having multiple full-time jobs like Musk.
It's a shell company used to dodge taxes, presumably? Or something similarly nefarious; avoiding liabilities or whatever. Not really a company but a legal instrument.
It's hasn't been a conspiracy theory since the Panama papers came out. Everyone is now aware of the extent rich people go to use tax havens and are rightfully upset. They make record profits, encourage irresponsible consumerism, and don't even pay their fair share for the damage they inflict upon the world.
Furthermore there's a reason rich people flock to places like Delaware, Washington, or California. Those states all have tax schemes that allow the wealthy to pay the least amount of taxes.
Hell us rubes even suffer through coach so that the ultra wealthy's luxury jets are subsidized.
People flock to Delaware because it's the most corporate-friendly state, especially regarding regulations and court cases.
Washington and California are two massive economies, so it's no surprise that rich people flock there.
If this CEO wanted to register a shell company to dodge taxes, he would have done it in better places than Southlake, Texas [1]. Anyone can register an LLC as long as they have valid identification and pay the $300 Texas filing fee...nothing nefarious.
Talking about the Panama Papers will be a long story, but notice how relatively few Americans are on that list. It was mostly people from developing countries with weak rule of law and high levels of corruption...the type where rich folks hide assets to avoid the government or rival business goons coming for it, and it's much easier to cheat taxes in those countries because of weak law enforcement.
There are plenty of consulting/writing/etc. jobs that are explicitly fractional or part-time where someone may have multiple clients. And this is even the case with fractional CFO positions and the like.
Sounds like a hold co. Even startups worth 100K may have the founders hold the stock through a family holding corporation (which may then also be used to "hold" vehicles).
Because CEO's decide which is okay and which isn't, and because fuck you, that's why.
No, it's not logical, or consistent, or rationally defensible. They don't give a shit, and they don't believe they have you answer to you. If they choose to give any answer at all, it will be bullshit in the "On Bullshit" sense of the word; the answer will not be made with any consideration for truth, but just to provide whatever words the speaker thinks will shut you up.
This but unsarcastically. Linux Torvalds, Anders Hejlsberg, and other elite developers also operate under totally different rules than worker bees too.
No, we're not on the same footing as a CEO candidate or 10x developer. Anyone who is sure as heck wouldn't be wasting their life collecting karma points on HN.
I suppose you believe all these billionaires are self-made and that having a handout of hundreds of thousands of dollars, and a network of very rich people you know to make investments, made no difference. 'Anyone can succeed through hard work'.
The really rich CEOs collect imaginary karma points on X ...
I started my career alongside a variety of people who are now CEOs, VPs, distinguished engineers, CTOs, etc. and had a chance to observe them as they rose far, far above me. Luck played a factor in their rise, sure, but so did talent and an immense level of drive; their titles are ones they earned.
A lot of bad in our society can be explained by the fact that a lot of people seriously believe that some people are inherently better than others, and deserve to be at the top of the hierarchy, to follow different rules, to get more than one vote, that they are "elite" and should therefore get better treatment. Egalitarianism is not a universally held doctrine.
I thought the downvotes were coming from people who didn't get my sarcasm, but it could also be that HN readers really believe that CEOs are inherently better people...
People aren't inherently better than others, but people are infinitely better at some things than others.
Terrence Tao is inherently better at mathematics than I am, and I'd be a fool to claim otherwise. Torvalds is a much better programmer than I am. There are endless examples.
I'm not saying people aren't better at things than others. The thread was about whether these people deserved special treatment or a different set of rules because of this.
Now if we start arguing if Torvalds "deserves" to be richer than Gates (even though both are quite better than adequate programmers from their time) that's a different story.
But in the end most of it really sounds like sour grapes and complaining.
Such deals are reasonable under some circumstances. For example, Tesla pays SpaceX for Musk's travels on the SpaceX jet (whenever he travels for Tesla-related business).
But definitely not for a company with just a few $100k in annual revenue that's teetering on bankruptcy. Not surprised it's a SPAC stock...
