Tag Archives: Elon
Elon Musk will not go quietly. On Monday night, lawyers representing the Tesla CEO submitted a filing to a federal judge in New York arguing that she should deny the Securities and Exchange Commission’s request to hold Musk in contempt of court for—what else?—a tweet. Musk’s legal team argued the SEC overreached in its request, and claimed the agency is trying to violate his First Amendment right to free speech.
If the judge, Alison Nathan of the Southern District Court of New York, does hold Musk in contempt of court, she would decide the penalty. “If the SEC prevails, there is a good likelihood that the District Court will fine Mr. Musk and that it will put him on a short leash, with a strong warning that further violations could result in Mr. Musk being banned for some period of time as an officer or director of a public company,” Peter Haveles, a trial lawyer with the law firm Pepper Hamilton, told WIRED last month.
This latest chapter in Musk’s ongoing legal spat with the SEC dates back to the evening of February 19, 7:15 pm Eastern Time to be exact, when Musk wrote on Twitter, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” About four and a half hours later—at 11:41 pm ET—Musk corrected himself, tweeting, “Meant to say annualized production rate at the end of 2019 probably around 500k, i.e. 10k cars/week. Deliveries for the year still estimated to be around 400k.”
Musk is the head of a publicly traded company, so making a mistake about his business on Twitter—which investors treat as a valid source of news like any other—is already less than ideal. But Musk and Tesla also reached a settlement with the SEC in September over another tweet containing misinformation about the electric carmarker’s operations. That was after Musk tweeted that he planned on taking Tesla private, and that he had the “funding secured.” He soon revealed he did not have that funding secured, and Tesla announced it would stay public.
In the ensuing deal with the SEC, Musk gave up his role as Tesla’s chairman for at least three years. He and Tesla each paid a $ 20 million fine. And Musk and Tesla agreed that the CEO’s tweets about the carmaker would be truthful, and reviewed by a team of Tesla lawyers before sending. According to the filing, Tesla’s general counsel and an assigned “disclosure counsel” are in charge of approving Musk’s Tesla tweets. The lawyers write that “the disclosure counsel and other members of Tesla’s legal department have reviewed the updated controls and procedures with Musk on multiple occasions.”
In December, Musk said on CBS’s 60 Minutes that he does not respect the SEC, and that the only tweets of his that require pre-approval are those that can affect Tesla’s stock price. Asked how Tesla could know which tweets would do that, Musk said, “Well, I guess we might make some mistakes. Who knows?” The SEC cited that interview in its motion for a contempt of court charge, writing that “Musk has not made a diligent or good faith effort to comply” with the terms of his settlement.
Now, though, Musk and the SEC are debating what that “pre-approval” actually means. Tesla’s lawyers say nobody pre-approved the tweet in question, but that it shouldn’t matter, because it had already made public the information about those production numbers: in an earnings call, in end-of-year financial results, and in an SEC filing submitted on the day Musk sent out the tweets in question. Musk did not receive pre-approval before sending that tweet because it “was simply Musk’s shorthand gloss on and entirely consistent with prior public disclosures detailing Tesla’s anticipated production volume,” according to the filing.
Moreover, the Musk team argues, the SEC’s attempt to limit Musk’s tweeting is a violation of his First Amendment rights to free speech.
The Musk legal team also argues that the CEO has really worked very hard since the SEC settlement to be careful about his tweeting behavior. It wrote that Musk’s less frequent tweeting about Tesla “is a reflection of his commitment to adhering the Order and avoiding unnecessary disputes with the SEC.” In fact, it says the correction tweet, the one sent four-and-a-half hours later, “is precisely the kind of diligence that one would expect from someone who is endeavoring to comply with the Order.”
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Have you ever gotten an email from your CEO at 1:00 in the morning?
And let’s just say the email…wasn’t pretty.
