It sure is interesting how they extended their tentacles into as many other companies and projects as possible (SBF even approached Elon about financing the Twitter acquisition) while knowing they were financing these deals with customer deposits, before blowing it up in the most spectacular way possible…
I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout.
The deep regulatory and political connections are also interesting…
This one involved strategic executive shuffling, secretive organization policy changes, shell companies, and over a billion dollars initial investment. They were probably right in the middle of it. Especially considering the thing they were buying for $1B is likely actually worth $2B+.
The crazy thing is that this is probably all within the confines of the law.
I'm all for letting a company die out, but jesus it looks like there were a ton of shady business dealings, hidden partners, reverse mergers and other sketchy moves.
This article should, at the very least, be a warning sign to anybody who thinks about investing with, or going to work for any of the people associated with any of the firms listed in the article.
yeah I think there are two things that will be interesting here. The real detailed timeline. How much Thiel's cohorts jumped into offer bridge loans or stopgaps to impacted companies for insane rates/equity.
IMHO this feels like a small problem that was turned into a crashed bank by targeted withdraws -- with the goal being blood in the water for the industry so the companies and investors that yanked out could clean up.
He probably mentions Solyndra because they absconded with $250 million in taxpayer money shortly after it was granted to them. They got the funds and the doors were shut the same week, money gone into who knows what offshore bank accounts.
Being evil. This is the group that invested in LinkedIn, PayPal and now recently Facebook after the scandals. If they went out of business, all I would say is, lol
Fascinating. A lot of the stuff they did still makes sense. Even having a hyperenergetic lunatic as a company face might work. But how on Earth did the investors refuse to address the red flags, that's criminal.
Now how about something about their relationship with the venture capitalist, Gustavo Fring? The efforts they had to go to in order to convince him that they were personally trustworthy, his nefarious plans to steal their IP and put them out of business, etc?
So basically everyone got screwed except the shareholders, who made out with an overpriced sale to Elon.
The actual company got pretty f'ed because it got a loan to buy itself out. Then it had to lay off most of its workers because it got a loan to buy itself out.
I'd recommend the book "The Smartest Guys in the Room", it goes into detail about the financial engineering. Yes it was decided in the end that it was fraudulent, but it took a while for that to become clear. Technically, much of what they did wasn't illegal and it wasn't even obvious at the time whether it was smart or stupid.
For me the most interesting part was the culture, and assumption that they couldn't fail. Because of this Ken Lay (CEO) continued to leverage himself personally against the Enron share price again and again. When told to diversify with other investments, rather than sell Enron shares and buy others, he instead took out loans against his Enron shares to buy others. He was in effect trying to "have his cake and eat it too". Ultimately once the Enron share price fell enough, it caused the whole house of cards to come crashing down as contract after contract, both for Lay and Enron, triggered pay-out conditions, and they all ended up bankrupt.
I hope this doesn't end badly for Musk, but he should probably be diversified enough to protect himself against Tesla's share price declining, and it will be interesting when SpaceX gets to an IPO, whether his personal leverage may affect whether he chooses to take it public or at what price.
Oh yeah there's definitely plenty more than I mentioned. But I just wanted to highlight that his reputation as this sort of accidental Grim Reaper of companies originated in the GFC back in 07/08
More than that. One key line: "We blew up a lot of hardware."
Any other exec would have pulled the plug. For example, in 2017 Blue Origin blew up an engine and test stand. Bezos freaked out, fired the CEO and brought in an oldspace stooge who has basically killed the company.
It's when things get tough that you find out what leaders are made of. SpaceX and Tesla have gone through some really tough times.
Not really something "sinister", but there was a level of chaos/shit-show that was orders of magnitude bigger than I had seen before, and I've worked for startups my whole career.
I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout.
The deep regulatory and political connections are also interesting…
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