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Elon Musk, Tech’s Cash-Poor Billionaire
- tren-hard 6y agohttp://archive.md/0ncZV http://archive.md/0ncZV
- stevespang 6y agoThx.
- DreadY2K 6y agoLink gets a DNS Resolution Error for me.
- vikramkr 6y agoIt's really concerning that theres essentially a giant liability, Elon's personal debt, that doesnt show up on the balance sheet. As the article discusses, a margin call would be devastating, and hopefully any irresponsible decisions in his personal lifestyle choices don't spill over to put Tesla or SpaceX at risk. Especially considering how powerful a force they've been in driving consumer changes in vehicles and in developing the commercial space market.
- toomuchtodo 6y agoVery unlikely, but if necessary Tesla would go through a Chapter 11 reorg, not a 7 liquidation. The brand, charging network, and manufacturing capacity has too much value to throw away. When Tesla was on the brink of insolvency years ago, he had a handshake deal with Larry Page (they jetpooled together) for Google to acquire Tesla and for Musk to continue to run day to day operations. Wasn’t necessary, but there are options. Elon will be fine.
- Alupis 6y agoEither that, or Musk fails and brings down all the things propped up by his charisma and enthusiasm... and the world learns a lesson.
- api 6y agoThe lesson learned would be "don't do new things, and don't believe in anyone who suggests that you do new things." That's not a positive lesson. The other lesson could be "maybe we shouldn't rely on one person's charisma to drive us to do new and interesting things," but that's not likely to be the lesson learned.
- Alupis 6y agoI'd think it's the second lesson that will be learned. Musk has been on the verge of failure for years, and cracks are showing now more than ever before. I'd hate for everyone to stop dreaming for tomorrow just because one guy couldn't pull off everything imaginable. For all the good things Musk does, he also does a lot of bad things. Including but not limited to dreaming up absurd fantasies to "reinvent" industries he has literally zero experience in (aviation comes to mind, drilling tunnels, underwater rescue, etc) - and everyone fixates on that imaginary solution because he said it. Not to mention taking credit for all the hard work the actual aerospace, mechanical and other engineers are doing under Musk. Very seldom do you hear Musk talk about how incredible the team is and how lucky he is to have them working on these problems. No, instead he has the gall to call himself Lead Designer this, or Chief Architect that. We all know he's not sitting down and crunching math to design rockets and cars and more. Look at Hyperloop. People are still wasting money, energy and resources on it, regardless that what we have in testing today are just Maglev trains in tubes... a far cry from what Musk originally dreamt up. Nevermind how impractical or prohibitively expensive and uneconomical it would be to build trains across the US, oceans, across the world all connected. People want to dream. Fine. But trusting all of the future to just one guy... I'm not so sure.
- mcot2 6y agoTheres a lot of B.S. in your post but I just wanted to point out that Elon constantly praises the Tesla and SpaceX teams on Twitter, Quarterly conference calls, Podcasts and in other investor presentations. There is for sure a cult of personality like there was for Steve Jobs.
- tehjoker 6y agoThe people in charge in America only fail upwards, never down.
- RhysU 6y agoIs that statement tautological?
- tehjoker 6y agoNo. In a healthy society, when the people in charge fail, they are demoted or shunned depending on how badly they did. For example, should Judith Miller still have her job at the NYT after cheerleading the march to war in Iraq based on fake evidence? Obviously not. People that perform well and are correct should have the top seats. It helps to compare the harsh treatment of the average worker to the soft humanized treatment reserved for the bosses and war criminals.
- reitzensteinm 6y agoIf Tesla goes through Chapter 11, there's no way in hell Musk will be running it afterwards. He gets away with all his shenanigans because he's a rain maker. If his incredible run of success dries up, the narrative is going to shift hard.
- avmich 6y ago> If his incredible run of success dries up, the narrative is going to shift hard. I remember how Apple kicked out Jobs. Any chance Tesla will suddenly find a competing company in EV market which it can buy with certain conditions?..
