Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads that
shape SpaceX, Tesla X, The Boring Company, and Neurolink.
I'm your host, Will Walden. Elon Musk says that a $150,000
(00:24):
investment in Tesla by a Stanford professor became $6
billion. Now how did this happen though?
So $150,000 investment in Tesla,this is back in 2006, his grown
into $6 billion. According to Elon, who shared
the claim during a recent post on X, Musk credited the windfall
(00:46):
to the early confidence placed in Tesla by Stanford professor
Steve Jurvetson. Now, the return from that
investment raises a pretty big question.
How did a six figure bet on an unproven vehicle?
It's an EV nonetheless turn intoone of the most lucrative
private to public bets in Silicon Valley now.
(01:10):
Tesla's earliest funding round in 2004 included $6.5 million
from Elon, who had made his first fortune from PayPal.
But the round also included funds from investors like
Jurvetson and his firm Draper Fisher Jurvetson DFJ, or Jurvet
(01:30):
Son, which became one of Tesla'skey backers.
As I pursued an EV product at a time when the concept looked
kind of wild. It's more like science fiction
at that point, and it wasn't really a viable business.
It was just somebody tinkering right?
We all know how Tesla started. It wasn't a viable product off
(01:53):
the bat. They had the Roadster, but that
injection of money helped keep Tesla float before the actual
first Roadster was shipped. At the time of DF JS investment,
Tesla had no finished product. There was no revenue.
And there was no proof that it could actually manufacture any
(02:16):
kind of vehicle, let alone a Roadster.
The company had not yet launchedthe Roadster and was still
refining batteries which relied on lithium ion cells packaged in
a novel thermal control system at that point.
So betting on Tesla back then was not calculated because of
(02:36):
earnings and more on a belief that the battery technology
could advance quick enough to make long range electric
vehicles feasible for the consumer market and for later
models. Now, Steve Jurvetson did not
just invest his capital though. He actually joined Tesla's board
(02:59):
and stays involved through the company's hardest years,
including delays with the Roadster.
Everybody wanted to see it. It wasn't there cost overruns,
internal tensions that led to the ousting of the original Co
founders. His involvement aligned with DF
JS track record of backing very high risk but also high reward
(03:20):
if they pay off. And this is for technology
companies like SpaceX. And also back then, remember
Skype that just got shut down, They invested in that too.
Jurvetson's continued presence through Tesla's IPO in 2010 met
His firm never cashed out duringthe crucial scale up period.
They could have made a bunch of money early on, but then the IPO
(03:43):
happened. The Tesla shares were $17.00
each and they raised about 226 million through that, which gave
it a market cap of about $1.7 billion.
DFJ's initial stake grew substantially during the run up
to and after the IPO, and over the next decade, Tesla stock
(04:05):
underwent several splits, A5 forone split in 2020 and a three
for one in 2022. In Tesla today, shares trade at
hundreds of times the IPO price,which multiples or multiplies
the original equity for value ofearly investors by a factor of
not 10s or hundreds, but of thousands, which is incredible.
(04:31):
So Musk is estimating the $6 billion for Jurvetson's original
$150,000 stake, and he assumes both the compounding effect of
equity appreciation and the retention of shares through all
public market volatility. They just held down to their
shares. What did they say?
Huddle, of course. That's what we want to talk
about right now. Through all the huddling, Tesla
(04:55):
stock has one dramatically up and down over the years.
You know, the last five years have been tumultuous, driven by
production targets, profit milestones, and also Elon Musk
getting into politics. Still, if you hold on to the
stock, the upside has proven immense compared to what it was
(05:16):
when you started way back in theday.
The return on this is insane. It stands out from everything
else but for how early it was aswell in the investment, they
didn't have anything. It was just an idea and they
invested $150,000. If you're a persuasive enough
(05:36):
business person with the right idea, you can get money.
That's what this is saying. You can get money from people
that believe in you. Also, Elon had a track record
already with PayPal and has already cashed out with that.
And Elon was also putting in a bunch of his own money.
So of course people are going tobelieve if you're putting in
(05:57):
millions of dollars of your own money, what's $150,000?
You know, for a venture capital firm, $150,000 is nothing.
So you put that in, you just siton it, see what happens.
You hold on to it. Stock keeps rising.
You hold on to it. Stock keep rising, hold on to it
up and up and up until you get to billions of dollars now.
(06:20):
DF JS investment terms are not public though.
But typical early stage VC rounds at the time valued Tesla
in the 10s of millions of dollars.
And if DFJ purchased equity at a$20 million valuation and
retained a .75% stake after a dilution, the current market cap
of Tesla, now hovering around 800 billion plus, would
(06:42):
translate that holding for $6 billion as long as there's no
secondary sales. So if they did sell off a little
bit and they're still making billions.
So I think they're pretty good now.
