Articles/Annotated

[Annotated] Firms that burn up $1bn a year are sexy but statistically doomed

af334 2017. 10. 21. 15:33

Five outliers[각주:1] - Chesapeake Energy, Netflix, Nextera Energy, Tesla and Uber - have collectively[각주:2] lost $100bn in the past decade    


Yves Saint Laurent, Lady Gaga, David Bowie. Some people do not operate by the same rules[각주:3] as everyone else. Might the same be true of[각주:4] companies? Most bosses complain of being slaves[각주:5] to short-term profit targets. Yet a few flout[각주:6] the orthodoxy in[각주:7] flamboyant fashion[각주:8]. Consider Tesla, a maker of electric cars. This year, so far, it has missed its production targets[각주:9] and lost $1.8bn of free cashflow[각주:10] (the money firms generate after capital investment[각주:11] has been subtracted[각주:12]). No matter[각주:13]. If its founder Elon Musk muses[각주:14] aloud about[각주:15] driverless cars and space travel, its shares rise like a rocket - by 66% since the start of January. Tesla is one of a tiny cohort of[각주:16] firms with a licence to lose billions pursuing a dream. The odds of[각주:17] them achieving it are similar to those of aspiring[각주:18] pop stars and couture[각주:19] designers. 


Investing today for profits tomorrow is what capitalism is all about[각주:20]. Amazon lost $4bn in 2012-14 while building an empire that now makes money. Nonetheless[각주:21], it is rare for big companies to sustain heavy losses just to[각주:22] expand fast[각주:23]. If you examine the members of[각주:24] the Russell 1000 index of large American firms, only 25 of them, or 3.3%, lost over $1bn of free cashflow in 2016 (all figures exclude financial firms[각주:25] and are based on Bloomberg data). In 2007 the share was 1.4% and in 1997, under 1%. Most billion-dollar losers today are energy firms temporarily[각주:26] in the doldrums as[각주:27] they adjust to[각주:28] a recent plunge in[각주:29] oil prices. Their losses are an accident. 


But a few firms love life in the fast lane[각주:30]. Netflix, Uber and Tesla are tech companies that say their (largely[각주:31] unproven[각주:32]) business models[각주:33] will transform industries[각주:34]. Two others stand out for[각주:35] the sheer[각주:36] persistence of[각주:37] their losses. Chesapeake Energy, a fracking firm[각주:38] at the heart of America's shale revolution, has lost at least $1bn of free cashflow a year for an incredible 14 years in a row[각주:39]. Nextera Energy, a utility that runs wind and solar plants, and which investors value highly, has managed 12 years on the trot[각주:40]. 


Collectively these five firms have burned $100bn in the past decade, yet they boast a total market value of about[각주:41] $300bn. Combining punchy[각주:42] valuations with[각주:43] massive losses means taking the entrepreneurial[각주:44] art form to[각주:45] a dizzying extreme[각주:46]. Steve Jobs, Apple's co-founder[각주:47], was said to have a "reality distortion field[각주:48]" that allowed him to bend the perception of others[각주:49] (although Apple itself was fairly[각주:50] timorous[각주:51], losing just $874m in its worst year, in 1993). The experience of the five suggests that bending reality today has three elements[각주:52]: a vision, fast growth, and financing[각주:53]. 


Take the vision thing first. A charismatic leader with a world-changing plan is de rigueur[각주:54]. For its first 23 years Chesapeake was led by Aubrey McClendon, a cocky[각주:55] Oklahoman[각주:56] who pioneered the process of[각주:57] blasting rocks to[각주:58] extract gas and oil (he died last year in a high-speed car crash). Reed Hastings at Netflix plans to destroy the conventional TV industry by selling films and shows over the internet. Like Mr Must, Travis Kalanick, Uber's tarnished former boss[각주:59], dreams of changing how humans travel. Nextera is led by technocrats[각주:60] but their aim is[각주:61] grandiose[각주:62] - to usher in a new generation of[각주:63] energy technology. 


