One is Elon Musk (duh), and the other is&nbsp;JB Straubel. But there were three more—and there’s a cautionary tale in why they aren’t billionaires too.



Electric car upstart Tesla gathered reporters at a Santa Monica Airport hangar on a July afternoon in 2006 to unveil its battery-powered roadster, an audacious, $100,000 two-seater for which few automotive experts saw much hope of success. The company’s brash, tech-savvy CEO, Martin Eberhard, declared that Silicon Valley ingenuity would teach Detroit’s auto giants how to make compelling zero-emission cars. Tesla’s first effort, a modified Lotus Elise chassis packed with 7,000 tiny lithium-ion cells, was a high-end concept that would soon be followed by a lower-priced family sedan, the chief executive said. The vision he laid out that day ultimately came to pass, but not with him in charge.&nbsp;



Tesla this month became the first carmaker to hit an astonishing $1 trillion valuation, but the CEO who introduced the company to the press 15 years ago didn’t become synonymous with the brand. And he certainly didn’t wind up as the wealthiest person in history. That’s Elon Musk, of course, Tesla’s earliest investor and the company’s current CEO. Musk was also present at Tesla’s debut in 2006, but he assumed a lower profile that day, mainly arguing for the need to shift cars away from gasoline power as quickly as possible.&nbsp;



Tesla’s original CEO, Eberhard, and another early executive named Marc Tarpenning, who in 2003 dreamed up the idea of naming the company’s vehicles in honor of inventor Nikola Tesla, are Tesla’s original shareholders — the first men to claim ownership of the upstart brand that would go on to shake up the Detroit establishment. But neither of them retained enough Tesla stock to achieve billionaire status, much less Musk’s current net worth that&nbsp;Forbes&nbsp;estimates at $282 billion as of Nov. 10. It was Musk’s seed capital—the result of an early payday investing in payments processor PayPal—that turned Eberhard and Tarpenning’s vision into a reality. Ultimately, it also set Musk on a path to take full control of Tesla by steadily raising his ownership stake in a series of nine funding rounds prior to the company’s 2010 IPO, each of which further diluted the stakes of Eberhard and Tarpenning. Even today Musk’s stake grows as he continues to receive quarterly stock awards, in lieu of salary, worth billions of dollars.



In an interview, Eberhard says he retains a “relatively small” stake in the carmaker, while declining to be specific.&nbsp; “I sold a good chunk of my stock a long time ago,” Eberhard, 61, says from his home in Washington state’s San Juan Islands. “People somehow have the idea that I was a zillionaire when I started Tesla. I was not.”&nbsp;



Had Eberhard been wealthier from the sale of the Rocket eBook, an early handheld electronic reader he and Tarpenning created in the late 1990s, there would have been no need to seek initial funding from Musk, he says.



Musk has often said he doesn’t care about wealth and sold his Los Angeles mansions last year to live in a humble, prefab box house on his SpaceX campus in Boca Chica, Texas. Nevertheless, he keeps amassing wealth at a remarkable pace. That’s because of an early ownership stake of nearly 20% in the company and a long-term compensation plan announced in 2018 that rewards him with billions of dollars of additional Tesla stock every time it hits quarterly performance targets based on financial and valuation metrics. (He’s also preparing to sell 10% of his stake, worth about $15 billion as of Nov. 9, to avoid a massive tax hit as some long-term options mature.)



“I own no Tesla stock now. Of course I could not imagine a $1 trillion valuation!”&nbsp;Tesla cofounder Ian Wright



Eberhard, meanwhile, sold much of his stake after being pushed out of Tesla in 2007, before the Roadster’s launch. He sued Musk in 2009 over his ouster and for slander, before settling the case for undisclosed terms. As part of a settlement, he dropped opposition to Musk, former Tesla Chief Technology Officer JB Straubel and Ian Wright, an early engineer with the company, also being called cofounders, in addition to himself and Tarpenning.&nbsp;



“When I got kicked out of Tesla I had no money—I mean I really had no money,” Eberhard says. “Worse than that, I had no possibility of employment for about a year” because of a restrictive intellectual property agreement with Tesla, he says. “I did not participate in any investment rounds after I left.”&nbsp;



Eberhard won’t provide details of his Tesla stake, but he confirms he’s not a billionaire. Tarpenning, these days a partner at Spero Ventures, a Silicon Valley venture capital firm, has said he, too, still owns Tesla stock, but he isn’t listed among its top shareholders. He didn’t respond to inquiries from&nbsp;Forbes.



Of the five official cofounders, only Straubel, who left Tesla in 2019, is likely to have attained billionaire status from his holdings. His stake may be worth about $1.3 billion, assuming he retains a significant portion of Tesla stock held when he left. Straubel, currently CEO and cofounder of battery recycling startup Redwood Materials, declined to comment on the matter. Engineer Wright, who joined Eberhard and Tarpenning a few months after they created Tesla, left in 2004 to start another EV company. He sold his stake years ago.



“I own no Tesla stock now,” he tells&nbsp;Forbes. “Of course I could not imagine a $1 trillion valuation!”&nbsp;



Beyond making Musk the world’s richest person, the company that’s become synonymous with a global car revolution has also enriched investors and board members including venture capitalist Ira Ehrenpreis and Oracle’s Larry Ellison, as well as Elon’s younger brother, Kimbal, and countless investors inspired by the potential for a clean energy future.&nbsp;&nbsp;



<hr class="wp-block-separator"/>



<blockquote class="wp-block-quote is-style-large is-layout-flow wp-block-quote-is-layout-flow">“Whatever my opinion is about Musk, I am still super happy to see the electric car revolution—that we after all started—I&#8217;d like to see that revolution winning.”Martin Eberhard</blockquote>



<hr class="wp-block-separator"/>



For all the company’s success in the electric vehicle space and newfound financial stability, as well as the non-stop attention Musk seeks and generates, Tesla’s earliest days were marked by a high degree of management and strategic turbulence that left a single cofounder in control. Other tech-oriented giants that attained trillion-dollar valuations, such as Microsoft and Alphabet, created several billionaires among their cofounders, though Musk’s singular financial gains aren’t so unusual.&nbsp;



“While it does seem true that other notable technology firms minted multiple financial winners, a somewhat similar dynamic at Tesla played out at Apple,” says David Hsu, professor of management at the University of Pennsylvania’s Wharton School. Cofounder Steve Jobs’ Apple stake was worth an estimated $2 billion at the time of his death in 2011 and Steve Wozniak’s wealth is an estimated $100 million, though Ronald Wayne, Apple’s little-known third cofounder, sold his stake early for $800, Hsu says. Musk’s rewards today simply flow from a risky early bet that’s paid off big for him.



“It’s not only ownership stakes of cofounders; we could also point to cases of missing out by investors, including angel and VC investors,” Hsu said. “At the time Musk invested in the Series A round, and for a considerable amount of time afterward, there was a lot of uncertainty about the ability of the firm to execute its bold vision. Some might argue that sentiment is still somewhat true today.”&nbsp;



Citing a “non-disparagement” clause that was part of the 2009 settlement, Eberhard declines to elaborate on his views about Musk these days. By contrast, Musk himself has shown far less restraint. He described Eberhard as “literally the worst person I’ve ever worked with” in a January 2020 interview for the&nbsp;<a href="https://www.youtube.com/watch?v=NxmO_QuD4Do" target="_blank" rel="noreferrer noopener">Third Row Tesla podcast</a>, hosted by Musk fans.&nbsp;&nbsp;



Still, the company’s original CEO, who owned “somewhat less” than 5% when he left Tesla, says he’s not unhappy these days, despite not profiting more from its surge.&nbsp;



“The valuation is what it is. What I&#8217;m happy about is the success of the company. It&#8217;s crucial that we get off of fossil fuels and Tesla has been the major driver of that, which is what we had hoped for from the beginning,” Eberhard says.



“Whatever my opinion is about Musk, I am still super happy to see the electric car revolution—that we after all started—I&#8217;d like to see that revolution winning. It has to.”&nbsp;



By Alan Ohnsman, Forbes Staff

GettyImages-760016751

Tesla Had 5 Founders. Why Did Only Two Get Really Rich?

Unexploded World War II bombs, protests over trees, water and animal habitats, union scrutiny and a labor review have hindered Tesla&#8217;s Berlin Gigafactory plans — but the biggest hurdle may come in the form of strict German regulations.



By Alan Ohnsman, Forbes Staff &amp; Sofia Lotto Persio, Forbes Staff



Tesla had hit its stride in November 2019 when&nbsp;<a href="https://www.forbes.com/sites/alanohnsman/2019/11/12/willkommen-elon-musk-says-next-tesla-gigafactory-will-be-in-germany/?sh=163614f68b03">Elon Musk announced a massive electric car plant in Germany</a>, the heart of European auto-manufacturing. His Silicon Valley company was riding a booming share price fueled by the start of a string of quarterly profits and, more importantly, its Shanghai Gigafactory was coming together at an astonishing pace: It was about to begin making Model 3s just 11 months after the groundbreaking.&nbsp;



Emboldened by that success and cash from an&nbsp;<a href="https://www.ft.com/content/7a3c8d9a-57bb-11e9-a3db-1fe89bedc16e" target="_blank" rel="noreferrer noopener">emissions credit sales deal with Fiat Chrysler</a>&nbsp;to fund it, the carmaker’s billionaire CEO and cofounder aimed to replicate it in leafy Grünheide, Germany, site of the future $4.9 billion (€4 billion) plant 24 miles east of Berlin. “Giga Berlin will come together at an impossible-seeming speed,” Musk&nbsp;<a href="https://twitter.com/elonmusk/status/1287598172508958721?s=20" target="_blank" rel="noreferrer noopener">tweeted</a>&nbsp;in July 2020. It hasn&#8217;t worked out that way.



Physical construction is nearing completion, but the plant may not start making Model Ys until 2022, months after an initial target of July 1–or even later, pending environmental approval from the state of Brandenburg. Tesla has had a much harder road than Musk envisioned. The company had to remove unexploded World War II shells at the site. It’s faced stiff opposition from environmentalists over chopping down hundreds of acres of trees, the plant’s voracious water needs and the disruption of bat and animal habitats. The plant is being <a href="https://www.reuters.com/business/autos-transportation/top-union-sets-sights-works-council-teslas-german-gigafactory-2021-05-07/" target="_blank" rel="noreferrer noopener">eyed for organization by IG Metall</a>, Germany’s biggest labor union. The project is also under scrutiny for a possible <a href="https://finance.yahoo.com/news/authorities-open-labour-probe-german-182635315.html" target="_blank" rel="noreferrer noopener">violation of labor laws during construction</a> and may be fined for installing sewer pipes without permission.



