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According to internal memos, at SpaceX they have liquidity events roughly every six months, by bringing new investors on board and allowing stock-holding employeees to be part of the transaction. The same could be done at Tesla - new investment rounds would be extremely easy with everyone dying to get onboard the privately held company.

Take out the fancy company names and their famous owner, isn’t what you’re describing then a classical Ponzi scheme?

No, because the shares actually represent ownership in a company that's engineering and building rockets.

I believe a Ponzi scheme is when you pay "interest" to early investors, via investments from new members. There is never any income generating activity other than recruiting new members.

I don't think Ponzi applies to Spacex.

people LOVE the term "Ponzi scheme", without actually knowing what that term means

often, people just use it as a drop-in replacement for the term "organized fraud"

example: "isn't JetBlue air-miles just a classical Ponzi scheme?"

That's a pyramid scheme. I think that SpaceX is also not a pyramid scheme.

It is not a scheme. It is NOT pyramid scheme. NOT Ponzi.

Difference of Pyramid vs Ponzi

- Ponzi: the fund manager/fraudster is the one who recruits new members

- Pyramid: existing members have to recruit other new members

In both schemes, there is no underlying product/service. Money contributions from new members are used to pay existing members.

To be clear, Tesla/SpaceX is NOT Ponzi, NOT Pyramid.

You are correct in saying Tesla is neither a Ponzi nor pyramid/MLM scheme, but you have erred in your distinction between the two.

A Ponzi scheme purports to have some amazing business opportunity, but secretly pays returns using money from new investors. They will often use MLM/pyramid-style recruiting tactics, and not solely rely on the fraudster for recruitment.

It's true that MLMs pay out fees collected from newer recruits, but everyone knows where the money is coming from. Usually MLMs also have some semblance of actual business activity (Mary Kay, Amway, Herbalife, etc.)

No, that's a Ponzi scheme. Ponzi schemes and pyramid schemes are very similar. Essentially, a Ponzi scheme is where you pay people based on the enrollment of new people. A pyramid scheme is where the payout is based entirely on the new recruit's ability to recruit more people.

No, a Ponzi scheme relies on recruiting new investors to pay out the old investors at the promised rate.

This doesn't involve paying anyone out.

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