After highlighting Tesla’s numerous accomplishments over the past year, Musk got down and dirty, announcing another round of job cuts–this time reducing the number of full-time employees by about 7 percent.
The job cuts are necessary, Musk argues, to help the company meet the unique challenges it faces. Challenges like, “making our cars, batteries and solar products cost-competitive with fossil fuels,” products that Musk admits “are still too expensive for most people.”
Musk also acknowledges that since Tesla is competing “against massive, entrenched competitors…[employees] must work much harder than other manufacturers to survive.”
All of this hard work is worth it, Musk says, to support the “mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth.”
It’s hard not to be inspired by this message.
Everyone–including the world’s major car manufacturers–knows the continued use of fossil fuels is not sustainable. And no one can deny that those companies probably wouldn’t be as vested in clean energy as they currently are, if it wasn’t for Tesla leading the charge.
But while I’m a fan of much of Musk’s philosophy, it’s the next part of the memo that worries me:
“There are many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive. Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.”
“We must do everything we can to advance the cause.”
Musk’s personal goal to save the planet may be admirable, but what he’s implying here is not.
Treating people like people
We generally think of emotional intelligence as a positive quality, one that can help you manage conflict or establish deeper relationships. But in my book, EQ Applied, I describe how one could also use their knowledge and understanding of emotions to motivate or even manipulate others with the sole intent of strategically achieving a goal.
Once that goal is reached, or when individuals are no longer helpful to pursuit of the goal, they are discarded with little or no concern for their well-being.
While it’s likely that Musk truly believes his own rhetoric, what he’s trying to achieve–namely, getting people to buy into the mission of “saving the world” by working themselves to the bone–simply isn’t sustainable.
And it’s hurting Tesla employees in the process.
In contrast, the most effective mission-driven organizations encourage balance and taking care of one’s self. They realize that anything other than that is foolish and will hurt the cause in the end, in the form of damaged workers and, subsequently, damaged culture.
Yes, the best organizations use their messaging to inspire their people and reach them on an emotional level. But they do so while keeping their individual needs in mind.
The best organizations encourage their people to get enough sleep, by not sending emails at 1:00 in the morning.
The best organizations encourage their people to take time off, by providing an adequate vacation policy–and encouraging company leaders to set the right example by not working on their own vacations.
The best organizations set a pace their people can maintain indefinitely. Because they realize that long-term success is brought about, not necessarily by those who are the fastest or who work the longest days, but by those who are steady and reliable.
By keeping the big picture in view, and treating their employees as real people–as opposed to disposable commodities–the best organizations inspire company loyalty.
The sooner Musk faces this reality, the greater Tesla’s chances of truly changing the world.
SAN FRANCISCO (Reuters) – Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc private in what would be the largest deal of its type, moving the electric car maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
“Am considering taking Tesla private at $ 420. Funding secured,” Musk said on Twitter bit.ly/2Om3gn3. At $ 420 per share, a deal would be worth $ 72 billion overall.
In a letter to Tesla employees published more than an hour later on the company’s blog here, Musk explained that going private would be “the best path forward.” Such a move – over which no final decision had been made – would let Tesla “operate at its best, free from as much distraction and short-term thinking as possible,” he wrote.
Tesla shares closed up 11 percent at $ 379.57, slightly below their all-time high.
Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be “no change.”
Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla’s valuation higher than that of General Motors Co.
The company is still working its way out of what Musk called “production hell” at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company’s profitability rests.
The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year.
Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.
Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.
“Musk does not want to run a public company,” said Gene Munster of Loup Ventures, as Tesla’s ambitious mission makes it “difficult to accommodate investors’ quarterly expectations.”
Musk owns nearly 20 percent of the company. He said in his letter to employees he did not seek to expand his ownership.
A price of $ 420 per share would represent a nearly 23 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about $ 58 billion.
In his letter, Musk suggested a choice for shareholders of selling their shares for $ 420 each or remaining investors in a private Tesla. He said he hoped all current investors would remain were the company to go private.