“Although things looked good regarding the Tesla facility up to a few weeks ago, a different reality can lie behind a facade,” says Matthias Schimdt, an independent auto analyst based in Berlin. He sees the project unfolding much like the capital city’s new airport, which was built quickly but saw its opening delayed nearly a decade as it struggled to win final approval to operate from German authorities. “This mustn&#8217;t be a carbon copy situation for Tesla, which is located just a stone&#8217;s throw from the new airport that eventually came into service last year,” Schimdt says. “It just goes to highlight that things aren&#8217;t easy in ‘bureaucratic hell’ Germany.”



Delays fulfilling Musk’s quest to tap the lucrative European market complicate the electric-car impresario’s efforts to stay ahead of mounting competition in battery-powered vehicles, especially from German automakers like Volkswagen, Daimler and BMW. Tesla may be the world’s most valuable carmaker, but it’s far from the biggest, having just a fraction of the production capacity of German, U.S., Japanese and Korean auto giants, delivering just under 500,000 vehicles last year versus VW’s 9.3 million. And while the company’s plant in China was a critical addition to its long-time production base in Fremont, California, Tesla can’t meet Musk’s long-held goal of producing millions of electric vehicles annually without Giga Berlin and a second U.S. auto-assembly plant under construction near Austin, Texas.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It just goes to highlight that things aren&#8217;t easy in &#8216;bureaucratic hell&#8217; Germany.”<cite>Auto analyst Matthias Schmidt </cite></blockquote>



“Coming off the incredibly fast build of the Shanghai factory, they might have miscalculated how quickly they could get Berlin up and running–perhaps not fully accounting for the significant differences in regulatory and environmental standards,” says Garrett Nelson, senior equity analyst at CFRA Research. Construction also happened amid logistical and supply chain headaches related to the Covid-19 pandemic, he says. “Tesla is doing everything possible to stay on track with its guidance, but the reality is that first production could be delayed until early 2022.”



The company hasn’t confirmed reports that&nbsp;<a href="https://www.marketwatch.com/story/teslas-berlin-gigafactory-to-be-delayed-another-6-months-report-11619992994" target="_blank" rel="noreferrer noopener">Musk agreed to a six-month delay</a>&nbsp;for the plant a few days after reassuring investors and analysts on Tesla’s April 26 results call that “both Texas and Berlin are progressing well.”



“We expect to have initial limited production from those factories this year and volume production from Texas and Berlin next year,” Musk said on the call. But during a surprise visit to the Grünheide construction site&nbsp;<a href="https://www.reuters.com/business/elon-musk-visits-teslas-delayed-european-gigafactory-state-minister-says-2021-05-17/" target="_blank" rel="noreferrer noopener">Monday he told reporters</a>&nbsp;&#8220;I think there could be less bureaucracy. That would be better.&#8221;



&#8220;There should be some kind of active process for removal of rules. Otherwise, over time, the rules will just accumulate and you get more and more rules until eventually you can&#8217;t do anything,&#8221; Musk said, according to Reuters.



Analysts have already adjusted their models for Tesla to reflect the slowdown. “Giga Berlin is an early 2022 story,” says Dan Ives, an equity analyst for Wedbush. “Given the red tape in Europe this timeline remains bumpy but needs to be running by March 2022–otherwise production issues would be hampered.” 



Germany’s role as a global auto powerhouse, with its strong parts supply base and reputation for high-quality engineering, lured Musk over other countries he eyed as sites for Tesla’s European plant. (He&nbsp;<a href="https://www.autoexpress.co.uk/tesla/108395/tesla-gigafactory-europe-to-be-built-in-germany-not-uk-as-elon-musk-blames-brexit" target="_blank" rel="noreferrer noopener">considered the U.K.</a>, but uncertainties related to Brexit ultimately proved too big a gamble.) Aside from selling vehicles in Germany, Tesla planted its flag there in 2016 with the&nbsp;<a href="https://www.forbes.com/sites/alanohnsman/2016/11/08/tesla-buying-germanys-grohmann-engineering-to-automate-accelerate-production/?sh=100c31523354">acquisition of Grohmann Engineering</a>, rebranded Tesla Grohmann Automation. The chance to square off against the country’s auto giants–which are also now aggressively focused on closing the electric vehicle gap with Tesla–on their home turf added to its appeal. For Economics Minister&nbsp;<a href="https://www.bloomberg.com/news/articles/2020-09-02/germany-promises-musk-whatever-he-needs-for-tesla-berlin-plant" target="_blank" rel="noreferrer noopener">Peter Altmaier</a>, Tesla’s decision to “build a highly modern factory for electric cars in Germany is further proof of the attractiveness of Germany as an automotive manufacturing base,” he said when the project was announced in 2019.



Given the headaches he’s run into, Musk may be “wondering whether that ‘Made in Germany’ stamp on the underbody of each model leaving the factory was worth it,” says analyst Schmidt.



Grünheide, in the state of Brandenburg, sits in what was East Germany, which&nbsp;<a href="https://www.pewresearch.org/fact-tank/2019/11/06/east-germany-has-narrowed-economic-gap-with-west-germany-since-fall-of-communism-but-still-lags/ft_19-11-01_eastwestgermanyecon_3/" target="_blank" rel="noreferrer noopener">remains poorer than the rest of the country</a>&nbsp;since reunification 30 years ago. Local politicians were thrilled at the prospect of a project that would bring thousands of jobs and prestige to the area. “The whole region can look forward to new opportunities of development now thanks to the Tesla project which has really put Grünheide on the map globally,”&nbsp;<a href="https://www.gruenheide-mark.de/m/politik/person/31026/pamela-eichmann" target="_blank" rel="noreferrer noopener">Pamela Eichmann</a>, chair of the Grünheide (Mark) local council, told&nbsp;<a href="https://www.dw.com/en/locals-views-on-german-tesla-plant-irreconcilable-as-production-start-faces-delay/a-57405731" target="_blank" rel="noreferrer noopener">Deutsche Welle</a>&nbsp;this month.



While the town’s leaders might be rooting for the factory, plenty of others are not. The plant occupies a space between the A10 highway and Fangschleuse railway station, but it’s also a few miles from the Löcknitztal nature reserve that’s had protected status since 1984 and been registered as a fauna-flora-habitat area (FFH) since 1998. Grünheide literally translates as “Green Heath” from German.



So when one of the first steps to ready the 300-hectare site for Musk’s gigafactory was&nbsp;<a href="https://twitter.com/joergstb/status/1227992011699052545?s=20" target="_blank" rel="noreferrer noopener">chopping down about 430 acres of forest</a>, it wasn’t the best start–particularly for a company whose motto is “accelerating the world’s transition to sustainable energy.”



Environmentalists temporarily blocked tree-cutting operations in early 2020, but Tesla <a href="https://www.cnbc.com/2020/02/21/tesla-gets-german-court-approval-to-chop-down-trees-for-gigafactory-4.html" target="_blank" rel="noreferrer noopener">won court approval,</a> initially to remove 92 hectares of trees, and then 82.8 hectares more. Musk downplayed the quality of the trees he cut down, tweeting in January 2020 that “this is not a natural forest—it was planted for use as cardboard &amp; only a small part will be used for” the Berlin gigafactory. The company has also pledged to <a href="https://www.teslarati.com/tesla-gigafactory-berlin-reforestation-video/" target="_blank" rel="noreferrer noopener">plant three times</a> as many trees as it cut down, though <a href="https://www.zmescience.com/science/agriculture-science/cutting-down-trees-and-planting-new-ones-is-wrecking-the-soil/#:~:text=Continuously%20cutting%20down%20forests%20and,crucial%20minerals%2C%20new%20analysis%20shows.&amp;text=It's%20always%20a%20good%20idea,you%20cut%20some%20old%20ones." target="_blank" rel="noreferrer noopener">scientists generally warn</a> that planting new trees is not as effective as a carbon-capture strategy as maintaining existing ones. Local environmental groups were also concerned about the disruption deforestation would <a href="https://www.loecknitztal.de/home/stellungnahme-zu-tesla/" target="_blank" rel="noreferrer noopener">cause to animals</a> inhabiting the forest. Site preparation in Grünheide <a href="https://www.cleanenergywire.org/news/tesla-searches-bats-and-resettles-ants-preparation-german-gigafactory" target="_blank" rel="noreferrer noopener">included relocating bats and ants</a> living in the forest and removal of <a href="https://www.dw.com/en/germany-defuses-wwii-bombs-at-tesla-gigafactory-site/a-52157407" target="_blank" rel="noreferrer noopener">seven unexploded bombs dropped by the U.S. during World War II</a>.



The amount of water the plant will use and its impact on the region also concern local environmentalists, “because most of the factory ground belongs to a drinking water protection area and very close to the factory are two nature protection areas which are very sensitive to changes in the ground water level,” says Christiane Schroeder, managing director at the Brandenburg branch of NABU (Nature and Biodiversity Conservation Union), one of the oldest and largest environmental non-profits in Germany, and a leading opponent of the Gigafactory.



Making matters worse, Tesla ran afoul of the district’s water authority, which discovered water pipes that had been installed without its permission. Tesla was allowed to continue construction work on April 12 after a brief suspension, but still faces a potential fine for the infraction, the Brandenburg Ministry for Agriculture, Environment and Climate Protection tells&nbsp;Forbes. Separately, the State Office for Occupational Safety and other agencies are&nbsp;<a href="https://finance.yahoo.com/news/authorities-open-labour-probe-german-182635315.html" target="_blank" rel="noreferrer noopener">reported to be investigating whether Tesla violated rules</a>&nbsp;for minimum wages, working hours, conditions and worker housing during plant construction.



