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Author | Zhou Jifeng
Edit | dawn
As one of the planet's most Twitter-loving people, and also a frequent expression of dissatisfaction with Twitter's existing mechanisms, Elon Musk recently showed the style that the richest man should have — buy whatever he likes.
On April 4, a filing disclosed by the U.S. Securities and Exchange Commission (SEC) showed that Tesla CEO Musk bought a 9.2 percent stake in the social media company Twitter, more than Twitter founder Jack Dorsey's 2.25 percent. This move made Musk the largest outside shareholder of Twitter.
Is Musk crazy? Is there too much money to spend?
But in fact, long before the investment, Twitter has become Musk's most commonly used public opinion tool. After investing in Twitter, many people speculated that Musk is expected to rewrite the rules of the game of Twitter and further seek to maximize benefits.
Musk launched a vote after taking a stake in Twitter: "Do you need an edit button?" ”
If you stretch the timeline further, you will find that in the past 20 years, Musk has actually been repeating the action similar to investing in Twitter: looking at a company, and then spending a lot of money to invest, if necessary, increasing investment efforts, to ensure that he has full control and influence over the companies he invests in.
Most of the invested targets have achieved certain results, either bringing huge returns to Musk after a few years, or perfecting Musk's business map, or bringing valuable network resources to Musk...
In addition to the halo of Silicon Valley Iron Man and the world's richest man, Musk is also a successful and excellent investment manager and blockbuster catcher. He has a unique vision, and with amazing insight, he can always find the most promising target in the corners of the world.
Today, the deep way will take everyone to pick up Musk's huge and hidden investment territory.
Likes to invest in projects that "look like failures"
Talking about Musk's story seems to have to start with Tesla, but before meeting Tesla, Musk has been successful in two consecutive businesses.
In 1995, Musk dropped out of Stanford and founded the Zip website with his brother. Four years later, American computer maker Compaq bought the startup for the equivalent of 280 million euros. Musk made a profit of nearly 20 million euros from the acquisition.
He then took the money to start a business again, starting X.com, an online financial services and electronic payment business company (which later merged with another company and was renamed PayPal). In 2002, eBay bought PayPal for $1.5 billion, and Musk made a huge fortune of $180 million from the deal.
Musk, 28, has made a lot of money by starting a business continuously. Thus, he officially began his investment career.
Unlike other big guys, Musk's projects are high-tech companies that look ambitious but have a high chance of failing. These include SolarCity, a solar panel installer, Everdream, a data center software company, Mahalo, an artificial search engine company, and Tesla.
DeepInnarch Incomplete Statistical Sources / News, CB Insights
Yes, Musk wasn't the founder of Tesla, he started out as an early investor.
In 2003, Silicon Valley engineers Alberthard and Tabronen founded an electric car manufacturing company, in honor of alternating current inventor Nikola Tesla, which was named Tesla Motors. Soon the two ran out of start-up capital, and they were introduced to Musk, who has become a silicon valley upstart.
This project aims to disrupt the existing fuel vehicle market and thus drive the global automotive industry towards a sustainable future. It may seem like a fantasy, but the three of them hit it off, and Musk invested $6.5 million in Tesla's Series A financing, becoming Tesla's largest shareholder and chairman.
After 2010, Musk's investment projects have undergone a relatively big change. He has expressed concern more than once that AI will soon become as smart as humans. He also said that once this does happen, the survival of humanity will be threatened.
Instead of being afraid of it, invest in it. As a result, Musk has been involved in several rounds of funding from AI company DeepMind, investing $40 million in 2014 in a startup, Vicarious, which is said to be "building the next generation of AI algorithms."
In 2010, he spearheaded investment in Halcyon Molecular, a gene sequencing company that claims to be able to sequence a whole genome in 10 minutes at a cost of less than $1,000. In 2016, he invested in Neuralink, a neurotech company that develops implantable brain-computer interfaces (BMI). The company has also demonstrated "brain-computer interface" technology in live pigs and monkeys.
The founders of these projects have more or less a certain connection with him.
For example, with Musk's advice and encouragement, in 2006, his cousins Peter and Lyndon Rive founded SolarCity. Tesla eventually acquired SolarCity for about $2.6 billion.
For example, Everdream was founded in 1998 by Musk's cousin Lyndon Rive. Musk, who was still PayPal at the time, invested in Everdream in the fourth round. The CEO of OneRiot is Musk's brother, Kimbal Musk. Musk's former partner, Luke Nosek, was one of the first investors to focus on halcyon Molecular.
Relying on these connections, Musk has established his own entrepreneurial circle.
Musk, a risk enthusiast
Musk's investment projects involve aerospace, new energy, artificial intelligence, brain-computer interfaces, biological gene sequencing, and more, but they all have some commonalities: high-risk, too unrealistic, and you can often find these in science fiction magazines.
Faced with high-risk projects, Musk is counterintuitive and adopts what many investment managers think is the worst way to do it – "ALL IN".
On the one hand, Musk is not willing to be just a simple investor, and he has a strong desire to control some excellent companies. For example, before Tesla's IPO, Musk invested a total of 9 rounds, constantly increasing the shareholding ratio, and finally he kicked the founder out of the company and became the real helmsman of Tesla.
