The early days of Tesla Inc TSLA and how the company managed to not go bankrupt along the way were among the topics covered with CEO Elon Musk in an interview with the Tesla Silicon Valley Club.
Early Days Of Tesla: There is some debate as to who founded the company that is now known as Tesla, a world leader in electric vehicles. A lot of the debate comes from Tesla co-founder Martin Eberhard, who according to Musk has launched a campaign to get sole credit for creating the company.
“He’s the worst person I’ve ever worked with, and I’ve worked with some real a**holes,” Musk said.
Musk said the creation and idea for Tesla and electric vehicles came from a lunch meeting with co-founder JB Straubel. The duo discussed electric vehicles and battery technologies, which eventually led to a test drive of a vehicle from AC Propulsion.
Musk and Straubel were introduced to others interested in commercializing an electric vehicle, which eventually became Tesla.
Musk said at the time, Eberhard and others had nothing that would be considered a company, with just an empty shell corporation with no employees and no intellectual property. The general idea of commercialization was shared by everyone.
“There was no company,” he flatly stated.
If Musk had not met with the other Tesla co-founders, he thinks he would have launched a company with just Straubel, which would have saved “a lot of grief along the way.”
“I would’ve moved forward and created Tesla, could have avoided a lot of drama in the early days,” he opined.
Eberhard was eventually fired by Tesla and is credited as a co-founder to this day.
“I wish I had never met Martin Eberhard, he’s the absolute worst,” Musk reiterated.
Even with his contempt for Eberhard, Musk credits Eberhard as one of the five co-founders of Tesla.
Moving On, Investing In Tesla: Musk liked the name Tesla Motors for the company and sought to get the copyright, which owned by someone in Sacramento. Musk recalls paying around $75,000 for the trademark, which was a lot at the time, he said.
Musk said investing in the company was important to him, and highlights that the important narrative is Eberhard could have done so a well.
“Eberhard was unwilling to risk money in the company,” Musk said.
Musk recalls Eberhard having successful companies prior to Tesla and living in a $10 million home. Musk said Eberhard could have matched the investment in Tesla that he made.
From the beginning, Musk oversaw the Tesla product and served as what he called the Chief Product Officer. He said it was rare to see someone who is the Chief Product Officer also be an investor in the company, something that confuses people on the origins of the company.
“If you’re not prepared to invest your own money, why should you ask others to invest.”
Musk said a lot changed for the car design and getting the vehicle to production after executive changes, which also saw Musk transition into the CEO role.
Related Link: 5 Things You Might Not Know About Elon Musk
Resisting Bankruptcy: One story Musk has told over the years is how close Tesla was to bankruptcy. In 2008, the company struggled to get financing and was close to bankruptcy.
“That’s when bankruptcy was knocking at the door, 2008 through 2012,” Musk said.
Musk had $40 million remaining from his sale of PayPal Holdings PYPL in 2008 he said.
One of the toughest decisions he had to make was what to do with his reaming $40 million as Tesla and SpaceX, two companies he founded, both struggled. Musk recalls he could’ve put all the money into Tesla or SpaceX to increase the chance of that company being successful.
Instead, he split the money as he saw the companies like kids.
“How can you let one kid starve?”
Tesla also received funding from some existing investors and from VantagePoint, which Musk refers to as “the worst venture capitalist on the face of this earth.” Musk calls VantagePoint co-founder Alan Salzman enemy number two.
“What a douche,” he said in describing Salzman.
Musk said Salzman is second only to Eberhard in being "a douche," recalling that Salzman wanted Tesla to go bankrupt and also prevented other investors from supporting Tesla due to having blocking rights on equity rounds.
SpaceX was helped by its fourth launch, which reached orbit. Musk said if it hadn't been a success, SpaceX would have failed.
Photo: Created with an image from Ministério Das Comunicaç on Flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