The vision needs to be validated by[각주:64] runaway growth[각주:65]. Often firms emphasize a flattering[각주:66] operating measure[각주:67], such as oil and gas pumped from the ground[각주:68], the number of rides[각주:69] hailed[각주:70] and so on[각주:71]. Investors need to believe in a high "terminal value[각주:72]", a point in the future when high, stable profits will arrive. So it helps to show that, hypothetically[각주:73], profits would gush[각주:74] if breakneck growth[각주:75] were to stop. Uber says it is profitable in[각주:76] cities where it has operated longest, such as San Francisco. Nextera says that if it stopped investing in new capacity[각주:77], it would make $6bn of free cashflow a year. Netflix amortizes the cost of[각주:78] content over periods of up to five years, so reports an accounting profit[각주:79] even as it bleeds cash. 


The third element is financing to pay for huge cumulative losses[각주:80]. Each of the five firms has been a financial innovator, taking advantage of cheap money[각주:81] and growth-hungry investors. Uber has tapped private capital markets[각주:82], Nextera has structured part of[각주:83] its business as a partnership, Tesla has taken deposits from customers and also trades environmental tax credits[각주:84]. Chesapeake Energy sparked[각주:85] Wall Street's lust for[각주:86] shale junk bonds[각주:87], and Netflix has signed commitments to[각주:88] make $14bn of future payments to studios and artists to buy creative content.


So sustaining a reality distortion field is possible, but the longer it goes on for, the harder it gets. More capital has to be raised and, in order to justify it, the bigger the firm's projected ultimate size[각주:89] - its terminal value - has to be. Fast growth puts huge strain on[각주:90] managers. At some point the edifice[각주:91] can come tumbling down[각주:92]. The five companies described here have $60bn of borrowings[각주:93], and one, Chesapeake, is struggling with its debt load[각주:94].


Poker face[각주:95]

A few firms other than Amazon have defied the odds[각주:96]. Over the past 20 years Las Vegas Sands, a casino firm, Royal Caribbean, a cruise-line company, and Micron Technology, a chip-maker[각주:97], each lost $1bn or more for two consecutive years[각주:98] and went on to prosper[각주:99]. But the chances of success are slim. Of the current members of the Russell 1000 index, since 1997 only 37 have lost $1bn or more for at least two years in a row. Of these, 21 still lose money.


To justify their valuations[각주:100], the five firms examined by Schumpeter must grow their sales by an estimated 8-33%[각주:101] each year for a decade. Based on the record of all American companies since 1950, and the five firms' present revenue levels, the probability of[각주:102] this happening[각주:103] ranges between 0.1% and 25%, using statistical tables from[각주:104] Credit Suisse, a bank. 


Firms that burn piles of cash are[각주:105] often lionized in an era when[각주:106] growth is sluggish[각주:107] and few companies reinvest[각주:108] all their profits[각주:109]. But losing a billion dollars or more a year is a wildly[각주:110] risky affair and the odds are that such businesses will fall flat[각주:111]. This should not be a surprise - hardly anyone can pull off[각주:112] building a fashion empire around androgyny[각주:113], wearing a raw meat dress to an awards ceremony[각주:114], or singing about life on[각주:115] Mars.