He made no mention in his tweets nor his letter where the funding for a deal would come from, and the letter did not discuss funding for the plan.
Like any other investor, Musk is beholden to securities laws and several securities attorneys told Reuters he potentially could face lawsuits if it was proven he did not have secure financing at the time of his tweet.
(GRAPHIC-Market value of Tesla, Ford, GM: tmsnrt.rs/2n4mFjh)
BIGGEST GO-PRIVATE DEAL
If Musk were to succeed in taking Tesla private, it would be the largest leveraged buyout of all time, beating the record set by the $ 45 billion deal for Texas power utility Energy Future Holdings, which ended in bankruptcy in 2014.
Raising both the debt and equity required for such a deal would be a challenge. Many major Wall Street bankers contacted by Reuters said on condition of anonymity they were not aware of Musk’s plans ahead of his tweets, and several expressed skepticism that a leveraged buyout of Tesla could be financed given the company’s negative cash flow.
“It’s unfathomable to me that anyone would finance the acquisition of such a liability-laden company that is losing so much money and have massive capex requirements going forward,” said Mark Spiegel, portfolio manager of hedge fund Stanphyl Capital Partners, who holds a short position in Tesla and has been a vocal critic of Musk on Twitter.
The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia’s Public Investment Fund (PIF) or major technology investment funds such as SoftBank Group Corp’s Vision Fund, bankers said.
China’s Tencent Holdings, which took a 5 percent stake in Tesla last year, is another possible partner.
Such foreign sources of capital would be subject to scrutiny by the Committee on Foreign Investment in the United States (CFIUS), which looks closely at deals for potential national security risks.
Earlier on Tuesday, a source familiar with the matter said Saudi Arabia’s PIF had bought a minority stake of just below 5 percent in Tesla.
The U.S. Securities and Exchange Commission declined to comment on Musk’s tweet, but the agency allows companies to use social media outlets like Twitter to announce key information in compliance with its fair disclosure rules if investors are alerted about which social media outlets will be used.
Tesla alerted investors in a 2013 SEC filing that they should follow Musk’s Twitter feed for “additional information” about the company. There is no reference to Musk’s Twitter account on the company’s investor relation page under “investor communication,” although Tesla’s Twitter feed is included.
In his letter to employees, Musk wrote that, “as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
A short squeeze is a trading scenario that occurs from time to time in heavily shorted stocks, when bearish traders are forced to buy shares to avoid big losses – something that ends up pushing the stock only higher.
Short interest in Tesla on Tuesday stood at nearly $ 13 billion, according to S3 Partners, a financial analytics firm.
(GRAPHIC-Tesla shares jump 10 percent, near record high: tmsnrt.rs/2MbzJin)
Reporting by Sonam Rai in Bengaluru, Alexandria Sage in San Francisco, Carl O’Donnell, Liana Baker, David Randall in New York and Pete Schroeder in Washington; editing by Saumyadeb Chakrabarty, Bill Rigby and Chris Reese
Who wins in the melee between Musk and the media?
The Model 3. And the Model Y that comes after that.
Consumers are interested in the cars not spats with the media. In the end, it’s free publicity that just raises the company’s profile and drives demand for its cars. As if Tesla needs any free advertising. (It doesn’t.)
And it’s all happened before and is now pretty predictable and pretty boring. Musk says something to defend his company, media umbrage ensues. (See this CNBC story for the most recent tiff and this New York Times piece for the same kind of bickering that took place a couple of months ago.)
And I’ll insert that there are a few journalists (or self-styled “journalists”) that believe they’re on some sacred mission to expose Tesla as a fraud or Ponzi scheme. I’m not talking about responsible business journalists who report on Tesla aggressively but fairly. But those who are ignorant of the niceties of car manufacturing and, as a result, are susceptible to believing sketchy information that comes their way. (See this Electrek story starting at paragraph #6.)