Ultimately, the plant won’t be permitted to begin production until it has secured all necessary permits, a process that can grind on, Schmidt says.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Very close to the factory are two nature protection areas which are very sensitive to changes in the ground water level”<cite>Environmentalist Christiane Schroeder </cite></blockquote>



IG Metall, Germany’s biggest labor union with 2.2 million members, represents workers at Tesla’s engineering unit there and initially&nbsp;<a href="https://www.reuters.com/article/uk-tesla-gigafactory-germany-idUKKBN1XM2M0" target="_blank" rel="noreferrer noopener">welcomed the company’s gigafactory plan</a>. It had previously attempted to organize Tesla’s Grohmann unit, but the company boosted salaries there to block the effort. The union intends to set up a works council and organize future employees at Giga Berlin, union chief Joerg Hofmann&nbsp;<a href="https://www.reuters.com/business/autos-transportation/top-union-sets-sights-works-council-teslas-german-gigafactory-2021-05-07/" target="_blank" rel="noreferrer noopener">told Reuters this month</a>.&nbsp;



That’s anathema to anti-union Musk. In California he’s worked to keep the United Auto Workers out of Tesla’s Fremont plant–a union factory in its previous incarnations as both a Toyota-General Motors joint venture and GM facility. Tesla was found to have&nbsp;<a href="https://www.nlrb.gov/case/32-CA-220777" target="_blank" rel="noreferrer noopener">engaged in unfair labor practices by the National Labor Relations Board</a>, including efforts to interrogate workers it suspected were part of the union push at Fremont. That 2019 ruling was&nbsp;<a href="https://www.washingtonpost.com/technology/2021/03/25/tesla-nlrb-ruling/" target="_blank" rel="noreferrer noopener">upheld in March 2021</a>&nbsp;and Musk was ordered to delete a&nbsp;<a href="https://twitter.com/elonmusk/status/998454539941367808?s=20" target="_blank" rel="noreferrer noopener">2018 tweet</a>&nbsp;discouraging Fremont workers from joining the UAW. (He has yet to do so.)



For now, IG Metall is waiting for operational details for the Grünheide facility, including whether Tesla intends to follow the round-the-clock, three-shift approach used in the U.S. and China, and adhere to German wage and working condition rules. “We give Tesla the benefit of the doubt regarding what the labor standards will look like in the long run,” says Birgit Dietze, IG Metall’s regional head. 



Long-time China auto analyst (and Tesla owner) Michael Dunne, whose ZoZo Go consultancy works with auto and parts makers across Asia, thinks Tesla’s exceptionally fast start in China led it to move too quickly in Germany. “I imagine Tesla thinking something like, ‘China is rife with regulations, licenses and government intervention, but we sorted that out in less than a year. Bring on Berlin!” he says. Powerful government allies eased the way for Tesla in China, that’s not an option in Germany, Dunne says. “One’s a democracy, the other one’s not. It’s rule by whim in China. Unlike in Germany, there&#8217;s no court of public opinion.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I imagine Tesla thinking something like, ‘China is rife with regulations, licenses and government intervention, but we sorted that out in less than a year. Bring on Berlin!”<cite>Zozo Go founder Michael Dunne </cite></blockquote>



In Germany, groups like Schroeder’s NABU have a right to make their opposition known. The environmental activist tells&nbsp;Forbes&nbsp;the group has discussed their concerns with Tesla, but that the company has only been receptive to some of the issues raised, the easiest to accommodate. “I think Elon Musk is more into his own business and into new technology than really in preventing climate change,” she says. “He sees a great opportunity to sell his inventions as ‘part of the solution’ but doesn’t realize that he creates new problems as a side effect.”&nbsp;



In retrospect, Musk might have been better off building the plant in adjacent EU countries, says analyst Schmidt. “Perhaps they are slowly starting to ask themselves if they really should have looked just a few kilometers further east toward the Polish or Czech borders, where things would have have been more freewheeling,” he says. “There’s good reason Porsche decided to manufacture the Cayenne SUV–one of their most profitable models–in Slovakia!” &nbsp;

gettyimages-490597722-594×594

The Rules Even Elon Musk Can’t Break

Billionaire Elon Musk’s rocket company SpaceX&nbsp;<a href="https://www.cnbc.com/2021/02/16/elon-musks-spacex-raised-850-million-at-419point99-a-share.html" target="_blank" rel="noreferrer noopener">reportedly</a>&nbsp;completed an $850 million fundraising round last week, as it looks to raise capital for its ambitious Starlink and Starship projects.&nbsp;



News of the funding was&nbsp;<a href="https://www.cnbc.com/2021/02/16/elon-musks-spacex-raised-850-million-at-419point99-a-share.html" target="_blank" rel="noreferrer noopener">first reported</a>&nbsp;by CNBC, which said that the private company will now have a valuation of around $74 billion, citing people familiar with the financing. SpaceX did not immediately respond to&nbsp;Forbes’ request for comment.



The company raised new funds at $419.99 per share, per CNBC. That price is just a cent below $420 per share, potentially a reference to Elon Musk’s notorious&nbsp;<a href="https://twitter.com/elonmusk/status/1026872652290379776" target="_blank" rel="noreferrer noopener">Twitter post</a>&nbsp;in 2018, when he joked that he would take Tesla private at $420 with “funding secured.”



Musk—who is the world’s second-richest person, behind Amazon CEO Jeff Bezos—owned roughly 48% of SpaceX prior to this latest funding round, according to&nbsp;Forbes’ calculations.&nbsp;



It is not immediately clear if Musk’s ownership was diluted by the new round. If he managed to hold onto all 48%, his stake would now be worth about $32 billion—up from roughly $20 billion previously, according to&nbsp;Forbes’ estimates. That would boost Musk’s net worth by $12 billion—but that’s still not enough for him to pass Bezos and retake the spot of the richest person on the planet.&nbsp;



He is <a href="https://www.forbes.com/profile/elon-musk/?sh=298803137999">worth</a> $173.4 billion as of market close on Tuesday, February 16, according to Forbes. Most of his fortune lies in his stake in electric car company Tesla, shares of which have more than quadrupled in value over the past 12 months. Musk also serves as CEO of Tesla.



SpaceX was last valued at $46 billion in an August 2020 fundraising round. But some Wall Street banks had put that value even higher: In October, a Morgan Stanley analyst gave SpaceX a&nbsp;<a href="https://www.forbes.com/sites/daviddawkins/2020/10/23/elon-musks-spacex-gets-bullish-100-billion-valuation-from-morgan-stanley-double-what-investors-said-it-was-worth-in-august/?sh=75aaf6b86e79">bullish valuation of $100 billion</a>—double what investors said it was worth in August.&nbsp;



The latest fundraising round comes in the midst of two capital-intensive projects, Starship and Starlink. Starship is the company’s long-term spacecraft project, intended to eventually replace SpaceX’s existing Falcon 9 rockets and Dragon spacecraft. The aim of the project is to develop a fully-reusable launch vehicle that is expected to take cargo, and eventually passengers, into space at a lower cost than other existing spacecraft.&nbsp;



Beyond&nbsp;<a href="https://www.forbes.com/sites/alexknapp/2020/05/25/elon-musks-first-astronaut-launch-is-one-giant-leap-for-space-capitalism/#3df32c382b49">successfully launching</a>&nbsp;U.S. astronauts into space in May of last year, SpaceX said in 2020 that it was seeing “extraordinary demand” for its Starlink satellite broadband service. The project aims to build an interconnected network of about 12,000 small satellites in low Earth orbit. So far, early tests have shown broadbands speeds capable of playing online video games and streaming movies, but the service faces criticism over its&nbsp;<a href="https://www.wtva.com/content/news/State-leader-questions-high-cost-for-Starlink-internet-service-573706251.html" target="_blank" rel="noreferrer noopener">cost</a>&nbsp;and the company’s ability to&nbsp;<a href="https://arstechnica.com/tech-policy/2021/02/isps-step-up-fight-against-spacex-tell-fcc-that-starlink-will-be-too-slow/" target="_blank" rel="noreferrer noopener">scale capacity</a>.



In addition to raising money for its large-scale projects, SpaceX also completed a secondary transaction in which SpaceX insiders and investors were able to sell an additional $750 million worth of their shares, <a href="https://www.cnbc.com/2021/02/16/elon-musks-spacex-raised-850-million-at-419point99-a-share.html" target="_blank" rel="noreferrer noopener">according to</a> CNBC.



By Sergei Klebnikov, Forbes Staff

Billionaire Elon Musk Receives Axel Springer Award

Elon Musk’s SpaceX Now Worth $74 Billion After Latest Fundraising Round: Report

Despite seeing his net worth skyrocket in recent months—and a&nbsp;<a href="https://www.bloomberg.com/news/articles/2021-01-06/musk-close-to-surpassing-bezos-as-world-s-richest-person#:~:text=Elon%20Musk%2C%20the%20outspoken%20entrepreneur,the%20world's%20500%20wealthiest%20people." target="_blank" rel="noreferrer noopener">report</a>&nbsp;from Bloomberg on Wednesday that he’s now the world’s richest person—<a href="https://www.forbes.com/profile/elon-musk/?list=rtb/">Elon Musk</a>&nbsp;remains the second-richest person in the world, according to&nbsp;Forbes’ estimates.



Shares of Musk’s electric-vehicle maker Tesla&nbsp;<a href="https://www.forbes.com/companies/tesla" target="_blank" rel="noreferrer noopener">TSLA</a>&nbsp;<a href="https://www.forbes.com/companies/tesla">+6.9%</a>&nbsp;rose by 7% as of 2:30 p.m. EST on Thursday, pushing Musk’s net worth up by $9.8 billion, to $175.2 billion. That makes him $22 billion richer than the planet’s third-wealthiest person, French luxury tycoon&nbsp;<a href="https://www.forbes.com/profile/bernard-arnault/?list=rtb/">Bernard Arnault</a>, but still $11 billion behind the world’s number one, Amazon&nbsp;<a href="https://www.forbes.com/companies/amazon" target="_blank" rel="noreferrer noopener">AMZN</a>&nbsp;<a href="https://www.forbes.com/companies/amazon">+1.8%</a>&nbsp;CEO&nbsp;<a href="https://www.forbes.com/profile/jeff-bezos/?list=rtb/">Jeff Bezos</a>.&nbsp;Forbes&nbsp;estimates that Bezos has a net worth of $186.8 billion.



Musk’s net worth has grown at an astronomical clip over the past year. He has added nearly $150 billion to his fortune since March 2020, when he was&nbsp;<a href="https://www.forbes.com/billionaires/">worth $24.6 billion</a>. Much of that increase comes from Tesla’s skyrocketing share price, which rose more than 720% in 2020. It has gained another 10% so far over the first week of 2021.&nbsp;



As Tesla’s stock soared ahead of its inclusion in the S&amp;P 500 Index on December 21, Musk surpassed Facebook&nbsp;<a href="https://www.forbes.com/companies/facebook" target="_blank" rel="noreferrer noopener">FB</a>&nbsp;<a href="https://www.forbes.com/companies/facebook">+1.9%</a>&nbsp;CEO&nbsp;<a href="https://www.forbes.com/profile/mark-zuckerberg/?list=rtb/">Mark Zuckerberg</a>&nbsp;(who is worth $98.2 billion today) to become the world’s fourth-richest person in early November, then leapfrogged Microsoft&nbsp;<a href="https://www.forbes.com/companies/microsoft" target="_blank" rel="noreferrer noopener">MSFT</a>&nbsp;<a href="https://www.forbes.com/companies/microsoft">+3%</a>&nbsp;cofounder&nbsp;<a href="https://www.forbes.com/profile/bill-gates/?list=rtb/">Bill Gates</a>&nbsp;(worth $121.9 billion today) for the number three spot.



