Elon Musk: A Call for Restraint

Elon has strengths and weaknesses, like we all do.

Elon’s strengths are that he is able to see how to achieve big and audacious goals and take the necessary risks to get there.  He’s not afraid of taking big risks as long as they are reasonable risks and the goals are achievable and worthwhile.  He does this better than almost anyone on the planet.

A lot of people when they reach a certain status (ie., with wealth, or company, etc), they tend to want to preserve what they have, and that becomes a main motivating factor in decisions they make.

It’s rare to find someone who leads a large company (ie., in the tens of billions of dollars market cap) or has great wealth (ie, billions of dollars), and who is able to not have preservation as a main or at least one of the main factors in decision-making.  Elon is unique in this regard, and I think it will serve him well in the future as it has in the past.

When a company reaches a certain size, (ie., tens of billions of dollars in market cap), investors like to see a certain amount of reasonable stability, and this also entails the behavior or the CEO.  Imagine if Bezos or Zuckerberg got into continuous Twitter spats with trolls.  Or if they smoked weed on TV/Youtube.  This doesn’t instill confidence.  Rather, the opposite.  Most CEOs are able to understand and appreciate this dynamic.  A rare few don’t, and most of them don’t last.

Elon values his freedom and the ability for him to express himself however he wishes on Twitter, but also to be honest and forthright in interviews as well.  This shows good intent.  But for him to smoke weed on Joe Rogan’s show in front of millions, this lacks discernment and the awareness that hundreds of thousands of his shareholders and employees and contractors are relying on him to be their leader – and a leader who instills confidence, stability, and trust.

For those shareholders, employees, contractors, suppliers, and others who are disappointed in Elon’s smoking weed on Joe Rogan’s show, I share that disappointment.  Elon should do better.  Those counting on him deserve it, and Tesla’s mission is so critical everyone at Tesla deserves better.

Regarding Elon’s pedo accusations, I understand that his is a sensitive issue especially with Elon’s family history (ie., his father having a child with his stepdaughter), but Elon needs to use more discernment here.  If he has clear evidence against the person, he ought to hand that over to media and get it out there.  If he doesn’t, then he needs to move on.  Again, hundreds of thousands of people are relying on Elon to be their leader, and they need a leader who will not loosely accuse without evidence, but one if he is inclined to accuse will do so appropriately and with ample evidence.

Lastly, it’s clear that Elon appreciates the power of long, hardworking hours… or what he calls high energy.  However, working too long hours can have adverse affects on one’s health and relationships, and that’s a very high cost.  Further, it can leads to a multitude of mistakes and mishaps.  Thus, excessive work expectations require some restraint, not only toward himself, but especially to those who he’s working with.  If this isn’t controlled, it could backfire and lead to unnecessary turmoil, turnover, and low morale.

Today’s stock price is lower than what it was 4 years ago.  And the blame need not go out to short sellers, the media, or big oil.  Rather, Elon and Tesla need to look introspectively, and control what they can control.  What one tweets can be controlled.  What one says and does can be controlled.  And it ought to be.

Doug Field is back at Apple

From John Gruber (daring fireball.net):

Here’s some interesting hiring news I’ve heard through the little birdie grapevine:1 Doug Field — who left Tesla in May after overseeing Model 3 production — has returned to Apple, working in Bob Mansfield’s project Titan group. Apple spokesperson Tom Neumayr confirmed with me only that Field has returned to Apple, but no one should find it surprising that he’s working on Titan.

Doug Field who oversaw Model 3 production knows more about the Model 3 vehicle and production process than almost anyone at Tesla, besides Elon.  And know, just a couple months after leaving Tesla, he is back at Apple and supposedly working on Apple’s car project.

I can’t imagine Elon is very happy about this.  Doug Field was a trusted lieutenant for Elon, and someone he relied on heavily in many regards.  And now Doug Field has left to go to Apple to make a possible competing car.

Gruber also makes an interesting point:

But I think it’s an interesting hire, primarily because it suggests to me that Apple still has an interest in making actual vehicles, despite reports that the company has scaled back the project to merely make autonomous systems for inclusion in vehicles made by other companies. That rumor never really made sense to me anyway — Apple’s modus operandi has always been to make the whole widget. Apple makes products, not components.

In other words, Apple is not about making a component of the car like the infotainment or the autonomous driving function.  Rather, Apple’s approach is to make the product, meaning the car.

Though probably unlikely, I do wonder with Apple hiring Doug Field so quickly, Elon also was also about to find out more about Apple’s plans.  And while I’m sure Elon is confident Tesla can withstand and beat out Apple in the car business, still there might be some concern over how the public markets might react when Apple releases a car and how much it might hit TSLA stock.  As a private company, Tesla’s private valuation would likely more more stable and somewhat insulated from events that tend to influence public sentiment.

Elon’s surprise

This morning Elon Musk announced that he is planning on taking Tesla private.

While this may be a shock to many, Elon’s rationale is quite clear and compelling. He would like to see less distractions and less short-term thinking for Tesla and he thinks that removing Tesla from the public stock market will accomplish this.

To understand Elon’s rationale, one must understand the plethora of propaganda attack that Tesla has been under over the past year. It’s been evident to many that there’s been a coordinated and efficient plan for those wishing to see Tesla fail to tarnish Tesla’s image and to hurt their chances of success. (Read this post about short sellers by jesselivenomore on TMC, https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/).

Over the past several months, I’ve been suggesting that Tesla has been losing the narrative around their company and story.

It turns out Elon has another plan to turn the narrative around. And his plan is if he takes Tesla private, then the negative propaganda around Tesla fed by short sellers will stop and this will ultimately benefit Tesla and their mission. Further, Tesla will be able to return to the public stock market at a future date, if needed.

I understand Elon’s plan and the reasoning behind it. In my opinion, Elon just wants to make amazing cars and change the world. He doesn’t have much interest in constantly defending Tesla in the media against a propaganda war. To Elon, all of that is just distraction. And Elon further isn’t seeing a lot of benefit of needing to deal with the fluctuating stock price, testy analysts, and quarterly expectations. Simply put, in Elon’s thinking if Tesla were to be free of all those pressures, they would be better in executing toward their mission.

And so, starting today we start the journey of Tesla possibly going private.

Going private is not a done deal since it needs to have shareholder vote for approval. However, with Elon holding 20% of the shares (thus 20% of the vote), he may only need another 31% or so, which would be fairly easy to obtain (in my opinion), unless he chooses to recuse himself from the vote.

According to Elon, in the event that Tesla goes private, all current shareholders would be transfer their shares to ownership in the new company. Elon tweeted, “My hope is all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.”

It’s going to be interesting to see TSLA stock price over the next weeks. As the proposal to take Tesla private goes to shareholder vote, those who’ve sold the stock short (35 millions shares) will need to cover (or buy back the shares). We might yet see the “short burn of the century” that Elon alluded to several weeks ago.

All in all, Elon’s announcement today was one of the biggest he has ever announced and will have major ramifications for Tesla and TSLA investors going forward.