What most people really pay attention to
It’s clear that hundreds of thousands of consumers worldwide want a Model 3. And it’s likely that hundreds of thousands more will want a Model Y (a cheaper version, more or less, of the Model X). So, if you’re a consumer in the market for a Tesla, what rivets your attention?
Price, styling/design, features, technology, availability, service, and reputation. And of course quality.
The latter is the source of a lot of the tension* between Musk and the media. But it’s often hard to tell what’s a real story about quality issues and, on the other hand, what’s an unreliable accusation. (See: “Tesla and Luxembourg squabble over failed Model S braking test” — Engadget via Electrek.)
Quality will get better as the young car maker gets a handle on manufacturing a mass-market car. The problem is, the media often goes too far by attributing some nefarious motive for issues (real or otherwise) that the company is having with Model 3 production (see Electrek link above).
The chasm between negative media coverage and the average Tesla buyer’s sentiment gets no wider than on YouTube (as I’ve written before). There Model 3 owners post overwhelmingly glowing reviews. And even when reviewers do complain, it’s typically a brief sidebar amid a long stream of fulsome praise. In the end, owners just want to be assured that Tesla stands behind the car and they’ll continue to get OTA updates.
*Remember the Consumer Reports kerfuffle? That made headlines when CR said, “Tesla Model 3 Falls Short of a CR Recommendation” though the Overall Score was high (and close to the highly-rated and recommended Chevy Bolt). After some back and forth with Tesla, Consumer Reports upgraded the Model 3 to “recommendation.”
When Elon Musk was a kid, he had so much trouble managing his time, that his younger brother Kimbal would lie to him about the bus schedule. Elon would show up a few minutes after the supposed arrival—and have just enough time to hop aboard. A few decades on, the whole world knows about Elon’s habit of blowing deadlines. And he admits it can be a problem.
“This is something I’m trying to get better at,” he said from the stage of Silicon Valley’s Computer History Museum on Tuesday afternoon, at Tesla’s annual shareholders meeting. “I’m trying to recalibrate these estimates.”
A few days after a Twitter rage fest aimed at the media, a month after refusing to answer questions about Tesla’s financial state during an investors’ call, and two months after getting in a public spat with the feds investigating a deadly crash in one of his cars, Musk’s attitude when he appeared before his fellow shareholders was conciliatory. He even seemed emotional at times. “We build our cares with love,” he said, with a slight quaver in his voice. And he noted how brutal the auto industry can be, especially to newcomers. “It’s insanely hard just staying alive.”
For an hour and a half, Musk patiently fielded questions on just about every part of Tesla’s sprawling business. He said the Model 3 production rate will hit the long-promised 5,000 cars a week rate later this month, predicted an enormous increase in battery production, announced upgrades to the Autopilot semi-autonomous system, and even appeased PETA. If you missed the meeting, here are the key takeaways.
Elon Retains the Reins
The official business of the meeting included voting on the reelection of venture capitalist Antonio Gracias, Elon’s bus-catching brother Kimbal, and 21st Century Fox CEO James Murdoch to Tesla’s board of directors. (Only a third of the nine board members come up for election at a time—it’s like the US Senate that way.) Last month, activist investor the CtW Group urged Tesla shareholders to replace the trio with people who had automotive and manufacturing expertise. Another investor, Jing Zhao, filed a proposal to strip Musk of his position as Tesla’s chairman, which he has held since 2004 (he took the CEO job in 2008). But the shareholders stuck with Musk, reelecting the board members and nixing the leadership change by an overwhelming majority. (Tesla will file the exact vote count with the SEC in the next few days.)
The loss didn’t surprise CtW executive director Dieter Waizenegger, who argues control of Tesla is too concentrated in people tied to Musk. “This opinion is shared by a significant number of shareholders of Tesla,” he says. “We expect the final vote tally to reveal that.” Even if he’s right, Musk remains fully in charge.
