
Elon Musk, PayPal Pioneer, Is Paper-Rich, Cash-Poor - donohoe
http://www.nytimes.com/2010/06/22/business/22sorkin.html
======
hop
Tesla is a cool project/company, but car companies have never historically
been good investments. Massive competition from many established companies,
$200M+ tooling costs to roll out a new car, low profit margins, high marketing
costs, etc... Not the recipe for striking it rich long term, but he will
surely make a handsome sum if he sells at the IPO.

But SpaceX, with their $1.6B contract from NASA and options for $3.6B, their
successful maiden flight two weeks ago of their Falcon 9 rocket -
<http://www.spacex.com/F9-001.php>, their newly inked $492M contract with
private satellite company Iridium
<http://www.spacex.com/press.php?page=20100616> ... and they are just getting
started. This could/probably will lay mega-fortune to Musk.

I too would leverage myself to the moon to keep that equity.

~~~
lrm242
Car copmanies haven't been good investments? Seriously? I mean, sure, if
you're talking about the last 10 or 20 years, I can dig that. But if you're
talking about from inception, you're wrong. Look at Ford:

[http://www.google.com/finance?chdnp=0&chdd=1&chds=1&...](http://www.google.com/finance?chdnp=0&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1276286400000&chddm=3285964&chls=IntervalBasedLine&q=NYSE:F&ntsp=0)

Not only has there been very nice asset appreciation but look at all those
dividends. Huge dividends for a very, very long time.

~~~
unexpected
I think he's arguing that Ford is an outlier. Remember, when the car was
invented, there were hundreds of car companies (remember the Stanley Steamer?)

If you went back to 1920, and compared the car companies from then and now,
Ford might be the only one that has still remained. Even classic nameplates
like Oldsmobile, Pontiac, and Buick have fallen off.

If you went back to the 1960's, and told someone that Oldsmobile and Pontiac
would cease to exist in 50 years, they would have called you crazy.

Is this going to happen to the electric car as well? Will Tesla be the next
Ford or the next Stanley?

*The same trend can also be seen with PC manufacturers. How many different PC companies were there in the 1980's. How many exist now?

~~~
hop
There were 2000 American car companies started after Ford, now there are
three. ~Warren Buffett

~~~
d2viant
Agreed, but the end result for many was being acquired not bankruptcy, so it
wasn't necessarily bad for all shareholders.

------
MJR
"It is pretty aggravating," he told me, referring to the rumors floating
around about him...

Yet the article does little more than add to the sensational bonfire. He
values his investments, so he's prioritized them. It seems like his friends
see him as an investment - a good one in my opinion, and have chosen to help
him out. With the IPO coming he'll be able to get square and that still leaves
him in a fantastic position.

He made the choice to be cash-poor and it seems he did so not out of ignorance
but with an understanding that he had income sources(friends, businesses, etc)
that would help him get through any dry spell. The divorce certainly doesn't
help, but this seems pretty logical for an entrepreneur.

~~~
eli
I agree that this is a poor article. But you assume he's being completely
truthful.

~~~
samratjp
Regardless of whether he is being truthful or not, Tesla Motors' products do
seem to speak for itself. He'll be fine 8-)

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brianobush
monthly expenses of 200k? Wow, that is quite a lavish lifestyle. Just
wondering what costs so much... that is more than 6k per day.

~~~
houseabsolute
Hard to believe he consumes twice in a month what my wife and I do in a year.

~~~
rjett
Hard to believe that you and your wife consume in a year what I would consume
in 7 years if I stuck to my current standard of living :)

~~~
presidentender
Hard to believe that you consume ~14 times what an average Kenyan consumes in
a year.

------
daniel-cussen
It's pretty shocking to see two amateurish blog posts about divorce
proceedings make it to the nytimes. That's gotta suck.

------
aptimpropriety
Can anyone comment on the divorce situation? The seemingly huge requests by
soon-to-be ex-wife? I mean, CA community property and all, but nonetheless,
any insights/opinions? (for those of us not up on the gossip)

~~~
quickpost
FWIW, I'd try to avoid demonizing the ex-wife in this scenario (not that you
are). I've followed her blog off and on during the proceedings, and honestly,
her demands don't seem terribly unreasonable:

"The irony of this whole thing is that I don't want hundreds of millions of
dollars. I think my ex-husband is brilliant and works like a demon and
deserves his success and his wealth. But I also think -- after eight years of
marriage and six kids (five surviving) -- that I am entitled to a fair
settlement..." <http://moschus.livejournal.com/140502.html>

She's probably asking for somewhere between 5 and 10% of their combined
assets, near as I can tell. I think the bigger issue in the divorce is one of
pride, in that Elon doesn't want to give up any shares in the companies he's
built... it's more than just money to him.

/back to work

~~~
philk
The thing is, 5-10% of their shared assets works out to over a hundred million
dollars [1] if you include the slices of his companies that she's asking for.
So while she couches her request in reasonable language she's actually asking
for (IMHO) an unreasonable amount of wealth given she didn't create it in the
first place.

[1] Which is over forty times the lifetime earnings of the average American
_simply for marrying well_.

~~~
_delirium
It's questionable whether she had _no_ role in creating the money he made
while they were married; marriage is usually a bit of a partnership, with a
lot of mutual support. You can allege that he would've been just as successful
if he hadn't been married during that period, but that's a hard counterfactual
to prove, and depends essentially on arguing that his marriage, having kids,
etc. provided no support at all that in any way contributed to his success
during that period. And if you're going to indulge in _those_ kinds of
counterfactuals, then maybe he doesn't deserve his money either, because hey,
maybe if he wasn't at PayPal, someone else would've done just a good a job, so
he only got his money by essentially having the luck to be "married" to
PayPal?