The scale of that return shows how a single high risk venture
investment can reshape a fund's entire performance profile.
(07:04):
VC funds typically expect only asmall number of their
investments to generate outlier returns, with most startups
failing or returning modest profits.
You invest in a bunch of stuff and you invest a decent amount
of money in everything. And out of all of those, there's
going to be a few you hope hit really big.
(07:25):
It's it's like Vegas, man. You go gamble and you play a
bunch of games throughout the night.
You put a little bit into every game and hopefully you come up
ahead at the end of the night. Hopefully you'd make more money
than you came in with. Or if you're like me, you lose
it all because you're not good at gambling.
(07:47):
I'm just going to be honest withyou, I'm not even a gambler.
I just play those silly slot machines and I think they're
funny and I usually bring in $10.
At that point, I'm like, you know what, that's all I got.
That's all I'm going to bring inbecause I'm not going to waste
my money. You know, the, the odds are
against me, but it's a fun time to hang out with friends and you
(08:07):
know, 10/10/20 dollars, that's not a big deal.
So at that point, man, you know,I haven't been to the casino in
a long time, to be honest with you, maybe a decade.
So anyway, leave it in the comments.
When was the last time you went to the casino?
Did you win money? That's a good comment.
And this is what those VCs are doing.
(08:29):
They're gambling on all these different companies.
They're gambling on the people and the leaders of these
companies more so than on the technology because they want to
invest in people more so than they want to invest in the tech
because the people make the tech.
Of course, that's how it works, right?
Most start-ups fail and of course some of them do make a
modest profit, but Tesla is rarein that case where they paid 6
(08:54):
billion to these VCs after that small $150,000 investment.
Now, Steve Jurvetson left Tesla's board in 2020 after
taking a leave of absence from DFJ and later Co founding a new
firm which is called Future Ventures.
Despite him leaving though, his connection to Tesla remains A
defining part of his vesting career.
(09:17):
His ability to identify Tesla's potential before any cars hit
the road remains one of the mostcited examples of high
conviction investment in tech history.
Was it just luck? Did he just spread out his
wealth to different companies and get lucky with Tesla?
No one's really going to know. And of course Steve is always
(09:38):
going to say I knew it. I knew it all along.
So Elon Musk used an anecdote ofJurvetson's Tesla investment to
make a big point about long termbets on very hard technology,
especially Elon Musk's technology.
He wants more people to invest. He's a salesperson at the end of
(09:59):
the day. So of course you're going to
tell the story. Oh, this guy invested $150,000
and made 6 billion. You know what, even if you have,
it's kind of like televangelistsgive give as much as you can,
you're going to get a payout at the end, right?
That's what it seems like. And, and I'm not just saying,
(10:21):
I'm not saying that Elon is a scammer televangelist.
I'm saying Elon is here to do what Elon does, which is hype up
a product and telling this anecdote shows that Elon
believes from the beginning thatof course, if you invested in
the beginning, you're going to get a big payout.
That's what he told everybody too.
(10:42):
He's like, this is going to be the biggest thing ever.
You don't even know. And of course it is.
You know, it's this claim is likely accurate, $6 billion
outcome with a broad margin of estimation, assuming DFJ or
Jurvetson personally held most of their stake through Tesla's
(11:04):
rise. If they just held on to
everything, didn't sell it off to private investors, didn't
sell it off to anybody else. You know, Tesla, SpaceX,
Neuralink, all of his companies are they keep rising.
So you could end up with a fortune if you had invested
early. And of course you're going to
(11:25):
kick yourself right now if you did invest early, sort of like
Bitcoin, why didn't you buy those 100 bitcoins at the
beginning? You would be filthy rich when
they were like $0.05 or whatever.
Or why didn't you mine some early and get like a Bitcoin or
even half of a Bitcoin would be nice.
But of course, Hindsight's 2020 and DFJ and Jervisdon really did
(11:48):
come out on top of this $150,000investment. 6 million or $6
billion at the end, that's a good one.
Assume the risk of the 150,000 and came away with a bunch of
money, but also how far did theyspread their wealth at that
point? Did they invest a billion
(12:09):
dollars because $150,000 for that company and then 150,000
for another, you know, does it end up being a million
eventually and they made out sixbillion out of that million that
they invested. It's a pretty good return on
your investment. You know, it's a problem that
(12:29):
needed to be solved as well. Hey, thank you so much for
listening today. I really do appreciate your
support. If you could take a second and
hit the subscribe or the follow button on whatever podcast
platform that you're listening on right now, I greatly
appreciate it. It helps out the show
tremendously and you'll never miss an episode.
And each episode is about 10 minutes or less to get you
(12:51):
caught up quickly. And please, if you want to
support the show even more, go to Atreoncom Stage Zero.
And please take care of yourselves and each other, and
I'll see you tomorrow.
