ELON MUSK IS AN

OBVIOUS FRAUD
The seemingly limitless capacity of men to be utterly consumed by the foolish
worship of idols can cost billions of dollars. Often a huckster with a veneer of
unshakable confidence comes along and the social cost of his fraud becomes a
burden to civilization at large. So powerful is the allure of personality cults to
investors that many of those that many of the same funds that have lost
fortunes to them will instantly jump into bed with another.

In 2012 a Brazilian business magnate named Eike Batista had his net worth measured at
32 billion dollars. He was named the worlds 8th richest man. Investors poured billions
into his companies. He was an actual golden child, having ascended to wealth and
influence on a stroke of luck by being in the gold mining industry during a historic rise in
the value of gold. He leveraged that position to break into many new industries that
were perhaps more difficult than simply taking existing gold mines and seeing their
margins rise.

Not content with being just a gold magnate, he decided he would raise large amounts of
public money and get in the business of iron mining, solar energy, coal mining and
power generation, offshore oil drilling, and international logistics and shipping. He had
no unique special knowledge to lead him into these industries just the charm
to convince institutional investors and his home government to grant him gigantic
infusions of cash.

One by one Batistas businesses fell. Batistas oil wells only pumped 1/50th of the
barrels he predicted they would and OGX, the company that owned them, filed for
bankruptcy. The power generation company he founded, MPX, lost 400 million dollars a
year until it filed for bankruptcy in 2014. OSX, his offshore drilling equipment
manufacturer, was contingent upon the success of OGX and also went bankrupt.
MMX, his iron mining venture, fell completely flat after losing billions in investments.
LLX, his attempt at a global shipping and logistics enterprise, found few customers.

All his stock tickers ended in X, to symbolize the multiplication of wealth. He is now
potentially the single greatest destroyer of wealth that ever lived. The fallout of
Batistas collapse was massive. Its brush tainted not only the economy of Brazil but all
emerging markets. For the next two or more decades one mans incompetence is going
to make it far more difficult for ventures in tens of countries to find investment. Many of
the institutional investors which put their faith in Batistas schemes were pension funds
left holding double-digit stakes in enterprises whose liabilities were a multiple of their
assets.
There were a bunch of warning signs. The biggest red flag is taking on a multitude of
projects each of which would need a full-time commitment from any man, no matter
how brilliant and resilient. It speaks of a personality in the throes of mania, jumping into
the founding of one business after another with disregard for their ability to push them
into the black. The second is a mans transition from great success borne chiefly of luck,
charm, and market conditions in simpler industries to far more complicated industries
requiring long-term capital influx from both public and private sources.

Theres no businessman that exhibits these characteristics today more than Elon Musk.
He made his initial success in an unrepeatable environment of the dotcom boom.
Making web applications is ridiculously simple compared to any one of Elons new
ambitions: automobiles, space travel, solar energy, and public transit. Any single one of
these would be a massive undertaking, requiring the full focus of any CEO. To take them
on all at once reeks of foolish pride and mania. Theres something innately childish
about trying to be the king of cars, space, and trains all at once as well. Its like
hes picking everything preteen boys might decorate their room with.

The financials and market realities make it obvious that Tesla is doomed to fail. Elon
Musk has failed to capture the potential centers of profit in the new transit economy.
Uber has captured the user experience of personal transit, and Google is leaps and
bounds ahead of anyone else in overcoming the legal and technical hurdles
of autonomous vehicles. These are the parties best suited to profiting in a burgeoning
new economy of technology-enhanced transit. Tesla leveraged itself to the hilt on
batteries in a prediction of rising gas costs forcing a switch to electric vehicles, but
fracking and shale oil drove crude prices from $146 from their peak in June of 2008 to
pretty consistently under $50 these days. Oil might drop even further.

Teslas level of leverage leaves anything other than a significant market share in the car
market as a fatal outcome. It has no room for competitors, which is why I believe that
Musk got so defensive in a German newspaper when confronted with rumors of Apples
self-driving car project and began to so aggressively attack them: Important engineers?
They have hired people weve fired. We always jokingly call Apple the Tesla Graveyard.
If you dont make it at Tesla, you go work at Apple. Im not kidding.

J.B. Straubel, Teslas CTO, said that employees can get afraid of Musk. A former Musk
employee said to of him, Elons worst trait by far, in my opinion, is a complete lack of
loyalty or human connection. Many of us worked tirelessly for him for years and were
tossed to the curb like a piece of litter without a second thought. Maybe it
was calculated to keep the rest of the workforce on their toes and scared; maybe he
was just able to detach from human connection to a remarkable degree. What was clear
is that people who worked for him were like ammunition: used for a specific purpose
until exhausted and discarded.

How many of these new Apple employees are arriving from Tesla with a strong desire to
give as big of a fuck you to Musk as possible after being fired for failing to meet
increasingly unreasonable product requirements and deadlines demanded by a
foolhardy sociopath? Teslas entire future is bound in the hope that Google takes only
the low end of next generation vehicles. If Apple creates a luxury electric car, that alone
is likely to destroy any hope of success. His current level of leverage leaves no room for
the smallest of setbacks, or him scaling up operations in a crowded market with
significantly capitalized competitors.

Teslas engineers may be the best in the world, but theyre all dedicated to a task that doesnt have
an ounce of basic financial sense. Its like the Herman Hesse classic The Glass Bead Game,
where the most brilliant scientists, linguists, and engineers of the age are all dedicated to an
extremely complicated board game instead of confronting problems that are actually critical to the
advancement of society. Hesse wrote it as a critique of the academic establishment, but it also
perfectly applies to the many capital bonfires that warm Silicon Valley. Elon once wrecked a McLaren
F1 and got out of the car laughing because it wasnt insured. Take this as an omen for the future of
his automobile business if you have any bit of wisdom in you.

Something that all of his companies rely upon is continued gubmint cheese. Without
the largesse of the state, his entire empire would have already collapsed. His
enterprises have collected $4.9 billion in free handouts, and the government is the
customer on a third of SpaceXs launches and probably well over half its revenue. For
someone that is the hero of so many Reddit libertarians he sure is awfully dependent
upon handouts from the state. Not a single one of his ventures are possible without
constant goodwill and cash from politicians.

His latest Hyperloop project reminds me of the Simpsons episode where Marge narrowly saves
Springfield from being cheated out of all its money in a monorail-building scam. I can look at the
balance sheets of Musks ventures now and know that most of his billions are like Batistas. Today
there is prideful, arrogant mockery of Apple, whose profit margins he can never attain. This kind of
hubris will always be punished. Dont find yourself getting punished with it. Many of Batistas
investors now count themselves as Musks. If you have any sense at all, dump your Tesla shares
before it is too late.