  1. outlier ; 1. 집 밖에서 자는 사람[동물], 임지(任地)에 살지 않는 사람, 영외 거주자 2. 본체(本體)를 떠난 물건, 분리물 3. 국외자, 문외한 4. (지질) 외좌층(外座層) [본문으로]
  2. collectively ; [부사] 집합적으로, 총괄하여; [문법] 집합 명사적으로 [본문으로]
  3. operate ; 4. OF BUSINESS/ORGANIZATION | [자동사][V] (사업체・기관 등이 특정한 방식으로 또는 특정한 곳에서) 영업[작업]하다 [본문으로]
  4. be true of ; ~에 적용되다 [본문으로]
  5. complain of ; (몸이) 아프다고 하다, (어디가 아프다고) 호소하다, 하소연을 늘어놓다 [본문으로]
  6. flout ; [타동사][VN] (법 등을 공공연히) 어기다[무시하다] ;; 미국∙영국 [flaʊt] [본문으로]
  7. orthodoxy ; (pl. -ies) 1. [C , U] (격식) 통설 [본문으로]
  8. flamboyant ; 1. (사람들이나 그들의 행동이) 이색적인; 대담한 2. (색상이) 화려한[현란한] ;; 미국∙영국 [flӕm|bɔɪənt] [본문으로]
  9. production target ; 생산 목표 [본문으로]
  10. free cash flow ; FCF (경제) 잉여현금흐름 [본문으로]
  11. capital investment ; [명사] 자본 출자, 설비 투자. [본문으로]
  12. subtract ; [동사] ~ sth (from sth) (수・양을) 빼다 [본문으로]
  13. no matter ; 상관없다[괜찮다] [본문으로]
  14. muse ; (격식) 2. (사색에 잠긴 채) 혼잣말을 하다 [본문으로]
  15. aloud ; [부사] 1. (다른 사람들이 들을 수 있게) 소리 내어 2. 큰소리로, 크게 [본문으로]
  16. cohort ; [C+sing./pl. v.] 1. (전문 용어) (통계적으로 동일한 특색이나 행동 양식을 공유하는) 집단 ;; 미국식 [|koʊhɔ:rt] [본문으로]
  17. odds ; [pl.], (참고: stacked) 1. 보통 the odds (어떤 일이 있을) 공산[가능성] [본문으로]
  18. aspire ; [동사] ~ (to sth) 열망[염원]하다 [본문으로]
  19. couture ; [U] (불어에서) 유명 디자이너 제품, 고급 여성복 ;; 참고 ; haute couture ;; 미국식 [ku|tʊr] 영국식 [ku|tjʊə(r)] [본문으로]
  20. be all about (sb/sth) ; ~이 최고[전부]다 [본문으로]
  21. nonetheless ; [부사] ˌnone the ˈless (격식) 그렇기는 하지만, 그렇더라도 [본문으로]
  22. sustain ; 3. (격식) (피해 등을) 입다[당하다] [본문으로]
  23. expand ; 2. (사업이[을]) 확장되다[시키다] [본문으로]
  24. examine ; 1. 조사[검토]하다 [본문으로]
  25. financial firm ; 금융회사 [본문으로]
  26. temporarily ; [부사] 일시적으로, 임시로 [본문으로]
  27. doldrums ; [pl.], 보통 the doldrums 2. 침체, 부진 ;; 미국식 [|doʊldrəmz] 영국식 [|dɒldrəmz] [본문으로]
  28. adjust to ; ~에 적응하다 [본문으로]
  29. plunge ; [주로 단수로] 2. ~ (in sth) (양・가치의) 급락 [본문으로]
  30. in the fast lane ; 아슬아슬하면서도 재미있는 ;; fast lane ; 추월 차선, (비유) 먹느냐 먹히느냐의 경쟁 [본문으로]
  31. largely ; [부사] 크게, 대체로, 주로 [본문으로]
  32. unproven ; [형용사] 증명[입증]되지 않은 ;; 참고 ; proven [본문으로]
  33. business model ; 비지니스 모델 ,기업이 서브하는 고객들에게 가치를 제공하기 위해 기업이 개발하는 전략들 [본문으로]
  34. transform ; [vn], [~ sth/sb (from sth) (into sth)] 2. (모습・성격을, 특히 더 좋게) 완전히 바꿔 놓다[탈바꿈시키다] [본문으로]
  35. stand out for ; …을 주장하다(=insist on). [본문으로]
  36. sheer ; 1. [명사 앞에만 씀] (크기・정도・양을 강조하여) 순전한 ;; 2. [명사 앞에만 씀] (다른 것이 섞이지 않은) 순수한[순전한] [본문으로]
  37. persistence ; [U] 1. 고집 ;; 2. (없어지지 않고 오래 동안) 지속됨 [본문으로]
  38. fracking ; (신조어) 셰일가스 시추기술, 석유 자원 채취를 위해 혈암층(shale beds)에 고압으로 액체를 주입하는 것으로 수압파쇄를 통해 셰일가스나 석유를 추출하는 기술 [본문으로]
