Disclosure:  I worked at SolarCity from July 2010 until December 2014 and still hold and am long $SCTY (or $TSLA in the future)

Let me start by saying as a $SCTY shareholder I'm not thrilled about the price I'm getting ($25 or so) but ultimately I think it will be better for the world in the long run and I hope the Tesla-SolarCity merger goes through.  I also don't think I could give as good of a bullish case on the merger as Jigar Shah just did.

It is the belief of most of the major decision makers involved that these ideas could be mutually beneficial when packaged together.  That combined with (IMO) the deep discount SCTY can be bought for right now, the decision was better to make sooner rather than later.  Elon has said that it's easier to create a single product and that's true, but David Crane's analysis that SC needs a reboot and couldn't survive this reboot in the public market is probably also true.  

So let's look at an optimist's view on the combined final product:

I think I've read that SolarCity will take on the Tesla name, I only assume as the Tesla Energy (TE) brand.  There should immediately be sales installations at Tesla stores in the states SC currently operates in, hopefully accompanied by an initial boost in leases/loans/sales in those areas as this is business as usual for SC/TE once the sale is made.  

TE needs to stop with the pushy door to door tactics that made the leases popular and instead rely on referrals and word of mouth sales.  Think of how many ads you saw Tesla run for their Model 3 launch that saw 400,000+ pre-orders (mine included)... oh wait, you didn't.  We've already seen evidence that solar is contagious and SC's referral business has been a success.  An emphasis on distributing the work needed to acquiring new customers to others (thoughts on that shared here) should drastically reduce the cost of marketing and sales overhead, a painful but necessary step to rein in costs.

SC as a company created a TON of jobs but some jobs inevitably become unnecessary when the organization becomes more efficient.  SC's operations department has become a machine when they're stocked full of scheduled jobs but during seasonal down times they become another unnecessary cost.  Their operations department is a huge success story in the field of construction management, the efficient gains they've made are remarkable but are getting harder to come by.  

What I'd like to see TE do is the same thing they did with their sales & marketing streamlining and distribute the work of their operations department.  You decentralize your installation work.  You'd be bolstering the independent contractor installer network by distributing not only your workers but also your knowledge by creating an industry-wide standard of installation excellence.  This will be hard for Elon and SC management to agree to as they like to have their finger on the quality from top to bottom and it may seem like you're losing that high standard of installation quality.  However it is simply being transferred via your industry-leading training and certification program to locally-owned and operated installation companies.  

Publicly it would look like TE is getting rid of A LOT of SC construction jobs and officially they are but overall those jobs are still being filled by the independent installers that are installing up to your standard (and even inspection) but are locally-owned and operated.  So you're actually creating a lot of small business owners, something that is always well-received.

Behind the scenes, I'd expect the Tesla and SC HR departments to see which roles are now duplicated, which are necessary independently, and which are mutually beneficial.  Then you decrease the positions that are duplicated and increase the mutually beneficial ones.  I think these are the main synergies Elon and Co. talked about initially.  I expect their battery and solar panel gigafactories to learn from each other and both benefit as well.

By distributing a lot of SC's work (both in creating the sale and installing the solar panels) they can streamline their costs and become more profitable.  Elon's always been a huge proponent of economies of scale and I think you can still have this with a distributed sales and installation force by controlling the standards instead of the workforce.  You'd lose a couple process efficiency points in the process but you gain that and more by not having to control everything.

I believe such changes can be beneficial to a combined company and I'm hopeful for the Tesla and SolarCity merger to finally go through, as it seems like it has been a long time coming.

Like I've mentioned previously, ultimately I'm in KC because this was the recommendation of the algorithm Teach For America uses to determine placements.  That much is out of my hands.  But how KC was rated in my top 5 placement preferences was a conscious decision.  This is that story, 4chan style for simplicity.

>Be me

>March 2015

>Looking for jobs while finishing up my Master's

>Denver hasn't provided any good hits

>My other top 2 choices Austin and Raleigh haven't provided any good hits

>Need to decide where else I'd look for jobs

>Read U.S. News Best Places to Live 2015 article on web

>See how they ranked them based off stats

>Decide to make my own personalized rankings

>Copy down the stats for 25 cities I wouldn't be opposed to

>Stats like median income, high tech job %, and job growth go into the Job category

>Because I want to find somewhere with good jobs

>Stats like cost of living and median home price go into the Cost category

>Because I want to find somewhere that isn't too expensive

>Stats like % that graduated high school, college, and graduate programs go into the Education category

>Because I don't want to be surrounded by too many idiots

>Rank each category from most desirable to least and award more points to higher rankings

>Remove any cities that have too many unreasonably hot or cold days

>Remove any cities that are not on this list of best places to find love

>Rank cities now based on a (40% Job) + (40% Cost) + (20% Education) weighted point average

>Kansas City comes in 3rd behind Raleigh and Austin and above other cities I was intrigued by like Dallas, Charlotte, Nashville, etc.

>Go "huh, KC?" and just throw it in my top 5 placement preferences

>End up in KC

Most people think of KC as a "flyover city" that you would literally fly over and not even think about.  And in some ways, it is:  it's the closest city to the geographical center of the continental U.S. (aka it's in the middle of the map) and there's nothing distinguishable about its landscape.  But I've grown to love KC and I'm happy to live here as it has an up and coming vibe, has a great sense of community, and because the people are amazing.