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads that
shape SpaceX, Tesla X, The Boring Company, and Neurolink.
I'm your host, Will Walden. Elon Musk says that a $150,000
(00:24):
investment in Tesla by a Stanford professor became $6
billion. Now how did this happen though?
So $150,000 investment in Tesla,this is back in 2006, his grown
into $6 billion. According to Elon, who shared
the claim during a recent post on X, Musk credited the windfall
(00:46):
to the early confidence placed in Tesla by Stanford professor
Steve Jurvetson. Now, the return from that
investment raises a pretty big question.
How did a six figure bet on an unproven vehicle?
It's an EV nonetheless turn intoone of the most lucrative
private to public bets in Silicon Valley now.
(01:10):
Tesla's earliest funding round in 2004 included $6.5 million
from Elon, who had made his first fortune from PayPal.
But the round also included funds from investors like
Jurvetson and his firm Draper Fisher Jurvetson DFJ, or Jurvet
(01:30):
Son, which became one of Tesla'skey backers.
As I pursued an EV product at a time when the concept looked
kind of wild. It's more like science fiction
at that point, and it wasn't really a viable business.
It was just somebody tinkering right?
We all know how Tesla started. It wasn't a viable product off
(01:53):
the bat. They had the Roadster, but that
injection of money helped keep Tesla float before the actual
first Roadster was shipped. At the time of DF JS investment,
Tesla had no finished product. There was no revenue.
And there was no proof that it could actually manufacture any
(02:16):
kind of vehicle, let alone a Roadster.
The company had not yet launchedthe Roadster and was still
refining batteries which relied on lithium ion cells packaged in
a novel thermal control system at that point.
So betting on Tesla back then was not calculated because of
(02:36):
earnings and more on a belief that the battery technology
could advance quick enough to make long range electric
vehicles feasible for the consumer market and for later
models. Now, Steve Jurvetson did not
just invest his capital though. He actually joined Tesla's board
(02:59):
and stays involved through the company's hardest years,
including delays with the Roadster.
Everybody wanted to see it. It wasn't there cost overruns,
internal tensions that led to the ousting of the original Co
founders. His involvement aligned with DF
JS track record of backing very high risk but also high reward
(03:20):
if they pay off. And this is for technology
companies like SpaceX. And also back then, remember
Skype that just got shut down, They invested in that too.
Jurvetson's continued presence through Tesla's IPO in 2010 met
His firm never cashed out duringthe crucial scale up period.
They could have made a bunch of money early on, but then the IPO
(03:43):
happened. The Tesla shares were $17.00
each and they raised about 226 million through that, which gave
it a market cap of about $1.7 billion.
DFJ's initial stake grew substantially during the run up
to and after the IPO, and over the next decade, Tesla stock
(04:05):
underwent several splits, A5 forone split in 2020 and a three
for one in 2022. In Tesla today, shares trade at
hundreds of times the IPO price,which multiples or multiplies
the original equity for value ofearly investors by a factor of
not 10s or hundreds, but of thousands, which is incredible.
(04:31):
So Musk is estimating the $6 billion for Jurvetson's original
$150,000 stake, and he assumes both the compounding effect of
equity appreciation and the retention of shares through all
public market volatility. They just held down to their
shares. What did they say?
Huddle, of course. That's what we want to talk
about right now. Through all the huddling, Tesla
(04:55):
stock has one dramatically up and down over the years.
You know, the last five years have been tumultuous, driven by
production targets, profit milestones, and also Elon Musk
getting into politics. Still, if you hold on to the
stock, the upside has proven immense compared to what it was
(05:16):
when you started way back in theday.
The return on this is insane. It stands out from everything
else but for how early it was aswell in the investment, they
didn't have anything. It was just an idea and they
invested $150,000. If you're a persuasive enough
(05:36):
business person with the right idea, you can get money.
That's what this is saying. You can get money from people
that believe in you. Also, Elon had a track record
already with PayPal and has already cashed out with that.
And Elon was also putting in a bunch of his own money.
So of course people are going tobelieve if you're putting in
(05:57):
millions of dollars of your own money, what's $150,000?
You know, for a venture capital firm, $150,000 is nothing.
So you put that in, you just siton it, see what happens.
You hold on to it. Stock keeps rising.
You hold on to it. Stock keep rising, hold on to it
up and up and up until you get to billions of dollars now.
(06:20):
DF JS investment terms are not public though.
But typical early stage VC rounds at the time valued Tesla
in the 10s of millions of dollars.
And if DFJ purchased equity at a$20 million valuation and
retained a .75% stake after a dilution, the current market cap
of Tesla, now hovering around 800 billion plus, would
(06:42):
translate that holding for $6 billion as long as there's no
secondary sales. So if they did sell off a little
bit and they're still making billions.
So I think they're pretty good now.