That's one reason that legally, money made while married is assumed to be
evenly split, absent a separate agreement. I don't have any particular insight
into his situation, but if, say, my parents had gotten divorced when I was a
kid, I would've considered it fair if they split the money evenly, even though
my dad officially made all of it.

Plus, if you put it the other way, he's keeping 90-95% of their shared wealth,
over a billion dollars, and yet is unhappy with that, because he wants _more_?
It doesn't sound like it has anything to do with control over his companies,
either; the amount of stock she's asking for wouldn't affect controlling
stakes at all. Seems like it's purely the money: either it's just greed (he
has a ton, but wants even more), or some variety of spite (he doesn't care
about the money, but doesn't want his ex-wife to get it).

~~~
jcnnghm
_It's questionable whether she had no role in creating the money he made while
they were married; marriage is usually a bit of a partnership, with a lot of
mutual support. You can allege that he would've been just as successful if he
hadn't been married during that period, but that's a hard counterfactual to
prove, and depends essentially on arguing that his marriage, having kids, etc.
provided no support at all that in any way contributed to his success during
that period. And if you're going to indulge in those kinds of counterfactuals,
then maybe he doesn't deserve his money either, because hey, maybe if he
wasn't at PayPal, someone else would've done just a good a job, so he only got
his money by essentially having the luck to be "married" to PayPal?_

You might be able to make that argument if he hadn't already founded a company
and sold it for over $300M before he married her. Paypal itself had already
been founded and was well under way before they married. It's disingenuous at
best to ascribe any of his success to her.

 _That's one reason that legally, money made while married is assumed to be
evenly split, absent a separate agreement. I don't have any particular insight
into his situation, but if, say, my parents had gotten divorced when I was a
kid, I would've considered it fair if they split the money evenly, even though
my dad officially made all of it._

That is a holdover from when women didn't work, which is why it makes sense
with respect to your parents.

 _Plus, if you put it the other way, he's keeping 90-95% of their shared
wealth, over a billion dollars, and yet is unhappy with that, because he wants
more? It doesn't sound like it has anything to do with control over his
companies, either; the amount of stock she's asking for wouldn't affect
controlling stakes at all. Seems like it's purely the money: either it's just
greed (he has a ton, but wants even more), or some variety of spite (he
doesn't care about the money, but doesn't want his ex-wife to get it)._

He's the one that worked for the money. What was her contribution, sex and
moral support? That's the most expensive hooker in history. Seems that the
best bet for successful men is to refuse to marry. Even if the wife signs a
pre-nup, they can still keep the man in court for years to force a settlement.

The real issue here is the duplicity of the womens lib movement. It's fair,
equal, and all that jazz until it hurts women financially. Some time ago, a
girl asked me to go to dinner with her, and while we were there, she spent a
great deal of time telling me all about her political views, especially about
women's rights. Of course, when the bill comes, she pushes it over to me.
We're equal, women deserve everything the same as men, etc., until the bill
comes, then it's "you should buy me dinner because I'm a pretty girl and
you're supposed to." I'd have bought dinner anyway, but don't lecture me if
it's all just bullshit. Same situation here.

~~~
_delirium
So you're arguing that, even though he signed a contract (yes, marriage is a
legal contract, and you shouldn't sign it if you don't agree with the terms),
he should be able to back out of it, because of some general dislike for "the
womens lib movement"? If he wanted to sign a different contract, he could've
asked for a prenuptial agreement (which is common among the wealthy), or not
gotten married. But he didn't; he signed the contract, so now he should honor
it according to the terms he agreed to, and any attempt to weasel out of them
is duplicitous bullshit. Should PayPal be able to back out of its contract
with him post-IPO, and decide that it didn't want to give him that much money
after all, because he didn't "deserve" it?

And yes, I do think moral support plus _raising five of your children_ is
sufficient support to deserve half the money you made in that period. If he
thought otherwise, he shouldn't have signed a contract saying so. Since he
did, the only honorable thing to do is to honor his obligations, not the
current pathetic show he's making of trying to claw his way out of them after
the fact.

~~~
philk
Well that's similar to the argument she's making; she signed a postnuptial
agreement and is now trying to weasel out of it.

------
zavulon
FWIW, it's extremely suspicious that he appears broke in the middle of a
divorce - of all times. But he may be telling the truth, obviously I don't
know his situation.

What I do know, is when I get married, it won't happen without a prenup.
There's no WAY I'm going to jeopardize the work of my lifetime.

~~~
phaedrus
IIRC from an earlier article, Elon Musk actually did have a prenup, but his
(ex-)wife's lawyer is filing to get it overturned.

~~~
zavulon
They have a "postnup", which is very different.. Apparently, she still signed
it even though they were married already (which was not that smart of her to
do)

------
EasyCompany
No issue here....just a divorce and business as usual for a millionaire!!!
Next better ny article.....

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callmeed
I have never heard the term "PayPal Mafia" until this week (3 times). Is this
new?

~~~
starkfist
No.

<http://en.wikipedia.org/wiki/PayPal_Mafia>

~~~
Dirt_McGirt
Well now, that page seems to have been created 6 months ago, so I'd argue it's
pretty new.

~~~
starkfist
If you read the page it says the term was first used in 2007.

~~~
lrm242
Google it, you'll find news articles from 2006/2007. This NY Times piece is
good. I especially like the diagram.

<http://www.nytimes.com/2006/10/17/technology/17paypal.html>