Musk owns around 21% of Tesla’s shares, plus a stake in private rocket company SpaceX. Tesla stock still sits at record highs, now trading for over $800 per share. The company’s $765 billion market cap makes it by far the most valuable car company in the world.



-By Sergei Klebnikov, Forbes Staff

No, Elon Musk Is Not The Richest Person In The World—Yet

Topline In an effort to beef up the firm&#8217;s balance sheet and capitalize on massive stock gains this year, electric-carmaker Tesla said on Tuesday it will raise up to $5 billion in a new stock offering, the second time since September that the firm&#8217;s raised cash by issuing new shares.



<h4 class="wp-block-heading" id="h-key-facts">KEY FACTS</h4>



In a Tuesday regulatory&nbsp;<a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000119312520312194/d60067d8k.htm" target="_blank" rel="noreferrer noopener">filing</a>, Tesla said it could issue up to 7.8 million new shares based on Monday&#8217;s closing stock price, increasing the number of shares outstanding to roughly 955.6 million.



The firm said it plans to use offering proceeds to &#8220;further strengthen&#8221; its balance sheet by investing in high-grade bonds, cash equivalents or U.S. government securities.



Tesla shares are down 1% on Tuesday following the announcement, but still up an eye-popping 660% this year alone; meanwhile, the tech-heavy Nasdaq has climbed 37%.



The firm previously <a href="https://www.sec.gov/Archives/edgar/data/1318605/000119312520236699/d931870d424b5.htm" target="_blank" rel="noreferrer noopener">announced</a> another $5 billion capital raise on September 1 after year-to-date stock gains of roughly 450%.



<h4 class="wp-block-heading">CRUCIAL QUOTE&nbsp;</h4>



&#8220;Now in a clear position of strength and out of the red ink with major factory build-outs on the horizon (in Austin and Berlin), Tesla is raising enough capital to get the balance sheet and capital structure to further firm up its growing cash position and slowly get out of its debt situation,&#8221; Wedbush analysts Daniel Ives and Strecker Backe wrote on Tuesday.



<h4 class="wp-block-heading">KEY BACKGROUND</h4>



Founded in 2003, Tesla went public on the Nasdaq exchange in June 2010 at an offering price of $17 per share. Shares have rallied this year amid a broader market boom for high-flying tech stocks, and much of the surge has happened in just the past month after S&amp;P Global announced in mid-November that it will&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2020/11/17/elon-musk-fortune-surges-5-billion-tesla-joining-sp-500/">add Tesla to the S&amp;P 500</a>&nbsp;Index on December 21, a move that should drive up demand for Tesla shares given the number of index and mutual funds tracking the S&amp;P.



<h4 class="wp-block-heading">BIG NUMBER</h4>



$600 billion. That&#8217;s how much Tesla topped in market value on Monday, making it nearly three times more valuable than the world&#8217;s second-most valuable automaker, Toyota. This year&#8217;s stock surge has boosted Musk&#8217;s <a href="https://www.forbes.com/profile/elon-musk/">net worth</a> to roughly $141 billion, Forbes estimates. 



<h2 class="wp-block-heading">WHAT WE DON&#8217;T KNOW</h2>



S&amp;P Global hasn&#8217;t yet announced which firm Tesla will replace on the S&amp;P 500.



<h2 class="wp-block-heading">FURTHER READING</h2>



<a href="https://www.forbes.com/sites/jonathanponciano/2020/11/17/elon-musk-fortune-surges-5-billion-tesla-joining-sp-500/">Elon Musk’s Fortune Surges $6 Billion After S&amp;P 500 Makes Tesla Its Largest-Ever Addition</a> (Forbes)



By <a href="https://www.forbes.com/sites/jonathanponciano/"></a>Jonathan Ponciano, Forbes Staff

Elon Musk Reveals Tesla Model Y Crossover; To Start At $39,000

Tesla Is Raising Another $5 Billion To Capitalize On Stock’s Near-700% Surge This Year

Thanks to Tesla’s roaring stock,&nbsp;<a href="https://www.forbes.com/profile/elon-musk/?sh=676b23917999">Elon Musk’s</a>&nbsp;net worth has nearly quadrupled during the Covid-19 pandemic, racing from $24.6 billion in mid-March to a current $126.8 billion by&nbsp;Forbes’&nbsp;estimate. But despite this meteoric rise, the 49-year-old is not the world’s second-richest person&nbsp;yet.&nbsp;



Forbes currently has Musk in the No. 3 spot, behind Jeff Bezos, who reigns supreme at $182.6 billion, and French luxury goods tycoon Bernard Arnault, worth $140.6 billion. With the surge in the value of Tesla shares this week, Musk surpassed Bill Gates, who is now in fourth place, worth $119.4 billion



Musk owns 21% of Tesla but has pledged more than half his stake as collateral for personal loans;&nbsp;Forbes&nbsp;applies a 25% discount to his shareholding to account for the loans. Musk’s&nbsp;net worth estimate includes $25 billion worth of options that he was awarded&nbsp;since May as part of&nbsp; a historic 12-tranche compensation plan.&nbsp;



Musk became eligible for the fourth tranche in late October after Tesla exceeded the cumulative EBITDA requirement, but Tesla has yet to confirm in public filings that it has certified the results. A representative for Musk did not reply to a request for comment from&nbsp;Forbes&nbsp;in time for publication. Until the receipt of the fourth tranche is confirmed,&nbsp;Forbes&nbsp;is only counting some 25 million options from the package towards Musk’s net worth.



Musk also owns an estimated 48% of SpaceX, the rocket company that recently made its first launch with astronauts on board. Investors valued SpaceX at $46 billion in August. After applying&nbsp;Forbes’&nbsp;10% private company discount, Musk’s SpaceX stake is worth just under $20 billion.



Tesla’s shares have risen 36% since Tuesday November 17 when S&amp;P Global announced that the electric car company would be added to the S&amp;P 500 index on December 21. The addition to the index means that more mutual funds tied to the S&amp;P 500 will buy Tesla stock.&nbsp;



With a current market capitalization of $525 billion, Tesla is worth far more than Toyota ($198 billion) and GM ($66 billion) combined. In the first three quarters of 2020, Tesla delivered 318,000 cars, a small fraction of the number produced by the world’s larger automakers.



“I really couldn’t care less,” Musk emailed Forbes about his net worth in July. “These numbers rise and fall, but what really matters is making great products that people love.”



-By Hayley C. Cuccinello, Forbes Staff

Key Speakers At The Satellite 2020 Conference

No, Elon Musk Is Not The Second Richest Person In The World — Here’s Why

After more than a decade of annual losses, Tesla&nbsp;<a href="https://www.forbes.com/companies/tesla" target="_blank" rel="noreferrer noopener">TSLA</a>&nbsp;<a href="https://www.forbes.com/companies/tesla">+0.2%</a>&nbsp;extended its profitability streak to five consecutive quarters, a company first, as increased sales of Model 3 and Model Y electric vehicles and pollution credits boosted net income to $331 million, its highest to date.



The Palo Alto, California-based company led by billionaire entrepreneur&nbsp;<a href="https://www.forbes.com/profile/elon-musk/">Elon Musk</a>&nbsp;<a href="https://ir.tesla.com/" target="_blank" rel="noreferrer noopener">reported</a>&nbsp;earnings per share of 27 cents in the quarter, up from 16 cents a year ago. Revenue jumped 39% to $8.77 billion from $6.3 billion in 2019’s third quarter. As usual, sales of emissions credits to other automakers fattened the quarterly profits. Tesla reported $397 million of credit sales, essentially free money that goes a long way toward keeping the company in the black.&nbsp;



The upbeat results come after Tesla said this month that <a href="https://www.forbes.com/sites/alanohnsman/2020/10/02/teslas-electric-car-shipments-jump-44-as-production-rebounds-from-coronavirus-slump/">deliveries of its electric cars and crossovers jumped 44%</a> in the quarter to the highest in company history, aided by the new Shanghai plant. Even as the company works to ramp up that $2 billion facility, it’s also begun construction of a $4 billion Gigafactory in Berlin and a new U.S. Gigafactory that will be built near Austin, Texas, at a cost of about $1 billion. Even with added capacity in China, it’s unclear whether Tesla will hit Musk’s goal of selling 500,000 vehicles this year. 



“We have the capacity installed to produce and deliver 500,000 vehicles this year,” Tesla said in a letter to investors. “While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target. Achieving this target depends primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.”



The results were generally higher than analysts anticipated. Tesla shares rose about 3.3% in after-hours Nasdaq <a rel="noreferrer noopener" href="https://www.forbes.com/companies/nasdaq" target="_blank">NDAQ</a> <a href="https://www.forbes.com/companies/nasdaq">+2.6%</a> trading to $436.75. The stock was little changed at the close, ahead of earnings, at $422.64. 



ird Bridge Group in New York. “Not super surprising&nbsp;given how much they beat on deliveries, which was revealed earlier this month.”



Tesla’s operating margin of 9.2% was slightly below expectations, likely reflecting a vehicle mix that has skewed toward the Model 3 and Model Y, the company’s lowest margin vehicles, and away from the pricier Model S and Model X, Shields said.



Sales of pollution credits, including California zero-emission vehicle and U.S. CAFE credits, have become a lucrative source of revenue for Tesla as they are generated for each electric vehicle it sells. The $397 million received in the third quarter brings its year-to-date credit sales total to $1.18 billion, double 2019’s full year total.



“The regulatory credits business was stronger than our expectations,” Tesla CFO Zachary Kirkhorn said in a conference all. “We are tracking to more than double this year compared to last.”



Fourth-quarter deliveries will be critical to watch “given that they have softened their language around the previously stated goal of 500 K for the year,” he said. To reach that target, Tesla will have to get just over 180,000 vehicles to customers in the final quarter of 2020.