More Model 3
Musk’s acknowledgement of his timeline trouble didn’t stop him from announcing that, by the end of the month, Tesla will be building 5,000 Model 3 sedans every week, which should be enough to start turning a profit on the car. The uptick is thanks to Tesla’s rebalancing of the workload between humans and robots in its factory in Fremont, California, where the company is adding a third Model 3 production line. It is also planning to open a factory in China, to go with its plants in Fremont and the Netherlands.
Meanwhile, Tesla is gradually expanding options for Model 3 owners, who so far have been limited to the version with an upgraded battery and premium interior, which starts at $ 56,000. By the end of this year, Musk hopes to start production of the version closer to the car’s $ 35,000 base price, with the smaller battery pack. Also coming soon: right hand drive.
Even as it struggles to build the Model 3, Tesla is planning on three new vehicles: the Semi truck, the revived Roadster, and the still mysterious Model Y. Musk told shareholders he’s hoping to start production of all three in the first half of 2020, though he has yet to specify where he’ll do that, or how. He’ll unveil the Model Y in March (it will be “something super special”), and expects the truck and the sports car to deliver better specs than the already very impressive numbers he announced last fall. Oh, and he’ll never build an electric motorcycle.
Without getting into details, Musk said Tesla is making steady progress to improve its Autopilot feature, and is now working on adding the ability to change lanes and handle highway on- and off-ramps (Musk noted he was testing new software around 1 am this morning). For drivers who aren’t sure they want to spend $ 5,000 on the feature, Tesla will soon start offering free trials. Musk also reaffirmed his distaste for lidar, the laser shooting sensor most autonomous vehicle developers say is key to building a safe, capable robo-car.
Tesla now runs nearly 10,000 Supercharger stations around the world, the stations where its drivers (and no one else) can plug in and charge a depleted battery to about 80 percent in 30 minutes. And Musk is working to keep improving charge times, saying a three- or four-fold improvement is possible. (That’s only true for relatively new cars, he added, disappointing the 2012 Model S owner who asked him about it.)
Unlike many automakers, Tesla has been offering leather-free versions of its cars for years, appealing to its vegan and vegetarian fans. But it’s still using some leather in its steering wheels, and a People for the Ethical Treatment of Animals (PETA) rep took the mic to press Musk on it. He explained Tesla can make leather-free steering wheels, but the work has to be done it its design studio, making it something of a pain. But he promised it’ll be easier once the Model Y comes around. Now he’s just gotta hit that 2020 goal.
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In the early 1500s, England faced an existential economic crisis: Demand for their most lucrative export, woolen cloth, was plunging in Europe. They needed to find new markets for their product –and fast.
So a group of merchants set their sights on the vast market of Cathay –the word used at the time to refer to China –then the largest economy in the world, with nearly 30 percent of global GDP. (By comparison, India during this period produced roughly 20-25 percent of global GDP. England was peripheral to the world economy, producing an inconsequential 1 percent of global GDP.)
These English merchants sent expeditions in search of a new overland sea route that, they hoped, would take them over the European continent to China, enabling them to avoid having to sail through waters controlled by the Spanish and the Portuguese, their arch rivals.
After failing to reach Cathay (though they did make it as far as Moscow), they decided to turn westward, eventually reaching the shores of America, where they established small trading outposts and, eventually, full-fledged colonies.
This is how the tale begins in a captivating new book by Simon Targett and John Butman, New World, Inc.: The Making of America by England’s Merchant Adventurers. Through meticulous research and a flair for bringing a colorful cast of long-deceased characters back to life, Targett and Butman tell the story of the founding of one of history’s most successful startups: America.
“It’s the ‘prequel’ to the Pilgrims,” Targett told me in a recent podcast conversation. “You can’t really understand America today if you only go as far back as the Pilgrims. Of course they are an important part of the founding. But there were many trips for 70 years before the Pilgrims, who eventually arrived in Plymouth, Massachusetts in 1620. As we delved further, we tracked and traced an unbroken chain of voyages. And we felt the story of these merchant adventurers –what we call the ‘forgotten founders’ – provide a better narrative.”