Edit: Upon digging; I discovered that this CEO has invested $230 million+ in Canoo (from personal funds he made selling his previous company)...this article is almost a nothing burger.
It’s a public company, he can’t treat it as his private company even if he invested $230M and it’s only worth $150M now and he’s trying to make up for his losses
I'm beginning to think the vast majority of corporate governance is a facade and that this is just a way to blow millions of dollars with no real accountability.
The money would probably be nice but I suspect a lot of people here would hate the amount of travel and the degree of scheduling morning, noon, and night that the CEO of any size of company has.
The boss already owns the jet. Now he makes his company rent it from him, so he can zoom around in the plane he already owns, and that he would be zooming around in even if he weren't the Canoo boss.
I don't think a company should be paying for the boss's jet, if the company isn't near break-even. I'd say the boss doesn't believe the company has legs, and he's extracting cash while he can.
I slightly mis-read the headline. Here's what's going on:
>Canoo reimburses Aquila Family Ventures, an entity owned by the CEO, for use of an aircraft. In 2023, Canoo spent $1.7 million on this reimbursement.
CEO owns a plane. CEO uses the plane (for business, one presumes). Business reimburses CEO for plane. That looks like a poor use of funds, but not necessarily self-dealing?
I mean, in their position he should probably be flying coach - maybe he's so good that he's totally worth spending seven figures for his travel (though I doubt it) - but it's technically no different than reimbursing any other travel expense.
Better system: they could reimburse the minimum airfare, and he could cover the difference himself. Everyone has that figured out for us peons, when we request a more convenient flight. (Want to bet they imposed that on their employees?)
> Better system: they could reimburse the minimum airfare, and he could cover the difference himself. Everyone has that figured out for us peons, when we request a more convenient flight. (Want to bet they imposed that on their employees?)
I'd absolutely be willing to bet the deal that regular employees get is worse-than-or-equal-to what you described. Most companies I have worked for do not even let you choose. If you are doing business travel, you use the company's preferred travel agency, and fly on the flight you're given, even if you could independently find a business-class flight just as cheap.
I've had that in academia, and in my current (medium-sized) company, where rules and processes aren't as stringent as I know they are in BigCorps. My partner works for a consultancy firm (where she, in part, arranges travel for various people), and they do that too. I guess I assumed that (very fair-seeming) practice is more widespread than it actually is. My condolences to all of you.
Edit: I just remembered a totally silly travel situation during my academic career. The school sent me to an academic conference in an interesting location, and I wanted to stay for an extra week to do some touristing. (It was during summer vacation, and golly do I miss those.)
No one had any problem with it, and they told me standard practice was for me to call the airline and pay the $250 (or whatever it was) change fee. No problem, until I noticed that tickets with the new return date would be something like $400 less than the original dates. No tickets had yet been purchased, so I suggested that they buy me those dates directly: everyone would win.
Except... "Sorry, we can't do that." Huh? "Travel must be +/- 2 days of the conference dates."
I presented the situation to my department chair, hoping for an intervention, but she sighed, and said that those people were impossible to deal with. "But, it's the end of the fiscal year, and I have some extra budget [somewhere], so submit a reimbursement form for the $250, and I'll sign it."
> avoid the same fate as other EV startups, like recently bankrupt Arrival.
Talking about other EV startups, I wonder how much longer Aptera can remain in a state somewhere in between not having gone bankrupt and not having started production yet. They do seem to be forever inching closer toward the latter [1].
According to their CFO who authorized the CEO to make the statement (kind of a big deal for legal reasons) aptera makes breakeven by making 6k cars a year, so they have 7 years number of preorders. Even assuming a low preorder execution rate at like 20% it seems like they will be good to go.
Plenty of companies spend more than that on just AWS egress fees.
I’m not saying money spent on a private jet is right or wrong.
But when a company is not profitable, you could compare this to anything. Like the headline could have easily been “Canoo spent double its annual revenue on AWS egress fees”
AWS egress fees serve a legitimate business function. They might be higher than what they could be with optimization but they go towards a business service.