The company had about $14.5 billion of cash at of the end of the quarter and said it “should have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.”



“We are currently building Model Y capacity at Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas, and remain on track to start deliveries from each location in 2021,” the company said. “Tesla Semi deliveries will also begin in 2021. We continue to significantly invest in our product roadmap.”



Despite the pandemic, Musk’s wealth has surged this year because of his nearly 25% ownership stake in Tesla. Forbes estimates his net worth at <a href="https://www.forbes.com/profile/elon-musk/">$88.7 billion</a> as of Oct. 21.



-By Alan Ohnsman, Forbes Staff

Elon Musk visits construction site of the Tesla Giga Factory

Tesla Stays In The Black For A Fifth Quarter, Buoyed By Emissions Credit Sales

Over the last few years, David Dobrik has given away more than a dozen cars to family and friends, filming the spectacles for his channel on YouTube, where the comedian is one of the site’s biggest stars. The first time was back in September 2016, when&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=sVXbKqzKZFw" target="_blank">he gave</a>&nbsp;then-girlfriend and fellow YouTube star Liza Koshy a white Tesla. He’s since doled out&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=ok5aimwxavI" target="_blank">a Mercedes to his mom</a>,&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=UFEJaAZU3nw" target="_blank">a BMW to his dad</a>, a Lamborghini to one&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=7FWdlYB7H0o" target="_blank">very, very lucky friend</a>&nbsp;and, most recently, a baby blue Ford Bronco&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=tMbRu3YkmJo" target="_blank">to his assistant</a>. Dobrik relishes capturing the recipients’ surprise on camera—the gifts’ outsize nature creating an overtop moment that he considers internet gold. Some people have cried. Others have screamed. The videos are among his most popular on YouTube, where he has 18.8 million subscribers and where such videos typically get around 12 million views. Just as David Letterman had his&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=4-P-bEHKVIE" target="_blank">Stupid Pet Tricks</a>&nbsp;and Jay Leno his&nbsp;<a rel="noreferrer noopener" href="https://www.youtube.com/watch?v=XpqmQJXdqrM" target="_blank">man-on-the-street quizzes</a>, the car giveaways have become a piece of signature Dobrik schtick.



<figure class="wp-block-embed-twitter wp-block-embed is-type-rich is-provider-twitter"><div class="wp-block-embed__wrapper">
https://twitter.com/DavidDobrik/status/1311044061969571840?s=20
</div></figure>



In August, a fan of Dobrik’s made&nbsp;<a rel="noreferrer noopener" href="https://www.tiktok.com/@fallafalous/video/6856856616155811078" target="_blank">a TikTok video</a>&nbsp;that urged Dobrik to do another giveaway while asking entrants to register to vote. At first, Dobrik didn’t want to. To him, the joke—the grand reveal, the wild looks of surprise—had started to run out of gas. “It’s gotten old,” he says. But he knew how much people loved this routine and figured there’d probably be no better way to drive his Gen Z-dominated audience to register to vote. So last Tuesday he posted&nbsp;<a rel="noreferrer noopener" href="https://www.instagram.com/p/CFu4_mKMYYm/" target="_blank">an Instagram picture</a>&nbsp;of himself surrounded by five white Tesla Model 3s. To have a chance to win one of the Musk-mobiles, you had to share his post on your account, tag a friend in a comment and see whether you’re registered through&nbsp;<a rel="noreferrer noopener" href="https://www.headcount.org/" target="_blank">HeadCount.org</a>, a non-partisan group devoted to increasing voting rolls. 



“I can’t vote. I’m not a citizen. I think that’s why I wanted to do this,” says Dobrik, 24, a Slovakian immigrant who is one of the so-called Dreamers, recipients of President Obama’s Deferred Action for Childhood Arrivals program. DACA, as the legislation is known, allows people brought to America as children to live and work here. “I wanted to go, like, ‘Hey, guys! I can’t vote. I’d love to, but the best I can do is you guys go vote on my behalf.’ ”



By directing his fans to a voter-registration portal run by HeadCount.org, the New York-based organization was able to count up how many people registered from Dobrik’s Instagram post: nearly 120,000. It’s the single largest voting drive in the 16-year history of HeadCount, which has worked with many celebrities, mostly musicians. Other recent HeadCount partners included Billie Eilish and Ariana Grande.



It’s common enough for all types of stars to lend their voices to political causes and to encourage people to vote, and much of this work is now carried out digitally. HeadCount is one of the most active in the space, and in founder Andy Bernstein’s experience, the highest-profile celebs tend to bring in perhaps a few thousand newly registered voters. The 120,000 from Dobrik’s push? “Absolutely unprecedented. Never seen anything like it,” Bernstein says. “We’ve registered close to 1 million voters over our lifetime, and more than a tenth of that has now come from David.”



Experts who study voting registration and elections pointed to two other prominent registration pushes in 2020 from outside the major political parties: the 1 million-plus voters Snapchat says&nbsp;<a href="https://www.forbes.com/sites/siladityaray/2020/10/01/more-than-1-million-people-have-registered-to-vote-through-snapchat-65-of-them-under-24/">it has gotten to register</a>&nbsp;and the 2.5 million that Facebook has persuaded to do the same thing. Dobrik’s Tesla campaign then is likely the single biggest voter registration success by an individual this year and one of the largest by an individual in modern American politics—a profound testament to the draw of Dobrik’s brand of youthful goofiness.



“Using a social media star to push people to a digital registration site has that kind of smoothness that really facilitates immediate action,” says Barry Burden, a University of Wisconsin professor who has long researched voter registration and elections. He does, reasonably, caution that voter registration does not at all translate to 100% participation in the next election. Nonetheless, Burden says, such a voter registration drive would’ve been “much harder in an analog setup where someone was communicating in a TV ad, and they wanted you to go get a form and mail it in.”



Kudos then to Dobrik, one of the funniest fellows on the internet today. He’s been digitally famous for a while now—and seems increasingly close to achieving the type of fame normally reserved for the men behind desks on late night TV. “If you ask somebody in their 40s who David Dobrik is, they know who David is—if they have kids and teenagers,” says Bernstein. “If they don’t have kids, they probably don’t.”



Dobrik came to America as a kid, arriving at age 6 from Košice, Slovakia and grew up in Chicago. While in high school, his first triumphs on the internet came through Vine, the briefly luminous social media app built on six-second clips. The zaniness of Vine informed the antics he began taping for YouTube in 2015. In the preceding years, he has&nbsp;<a href="https://www.youtube.com/watch?v=Bav1DzAnitc" target="_blank" rel="noreferrer noopener">loaded a Slip ‘N Slide</a>&nbsp;into the back of a moving truck;&nbsp;<a href="https://www.youtube.com/watch?v=7SLeGyT0Smo" target="_blank" rel="noreferrer noopener">filled someone’s mouth</a>&nbsp;with Mentos and Coca-Cola; built a slide and&nbsp;<a href="https://www.youtube.com/watch?v=iIYzdIphPzM" target="_blank" rel="noreferrer noopener">ridden a kayak</a>&nbsp;down it with his dad; and&nbsp;<a href="https://www.youtube.com/watch?v=ZPJKbXuP-_A" target="_blank" rel="noreferrer noopener">taught a friend’s mom</a>&nbsp;the lyrics to&nbsp;<a href="https://www.youtube.com/watch?v=2zencBD3z68" target="_blank" rel="noreferrer noopener">“I Love It”</a>&nbsp;by Lil Pump and Kanye West (“I’m a sick f—k, I like a quick f—k”). Along the way, he has palled around on camera with such other celebrities as singer&nbsp;<a href="https://www.youtube.com/watch?v=KRPNw6_SfTA" target="_blank" rel="noreferrer noopener">Charlie Puth,</a>&nbsp;<a href="https://www.youtube.com/watch?v=6VF0GEf3S0I" target="_blank" rel="noreferrer noopener">Justin Bieber</a>&nbsp;and&nbsp;<a href="https://www.youtube.com/watch?v=vb_OBMAY18s" target="_blank" rel="noreferrer noopener">Steve-O</a>, the star of&nbsp;Jackass,&nbsp;a TV show that has clearly informed some of Dobrik’s sensibilities. Each video runs exactly 4 minutes and 20 seconds, a nod to April 20, a holiday to marijuana enthusiasts as Oktoberfest is to beer drinkers.



Dobrik’s stuff is good natured enough to be brand friendly, and he has earned sponsorship dollars from Warner Bros, Bumble, Electronic Arts and SeatGeek. Earlier this year, he stopped posting on YouTube and pivoted entirely to TikTok, where he has attracted 23 million followers. Dobrik’s delight in collaborations has worked well there too, where he has struck up a tight friendship with Addison Rae Easterling, one of TikTok’s biggest stars and&nbsp;<a href="https://www.forbes.com/sites/abrambrown/2020/08/06/tiktoks-highest-earning-stars-teen-queens-addison-rae-and-charli-damelio-rule/">its top earner</a>. In January, he appeared on&nbsp;The Tonight Show Starring Jimmy Fallon.&nbsp;Dobrik now has his own cosmetics line, the simply named David’s Perfume, and he is also the founder of a camera app called Dispo that has newly raised $4 million from Reddit cofounder Alexis Ohanian and other investors. As its name suggests,&nbsp;<a href="https://apps.apple.com/us/app/dispo-single-use-camera/id1124432145" target="_blank" rel="noreferrer noopener">Dispo</a>&nbsp;mimics old fashioned disposable cameras—taking digital images that a user does not see until the next day.



In his voting initiative, Dobrik stopped short of directly advocating who his audience should vote for. “My least favorite thing is when the comments section on my videos—which is supposed to be a fun place—get political, and a bunch of people are yelling at other,” he says. “I try to keep out of it.” Left unsaid are the implications around DACA, the immigration law allowing Dobrik to hang out a shingle in entertainment. The legislation is a Obama hallmark, a piece of legislation trumpeted by Democrats and one that President Trump has tried hard to end. Meanwhile, his dad, who’s ineligible for DACA, is in the middle of deportation hearings, Dobrik says.



As for the winners of the Teslas, they’ve already been selected, and on Monday afternoon, Dobrik was preparing to FaceTime them, though none would know it was him calling rather than some member of his team. As in the past, he was very much looking forward to the astonished looks on their faces but was unsure whether he’d publish any of these videos online. “Sometimes,” he says, “I just do it for my own enjoyment.’



