elon r u ok
Support for this episode of today explained comes to you from Tom's they sell shoes and also I wear and for a limited time you can get fifteen percent off plus free shipping on your first order of shoes, or I wear when you visit Tom's dot com. Slash explained. Liz, the pod, you host a segment on the podcast, the verge cast called this week in Ilan here. It's now a newsletter to is this true? Yeah, that's right. There's just so much news about Elon Musk that it can be hard to keep up. Carmaker tesla is now facing a criminal investigation over statements made by their CEO Elon Musk, musk, bombshell tweet last month about taking tesla pilot has set off an investigation. I don't for that is potential jail time as well as billions of dollars mosque under fire after taking a hit of marijuana. Mixed with tobacco use. The only game in town is his best thing that since Thomas Edison. Well, here's like a big broad question that I want to ask you before we talk about all the news does Alon musk matter. I would say yes, and I'll tell you why a lot of what he's doing does indirectly or directly affect people, even people who don't necessarily buy cars, like tesla or who aren't necessarily into rocket launches because he tends to be somebody who uses a lot of government money and government money comes from ause. All of us the taxpayers. Can you give me like some of his his sort of moonshot ideas? What are the craziest things that Elon Musk wants to do because he is a dreamer, right? This whole thing is that basically after he made his fortune from pay pal, he was like, I don't think people are dreaming big enough. And so he sort of moved into the transportation sector. So you have SpaceX which pioneered reusable rockets SpaceX is announced sending Japanese billionaire up around the moon. You have tesla, which made the electric car sexy. This is the new tesla model three, and it is the coolest car that's coming out this year. And then there's some other things that have been sort of floating around. So he released a design for something called the hyperloop, which is a very fast transit. And it's basically a train in like a vacuum tunnel. It allows you to get to very, very high speeds so that you could potentially go like seven hundred and sixty miles per hour. So it's able to move you from Los Angeles to San Francisco within city six minutes. Perhaps it's like a subway on steroids. He recently founded the boring company which is a tunnel, boring endeavor. That's meant to help with decreasing traffic in a city, notorious for traffic congestion and gridlock. Elon Musk's boring company today got the may oral nod to dig deep tunnel for a high-speed trip from downtown Chicago to O'Hare airport. And then also there's sort of the scifi company neural link, which is about brain machine interfaces basically about putting implants in your brain so that you can talk to a computer. Wow, very impressive. So this guy who spends his time dreaming about space exploration and revolutionizing transit and modifying. Our brains isn't a whole lot of shit right now because of a tweet. Yeah. I mean, look, if there's only one thing that I can get you to come away from this with it is the danger of tweeting and that the smartest thing we can all do is just never tweet. Because social media is such a huge part of this story and like so much of what has happened has happened on social media that it feels a little surreal even for Eli, musk. Oh, let's let's start with that tweet which musk says he sent while he was driving. Never good sign when you tweet while driving and it's particularly true if the thing you're tweeting about is the largest buyout in corporate history in his post must said quote, and considering taking tesla private at four hundred and twenty dollars funding secured at four twenty dollars. That's for twentieth share. When did he tweet that August, seventh. Now this is material information when you make go private offer, that's material public disclosure that you have to tell the SEC about and he just tweeted this. What made it even crazier is the fact that it appeared that he basically didn't have any money to do it, which is fine. Like if you were, I say, I'd like to buy that car, but you know, he has investors. The SEC is now involved in bothered. Discussing this with his board apparently. And then there was nothing for several hours. And then there was this blog post on tesla and my initial reaction to that tweet was like, I thought it was a, we joke like four twentieth Shera. But then it turned out based on the blog posts that this was actually to some degree serious. It was the most elaborate we joked you've ever heard. So there was just like it was just pandemonium. Shares of tesla, they're down since the Alon must tweeted that he wanted to take the company private. Some investors are pushing back on his plant, urging him to keep this company public. Just in case it's unclear. He's taking this company private. It's a publicly traded company. It was before that, obviously, private. What does that really mean? A private company isn't traded on public stock exchanges, and that's a really, really good way being traded on a public stock exchange to raise capital if you need it. And that's why tesla went public about ten years ago was was to get a capital infusion, but there are regulations about how a company that is treated like