Elon Musk, Tech’s Cash-Poor Billionaire | Hacker News Reader

Elon Musk, Tech’s Cash-Poor Billionaire

wsj.com

68 pointsabhi356 comments

It'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.

Very 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.

Either that, or Musk fails and brings down all the things propped up by his charisma and enthusiasm... and the world learns a lesson.

The 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.

I'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.

Theres 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.

He constantly praise or give credit to his teams, even full credit where it is due.

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.

Yes? All the bucks stop with him. He makes engineering decisions, bad or good. It doesn't matter if he doesn't have the relevant degree or did the calculation on a particular project.

What cracks are showing more than ever before?

I honestly know a lot of scientists who get really upset because Elon shows you don't need a degree to do any of that.

> But trusting all of the future to just one guy

Part of the problem is not trusting the future to one guy, but rather that there is hardly more than one guy to trust it to. Where are the other Elon Musks? We need more people like him, not less.

Oh yeah. I've been on about that for years. If extreme wealth or political power were a meritocracy most billionaires and high-ranking political officials would be similarly productive and competent and he'd be average for his socioeconomic class. There should be hundreds and hundreds of Elon Musks at least.

> There should be hundreds and hundreds of Elon Musks at least.

I'm not sure I agree.

I like Elon Musk (a whole lot more than most people) - but every Elon Musk consumes a lot of societies resources. He's spending 10s or 100s of billions of dollars worth of resource on (literal) moonshots. A hundred of him would raise that to trillions to 10s of trillions of dollars.

I think we can afford the former as a society (and that it benefits us). I'm not sure we an afford the latter. Worse, we become less efficient at is when there are more of him because we start running out of talented and driven engineers.

Maybe 10s would be a good order of magnitude.

I think you are underestimating how much we waste. The resources are consumed regardless.

Maybe it is the other way around; we can't afford _not_ to spend 10s of trillions on moonshots. Depends on how sustainable one thinks the status quo is, and the risk timeframe for potential consequenses.

It also depends on how much you think you increase the risk by disrupting the status quo, and how much you think extracting 10s of trillions would disrupt the status quo.

The people in charge in America only fail upwards, never down.

Is that statement tautological?

No. 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.

If 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.

> 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?..

I 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.

Google has been anything but a hollow shell from a shareholder's perspective. They've gone from strength to strength.

Google was wildly successful under Eric Schmidt.

Yes 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.

I think it depends on why Tesla goes Chapter 11 and who acquires it.

If it's because he did something entirely insane you're probably right. If it's because market conditions shifted post Covid-19 I think he's been enough of a rainmaker that people would likely still leave him in charge.

If a friend of his who is willing to put up with his antics (e.g. Larry Page) managed to acquire it, it's probably more likely than if risk adverse/sensational personality adverse institutional investors acquired it.

Admittedly at this point I doubt Larry Page would be able to easily front the money any more... Tesla's assets have grown substantially in value since back then.

With 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.

I 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. :)

> 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.

Didn'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.

That’s literally the article?

Everything 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.

> 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.

Seems 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.

Perhaps Starlink will save him. It does have the potential to become a money printing machine.

http://archive.md/0ncZV

Link gets a DNS Resolution Error for me.

> 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

As 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.

Yeah, 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.

> 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.

The 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.

Propaganda machine? Give us examples Of what you mean

It 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.

Pay walled.

Hit the web button at the top and then the first link

Elon uses four personal jets guzzling who knows now much gas. He practically flies 24x7. When it comes to climate, he is a hypocrite.

Elon 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.

I 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.

Remember 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.

Take a close look at the actual terms of what is required to be reviewed by the legal team.

He 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.

Lol. 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.

> 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...

Order denying the SECs contempt motion as moot following the entry of that consent agreement: https://www.courtlistener.com/recap/gov.uscourts.nysd.501755...

> Even if you think it did, you're blindly assuming that this tweet wasn't reviewed

Musk said it wasn't reviewed:

https://www.wsj.com/articles/tesla-stock-falls-after-ceo-twe...

His tweets in general are not reviewed. He does not respect the SEC:

https://www.youtube.com/watch?v=SIzGdoPu9vs

> Musk said it wasn't reviewed:

Huh, I hadn't seen that. You're right (upvoted you).

> His tweets in general are not reviewed. He does not respect the SEC:

I'm perfectly aware, I'm the sort of weirdo who reads the court filings in these lawsuits. I was hoping that he would have been ... cautious ... enough to get this tweet reviewed against the general policy since it is pushing the boundary of the agreement.

> Remember 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 said he could've taken it private at $420. Tesla is trading over $800 today. So he probably wasn't lying.

> Something legal would never allow him to say, especially if he is on the verge of exercising options.

If he were exercising his options, he wouldn't want the share prices to drop.

> 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.

People like you have been saying this for years. I remember the haters/journalists/etc claiming tesla was going to go bankrupt, SEC was going to remove musk, the "pedo guy" was going to ruin Musk, etc.

If you want a good laugh read the article and the comments. It's amazing how little journalists know about anything and how wrong online commenters tend to be.

"Is Elon Musk trying to commit ‘suicide by SEC’ by taunting the agency?"

https://news.ycombinator.com/item?id=19259911

There are dozens more if you feel like searching.

Reply on news.ycombinator.com