- na85 6y agoI know it's fashionable of late to lionize Jobs, but was it really him or was it just the "second-generation effect"? Look at Microsoft under Ballmer, or Google after Page/Brin. All seem(ed) to be hollow shells of what once was.
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- lowdose 6y agoYes Elon has a reality distortion field but that's allowed when pushing for real progress. A reality distortion field becomes a self fulfilling prophecy and it has the ability to change the fabric of our reality. I didn't expect the kind of naysayer here on HN.
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- SquishyPanda23 6y agoWith Google tightening its belt to appease Wall Street, I doubt investors would look kindly on Google acquiring a struggling business just because too friends shook hands on an airplane.
- ydb 6y agoI hope Elon will be fine. The future depends on benevolent billionaires like himself to get us out of the financial mess the governments of the world have put us in. If we have any hope of tackling climate change, Tesla will be front and center in that battle. Besides, he just had a child! What a wonderful gift to the world. I hope his child grows up to be as wise and down-to-earth as his father. :)
- beervirus 6y ago> Tesla’s board has capped how much Mr. Musk can borrow at 25% of the value of whatever shares he pledges as collateral. The value would have to decline a LOT before he got a margin call.
- zozbot234 6y agoDidn't Elon just tweet a few days ago that he'd be selling a lot of his personal stuff? That seems like he's being quite prudent and responsible if anything.
- robbiep 6y agoThat’s literally the article?
- mire_rustling 6y agoEverything he does is for PR. That tweet came out right before he got his bonus payout. He's had controversy with the virus and his factories. By tweeting that out, he gave off a "billionaire doesn't care about money" vibe. What got more coverage? His payout or his rambling tweets. He would have got more flak if the press covered his payout while he has been pushing his workers to get back into the factories.
- gpm 6y ago> Everything he does is for PR. That tweet came out right before he got his bonus payout. This is overly cynical. A fair bit of what he does is about PR - but not all of it. He's still human and it's pretty clear that he uses twitter as a stress relief mechanism (for better or worse). Whether that was for PR or not is pretty unclear. It was basically simultaneous with him (according to him) having a fight with his girlfriend a few days before his child was born, and in the middle of him tweeting a bunch of nonsense that definitely wasn't for pr.
- new_realist 6y agoThe nonsense wasn’t PR, it was drugs.
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- pmorici 6y agoSeems like they are over hyping the margin call risk. It says in there that his total borrowing is ~500 million and his paper assets are estimated at $39 billion. The debt is a lot in absolute terms but relative to his assets it is less than 2% of his wealth which seems really low to me.
- hourislate 6y agoPerhaps Starlink will save him. It does have the potential to become a money printing machine.
- mike_d 6y agoRemember that Elon agreed to have his tweets reviewed by Tesla's in-house counsel in lieu of formal SEC action after he lied about taking the company private. He recently tweeted that the stock price was too high. Something legal would never allow him to say, especially if he is on the verge of exercising options. My bet is the SEC isn't going to tolerate this behavior anymore, and he won't be at the helm of any of his companies by the end of the year. He will be just plain poor.
- beervirus 6y agoTake a close look at the actual terms of what is required to be reviewed by the legal team.
- gpm 6y agoHe agreed to have material tweets reviewed by Tesla's in house counsel before publishing. With a specific definition of material and examples of content that would be material. This tweet IMHO doesn't fall under that definition of material. Even if you think it did, you're blindly assuming that this tweet wasn't reviewed (which it might well have been, if it was reviewed it was certainly legal instead of probably legal). The SEC doesn't have a choice to tolerate or not tolerate this behavior. They basically lost the last time they sued (it ended in a settlement where the only concession to them was rephrasing an existing agreement after a judge said some strong words), and they would probably lose again if they sued this time.