Musk, on the other hand, often invests in high-risk, little-known projects that he has had to pay for himself for a long time to keep them running.
The biggest crisis was in 2008. He smashed into the huge wealth he had made in his first two businesses.
At that time, Musk, several of his companies had operational problems. SpaceX's first three launches all failed, and Tesla ran into various production, supply chain and design issues. To make matters worse, the financial crisis broke out.
Source / pexels
Musk later recalled to the media that he was faced with a tough choice: "I could keep the money, but these companies will never survive, or invest my remaining money in, maybe there is a silver lining." 」 In the end, he chose to invest all his money in the project.
The money he earned quickly ran out of money to spend, and he continued to borrow foreign debt in his personal name. The Wall Street Journal confirmed Musk's financial problems with debt. "Sometimes he has to borrow heavily to pay for his business investments, thus retaining control of the companies he runs." The Wall Street Journal wrote.
As of 2017, Musk's personal borrowings totaled $624 million, mostly to invest in Tesla. By 2020, Musk's personal financial situation has not improved. The Financial Post reported that Musk received $548 million in personal loans from Morgan Stanley, Goldman Sachs Group and Bank of America.
But surviving the most difficult days, many projects gave him a huge reward.
For example, DeepMind, in which he invested, was acquired by Google in 2014, resulting in a handsome return of $92 million. In addition to this, Dell acquired Everdream, and Musk earned $15 million.
Some projects haven't quit yet, but have grown into unicorns in just a few years.
In 2011, Musk invested in Stripe, an online payment services company founded by brothers John and Patrick Collison. Ten years later, the company is valued at $95 billion. Some media predict that if the company goes public, it may gain a higher valuation and become one of the largest initial public offerings (IPOs) ever made. Once successfully listed, Musk will receive a huge exit return.
Only DNA sequencing company Halcyon Molecular is one of Musk's few failed projects. The company closed in 2012.
Of course, the most successful and well-known investment was Tesla, which Musk spent only $6.5 million on in 2004. Now Tesla has created history, and its market value has surpassed Toyota and Volkswagen to become the world's largest car company in terms of market capitalization.
The secret of the richest man
Under such crazy bets, Musk has reaped amazing rewards, which has even helped him become the richest man in the world.
On April 6 this year, the American fortune magazine Forbes released the list of the world's billionaires in 2022, and Musk replaced Amazon founder Jeff Bezos as the world's richest man with a net worth of $219 billion. Compared with last year, Musk's wealth has increased by another $68 billion.
The wealth growth of the richest man is closely linked to the projects he invests in. One is a stake in Tesla, which Musk currently owns 21 percent of, but has secured more than half of his shares as collateral for a loan. The second is Musk's rocket company SpaceX, which was valued at $74 billion in its latest round of funding.
In 2018, Tesla's board of directors and CEO Musk reached the largest corporate compensation agreement in history. The agreement stipulates that musk can unlock a level of stock option rewards for every level of Tesla's market value and profit increase thereafter. The deal includes 20.3 million options, divided into 12 lots, and musk will receive more than $50 billion (about 350 billion yuan) in revenue if all of its goals are met.
The reality is that Musk is too strong to execute, and he reached one of the final goals of the compensation plan (a market capitalization of $650 billion) 7 years ahead of schedule in 2021. This compensation plan also allowed Musk to gain a huge fortune.
Source / Forbes
In the future, Musk's wealth is likely to grow further. On the one hand, Tesla's market capitalization is expected to increase further. SpaceX is not yet available.
In addition, Musk has a major hidden investment - Bitcoin. Musk once told the media, "In addition to Tesla and Space X stocks, Bitcoin is my biggest investment."
He also advocated, "Paper money will soon be far away from us, and cryptocurrencies are a very good medium, and there is no doubt that Bitcoin is too much better than paper money." ”
Driven by Musk, Tesla also began to "speculate". However, the market in the crypto market ups and downs, the year before, Tesla made money by "speculating coins", and last year, the book lost a lot. In its most recent earnings report, Tesla claimed to have recorded an impairment loss of approximately $101 million (about 642 million yuan) for the year ended December 31, 2021, due to changes in the book value of the company's bitcoins.
Due to the frequent release of good feelings for cryptocurrencies on social media, Musk has even become a big man in the cryptocurrency circle. Musk said on December 14 last year that Tesla will test the use of Dogecoin to buy some peripheral goods. When the news broke, the price of Dogecoin rose by 24% at one point.
But for now, Musk hasn't further disclosed how much Bitcoin, Ethereum, and Dogecoin he holds.
Due to Musk's long-standing love for cryptocurrencies such as Bitcoin and Dogecoin, the market began to speculate that Musk was likely to push Twitter's development in the cryptocurrency space next.
There's no doubt that Musk's investment path is crazy. He chooses projects that look absurd and bizarre, abandoning traditional investment concepts such as the so-called "moat" in pursuit of innovation and speed.
But crazy ideas that conformist investors won't touch are becoming a reality: factories around the world are producing electric cars, space travel costs are falling, and people have the opportunity to open up the universe.
*The caption image is from Visual China.