The city data without my personalizations can be found here if you're interested

I can't let go of an old favorite past time of mine:  the NFL mock draft.  The picks I feel most confident in are Darron Lee to ATL, Ryan Kelly to IND and Mackensie Alexander to PIT.  I could also see Washington trading up for Zeke Elliot with New Orleans to get ahead of Miami.

//Update:  3/26/16

I've been thinking recently that the solar companies have to know that they can't compete against the utilities in all of these fights concurrently (http://www.wsj.com/articles/solar-panel-installers-face-clouded-future-1458926502).  They can't be reactive against goliaths, they need to be proactive in the fight as any David should be.  The solar companies and their supporters need to get the American people to vote on a comprehensive, objective study of the impacts of distributed solar on the grid.  This will bring attention to the nation-wide issue (not just on the state level) and hold both sides accountable in the eyes of Americans.  If it is found that distributed solar will hurt other users of the grid, the solar side should pay more.  If it comes out that it won't hurt the other electricity users and only the utility will lose profit, these state level fights should cease.  There is risk for the solar companies to initiate this fight but I think the national exposure (and publicity) and potential rewards (these state-level, utility-backed current fights) warrant the big swing at the plate.

___________________________

2/18/16

(Disclosure: I worked at SolarCity from 2010-14. I am still a shareholder. I am long SCTY)

Here are some thoughts I have on the future of the solar industry:

1.  Like Elon Musk has said before, solar will become the energy plurality in our lifetime, likely in the next 20-30 years.  We will still get plenty of energy from fossil fuels and nuclear but solar, both distributed and utility-scale, just makes too much sense to not win out over a long period of time.  Whether it's shorter than 20 years or longer than 30 is dependent on policy decisions but it's inevitable in the long run.  I for one would love to see it happen sooner since we could be saving 10+ years worth of not burning fossil fuels for those GWh.

2.  Think about the above point in terms of future value created for the industry.  Huge.  I think we'll see the solar industry to consolidate even more in the near future as economies of scale begin to act exponentially.  The big players will get bigger, there will be new market entrances from big companies in similar industries and more mom-and-pop operations will close shop.

3.  The cost of customer acquisition will be what separates the industry leaders from the rest of the pack.  Installation costs have come down and will level off but acquisition costs could get exponentially lower.  The biggest drop in costs will be because of the industry becoming more popular and accepted and will benefit the industry as a whole.  And the biggest brands will benefit the most from the name recognition.  Another way to drastically reduce costs is to democratize the sales process and let the customers do most of the work instead of internal sales teams.  Google's Project Sunroof is part of this process, as is SolarCity's Ambassador program.  I've already mentioned my thoughts on that : )

4.  Since almost all companies in a free market hate to lose money and investor-owned utilities (IOUs) stand to lose A LOT of future revenue from distributed solar, I'd expect their attacks on distributed solar to only increase in the future.  At the same time, they will trumpet every new solar plant they build.  The road will only get tougher in the near future for solar (think Big Tobacco type doubt created about the effect of distributed solar on the almighty yet purposely obfuscated "grid", as referenced here) but they're not at the big boss yet in the game.

5.  I think one positive that the pro-solar camp can take away from their fight with IOUs is that they're getting a lot of positive, cheap advertising. Solar is getting some love thrown around about it by the media and everybody from liberal tree-huggers to conservatives and libertarians.  Yeah there's doubt surrounding the solar industry right now (the constant fights with IOU-backed state regulators) but these fights will only last so long.  Pretty soon, it's going to be clear that distributed solar is actually helping the grid and these fights will almost disappear.  When the general public gets behind the logic and accepts distributed solar as not just an option but the no-brainer option then the universal love will be self-reinforcing.

6.  I hope SolarCity holds out and doesn't get gobbled up/run out. The Rives seem to be in it for the long haul, as does Chairman Musk. The company has and will make mistakes and has been given a lot of cushion since they're literally creating new processes as they go. Given their work thus far in building it and the long-term view of the market, the Rives should get the chance to turn it around in the near future. However, I can see investors getting impatient in the next year or two and voicing their opinion.  So a change at the top to a more proven, established CEO is possible.  I think there's enough smart people at SolarCity (and a big enough first-mover advantage) that they will figure it out, become more efficient, and prosper. 

7.  Even the most modest forecasts for the solar industry have it making up at least 10% of the electricity market that makes hundreds of billions of dollars each year in revenue. I don't expect them to hold a 34% market share forever, but even a part of that share is worth much, much more than the ~$2 billion SCTY market cap right now.  If the stock price is supposed to value a company on present and future value, I believe SCTY is very undervalued at it's current price.  That's mostly why I'm long SCTY, that and beginning to consider future company efficiency and industry-wide, mature-market gains.

One of the people I most admire in the world is Elon Musk and a really cool thing about him is the insane focus he's had for most of his whole adult life:

"In the case of Tesla, SpaceX, SolarCity, and PayPal... it really stemmed from when I was in college and trying to think: what would affect the future most likely in a positive way?" Musk said. "So the three areas I was quite sure would be positive were sustainable energy, the internet, and making life multi-planetary."