Countless people who have financial motives contrary to the continued forward momentum of Tesla, contrary to the overwhelming interests of Tesla shareholders, and contrary to the productive inroads Tesla may continue to make in the war on climate change are now asserting a financial claim against Elon Musk directly.
My advice to Mr. Musk is to countersue these plaintiffs, immediately and publicly. In my estimation, it’s the only way to ensure that the larger public understands who those parties actually are: interests pretending to piously act on behalf of ‘common folk.’ The general public does need that information.
Now, as the sole remaining defendant, you DO very much have a right to face your accusers, Elon.
Please exercise that right for the rest of us such that the general public can very clearly see the ‘shareholders’ who are so interested in punishing you for a decision which I will conclusively show (below) was an excellent decision. Regardless of whether you made it solely or in effect.
Let’s see what their true interests are, and how many of them are actually current shareholders versus parties who took interest for the purpose of doing little more than causing the company harm via operational interference. Now is clearly the time to turn the heat all the way up on institutional investors who would see Tesla fail: simply forcing those parties to name themselves would all but ensure that the ruse is up.
Let me be clear about one thing which many of you may readily mistake: I don’t play for what many of you may consider ‘the good guys’ or ‘the bad guys.’ I care about the future of the planet and about telling the truth.
If I were playing for ‘the bad guys’ I might be interested in seeing Tesla fail. If I were playing for ‘the good guys’ I might take the criminal and civil abuse I suffered at the hands of Tesla personnel in various situations with a smile on my face. I’m more than capable of asserting my own rights and I don’t subscribe to the false dichotomies mass media promulgates.
There are more than just a few ways to determine the value of a company, and it’s easy to know that Solarcity’s value — prior to being acquired by Tesla Motors, Inc. — was significantly higher than zero. It now appears priceless, as I explain below. The presiding judge in this case, who I’ll leave nameless here, very much appears to be enjoying a few minutes of fame at everyone else’s expense and I have little doubt that he’s also being paid rather handsomely for his services:
You can baffle the rest of the world with your bullshit, Judge, but you aren’t going to do it without strenuous and public objection on my watch.
The following facts, registered in a document here
are more than enough, in concert with the information continued below, to establish that both Musk and the Tesla Board behaved more than reasonably considering the full span of information available to him at the time:
- The Board “decided not to proceed with an offer to SolarCity at [that] time because of the potential impact on the management team’s time and resources in the near term.” [Boldface added]
- The meeting minutes reflect that although Evercore’s presentation included a brief analysis of “various potential targets,” the Board did not discuss potential acquisitions of any target other than SolarCity.¹³³ This is surprising, to say the least, given that “Goldman Sachs & Co., which was a co-underwriter in Tesla’s $2 billion secondary stock offering that was issued just weeks earlier, publicly stated that SolarCity was the ‘worst positioned’ company in the solar energy sector for capitalizing on future growth in the industry.”¹³⁴ [Goldman Sachs & Co., has not handled its investments in this or any other sector to such a uniformly successful extent that anyone could consider it the “gold” standard other than by name alone, and the assessment above has since been proven false if by no other means than by both of the videos attached below. It is certainly not the place of conventional investment houses to throttle the forward momentum of innovative companies based on the overly conservative assessments that allow them to amass their fortunes as a general rule. Their judgment is, strictly speaking, immaterial to the case at hand.]
- Musk and Gracias, both directors of Tesla and SolarCity, recused themselves from the June 2016 Special Meeting while the remaining members of the Board voted to approve the offer for SolarCity.
The balance sheet of a company — regardless of whether its debt exceeds its existing tangible assets — is neither the sole nor even consistently the most relevant measure of that company’s value. Its state of development, physical location, talent pool, direction, and intellectual property are nowhere near as readily quantified as the real estate and buildings it owns.
Tesla Motors is clearly an excellent example of intangibles exceeding tangibles. Its success is what brings this case about, not mistakes which either it or its CEO made. Plaintiffs are attempting to force a narrative that simply isn’t accurate, and they’ve apparently found themselves a judge who is either gullible enough or affordable enough to plausibly get it done.
Intangible value — including future prospects and the sunk costs of hiring a cohesive workforce and management personnel, among other things — are no less important for a chief executive officer to evaluate than tangible ones. I have long argued that a company’s direction and talent ought to be valued beyond anything else. Without heart, nothing lives and nothing thrives.
If these things weren’t the case, no fledging company could ever start.