that can behave and how much they have to disclose. So for instance, every publicly traded company discloses its financials every quarter that's required there. Again, I mentioned certain forms that the company has to file with the SEC whenever it makes a public statement, basically just to try to prevent insider trading. How does he law on musk react to the sort of chaos that ensues after he's ends its tweet. This is again going to be a cautionary tale about social media according to Zia banks, who for those of you who do not know is a musician who sort of shot to fame with the song to onto several years ago. I can be the answer advance when to be above. And when you get to him the net this pampa in the shoes, actually staying Elon Musk's house because she was planning to record a song. With Musk's girlfriend who's also musician named Grimes. And so Zilly a bank's. She made a number of accusations about mosque about what was going on. What was she saying about you almost get the time she alleged drug use was involved when he had been tweeting. So that was that was pretty explosive. And shortly after that, the New York Times, does this interview with him where they mentioned that the board is concerned by Musk's use of Ambien and possibly other recreational drugs, and she was actually confirmed to be at Musk's house like that was something that that reporters did nail down. So salia banks says that, you know, musk is on acid. We don't really know if that's true or not. The company's sort of trying to figure out where exactly it stands. What happens next test, the puts up a post on their website, and I remember this it was. It was a Friday night. I had just finished eating dinner and they're like actually were were not going private. You know, we talked. Over, we wanna keep our shareholders involved. And there doesn't seem to be a way to structure that in additional. You know, our institutional shareholders can't necessarily participate in a private company. So we're abandoning the whole thing. How do people react to that? God, I'll hell breaks loose again. One of the things about being publicly traded company is people can bet on your company, right? So if I buy a share of tesla, I'm betting that the company is going to succeed in that my share is going to be worth more money. You know, at some point in the future. But one of the things about public markets is that you can also bet a company is going to fail or going to suffer a setback, and you do that via shorting. And if I do this right, if the the, the price of the share has decreased, I can potentially make a lot of money, right? And the short sellers are essentially betting against tesla, and it's something that you on musk has really heated. He's been on this campaign all this year about short burn, and you know, shortsellers had better had better stop roles. You know they're going to really regret it, but sounds like an empty threat, right? Like the distract really. And so that does raise some questions in some people's minds about what the motivation for that go. Private tweet was. Does he on musk face any consequences for sort of playing with investors psyches like this sort of on a whim? The first thing that happened was that he was immediately hit with a wave of shareholder lawsuits. There were a bunch of people who basically were like, this is market manipulation. I'm suing you for securities fraud and to be clear like any kind of legal action that's expensive, but then. The next thing that happened was the security and Exchange Commission opened an investigation, and there's sort of some questions about what specifically is being investigated and what the details are. But there are a number of questions about whether that tweet was actually a legal thing for him to have done. And now this week, the department of Justice is looking into that tweet to. Yeah, that's actually significant with a statement from a spokesperson for tesla. Tesla received a voluntary requests for documents from the DOJ. We have not received a subpoena a request for testimony or any other formal process. We respect the DOJ's desire to get information about this. The DOJ pursues criminal cases and the SEC pursue civil cases. A criminal investigation is pretty serious. And so that's the sort of thing that makes investors nervous. Like right after Bloomberg reported on the criminal investigation tesla shares dropped about seven percent. They did recover before the end of the day were only down three percent, but still that gives you a sense of the worry that people are feeling. So what's at stake for you on musk and even tesla them Tesla's not making money right now. The the company has never posted an annual profit. It's ten billion with a b. dollars in debt and billion. That's a lot of debt, especially if you aren't making money and that's troublesome and scary and like potentially can destroy. Tracked from the main mission of trying to put out cars. But the other piece of this is that this this company is really tied up in Elon Musk's personality, like people really believe in Elon Musk, they find him very inspiring figure it will call you the real Tony stark. You've got your finger in so many different Vance technologies. As I said, SpaceX tesla. Now you've got solar city and the solar pack that people put on their house. Are you sincerely trying to save the world. Well, I'm trying to do