  39. in a row ; 2. (며칠·몇 달·몇 년 등을) 계속해서[연이어] [본문으로]
  40. on the trot ; 1. 연이어[내리] [본문으로]
  41. boast ; 2. [타동사][VN] [진행형으로는 쓰이지 않음] 자랑할 만한 …을 갖고 있다, 자랑하다 [본문으로]
  42. punchy ; [형용사] punch・ier , punchi・est 연설・노래 등이 (간명하면서도) 아주 효과적인 [본문으로]
  43. valuation ; [C , U] 1. (가치) 평가; (평가된) 가치, 가치액 [본문으로]
  44. entrepreneurial ; [형용사] 기업가의, 기업가적인. [본문으로]
  45. art form ; 1. [C] 예술 형식 ;; 2. [sing.] 예술 행위(와 같은 것) [본문으로]
  46. dizzying ; [형용사] 어지럽게 만드는, 어지러운, 아찔한 [본문으로]
  47. co-founder ; [명사] 공동 창설[창립]자 [본문으로]
  48. reality distortion field ; [명사] (신조어) 현실왜곡장. (사람의 매력, 열정, 영업능력, 혹은 선천적 능력을 통해) 물건을 실제의 모습과 다르게 보이도록 하는 분위기 [본문으로]
  49. bend ; [동사] 7. (규칙·규제 등을) 자의적으로 바꾸다[변경하다]. [본문으로]
  50. fairly ; 1. [형용사・부사 앞에 쓰여] 상당히, 꽤 [본문으로]
  51. timorous ; [형용사] (격식 또는 문예체) 겁이 많은 ;; 미국∙영국 [|tɪmərəs] [본문으로]
  52. element ; 1. PART/AMOUNT | [C] ~ (in/of sth) 요소, 성분 [본문으로]
  53. financing ; [U] 자금 조달, 융자, 조달 자금 [본문으로]
  54. de rigueur ; [형용사] (명사 앞에는 안 씀) (불어에서) (사회 관습상) 필요한 ;; 미국∙영국 [|də rɪ|gɜ:(r)] [본문으로]
  55. cocky ; [형용사] cock・ier , cocki・est (비격식) 자만심에 찬 [본문으로]
  56. Oklahoman ; [형용사] Oklahoma주(사람)의 , [명사] Oklahoma주의 사람 ;; 미국·영국 [òukləhóumən] [본문으로]
  57. pioneer ; [타동사][VN] 개척하다 [본문으로]
  58. blast ; 1. EXPLODE | 폭발시키다, 폭파[발파]하다 [본문으로]
  59. tarnish ; 2. [타동사][VN] (평판을) 더럽히다[손상시키다] [본문으로]
  60. technocrat ; [명사] 테크노크라트(많은 권력을 행사하는 과학 기술 분야 전문가) [본문으로]
  61. aim ; 1. [C] 목적, 목표 [본문으로]
  62. grandiose ; [형용사] (못마땅함) (너무) 거창한, (실속 없이) 거창하기만 한 ;; 미국식 [|grӕndioʊs] 영국식 [|grӕndiəʊs] [본문으로]
  63. usher in ; (격식) ~이 시작[도입]되게 하다 [본문으로]
  64. validate ; [vn], (격식) 1. 입증하다 [본문으로]
  65. runaway growth ; (증권·금융) 과열 성장(過熱成長). [본문으로]
  66. flattering ; 1. 돋보이게 하는 [본문으로]
  67. operating ; 2. 경영[운영]상의 [본문으로]
  68. pump ; 1. (물・공기 등을 펌프로) 퍼 올리다[퍼내다] [본문으로]
  69. ride ; [명사] 1. IN VEHICLE | (차량・자전거 등을) 타고 달리기[가기] [본문으로]
  70. hail ; 2. [타동사][VN] (택시・버스 등에[을]) 신호를 보내다[부르다] [본문으로]
  71. and so on ; 기타 등등, …등(et cetera) [본문으로]
  72. terminal value ; (증권) 종가 ;; Terminal value (TV) represents all future cash flows in an asset valuation model. This allows models to reflect returns that will occur so far in the future that they are nearly impossible to forecast. The Gordon growth model, discounted cash flow and residual earnings all use terminal values that can be calculated with perpetuity growth, while an alternative exit valuation approach employs relative valuation methods. [본문으로]
  73. hypothetically ; [부사] 가설로, 가설에 근거해서. [본문으로]
