In a Spaces conversation streamed on X on Dec. 21, Tesla Inc. and SpaceX CEO Elon Musk provided insights into his approach to funding startups and managing investors.
Hosted by ARK Investment Management CEO Cathie Wood, the discussion revealed Musk's philosophy on the role of investors in business. Despite his capacity to independently fund startups, Musk emphasized the strategic value of involving outside shareholders.
"Each investor you add is an ally," he said. "It's good to have more allies."
Don’t Miss:
- The average American couple has saved this much money for retirement — How do you compare?
- Airbnb was worth $47 billion at IPO. This startup is automating the trillion-dollar hospitality market.
- Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.
This perspective underscores his belief in building a network of support rather than operating in isolation.
He highlighted the value of external perspectives, saying, “I think it also establishes that I’m not delusional in the valuation of the companies. If others are prepared to invest at a particular value, then I’m not the sole decider of what the value of the company is. Others are deciding what the value of the companies are; it’s sort of an assessment of the value of the company.”
This approach helps establish a grounded perspective on his companies' valuations, countering any notions of personal bias.
Another key point Musk discussed was the concept of "enabling liquidity" for employees holding stock options. He believes in aligning employees' incentives with the company's outcomes.
"It's important to give workers stock," he said.
He said his approach at Tesla has potentially created more employee millionaires than any other company, reflecting his commitment to employee investment.
Trending: Funders on this alternative asset platform are earning more than 14% annualized consignment profit funding Pro consignment opportunities.
Musk's diverse portfolio includes The Boring Co., Neuralink Corp., X and x.AI Corp., his venture competing with OpenAI's artificial intelligence (AI) chatbot technology. These companies, while laden with the typical risks and controversies of Musk-led projects, demonstrate his confidence in managing diverse ventures through equity or debt.
Reflecting on his track record, Musk said, "In all my companies across all the years, I've never lost money for an investor even once."
This record, spanning over 100 financing rounds, illustrates his effective stewardship of capital. While he acknowledged that he cannot prevent people from selling their investments, he emphasized that he has never pushed them toward unfavorable outcomes.
Musk attributed his ability to attract capital easily to his history of responsible capital management. He noted that when you treat capital well, it tends to reciprocate. This has enabled him to secure funding for his ambitious projects with relative ease.
“Obviously, when you’ve treated capital well, then capital treats you well in turn,” Musk said. “So it’s basically very easy for me to raise almost any amount of capital, frankly.”
He also emphasized the importance of maintaining transparency and avoiding complacency to ensure continued investor trust.
Investing in startups like Tesla presents a valuable opportunity for investors to get in on the ground floor of innovative ventures. While Tesla has already achieved substantial worth, it’s important to recognize that numerous other startups with great potential are awaiting investment. These early-stage companies often represent the forefront of technological advancement and market disruption, offering investors the chance to be a part of something groundbreaking.
Read Next:
- Hot take: How to turn a $100,000 investment into $1 Million — and retire a millionaire.
- What decision made this 20-year-old a millionaire in 1 year?
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