good things. Yeah, they love that. He is like dreaming big about what the future of transportation could look like. And to some degree, they have a right to to do that. Because again, like tesla revolutionized electric cars. They were like boxy. They were clunky. People didn't want them and Tesla's first car the roadster when it came out like it was a car for car people and it was electric. So that totally changed the game in terms of the electric car marketplace, right? Like that's why we have all of these electric cars entering the marketplace now, and now all the rappers I listened to, they rap about Tesla's instead of Mercedes Benzes. Yes. Feel plaza a more fucking, put up an attempt. Color, Satan. McClair tesla used to talk about pocket next. Tessema black Desta tesla. Was. Right? I mean, like it's, you know, it's really a status symbol, and it's like all of that is tied up in the idea that you Lon mouse because visionary and somebody who can really move us to the future. And so you know if he is implicated in some kind of fraud that potentially really tarnishes his image and Tesla's image, do you think that all of the controversy and now these federal investigations that have ensued since he sent this dump tweet just a bit over a month ago is the reason he wanted to take the company private in the first place? Well, so here's the thing. He's never liked publicly traded companies. If you read actually Vance's biography, which is really great if you wanna get a sense of like this guy and his history actually Vance rights for must going public represented something of a false chin bargain. Because even though an initial public offering like tesla had can raise a substantial amount of money, it comes at a cost, right? You have to do these disclosures. You have to basically open your books. You open yourself to the possibility of being shorted. There's just a lot more. Scrutiny on you and potential pitfalls that can come with a publicly traded company. And musk was very clear about that like years before this tweet. So why was tesla publicly traded company to begin with? I don't think they had a choice. Two thousand eight was that was a really, really rough year for the company. They were on the verge of bankruptcy. They just barely got saved. Basically, he got forced into going public in order to make the company continue. And I think he's regretted it ever since. Can Elon Musk save himself from Elon Musk. That's next on today explained. Neon. Sexual Kate out to England, must must must must was was was, was was okay. I'm here in the studio with all of the shoes that Tom sent us that we've been talking about all week laid out on the table. Tom's makes all kinds of shoes, high tops, low tops. They got this two panga Kenyon collection that's thrown back to California in the sixties and seventies, and they've got vegan shoes, don't eat them. They're just not made with animal products anyway. Luke's about to come in here, and I wanted to show them all of these and don't forget before it gets here that you can go to Tom dot com slash explained and get fifteen percent off your first purchase and free shipping. Here. He comes. Look at all these shoes slot of shoes, right? Yeah, this is crazy. I'm willing to to wage this currently with the two year wearing and the two, I'm way the most shoes that have ever been in the studio. I, yeah. Well, I I don't know how many people have we had in here before, like max, like four had, who knows if they're wearing shoes, right. That's the time we're barefoot over. True. So which one of these do you think you'd like to take home here? Vendor Pook. Well, none of them will fit me intend to anyone at Tom's is listening. Yeah, no kidding. What's your size again? Your size again, ten and a half or eleven ten. Oh, into the folks at home, don't forget about the last scene podcasts from WBU on the Boston. Globe last seen investigates the largest unsolved art heist in history. The theft of thirteen pieces, half a billion dollars worth of art from the Isabel. Stewart Gardner museum in Boston. Is weird is you on must come from? Well, he was born and raised in South Africa. He moved to Canada, and then he came to the US for college, and he's been here ever since he did make his his fortune through two companies in the nineties zip to which is not necessarily well known, but was originally meant to help newspapers, put their content online and then pay pal which people do now pretty well. And that pay pal really is where he made his fortune. And does he become like a Steve Jobs type figure after pay pal, or is he still more of like a behind the scenes type of guy. He's in the mix and people in the tech industry know who he is, but he's not like the kind of celebrity figure. He eventually becomes. There's this anecdote that he he keeps returning to, which is that he nearly died from malaria in the early two, thousands, and that re framed his entire life for him and change the problems that he wanted to work on. And so it's after this, you see him starting SpaceX. You see him becoming involved with tesla. There's some controversy about whether or not he counts as a founder, but you see him starting. You see the beginnings of of the sort of celebrity entrepreneur. He becomes ladies and gentlemen on behalf of all of my colleagues here at Tuzla. It is my honor to welcome to the stage Mr. Yulon month. And so what's