Targett and Butman relate the fascinating and largely untold story of the earliest days of globalization, of innovation and entrepreneurial risk-taking, and of the creation of some of the earliest venture-financed companies in the world.
“What they did initially was to setup a company,” explains Targett. “This we think of as perhaps the forefrunner of all modern corporations. It was called ‘The Mysterie, Company, and Fellowship of Merchant Adventurers for the Discovery of Regions, Dominions, Islands, and Places Unknown.'”
This was a period when the newly-coined word, “company,” was just starting to become a part of the English language. In a fascinating bit of etymology, Targett explains how the word was formed through the conjunction of the Latin words, “com,” meaning “together,” and “panis,” meaning, “bread.” Together, the word loosely means, “the breaking of bread together.”
Of course, English merchants had supported and funded voyages for decades, and these had often been funded either by private individuals or private syndicates. “But the idea of going across the world required a higher level of organization and financing, so they set up this company which not only allowed them to pool their resources, but also allowed them to attract their resources from people who didn’t want to get involved in the mundane running of company.”
Like the startups of today, most of which are statistically prone to flop, failure was very much a part of the story. “It’s remarkable how many setbacks these people experienced and yet they continued to believe there was a pot of gold or a fortune to be made at the end of it,” observes Targett. “And, in a way, that driving spirit was key to these people. It’s another feature of a modern America that we feel needs to be traced back to before the Pilgrims.”
Targett compares these risk-taking, adventurous ‘forgotten founders’ of 16th and 17th-century England to one of the boldest entrepreneurs of our era, Elon Musk. “To some extent the people that we write about, these ‘forgotten founders,’ were venture capitalists. They were very much the Elon Musks of their day. Just as he is dreaming of new worlds, in his case Mars, their new world was America. And he’s pulling together some of the best minds to help him design some of the rockets and the spaceships that will be needed. Likewise, the merchants pulled together the very best minds of their days, the scientists, the navigators, the buccaneers, the marketers.”
“These ‘forgotten founders’ and the people they sent across were the first people to really experience and live the American dream. These were the people that often went across with nothing but made their place and made their home. They didn’t all make fortunes but they found a life, they found a place in society.”
Elon Musk’s ongoing criticism of the media took a strange turn late Saturday when he praised an analysis of media bias produced by a website linked to NXIVM, a group which federal prosecutors have described as an exploitative pyramid scheme. Keith Raniere, the group’s charismatic leader, was arrested in March on sex-trafficking charges, with charging documents describing a system of sexual blackmail and domination. The article Musk praised looks conventional enough, and there’s no evidence he was aware of its troubling origins—but the incident highlights the double-edged nature of campaigns to discredit the media.
Musk retweeted a link to an article on TheKnifeMedia.com Saturday evening, writing “This analysis is excellent.” The linked article applied numerical scores for factors like “spin” and “logic” to coverage of Musk’s recent critiques of the media, finding that outlets including The Wall Street Journal and the New York Times were “slanted.”
The problem with Musk’s endorsement is that The Knife, previously known as The Knife of Aristotle, has been linked to NXIVM, a marketing company that is allegedly a front for a secret group known as DOS, and which has been described as a cult by experts. NXIVM’s leader, Kieth Ranier, was arrested in March on charges of sex trafficking and abuse, including branding female members of DOS. The FBI’s efforts to rein in the group are ongoing.
Musk has since deleted his endorsement, which was archived by Slate. After being alerted to the article’s problematic origins, though, Musk seemed to double down, writing that the article “had better critical analysis than most non-cult media.”