-By Abram Brown, Forbes Staff

Comedy Central Roast Of Alec Baldwin – Arrivals

David Dobrik’s Tesla Giveaway Was Probably One Of The Largest U.S. Voter Registration Drives—Ever

The newest superstar investor has leveraged a zealous belief in innovation into a $29 billion-in-assets firm and a $250 million net worth. Among her predictions: Elon Musk&#8217;s car company is vastly undervalued.



Tesla shares were limping along around $200 in May 2019, about where they had traded five years earlier, when Elon Musk’s biggest Wall Street booster tried a gutsy experiment. Cathie Wood and her Ark Investment Management were already well-known for their way-out-there predictions that Tesla would build a fleet of robo-taxis worth $1 trillion and that its shares would soar 20- or 30-fold by 2023. Now she stirred the pot again by publishing online Ark’s new bull’s-case valuation of $1.4 trillion, implying a share price above $6,000, complete with every Excel calculation and assumption behind those estimates. 



Criticism came fast and furious. Tesla short seller Jim Chanos, famed for uncovering Enron’s fraud, took Wood to task over Ark’s forecasts of Tesla’s gross margins. “[W]hat Ark has produced is a forward pricing for Tesla, not a valuation,’’ sniffed valuation expert Aswath Damodaran, a finance professor at New York University. The model, he noted, didn’t include a discounted cash-flow analysis and carried incomplete forecasts on the costs Tesla would incur to scale its vehicle production. That $1 trillion value Ark was placing on Tesla’s nonexistent robo-taxi fleet? “Strikes me as more fairy tale than valuation,’’ Damodaran opined.&nbsp;



Sixteen months later, Tesla shares—after a five-for-one August stock split—were trading at $400. In other words, they’d risen tenfold, driven up by speculation and excitement over Musk’s autonomous-driving and battery technologies and Tesla’s stronger-than-expected financial performance. Musk’s car company is now worth five times more than Ford and General Motors combined, and Wood has made a fortune. The nitpicking skeptics, she believes, have missed the big picture: As electric cars go increasingly mainstream, production efficiencies and advances in batteries and other technologies will cut what it costs to make them. And as sticker prices fall, demand will surge, including from businesses like ride-sharing companies. In September, Musk promised a $25,000 car within three years.&nbsp;



Meanwhile, Wood, 64, is perfectly happy to have a chorus of critics: “It almost makes me feel comfortable, to be honest, because it means if we’re right, then the rewards will be pretty enormous.”&nbsp;



<hr class="wp-block-separator"/>



<h1 class="has-text-align-center wp-block-heading">Loaded on the Ark</h1>



Cathie Wood’s ETFs bet on big ideas and industry disruptors. Here are some of her top holdings.



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td>ETF</td><td>Stock</td><td>1-Year Gain</td><td>Bullish Case</td></tr><tr><td>ARKK (Innovation)</td><td>Invitae Corp.</td><td>109%</td><td>Genetic-testing innovators could cut health-care costs.</td></tr><tr><td>ARKW (Next-gen internet)</td><td>Roku</td><td>68%</td><td>Consumer operating system for streaming media. </td></tr><tr><td>ARKQ (Robotics) </td><td>Proto Labs </td><td>26%</td><td>3D printer lowering costs in industries like aerospace. </td></tr><tr><td>ARKG (Genomics)</td><td>CRISPR Therapeutics</td><td>81%</td><td>Gene editor developing treatments for cancer and diabetes. </td></tr><tr><td>ARKF(Fintech)</td><td>Square </td><td>185%</td><td>The payment processor is becoming a digital bank. </td></tr></tbody></table></figure>



<hr class="wp-block-separator"/>



Wood’s comfort with going her own way has helped her turn Ark into one of the fastest-growing and top-performing investment firms in the world. Its flagship $8.6 billion Ark Innovation Fund is up a staggering 75% in 2020 and has returned an annual average of 36% over the past five years, nearly triple that of the S&amp;P 500.&nbsp;



While most star stock pickers treat their work like state secrets, Wood makes Ark’s research freely available online and posts real-time logs of her firm’s trades. Instead of hiring MBAs, she prefers to bring onboard young analysts with backgrounds in subjects like molecular biology or computer engineering, figuring they’re more likely to spot the next trend. Even the structure of Ark, an acronym for Active Research Knowledge, is original. Wood manages seven portfolios designed to capitalize on breakthroughs in robotics, energy storage, DNA sequencing and financial and blockchain technology, and makes them available to investors, particularly Millennials trading on Robinhood, as tax-efficient exchange-traded funds.&nbsp;



Its Tesla position and a pandemic that has accelerated adoption of the technologies embedded in the 35 to 55 companies in each Ark ETF have helped its assets nearly triple in 2020, to $29 billion. “Coronavirus has catapulted our innovative platforms into high gear because they solve problems,” Wood says. “Innovation solves problems.”&nbsp;



Forbes&nbsp;conservatively values Ark at $500 million, or about 2% of assets under management, roughly the same multiple as publicly traded T. Rowe Price commands. Wood’s 50%-plus ownership gives her a net worth of $250 million, good for the No. 80 spot on&nbsp;Forbes’&nbsp;sixth annual list of America’s Richest Self-Made Women.&nbsp;



It’s easy to dismiss Wood as the face of a stock-market bubble created by the Federal Reserve’s easy-money policies. But she has survived her share of both bubbles and bear markets. While an economics student at the University of Southern California, she studied under supply-side guru Arthur Laffer and apprenticed from 1977 to 1980 at Los Angeles fund giant Capital Group, watching as interest rates approaching 20% crushed the economy and the market. After graduating in 1981, she joined Jennison Associates, now an equity investment arm of Prudential, as an economist in New York. There she made an early call that inflation and interest rates had peaked. That garnered eye rolls from her superiors, but Wood was right—and the experience inculcated in her an appreciation for the potentially big upside of going against consensus. 



<blockquote class="wp-block-quote has-text-align-center is-style-large is-layout-flow wp-block-quote-is-layout-flow">As the pandemic took hold, Cathie Wood loaded up on tech stocks that she correctly predicted would lead the recovery—and bought herself a house in ritzy Hilton Head, South Carolina, from which to work.</blockquote>



Frustrated with her career path at Jennison and wanting to research individual companies, one Friday Wood up and quit. Her mentor at the firm persuaded her to return the following Monday and moved her into equity research. She covered nascent wireless telecom companies in the late 1980s and early ’90s, getting a ground-floor view of the huge economic and societal changes coming as cellphones grew ubiquitous. In 2001, she moved to New York–based AllianceBernstein as chief investment officer for thematic portfolios. But the 2008 financial crisis ushered in an era in which active managers underperformed the S&amp;P 500 and trillions flooded into low-cost index funds. Wood decided a fresh approach was needed. In 2012, she proposed putting actively managed portfolios of innovative companies inside an ETF structure. The idea got nowhere at AllianceBernstein.&nbsp;



Two years later, she launched Ark in New York. Success wasn’t immediate. In the firm’s first two years, its flagship fund placed in the bottom quartile of its peer group, according to Morningstar. By the end of 2016, Wood had attracted just $307 million in assets, and Ark’s 0.75% management fee wasn’t covering overhead. To keep going, she dug deep in her savings, sold minority stakes and struck partnerships with larger firms to build distribution. Japan’s Nikko Asset Management and the mutual fund firm American Beacon now own 39% of the company. Almost 10% is owned by the firm’s two dozen employees.



In 2017, Ark took off, buoyed by surging prices for stocks like Netflix, Salesforce, DNA sequencer Illumina, digital-payments processor Square and digital health provider Athenahealth. Assets rose tenfold, and Ark began to build its brand on the back of bold predictions, an active Twitter presence and the free research it put online. (It also attracted notice for a cryptocurrency fund available only to accredited investors; Wood started buying Bitcoin, which she calls an “insurance policy” against inflation, in 2015 at $250 a coin.) &nbsp;



Wood takes a top-down approach to building portfolios, first identifying disruptions by any means possible, including crowdsourcing—she even opens the firm’s Friday afternoon research meetings to outsiders, who can call in via Lifesize. Economics is central. Wood is most bullish on innovations if she believes their costs will decline over time, creating real demand. When scoring potential holdings, Ark looks at corporate culture and management execution on growth initiatives. Only at the end of the process does Wood value a company, refusing to buy anything she doesn’t expect will rise by 15% annually over five years, Ark’s minimum expected holding period. 



<hr class="wp-block-separator"/>



The tumult of 2020 has been good for Ark. In March, when the pandemic emerged and stocks plunged, Wood correctly predicted fast-growing tech companies would lead the world (and financial markets) to recovery. She concentrated Ark portfolios in Tesla and other top picks including education-software company 2U and real estate platform Zillow. Then, in late summer, when Tesla soared, she trimmed her holdings and built a large position in the battered shares of Slack.



With all successful innovations, of course, come copycats. Gimmicky themed ETFs have proliferated in everything from pets to sports gambling to work-from-home. Fund giants Dimensional Fund Advisors, Fidelity Investments and T. Rowe Price have all recently launched their own slates of actively managed ETFs.&nbsp;



An optimist by nature, Wood nonetheless offers some unsettling predictions for the next five years. She expects a broad swath of large industries—banking, energy, transportation, health care—to be disrupted by technological change, with many workers displaced. The result, she believes, is that economic growth, inflation and broad market indexes will all fall persistently short of expectations, providing an opportunity for active managers to pick the innovative winners that will continue to drive market-cap gains.



“I think the benchmarks and the indexes are going to go through a terrible period. We’re already seeing it,” she says. “We believe they are being increasingly populated by value traps.”&nbsp;



Does she think the market is now in a bubble? Nope. Uncertainty over the pandemic and the election (Wood supports President Trump “unabashedly”) means money has been flowing out of stocks and into the safety of bonds, she notes. “The fact that people are fearful now that we’re back at the S&amp;P 500 trading at 25 times earnings tells me that we are not in a bubble at all.” 



-By Antoine Gara, Forbes Staff

Key Speakers At The Sooner Than You Think Technology Conference

How Cathie Wood Beat Wall Street By Betting Tesla Is Worth More Than $1 Trillion

Elon Musk&#8217;s meteoric rise up the Forbes Billionaire List has continued this month, as he’s ascended past luminaries such as Warren Buffett and Steve Ballmer. As of Monday afternoon, Musk&#8217;s net worth surpassed <a href="https://www.forbes.com/real-time-billionaires/#11a0831e3d78">$74 billion</a>, meaning he is now the fifth-richest person on the planet.