the initial promise of Kessler? Well, the idea was essentially that you know, gas cars are ruining the environment exist. Why? Why are we making cars as because it's very important to celebrate transition to sustainable transport, really, really big automakers weren't pursuing electric vehicles because it was, you know, against their interests basically. So this was kind of like a standard Silicon Valley disruption in some ways where it was like, okay, we're gonna make a really, really great car. We're going to re imagine what a car can be. We're going to have it run on electric city because we think that will pollute less and we're going to just change the entire auto industry and how does he fund this thing? Can a billionaire just start a car company. Is it that easy? Well, all of his companies have substantial amount of capital from him, but he's also been very good at looping in other investors. And then on top of that. That one of the things that he's shown himself to be really good at is taking advantage of financial incentives offered by the government and working with government programs select for electric cars. For instance, there's a tax credit until you get to a certain number of cars produced that allows consumers to pay less for the cars. They basically get paid back by the US government if they buy an electric car because they're saving the planet. Right? Exactly. So he's been very good. Like finding these kinds of incentives and operating on them in such a way to keep his costs down and to make his products look more appealing. Like if you look at SpaceX like its biggest client is NASA and NASA is obviously a public endeavor. Right? And this week he announced he's sending a Japanese billionaire to the moon with SpaceX and Tesla's have become this status symbol for all the Ritchie's out there. I think his motivation was essentially to start with it as a status symbol, and then make an electric car for the masses, which is what the model three was supposed to be the. Tesla model. Three isn't just a new electric car. It's the culmination of over a decade of careful strategic planning to achieve Elon Musk's gold and the the low end model. Three is about thirty five thousand dollars, and that's not being sold yet. But the idea was that like, okay, we'll start with the wealthy people because we can make more money off of them, and that will let us expand to the masses. And I, I, I want to say that this is kind of not that unusual in the tech industry because like remember when the iphone launched and it was so expensive and like people were standing in line and it was a status symbol. People were stealing them from each other on the street, right. And like now you look around and like iphones have like what, like half the market. So it was probably a some kind of notion that he could do that with cars as well. That motivated this idea of the high end luxury product. Look, sexy makes people want it allows you to lake, you know, finance the company a little bit, and then you can make a mass market vehicle. So when when our liveries. Their next year. I do feel fairly confident that it will be next year. So the model three has experienced a number of production delays like he wanted to totally automate production and it turned out that wasn't possible. There's been a lot of reporting about accidents on these Sembler lines. There's been some skepticism about whether he can actually meet these very aggressive production targets he has. So the model three is actually filled with question marks, well, how's that making the company look right now to its public investors or to anyone. Here's the thing you on must because really, really strong fan base like the kind that you would see with like beyond say. And I know this because every time I read about him, the Email me. The thing that's been interesting over the course of the last I would say years. So is that for a long time if I wrote anything about Elon Musk that was perceived to be negative, I would just get flooded. And now if I write anything about Ilan musk, that's perceived to be positive. I also get flooded. There's like these two very strong camps of Elon Musk is a dreamer and visionary who's going to revolutionize society, and then you know, Elon Musk is this jerk and we don't like him and we think he's a bad CEO and it's really sort of difficult to get these two groups of people to talk to each other. But what I will say is that tesla shares have fallen this year fairly significantly. So that looks like some loss of confidence. And you know, there's been more and more bad press around tesla in terms of working conditions and in terms of their financials, right? Like the model three, the mass market car was the thing that was meant to get them to profitability. And as all of these production delays have piled up, people are like, well, maybe they're not. Maybe that's not it. Maybe they're not going to get to profitability on the model three. And let's remember their ten billion dollars in debt. And on top of all this, you've got you on stirring up all sorts of shit online ES. So he's been like tweeting angrily at shorts. He's been tweeting angrily at journalists. He's been tweeting angrily at a lot of people, and he called the cave diver who's trying to save some kids in Thailand. A pedophile. Oh God. Yeah, the cave divers now, soothing for defamation. I mean, it