- kasey_junk 6y agoLol. That and a binding legal agreement that he’d have public statements reviewed. And the small thing of being removed as the chairman of the board. When the SEC starts dictating your board shape no one considers it a loss for the SEC.
- gpm 6y ago> That and a binding legal agreement that he’d have public statements reviewed As I just said, no such general legal agreement exists. The only legal agreement that exists is the one I described in my above comment. I'd cite a source, but citing a negative is basically impossible. So I'd ask that instead you cite that agreement. Sec agreements are public documents. Here is a link to the most recent agreement that the SEC settled with musk on - this is all they got the last time they sued. Note that the previous agreement (which you can dig up if you want) basically said the same in less words. https://www.courtlistener.com/recap/gov.uscourts.nysd.501755/gov.uscourts.nysd.501755.47.0.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.501755... Order denying the SECs contempt motion as moot following the entry of that consent agreement: https://www.courtlistener.com/recap/gov.uscourts.nysd.501755/gov.uscourts.nysd.501755.48.0.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.501755...
- burnett2k 6y agoPay walled.
- robbiep 6y agoHit the web button at the top and then the first link
- troughway 6y agoThe propaganda machine around Musk (Iron Man, etc) is so strong that I doubt it will allow him to fail. There is too much money to be made in mythology.
- sixQuarks 6y agoPropaganda machine? Give us examples Of what you mean
- kinkrtyavimoodh 6y agoIt looks to me like the real propaganda machine is the one whose only output is a non-stop barrage of articles like these, unlike you know, rockets that reach the ISS, and cars that have collectively safely driven billions of miles. Musk doesn't need to justify himself, these journalists might.
- mandeepj 6y ago> Yet he has to borrow, sometimes a lot, to pay for his lifestyle and business investments without liquidating shares that help him maintain control of the companies he runs. Not sure. He could sell secondary shares without losing control, just like zuck
- colinmhayes 6y agoAs the article points out, Tesla went public before the "founder gets preferred shares that have all the voting power" thing became popular. Zuckerberg sells the non-voting shares, but Musk doesn't have any.
- mandeepj 6y agoYeah, I also read that in the article. It's incorrect. Google went public in 2004, and they have that voting structure. It's mentioned correctly in the article.
- dntbnmpls 6y ago> As the article points out, Tesla went public before the "founder gets preferred shares that have all the voting power" thing became popular. This is simply not true. Google popularized it in 2004 with their IPO. It's how page/brin today control over 50% of the alphabet votes. Zuckerburg copied page/brin. The reason why musk couldn't get the same privileges is because tesla wasn't a growth powerhouse that google/facebook/etc were. He wasn't in position to make such demands from investors.
- new_realist 6y agoElon uses four personal jets guzzling who knows now much gas. He practically flies 24x7. When it comes to climate, he is a hypocrite.
- ydb 6y agoElon has done more for climate activism and the green movement in the last decade than basically anybody. Besides perhaps Miss Thunberg. His "guzzling" jets as you call them are a minor convenience in order to facilitate quicker, more efficient transport to enable the evolution and development of Tesla and SpaceX. Do you expect him to drive everywhere? Not only would that be worse for the environment, but it would mean more of Elon's precious time wasted and thus also our time wasted because a brilliant man is stuck in traffic.
- new_realist 6y agoI expect him to video conference, not fly 150,000 miles/take 250 flights a year—nor fly his jet from one LA airport to another LA airport to shorten his chauffeured ride home. I expect him to buy carbon offset credits. I expect him to not publicly trash public transportation. I expect him to not donate to climate change denying politicians, and I expect him to not sell emissions credits to polluting automakers, delaying their transition to ZEVs, and sneakily undoing all of the environments benefits from buying a Tesla car. I expect the Tesla paint shop from repeatedly violating California emissions regulations. I expect Musk to not spread coronavirus disinformation over Twitter. I expect him to not expose his workers to undue risk by violating Alemeda County’s restrictions on non-essential businesses.