The first days of Tesla Inc. TSLA and how the company managed not to go bankrupt along the way were among the topics discussed with the CEO Elon Musk in a interview with the Tesla Silicon Valley Club.
The beginnings of Tesla: There is some debate as to who founded the company that is now known as Tesla, a world leader in electric vehicles. Much of the debate comes from Tesla’s co-founder Martin Eberhardwho Musk says launched a campaign to get sole credit for founding the company.
“He’s the worst person I’ve ever worked with, and I’ve worked with some real assholes,” Musk said.
Musk said the creation and idea for Tesla and electric vehicles came from a lunch meeting with the co-founder JB Straubel. The duo discussed electric vehicles and battery technologies, which eventually led to a test drive of a vehicle from AC Propulsion.
Musk and Straubel were introduced to others interested in bringing an electric vehicle to market, which eventually became Tesla.
Musk said at the time that Eberhard and others had nothing that could be considered a business, just an empty shell company with no employees and no intellectual property. The general idea of commercialization was shared by all.
“There was no company,” he said flatly.
If Musk hadn’t met the other Tesla co-founders, he thinks he would have started a company with just Straubel, which would have saved “a lot of heartache along the way.”
“If I had gone ahead and created Tesla, I could have avoided a lot of drama in the beginning,” he said.
Eberhard was eventually fired by Tesla and is credited as co-founder to this day.
“I wish I had never met Martin Eberhard, he’s the absolute worst,” Musk reiterated.
Even with his contempt for Eberhard, Musk credits Eberhard as one of Tesla’s five co-founders.
Moving forward, investing in Tesla: Musk liked the Tesla Motors name for the company and was seeking the copyright, which belonged to someone in Sacramento. Musk remembers paying around $75,000 for the brand, which was a lot at the time, he said.
Musk said investing in the company was important to him, and points out that the important narrative is that Eberhard could have done it well.
“Eberhard was unwilling to risk money in the business,” Musk said.
Musk recalls Eberhard having successful businesses before Tesla and living in a $10 million house. Musk said Eberhard could have matched the investment he made in Tesla.
From the start, Musk oversaw the Tesla product and served as what he called the chief product officer. He said it’s rare to see someone who is the product manager also be an investor in the company, which confuses people about the company’s origins.
“If you’re not ready to invest your own money, why should you ask others to invest.”
Musk said a lot has changed for the design of the car and the production of the vehicle after the leadership changes, which also saw Musk move into the role of CEO.
Related Link: 5 Things You Might Not Know About Elon Musk
Resisting Bankruptcy: One story Musk has told over the years is how close Tesla came to bankruptcy. In 2008, the company struggled to obtain financing and was on the verge of bankruptcy.
“That’s when bankruptcy knocked on the door, from 2008 to 2012,” Musk said.
Musk had $40 million left over from his sale of PayPal Credits PYPL in 2008, he says.
One of the toughest decisions he had to make was what to do with his $40 million as Tesla and SpaceX, two companies he founded, struggled. Musk recalls that he could have invested all the money in Tesla or SpaceX to increase that company’s chances of success.
Instead, he shared the money because he saw businesses as children.
“How can you let a child starve to death?”
Tesla has also received funds from some existing investors and from Point of view, whom Musk calls “the worst venture capitalist on the face of this earth.” Musk calls out VantagePoint co-founder Alan Salzman enemy number two.
“What an idiot,” he said, describing Salzman.
Musk said Salzman is second only to Eberhard as an “asshole,” recalling that Salzman wanted Tesla out of business and also blocked other investors from backing Tesla due to his rights to block rounds.
SpaceX was helped by its fourth launch, which reached orbit. Musk said if it hadn’t been a success, SpaceX would have failed.