seems like he might be sort of losing it a bit. Oh, this is what's interesting to me because. I'm not sure that he actually is like Owen Thomas yesterday in the San Francisco Chronicle who's been covering most for quite some time. It was like, you know, musk has always been like this. This is what he's like, and that sort of lines up with what I've seen is well, like he's gotten choked up at shareholder meetings. Maybe a little cheesy, but at at tesla, we, we bought causing with love like we really care. I think a lot of other companies, they're both by the the marketing department and the finance department, and. There's no soul, you know. So like we're not perfect, but we, we pour a heart and soul into the park. We really care. He's just you. He's guys got a lot of feelings, but there's definitely like a narrative that Elon Musk is losing it, and that narrative seems to be gaining steam. And that sort of started with the shortsellers who are like, you know, it seems like you on Busk is maybe not a very good CEO and it's just been rolling on since then. I don't want to root for this guy to lose. It feels like he's mostly trying to realize future that we were all promised as kids and that's something to root for. Let's one of the reasons why I have a hard time coming down on how I feel about Elon Musk, right? Like there's this narrative that he's a villain, and there's this narrative that he's a hero, and I don't think either of them are true. I think that there's something much more interesting going on, which is that the sky is complicated. He may be sabotaging himself basically out of ego. From accomplishing the very things that he wants to do. Listen, like, I love SpaceX. I love those rockets. I think there is really exciting to have, like, you know, this kind of focus on space. Again, like to have this moment of like people getting excited about space exploration, right? Like that's cool. And like I have a hard time objecting to electric cars. I think that's probably a great harm reduction measure for, like, you know, making the world be a little less polluted. Like, how do I feel about Elon Musk's part of my brain like burned out a couple of years ago, and I pretty much just popped myself some popcorn and I'm like, all right, buckle up. Is part of the problem that he's experiencing right now. Maybe that he just has too many big, huge dreams and he's spread thin across all of them. I think that's a really reasonable question. It does seem like a lot of projects. It really does seem like more than one person can handle. I mean, one of the things that you might remember about apple is that Steve Jobs was thrown out of the company. You know he, he was running the company into the ground and he got thrown out and he did, of course, eventually return and basically lead apple to to to new heights that the company had an imagined before, but he did have to wander in the wilderness for a while. It's it's not unusual for people who are really good at being founders to maybe be not so great at doing the operational boring day to day of of being a leader. So you're saying that someone needs to get ill on Musk's some help, and maybe just changes, Twitter password and things will normalize for the. I think that that's a very real possibility during the sort of kerfuffle around will tesla go, private. One of the questions was, is somebody going to hire a number two for him because he seems to be doing too much. And the question becomes like, who. Is that at tesla who wants to come in and be that person and who can do that for him, and is he opened to it even I got a proposal, Connie west. Everyone of this rove is inspired by you. Who are you? Which. What kinda west obviously. It's a good comparison though because I think that there is like an element of creativity chaos and a certain propensity for shooting oneself in the foot that both of those guys have what could go wrong. Louisville Pado is the deputy editor at the verge. I don't care. I'm Sean Rama's firm pedigree, this is today explain. That's interesting. Our executive producer that's Irene Noguchi. One hundred percent are editor Bridget McCarthy. I don't believe that. No, I'm Hassenfeld produces the show. Awesome. At least scars, say, helped out this week, give voice. It's so strong and you might have heard of Luke Vander Pook. Why are you so focused on just clothing fumes, Shapiro's our engineer. We're so jacked up on our own egos and the resourceful brake master cylinder makes music for us. I don't care about what position nobody get. We've had two interns for the past few months was their names are Catherine Wheeler. Why you mad and breezily we'd Rockstars breeze graduating this week and we're going to miss her. Thanks for everything. Bring I that anything anything's possible never tweet, but follow today explained it today. Underscore explained shutouts to Julie Bogan for all the money tweets, and you eat the helping me, but you. Are you hurting me today explained is produced in association with Stitcher, and we are part of the vox media podcast network, and thank you very much. The whole thing with Tom's is you buy thing and then Tom's will help a person in need. Get that same thing. And for a limited time you can get fifteen percent off plus free shipping on your first order of shoes or eye glasses at Tom dot com. 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