KEY FACTS



<ul><li>Musk, 49, is the CEO of SpaceX and Tesla, the electric vehicle company whose stock price has soared since March.</li></ul>



<ul><li>Tesla shares gained another 9.5% in Monday&#8217;s trading to $1,643.00, giving it a <a rel="noreferrer noopener" href="https://www.cnbc.com/2020/07/20/cramer-says-moves-in-tech-stocks-are-truly-insane-as-amazon-and-tesla-climb.html" target="_blank">60%</a> rise in just three weeks since June 29, and a nearly 300% increase in 2020 alone.</li></ul>



<ul><li>Tesla is now not only the <a href="https://www.forbes.com/sites/sergeiklebnikov/2020/07/01/tesla-is-now-the-worlds-most-valuable-car-company-with-a-valuation-of-208-billion/#64a2c1d05334">world&#8217;s most valuable car company</a>, with a market cap of $304.5 billion, it’s worth more than Ford, Ferrari, General Motors and BMW <a href="https://www.forbes.com/sites/sergeiklebnikov/2020/07/01/tesla-is-now-the-worlds-most-valuable-car-company-with-a-valuation-of-208-billion/#64a2c1d05334">combined</a>.</li></ul>



<ul><li>Musk was ranked <a href="https://www.forbes.com/billionaires/"> No. 31</a> on Forbes&#8217; Billionaires List as recently as mid-March, with a net worth just under $25 billion.</li></ul>



<ul><li>His fortune has nearly tripled since then, skyrocketing to $74.2 billion at the close of trading Monday, <a href="https://www.forbes.com/real-time-billionaires/#11a0831e3d78">Forbes calculates.</a></li></ul>



<ul><li>Musk owns 21% of Tesla but has pledged more than half his stake as collateral for loans; Forbes has discounted his stake to take the loans into account.</li></ul>



KEY BACKGROUND: 



Musk first debuted on Forbes’ 400 Wealthiest Americans List in 2012 in 190th place with a net worth of $2.4 billion. On January 1 this year, he was the 37th richest person on earth. However, Tesla&#8217;s sudden and spectacular rise has propelled him near the very top of the world&#8217;s wealthiest humans. Tesla&#8217;s surge has confounded some investors, considering it’s far smaller than its competitors and only recently began to log quarterly profits. Tesla produced&nbsp;<a href="https://www.forbes.com/sites/sergeiklebnikov/2020/07/01/tesla-is-now-the-worlds-most-valuable-car-company-with-a-valuation-of-208-billion/#64a2c1d05334">103,000 vehicles</a>&nbsp;in the first quarter; Toyota produced&nbsp;<a href="https://www.forbes.com/sites/sergeiklebnikov/2020/07/01/tesla-is-now-the-worlds-most-valuable-car-company-with-a-valuation-of-208-billion/#64a2c1d05334">2.4 million vehicles</a>&nbsp;during that same period. In 2019, American automakers General Motors and Ford generated&nbsp;<a href="https://www.forbes.com/sites/danrunkevicius/2020/07/20/tesla-stock-may-be-rallying-for-this-absurd-reasonand-this-wont-end-well/#794f313f67a6">ten times</a>&nbsp;more sales than Tesla. Late last month, analysts from Morgan Stanley warned that Tesla stock, which was trading at roughly $1,000 per share at that time, was &#8220;<a href="https://www.forbes.com/sites/sergeiklebnikov/2020/06/23/tesla-is-overvalued-investors-are-treating-it-too-much-like-a-tech-company-says-morgan-stanley/#15e075f96c74">grossly overvalued</a>&nbsp;and set to plunge.&#8221; Earlier this month, Musk said that Tesla would produce virtually fully autonomous&nbsp;<a href="https://www.forbes.com/sites/johnkoetsier/2020/07/09/elon-musk-tesla-will-have-level-5-self-driving-cars-this-year/#1942918a2d1d">self-driving vehicles</a>&nbsp;by the end of 2020, a claim that was met with skepticism by an auto industry accustomed to a heaping of hype from Musk on the&nbsp;<a href="https://www.nytimes.com/2020/07/14/business/tesla-autopilot-germany.html" target="_blank" rel="noreferrer noopener">capabilities of self-driving technology</a>. Musk has not sold shares of Tesla&nbsp;<a href="http://sites/" target="_blank" rel="noreferrer noopener">since 2010</a>.



CRITICAL QUOTES:



&#8220;I really couldn&#8217;t care less,&#8221; Musk emailed Forbes about his net worth earlier this month. &#8220;These numbers rise and fall, but what really matters is making great products that people love.&#8221;



&#8220;Moves like we are seeing in Microsoft and Tesla and Amazon are truly insane and unlike any i have ever seen in my life,&#8221;&nbsp;<a href="https://twitter.com/jimcramer/status/1285293615019888640?s=20" target="_blank" rel="noreferrer noopener">tweeted</a>&nbsp;analyst Jim Cramer on Monday afternoon. When asked if Tesla was a &#8216;Covid Stock,&#8217; Cramer&nbsp;<a href="https://twitter.com/jimcramer/status/1285310934114861057?s=20" target="_blank" rel="noreferrer noopener">replied</a>, &#8220;i don&#8217;t even know if it is a stock. it is something else entirely, like a new species discovered in the wild.&#8221;&nbsp;



TANGENT:



When Kanye West<a href="https://www.forbes.com/sites/randalllane/2020/07/08/kanye-west-says-hes-done-with-trump-opens-up-about-white-house-bid-damaging-biden-and-everything-in-between/#4597b0a647aa"> initially announced</a> that he was running for president, he said he had the &#8220;full support&#8221; of Musk, a longtime close friend. In a <a rel="noreferrer noopener" href="https://pagesix.com/2020/07/11/elon-musk-backpedals-on-support-of-kanye-wests-presidential-bid/" target="_blank">since-deleted tweet</a>, Musk responded, &#8220;We may have more differences of opinion than I anticipated.&#8221; However, Musk later told <a rel="noreferrer noopener" href="https://pagesix.com/2020/07/13/elon-musk-on-why-hes-still-backing-kanye-west-for-president/" target="_blank">Page Six</a>, &#8220;Kanye explained afterward some of the reasoning behind why he said what he said. It makes more sense than many people, including me, realized.&#8221; On July Fourth, Musk <a rel="noreferrer noopener" href="https://pagesix.com/2020/07/13/elon-musk-on-why-hes-still-backing-kanye-west-for-president/" target="_blank">tweeted</a>, &#8220;You have my full support!&#8221;



&#8211; <a href="https://www.forbes.com/sites/tommybeer/">Tommy Beer</a>, Forbes Staff, <a href="https://www.forbes.com/business">Business</a>