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Links between NXIVM and The Knife/The Knife of Aristotle were unearthed last year by investigative reporter Brock Wilbur, writing in Paste. Wilbur found that the Knife shared leadership with NXIVM—including Battlestar Galactica actress Nicki Clyne—and speculated that its efforts to hire journalists were a form of recruitment for the broader group. The Knife and NXIVM have since scrubbed evidence linking the two entities.
Musk’s recent criticism of the media started as pushback against coverage of Tesla’s troubles, including Autopilot-linked wrecks, labor battles, and Model 3 production delays. On the Autopilot topic in particular, Musk has a very fair point—the event-driven nature of media coverage means a few wrecks could easily overshadow the life-saving potential of A.I. driver assistance.
But Musk has broadened his critique, painting the media as a whole as “holier-than-thou,” “sanctimonious,” and lacking integrity, and suggesting that he himself could restore that integrity by building a site to rate media outlets’ credibility. His attacks have invited comparisons to President Donald Trump’s remarks against the media, and highlighted Silicon Valley billionaires’ broader distaste for criticism.
Tesla stock dropped a bit after Elon Musk dismissed a some analyst questions, calling them “boring” and “bonehead.” The take from the business press was that Musk‘s behavior was “bizarre” (Marketwatch) and “irksome” (Wall Street Journal).
“The 2 questioners I ignored on the Q1 call are sell-side analysts who represent a short seller thesis, not investors.”
In other words, these were analysts who had a drum to beat (hardly an unusual circumstance, as I’ll explain below). Musk continued that the first question was boneheaded because
“it had already been answered in the headline of the Q1 newsletter he received beforehand, along with details in the body of the letter.”
In other words, the analyst who asked the first question didn’t bother to read the materials he’d been given (again, not unusual with analysts) or, if he did read them, he wasn’t able to absorb the information because he was filtering it through his preconceptions.
Musk continued to explain that the second question (about Model 3 demand) was absurd because
“Tesla has roughly half a million reservations, despite no advertising & no cars in showrooms [and] even after reaching 5k/week production, it would take 2 years just to satisfy existing demand even if new sales dropped to 0.”
In other words, the analyst who asked the second question either can’t understand, or is willfully deciding to ignore, basic math and simple logic.
Now, I don’t know those analysts personally and, for all I know, they may be frelling brilliant, but in my experience financial analysts are a fairly dim lot.
Look, anyone can be an “analyst.” The title carries exactly as much weight as “consultant.” Maybe less. To be an analyst, all you really need is the ability to look credible, ask obvious questions, and then write a semi-coherent paragraph that fits within the parameters set by whomever is paying your salary.
The only other job requirement is the shamelessness to promote the few times your predictions turn out to be true and quietly bury the many times your predictions turn out to be wrong. And even then, you can hedge your bets by being vague about the time line.
Analysts are never, ever called to account when their predictions go wrong. For example, Lawrence Kudlow has has been predicting rampant inflation for decades. But rather than being laughed off the air, he’s now Trump’s Director of the National Economic Council.
While clueless Kudlow might be an extreme case, there are dozens of similar examples. Just look at what happened to the careers all the analysts who were predicting Y2K disasters. (Hint: they moved on and got promoted.)
As for the analysts who follow Tesla, Elon Musk surely knows that most of them are full of bullsh*t, because the games they play are painfully obvious. No CEO of any intelligence (much less Musk, who is genuinely brilliant) would give a two-cent stamp for the opinion of ANY analyst on earth were it not for the lemming-like behavior of a certain class of easily-bamboozled investors, not to mention a small army of business reporters who depend upon the analysts for juicy quotes.
Seriously, imagine what it must be like to be Elon Musk surrounded by people of average or slightly above average intelligence who continually ask silly questions. It would be like you or me being forced to spend 24 hours answering questions from toddlers. It’s a wonder he doesn’t go crazy.
Anyway, what’s truly “irksome” about this entire situation is that, rather than asking ludirous questions, the analysts could have asked questions that actually meant something, like:
- “Why are you simultaneously promoting the idea of self-driving cars and the notion that AI constitutes a threat to humanity?”