What we’re seeing here is more like if those egress charges were due to him hosting the business on his own cloud service even though it cost more.
Yes, it did. The question is whether there’s enough value generated by taking a private jet instead of normal plane flights, which is unlikely to be the case for a business losing money.
I love startup culture. The CEO of my company flies commercial, and we've have thousands of employees, have been around since the 1940s, actually ship products, and make a shit-ton money.
But startup CEOs leading companies with 800 employees that can't ship hardly anything are movin & shakin so startupfully between plays and deals that they ain't got no time for that.
$1.8 million per year for travel is $5,000 per day. That's more than a day-of round-trip first-class flight on ANA ($20k today) from NYC to Tokyo every week.
First class flights are completely different from potato class, and private jets are so far above first class it's really hard to exactly explain how much.
Yeah I don't think people realize that flying private means you don't have to go through security. You don't even have to go into the airport.
You just drive up and walk onto the plane.
For executives in a tight race with hundreds of millions of dollars on the line, where a schedule slipping even 1 day can matter, sometimes flying private does actually make financial sense.
>For executives in a tight race with hundreds of millions of dollars on the line, where a schedule slipping even 1 day can matter, sometimes flying private does actually make financial sense.
I'm not an executive.
I would never disgrace my ancestors or embarrass my descendants by getting an MBA.
But I have been around the block a few times and if you're in a situation where missing a flight will torpedo a "hundred million dollar" deal you're a shitty businessperson.
It has been my experience that the best way to keep a schedule from slipping is for executives to keep their mouths shut, cloistered in their office, waiting for an assistant to build some slides for them.
I wonder when the public wakes up and understands that rich people don't own anything "personally" so you can increase VAT and income tax just as much as you like to tax the rich.
I also love when startups brag about headcount. You know what's impressive? Revenue, followed by profit, and also profit per employee. Having 500 people and no revenue leads to the graveyard.
The market isn't weird; it's working exactly as intended: Do whatever it takes to make the number at the bottom of the page bigger than what people predicted it would be at the start of the quarter. If that means screwing some people's career trajectories, do it. If it means parting out divisions of the company that had strategic value, do it. If it means allegedly murdering a whistleblower, do it.
This is interesting because it doesn't mean that actually, it means if you want to make that choice the market will reward you now, and the market may not be focused on any one specific strategy.
on the one hand, it's obviously stupid and a preposterous waste of resources, on the other hand, it's a moral good to incinerate VC money if the VC are so fucking stupid as to give it to idiots like this guy.
I worked for a company under a big corporate. Or they thought they were. Lots of Big Business Talk, earnest Reports (not sure if they were TPS but they might as well have been) and lots of Management Structuring, no actual products except for things already made by acquisitions. It reminded me strongly of the Mattel boardroom in Barbie.
> Under a deal reached in November 2020, Canoo reimburses Aquila Family Ventures, an entity owned by the CEO, for use of an aircraft.
Any guess how much of that money actually went into operating the aircraft, and how much was skimmed by the CEO? Madness either way, but we can't have it filed under the wrong kind of madness, right?
If he's skimming, it's not enough to immediately stand out. They reimbursed $1.3 - $1.8 million per year, which is about how much it costs to operate a private jet.
Note that the capital outlay for a jet is a minor portion of the total operating budget over the years. Fuel and crew is the major component especially with smaller jets.
The CEO here sold his previous company for $6.5 billion [1], so he already owned the jet before starting Canoo. The company reimburses him for corporate travel on it.
What's concerning is that Canoo is stacking big losses and living on the edge...it seems like excessive spending for a company that hasn't even made a dime of profit.
But hold on, this same CEO has spent over $230 million(!) buying Canoo stock from his personal funds [2], so he is significantly in the red no matter how much he gets reimbursed for air travel.
Always dig into the details and avoid getting suckered by clickbait...
1- https://www.reuters.com/article/idUSL1N11J0PS/
2- https://www.secform4.com/insider-trading/1399053.htm