gettyimages-1130598362-594×594

Elon Musk Is Now The Fifth Richest Person In The World

The first thing you notice when you step onto Tesla Motors’ production floor are the robots. Eight-foot-tall bright-red bots that look like Transformers, huddling over each Model S sedan as it makes its way through the factory in Fremont, Calif., on the eastern, shaggier side of Silicon Valley. Up to eight robots at a time work on a single Model S in a choreographed routine, each performing up to five tasks: welding, riveting, gripping and moving materials, bending metal, and installing components. Henry Ford and the generations of auto industry experts who have followed would dismiss this setup as inefficient – each robot should do one task only before moving the car on to the next Transformer.
The first thing you notice when you step onto Tesla Motors’ production floor are the robots. Eight-foot-tall bright-red bots that look like Transformers, huddling over each Model S sedan as it makes its way through the factory in Fremont, Calif., on the eastern, shaggier side of Silicon Valley. Up to eight robots at a time work on a single Model S in a choreographed routine, each performing up to five tasks: welding, riveting, gripping and moving materials, bending metal, and installing components. Henry Ford and the generations of auto industry experts who have followed would dismiss this setup as inefficient – each robot should do one task only before moving the car on to the next Transformer.
It’s a $3 billion criticism, to be specific. That was the amount shaved off the company’s market value in early August after Tesla cut its sales forecasts for the year by 10% to 50,000 vehicles, citing delays in teaching the robots to make both the Model S and the new crossover SUV Model X. “The Model X is a particularly challenging car to build. Maybe the hardest car to build in the world. I’m not sure what would be harder,” admitted Elon Musk, Tesla’s billionaire founder and visionary CEO, who also serves in those same roles at SpaceX.
But neither delays nor the cash burn ($1.5 billion in the past 12 months) particularly fazes Musk. He just wants to focus on making the world’s best car, and the $90,000 Model S, by all rights, can claim that prize. An all-electric vehicle, it offers a week’s worth of driving on a single charge from any one of a nationwide network of free solar-powered charging stations. It goes from 0-60 in under three seconds in “ludicrous” mode, the fastest of any four-door production car on the planet, and is also the safest car in its class. When it collides with the crash-test machine, the crash-test machine breaks. You can order it online and have it delivered to your door, get software updates beamed wirelessly and receive maintenance alerts before bad stuff happens. Plus, it’s beautiful. The door handles reach out to be opened as you approach, then fold flat for better aerodynamics. Don’t believe us: Consumer Reports called it the best overall car on the market for the past two years.
These are the kinds of superlatives that shoot Tesla Motors to the top of FORBES’ World’s Most Innovative Companies list in the first year we’ve had enough financial data to consider the company. The word “disruptor” gets attached to Tesla all the time. For several years we’ve closely studied the phenomenon of disruptive innovation, identified in the late 1990s by Harvard Business School’s Clayton Christensen. We quantify it, based on the difference between a public company’s market value and the measurable intrinsic value of its existing business – an innovation bonus, if you will. Despite all the buzz – and that’s something we try to factor out when measuring the premium – we were initially puzzled by Tesla’s growing success. Unlike classic disruptive innovations such as steel mini-mills, personal computers and, in the car business, cheap Japanese imports, Tesla never pursued the classic route of going after low-end, price-sensitive customers first with cheaper, inferior technology. It doesn’t pursue nonconsumption, or customers who don’t currently drive cars. Tesla automobiles look and drive much like other cars, use established infrastructure like roads and confine much of their product innovation to only one aspect: the power system.
These facts don’t fit the required mold for successful low-end disruption – a traditional case study would point to Tesla hitting a wall. Even Musk wasn’t sure at the beginning. “I didn’t ask for outside money for Tesla, and SpaceX, because I thought they would fail,” he says. But Tesla has instead proved to be a different kind of disruptor, a high-end version that can be just as troublesome for the incumbents.
High-end disruptors produce innovations that are leapfrog in nature, making them difficult to imitate rapidly. They outperform existing products on critical attributes on their debut; they sell for a premium price rather than a discount; and they target incumbents’ most profitable customers, going after the most discriminating and least price-sensitive buyers before spreading to the mainstream. If you look within some large companies, you can flesh out previous examples: Apple’s iPod outplayed the Sony Walkman; Starbucks’ high-end coffee drinks and atmosphere drowned out local coffee shops; Dyson’s vacuum cleaners now have solid market share; Garmin’s GPS golf ­watches have taken much of the business from range finders. The incumbents didn’t react fast enough, and the high-end disruptors took over their market.
Tesla has built its entire company around this idea. The Model S and X will be followed in 2017 by a cheaper Model 3, a $35,000 Tesla for the masses, if all goes according to plan. And despite the fact that Tesla abandoned its forecast of turning a profit this year (even with its unusual and pro-company lease accounting), investors can’t get enough of it: Musk has raised $5.3 billion in equity and debt for Tesla since 2010, with each round increasingly oversubscribed by investors, including a $650 million secondary offering in mid-August, partly to complete its giant battery-making Gigafactory in the Nevada desert. “The willingness of the markets to support the company with various financing structures leads me to believe that everything will probably be okay, assuming the model proves viable,” said Jacob Cohen, senior associate dean at the MIT Sloan School of Management.
That viability moment should come around 2017, say analysts at Credit Suisse, when Tesla is expected to show its first significant dose of free cash flow, or operating income after capital expenditures (see charts, p. 28). The other metrics look golden: It is on track to gross $5.5 billion this year, up 54% over 2014. Its shares have soared 15-fold since its 2010 IPO to a recent $33 billion market capitalization.
Meanwhile, incumbent automakers face the same challenge now and long term: If much of the auto business ends up going electric (and that’s a big if right now with sub-$3 gas and sales falling overall for electrics and hybrids) Tesla will be miles ahead at the high-end and coming down-market to eat away at the $1 trillion industry. Detroit finds it easy to dismiss Tesla as a moneylosing startup, but it has changed the industry. “[In 2001] GM crushed all of its electric models in a junkyard,” Musk says. “When we came along and made the Roadster, it got GM to make the Volt and then Nissan felt confident enough to go with the Leaf. We basically got the whole ball rolling with electrification of cars. The ball is rolling slowly, but it is rolling.”
Peel back the aluminum skin of a Tesla Model S and you will see what high-end disruption looks like. The motor and gearbox are a fraction of the size of a combustion engine drivetrain, mounted low between the wheels to create a larger crumple zone for passenger safety. The chassis is like a giant skateboard built to accommodate lots of battery wattage.
To create a car that looks this different, Musk has engineered a team and process that look different. Call it the Musk Way. Most car companies try to capture value with an established product. Laboring under radical uncertainty, Tesla has a process that is centered on a single purpose: speed. Like the big automakers, Tesla stamps its own body panels in-house, but it also makes its own battery packs and motors in the Fremont assembly plant. It even makes its own plastic steering wheel casings – a part easily and usually outsourced – because suppliers (much to their regret) tried sending their B teams and took months to turn around designs.
Tesla cannot wait – it updates designs continuously, borrowing ideas freely from its sibling SpaceX, including its extensive use of aluminum in both the body and the chassis of the Model S, as well as drawing and casting techniques used to produce the aluminum bodies of SpaceX’s Falcon rocket and Dragon capsules. “It’s very helpful to cross-fertilize ideas from different industries,” says Musk.
You’ll rarely find someone at Tesla who worked at GM, Ford or Chrysler or an automotive supplier (Aston Martin is one notable exception). Sterling Anderson, a former McKinsey associate and MIT-trained expert in self-driving cars, was hired in the summer of 2014 to work on Tesla’s autopilot systems. Now he’s the program manager of the Model X. The reason Tesla will occasionally put someone in a position without prior industry experience is that Musk is known for selecting people based upon their ability to solve complex problems—not based upon experience. Says Tesla Chief Information Officer Jay Vijayan, “Elon doesn’t settle for good or very good. He wants the best. So he asks job candidates what kinds of complex problems they’ve solved before … and he wants details.”
Musk’s team screens job applicants for their ability to learn under uncertain conditions. Every new employee, no matter which department, has to have proven some kind of ability to solve hard problems. “We always probe deeply into achievement on the résumé,” says Musk. “Success has many parents, so we look to find out who really did it. I don’t care if they graduated from university or even high school.”
Promotions and bonuses at both Tesla (and SpaceX) are built around a 1-to-5 rating system, with 4 and 5 being “great” and “phenomenal”, respectively. “You don’t get the two highest ratings,” says Musk, “unless you have done something innovative. It has to be significant in the case of phenomenal, something that makes the company better or the product better. Anyone can be an improver: HR, finance, production, they can all figure out how to improve things.”
When Tesla first called Vijayan to ask him to consider the CIO job, he said maybe but then pulled himself out of contention. He had a cushy CIO job at Silicon Valley blue-chip software firm VMWare and wasn’t looking to step out on any ledges. Tesla appeared to be taking huge risks, and Elon Musk had a reputation of making monumental demands of the leadership team. But 18 months later he got a call back and was asked to reconsider. During his interview with Musk he became convinced this company could change the world.
Vijayan’s first major task? Build all the software to run the business, from scratch, in three months, for one-fifth the cost. Typically big companies spend millions of dollars on enterprise resource planning software – which handles product planning, finance, manufacturing, supply chain and sales – from large vendors like SAP and Oracle. When Vijayan told him such a task wasn’t possible, Musk simply stated, with a Steve Jobs-like confidence: “Let me know what you need from my side to make this happen.” Says Vijayan, “He doesn’t accept constraints as ‘givens’ the way most people do.”
Vijayan and his team implemented a basic but functioning homegrown system in four months, and with steady improvements it now gives Tesla a lightning-fast feedback loop. “We have a seamlessly integrated information system that gives us speed and agility like no other automaker,” says Vijayan. By comparison, GM outsourced its entire IT function after spinning out EDS in 1996, and only since exiting bankruptcy has it rebuilt its IT strength, but at huge cost.
After hiring folks with a demonstrated ability to solve complex problems, Tesla deploys them in small teams that sit cheek-by-jowl to hasten the solutions. “Our communication allows us to move incredibly fast,” says chief designer Franz von Holzhausen. “That is an element that isn’t happening in the rest of the automotive world. They are siloed organizations that take a long time to communicate.” Von Holzhausen was able to design the award-winning Tesla S with a team of just three designers sitting next to their engineering counterparts. Bigger automakers typically have 10 to 12 designers working on each new model.
Even the car itself is designed for speed of learning. Customers are continuously connected to Tesla via their car’s 4G wireless connection and 17-inch touchscreen control panel, which sends usage data to the manufacturer in real time. Tesla will release fixes via overnight software download or make physical ­changes at a moment’s notice. That ludicrous mode that shaves the zero-to-60mph time by 10% on the top-of-the-line P85D Model S sedan is available as an over-the-air $10,000 software upgrade. And in 2013, after receiving feedback that the back seats in the Tesla S were uncomfortable, Tesla service workers changed every owner’s seats in a matter of weeks, midyear.
Learning in an environment of uncertainty requires a willingness to admit mistakes and move quickly rather than digging in and doing nothing for fear of admitting failure. In fact, obsessively attempting to avoid failure can lead to the greater failure of missing the big opportunity.
When the Model S was introduced in June 2012 it came with a “smart” air suspension system that automatically lowered the car at highway speed for better aerodynamics and range. One day a Model S owner was zooming down the highway and ran over a three-ball trailer hitch. It punctured the underbody’s ballistics-grade armor and the battery pack above it with incredible force. No one was hurt; the car’s warning system told the passengers to exit the vehicle before a fire started in the front compartment. Tesla quickly added a titanium underbody shield to the existing armor on all new cars and made it a free upgrade on existing ones, and it updated the software so the car doesn’t automatically lower at highway speed.
Most automakers lay out their shop floor once to minimize costs and plan model lines that will remain unchanged for several years. Tesla’s production engineers are continually changing the layout of the factory to learn as much as possible. Over time, as Tesla wrings out the uncertainty in the development and manufacturing process, it will transition to a more familiar arrangement, a process that is already starting to happen in the second and third production lines for the Model S and Model X. Tesla learned the benefits of staying nimble early on with the Roadster when, in an effort to reduce costs, it tried to establish a global supply chain similar to a giant carmaker’s. Tesla wasn’t ready for that setup, and having manufacturing spread out over the world led to massive coordination problems. “We definitely don’t get it perfect on the first try, not even close,” says cofounder and chief technical officer J.B. Straubel. “But that’s how we learn.” The stakes will go way up when Tesla adds the future Model 3 on another production line. If one part isn’t right, the whole factory can grind to a halt. FiatChrysler, for example, delayed the launch of the popular Jeep Cherokee by about six months because of problems with its new nine-speed transmission.
Tesla’s innovation process is neither easy nor comfortable. A recent Musk
biography tells the story of the time when, after asking already overworked employees to continue pulling overtime before the launch of the original Tesla Roadster, one employee said, “But we haven’t seen our family in weeks.” Musk’s response: “You will have plenty of time to see your family when we go bankrupt.” Musk also looks down on holidays, having nearly died from malaria following a trip to Brazil and South Africa in 2000. “That’s my lesson for taking a vacation: Vacation will kill you.”
The Tesla team is successful at achieving seemingly impossible goals not just because they work harder than anyone else. It has a process for solving complex problems that is effective. “I operate on the physics approach to analysis,” says Musk. “You boil things down to the first principles or fundamental truths in a particular area and then you reason up from there. Then you apply your reasoning to those axiomatic principles to assess what is really possible and what is simply perceived to be possible.” This method leads to innovative solutions that even Tesla executives didn’t think were possible.
Says Straubel: “Musk challenges everyone to work incredibly hard.  I know that sounds stereotypical, but I think he does it to a degree that is pretty unusual, and it is highly uncomfortable for most people, but the results are fairly undeniable. If you challenge people to work hard, they achieve more than they think they can. Most leaders don’t want to do that.” Adds Doug Fields, vice president of engineering: “We take leaps of faith that are like jumping out of an airplane and designing and building the parachute on the way down.”
That’s the necessary approach when you’re making the transition from a one-car company to a multi-car company, and doing it at scale, while simultaneously building a giant indoor energy-storage business. That’s the Musk Way.

Tag: Tesla Motors

FORBES AFRICA SOCIAL MEDIA