- “How can you prove 100% that the supply chain for all your component parts have zero child labor or slave labor?
Yes, I realize those aren’t the sort of questions that financial analysts are supposed to ask at an earnings call but that’s the point. If you want to understand the earnings, read the damn report.
Don’t waste Musk’s time–or ours–trying to work your own lame agenda.
OpenAI, a nonprofit research lab started by Tesla founder and CEO Elon Musk released the salary details of it’s employees–and they are striking. The organization’s top researcher was paid more than $ 1.9 million in 2016, and another leading researcher who was only recruited in March was paid $ 800,000 that year, according to a recent article in the New York Times.
Salaries for top A.I. researchers have skyrocketed because there is high demand for the skills–thousands of companies want to work with the technology–and few people have them. So even researchers at a nonprofit can make big money.
It likely has more to do with competition than interest in the field itself, however. The Times points out that both of the researchers employed by OpenAI used to work at Google. At DeepMind, a Google-owned A.I. lab in London, $ 138 million was spent on the salaries of 400 employees, translating to $ 345,000 per employee including researchers and other staff, the Times reports.
OpenAI was started by Musk who recruited several engineers from Google and Facebook, two companies pushing the industry into artificial intelligence. People who work at major companies told the Times that while top names can expect compensation packages in the millions, even A.I. specialists with no industry experience can expect to make between $ 300,000 and $ 500,000 in salary and stock as demand for the skills continues to outstrip supply.
The most powerful threat to greatness isn’t evil. It’s mediocrity.
Of all the colorful ways to articulate that truth, one of the best is what Elon Musk told Chris Anderson of Wired magazine, back in 2012.
They were talking about Musk’s space exploration company, SpaceX, which grew out of Musk’s “crazy idea to spur the national will” to travel to Mars–by first sending a private rocket to the red planet.
He tried to to slash the cost of his quixotic dream by buying Cold War Russian missiles to turn into interplanetary rockets. While negotiating that deal, he realized that it wasn’t lack of “national will” that held the U.S. back from exploring space.
Instead, it was a lack of affordable technology–and the high cost, he told Anderson, was the result of some “pretty silly things” in the aerospace industry, like using legacy rocket technology from the 1960s.
Anderson: I’ve heard that the attitude is essentially that you can’t fly a component that hasn’t already flown.
Musk: Right, which is obviously a catch-22, right? There should be a Groucho Marx joke about that. So, yeah, there’s a tremendous bias against taking risks. Everyone is trying to optimize their ass-covering.
That’s the quote that I liked so much, especially those last six words: a “bias against risk,” because everyone is “trying to optimize their ass-covering.”
It’s funny–but also poignant. And, of course, it applies to a lot more than space exploration.
It applies to the vast majority of successful companies that get stuck producing legacy products–because they can’t risk that innovation might upset their own profit models.
It applies to the service providers that make a mockery of the word “service” (say for example, big airlines and utility companies)–because cost-cutting with crappy service maximizes shareholder value.
It applies also to temptations in our personal lives, and in the lives of those around us.
Think of the colleagues you know who hold onto uninspiring jobs for fear of going after the careers or entrepreneurial dreams they really want.
Or think of the friend you might have (I think most of us do), who stays in a lousy relationship because he or she is more afraid of being alone than of living with less than they deserve.
We’re all a little bit afraid of risk. Yet, each day represents a new chance and a new beginning. At the start of the year, that sense is especially acute.
And sometimes we need a little inspiration to take the leap.
Whatever is the thing you’re afraid of trying–a new business, a new adventure, a new relationship–maybe now is the time to give it a try.
Cast aside your risk aversion. Be uncomfortable for a while as you try something new. Accept the chance that you’ll fail.
Don’t optimize your ass-covering. Instead, optimize your opportunities. And find your own mission to Mars.