The scale of that return shows how a single high risk venture
investment can reshape a fund's entire performance profile.
(07:04):
VC funds typically expect only asmall number of their
investments to generate outlier returns, with most startups
failing or returning modest profits.
You invest in a bunch of stuff and you invest a decent amount
of money in everything. And out of all of those, there's
going to be a few you hope hit really big.
(07:25):
It's it's like Vegas, man. You go gamble and you play a
bunch of games throughout the night.
You put a little bit into every game and hopefully you come up
ahead at the end of the night. Hopefully you'd make more money
than you came in with. Or if you're like me, you lose
it all because you're not good at gambling.
(07:47):
I'm just going to be honest withyou, I'm not even a gambler.
I just play those silly slot machines and I think they're
funny and I usually bring in $10.
At that point, I'm like, you know what, that's all I got.
That's all I'm going to bring inbecause I'm not going to waste
my money. You know, the, the odds are
against me, but it's a fun time to hang out with friends and you
(08:07):
know, 10/10/20 dollars, that's not a big deal.
So at that point, man, you know,I haven't been to the casino in
a long time, to be honest with you, maybe a decade.
So anyway, leave it in the comments.
When was the last time you went to the casino?
Did you win money? That's a good comment.
And this is what those VCs are doing.
(08:29):
They're gambling on all these different companies.
They're gambling on the people and the leaders of these
companies more so than on the technology because they want to
invest in people more so than they want to invest in the tech
because the people make the tech.
Of course, that's how it works, right?
Most start-ups fail and of course some of them do make a
modest profit, but Tesla is rarein that case where they paid 6
(08:54):
billion to these VCs after that small $150,000 investment.
Now, Steve Jurvetson left Tesla's board in 2020 after
taking a leave of absence from DFJ and later Co founding a new
firm which is called Future Ventures.
Despite him leaving though, his connection to Tesla remains A
defining part of his vesting career.
(09:17):
His ability to identify Tesla's potential before any cars hit
the road remains one of the mostcited examples of high
conviction investment in tech history.
Was it just luck? Did he just spread out his
wealth to different companies and get lucky with Tesla?
No one's really going to know. And of course Steve is always
(09:38):
going to say I knew it. I knew it all along.
So Elon Musk used an anecdote ofJurvetson's Tesla investment to
make a big point about long termbets on very hard technology,
especially Elon Musk's technology.
He wants more people to invest. He's a salesperson at the end of
(09:59):
the day. So of course you're going to
tell the story. Oh, this guy invested $150,000
and made 6 billion. You know what, even if you have,
it's kind of like televangelistsgive give as much as you can,
you're going to get a payout at the end, right?
That's what it seems like. And, and I'm not just saying,
(10:21):
I'm not saying that Elon is a scammer televangelist.
I'm saying Elon is here to do what Elon does, which is hype up
a product and telling this anecdote shows that Elon
believes from the beginning thatof course, if you invested in
the beginning, you're going to get a big payout.
That's what he told everybody too.
(10:42):
He's like, this is going to be the biggest thing ever.
You don't even know. And of course it is.
You know, it's this claim is likely accurate, $6 billion
outcome with a broad margin of estimation, assuming DFJ or
Jurvetson personally held most of their stake through Tesla's
(11:04):
rise. If they just held on to
everything, didn't sell it off to private investors, didn't
sell it off to anybody else. You know, Tesla, SpaceX,
Neuralink, all of his companies are they keep rising.
So you could end up with a fortune if you had invested
early. And of course you're going to
(11:25):
kick yourself right now if you did invest early, sort of like
Bitcoin, why didn't you buy those 100 bitcoins at the
beginning? You would be filthy rich when
they were like $0.05 or whatever.
Or why didn't you mine some early and get like a Bitcoin or
even half of a Bitcoin would be nice.
But of course, Hindsight's 2020 and DFJ and Jervisdon really did
(11:48):
come out on top of this $150,000investment. 6 million or $6
billion at the end, that's a good one.
Assume the risk of the 150,000 and came away with a bunch of
money, but also how far did theyspread their wealth at that
point? Did they invest a billion
(12:09):
dollars because $150,000 for that company and then 150,000
for another, you know, does it end up being a million
eventually and they made out sixbillion out of that million that
they invested. It's a pretty good return on
your investment. You know, it's a problem that
(12:29):
needed to be solved as well. Hey, thank you so much for
listening today. I really do appreciate your
support. If you could take a second and
hit the subscribe or the follow button on whatever podcast
platform that you're listening on right now, I greatly
appreciate it. It helps out the show
tremendously and you'll never miss an episode.
And each episode is about 10 minutes or less to get you
(12:51):
caught up quickly. And please, if you want to
support the show even more, go to Atreoncom Stage Zero.
And please take care of yourselves and each other, and
I'll see you tomorrow.
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