  74. gush ; 1. [자동사][V + adv. / prep.] ~ out of/from/into sth | ~ out/in (액체가) 솟구치다[쏟아져 나오다] [본문으로]
  75. breakneck ; [형용사] (명사 앞에만 씀) 위험할 정도로 빠른, 정신없이 달려가는 [본문으로]
  76. profitable ; 2. 이득이 되는, 유익한 [본문으로]
  77. capacity ; 4. OF FACTORY/MACHINE | [sing., U] (공장・기계의) 생산 능력 [본문으로]
  78. amortize ; (英 또한 -ise) [타동사][VN] (상업) (빚을) 분할 상환하다 ;; 미국식 [|ӕmərtaɪz] 영국식 [ə|mɔ:taɪz] [본문으로]
  79. accounting profit ; 회계적 이익, 회계상의 이익 [본문으로]
  80. cumulative loss ; (회계세무) 이월결손금 누계액 [본문으로]
  81. cheap money ; (금융) 저리(低利) 자금 [본문으로]
  82. tap ; 3. ~ (into) sth (기존의 에너지・지식 등을) 이용하다 [본문으로]
  83. structure ; [타동사][VN] [주로 수동태로] ~ sth (around sth) 조직하다, 구조화하다 [본문으로]
  84. tax credit ; 세금 공제 [본문으로]
  85. spark ; 1. [타동사][VN] ~ sth (off) 촉발시키다, 유발하다 [본문으로]
  86. lust for/after ; …에 대한 욕망. [본문으로]
  87. junk bond ; [명사] (상업) 정크 본드(수익률이 아주 높지만 위험률도 큰 채권), (위험도가 높은 싼) 증권 [본문으로]
  88. commitment ; 4. [U , C] ~ (of sth) (to sth) (돈・시간・인력의) 투입 [본문으로]
  89. projected ; [형용사] 예상된 (cf. projection 예상) [본문으로]
  90. put a strain on ; ~에 부담을 주다 [본문으로]
  91. edifice ; [명사] (격식) (크고 인상적인) 건물; 조직, 체계 ;; 미국∙영국 [|edɪfɪs] [본문으로]
  92. tumble down ; 뒹굴다 ;; to fall suddenly to the ground in a dramatic way [본문으로]
  93. borrowing ; 1. [C , U] 대출 [본문으로]
  94. a load of debt ; 빚의 무거운 짐 [본문으로]
  95. poker face ; 무표정한 얼굴(을 한 사람), (카지노용어) 포커 페이스, 얼굴 표정이 없는 카드 게임자를 지칭하는 말이다. ;; 참고 Poker [본문으로]
  96. defy the odds ; 불가능에, 한계에 도전하다, 예상을 뒤엎다, [본문으로]
  97. chipmaker ; [명사] 칩메이커, 반도체 (소자) 제조업자 [본문으로]
  98. consecutive ; [형용사] (주로 명사 앞에 씀) 연이은 [본문으로]
  99. go on to do sth ; (무엇을 끝마친 뒤에) 이어서 ~을 하기 시작하다 [본문으로]
  100. valuation ; [C , U] 1. (가치) 평가; (평가된) 가치, 가치액 [본문으로]
  101. estimated ; [A] 견적의, 추측의 [본문으로]
  102. probability ; 3. [C , U] (수학) 확률 [본문으로]
  103. happening ; 1. [주로 복수로] (흔히 이상한) 일[사건] [본문으로]
  104. statistical table ; [명사] (수학) 통계표(統計表) [본문으로]
  105. pile ; 3. [C] ~ of sth (주로 복수로 비격식) 많은 ~, ~ 무더기[더미] [본문으로]
  106. lionize ; [타동사][VN] (격식) (사람을) 명사(名士) 대우하다[떠받들다] [본문으로]
  107. sluggish ; [형용사] 느릿느릿 움직이는; 부진한 [본문으로]
  108. reinvest ; [타,자동사][VN, V] 재투자하다 [본문으로]
  109. profits ; [명사] 이익, 수익 [본문으로]
  110. wildly ; 2. 극도로; 몹시, 아주 [본문으로]
  111. fall flat ; (농담·이야기 등이) 완전히 실패하다[아무런 호응을 못 얻다] [본문으로]
  112. pull off ; (힘든 것을) 해내다[성사시키다] [본문으로]
  113. androgyny ; [U] 남녀 양성구유; [식물] 자웅 양화(兩花) 소유 ;; 미국식 [ændrɑ́dƷəni] 영국식 [-drɔ́-] [본문으로]
  114. awards ceremony ; 시상식 [본문으로]
  115. sing about ; (노래와 시로) …을 찬미하다. [본문으로]
저작자표시 비영리 변경금지 (새창열림)