Musk’s operational freedom — both previously and moving forward — is clearly the most fundamental of issues here. It is undoubtedly the chief reason this action was brought, it is consistent with other inappropriate actions taken by the SEC to place limits on Musk’s First Amendment rights on the Twitter platform, and it paradoxically represents big business attempts to squelch entrepreneurship versus the executive overreach it pretends. A guise under which this case somewhat convincingly masquerades.
It is not a court’s business — let alone one which shows quite obvious bias, and indications of being manipulated by some unseen force [as opposed to making its decisions and writing its legal commentary from the position of advocating for justice for all parties involved] — to lay its heavy hands between a CEO and the Board which he advises.
Certainly not in this of all situations.
If the judge in question is genuinely attempting to act in the interests of justice, he ought to well bear in mind that the financial interests of a quite limited group of previous investors are, at the time those investors hold their stakes in a company, subject to their own external interests and their own external judgment. They are perfectly capable of evaluating for themselves — at the time and place of events such as these, and being themselves educated to their own satisfaction about where they choose to invest their money — whether a CEO is acting against their financial interests, and if so, to remove their money from a company whose board they feel is ‘unduly influenced’ by his or her decision making.
Shareholders can no more appropriately run companies in preference for expertly appointed Boards after the fact and through the proxy of a judge than they can by exercising their right to remove their money from exposure to the CEO at the time they believe questionable decisions are, or could be, about to be made.
We CERTAINLY need to know who these parties may be, because it is all but certain they represent special interest groups. It’s about time real Tesla shareholders raised their voices on this situation, rather than counterfeit shareholders who think opportunistic Monday morning quarterbacking like this might serve to put the brakes on Tesla’s copious advances.
Without Solarcity, Tesla would not be able to fully leverage the individually-impressive components of its product portfolio. Solar roofs — not just solar panels but solar roofs — are a critical component of a seamless integration of all Tesla products, an integration known as System 3.
Other systems such as this one could be designed with Tesla products, but none of them would work as effectively without the critical component of a solar roofing product.
System 3 is a renewable energy ecosystem which is designed to provide homeowners a ready method of capturing the additional value represented by solar energy that currently falls on their roof. [Two video synopses are provided below.] Tesla personnel have been aware of the possibility of integrations such as this one since long before Solarcity was acquired. Elon Musk has considered the solar energy component of Tesla’s overarching business plans and overall mission for over a decade.
In his estimation, Solarcity was a worthwhile company to acquire. Comparisons with other companies which might have been sufficient need not have been done, because the first and strongest possibility — Solarcity — was evaluated based on its priority, and Board members decided that regardless of its state of financial solvency at the time, its intangibles (including the ease with which it might be integrated with the acquiring entity, Tesla Motors) were worth more to it than the comparative companies it might otherwise have acquired.
Companies whose principals are assertive need not evaluate any more data than is necessary to ensure that the decision they plan to make is a value-positive one. In this case, the acquisition of Solarcity was clearly value positive when the lifecycle of the parent company is considered. This is inarguably the case. The only argument which exists to counter it is the spurious claims of in-and-out investors who frequently don’t at all represent the long term interests of a company.
Are we really going to pretend that the plaintiffs in this case are acting in the general interests of Tesla shareholders, let alone shareholders at large? Are special interests really going to be allowed to make a plausible enough legal argument as to short-circuit the long term well being of Tesla as a company just because, with enough searching, they can find a judge whose judgment can be compromised?
Here’s what we know:
Hiring practices are extremely important for a company such as Tesla. Confidence in its workforce is paramount to its success. Elon Musk has long been known to personally supervise the hiring of senior staff, and the level of confidence he has in that staff — and it in him — is significantly higher than many if not most comparable companies. This is one chief reason the company is able to pioneer the methods it does, and achieve unprecedented innovations at the speed it does. Calculated risks aren’t risks easy to consider after the fact.
The Solarcity acquisition was unquestionably a good one, both viewed from the perspective of late January, 2020, and “even” from the perspective of 2016. It is very difficult to make the argument that a horse which subsequently won the race was not a sensible horse to be on.
Without Solarcity, Tesla absolutely could not be in the position it is in currently — which is by any measure a rather solid financial position. The judge in this case cannot wholly disregard the timing of its filing, and ultimately should reject the further assertions of the plaintiffs. Elon Musk should take immediate action to countersue those plaintiffs such that we can know their identities once and for all. Regardless of whether he wins or loses the current case.
Thank you for the long read.
This is the original System 3 explainer video, designed roughly two years ago.
This later video was prepared 12/18–1/19.
