Duplicitous Double Dealing

By now, nearly everyone can agree that Elon Musk and reckless, self-serving decisions go together like rice and beans. Consequently, it’s really not that shocking that he would use a big pile of investor cash to bail himself out from the largest impulse buy in world history, especially in light of the fact this is not the first time he’s used other people’s money for quixotic acquisitions that only make sense in light of how they serve Elon’s interests. In light of those episodes, no one should be surprised he’d rob Peter to pay Paul.

I’m referring, of course, to Elon's AI company, xAI, buying X from Elon at a valuation of $45B ($33B when you deduct X’s debt). Before diving into his history of similarly audacious business moves there are a couple of things that caught my attention. The first is that Elon’s bizarre fetishization of the letter “X” has achieved an indescribable level of weirdness. The second is that the valuation itself is awfully suspicious. It’s $1B more than what Elon paid for X,the social media platform formerly known as Twitter, which reeks of his personal engineering, as opposed to a fairly arrived at estimation of X’s worth.

This outcome, or something similar, seems all but inevitable given how tawdry this whole saga has been. Elon’s increasingly polarizing public persona, combined with the rebranded platform’s amplification of far right conspiracy theorists and Nazi sympathizers further degraded what was already mostly sewage in word form. Looking for ways to describe what were called “tweets” and “tweeting” I, myself, settled on “excrements” and “excreting”. As time has gone on those descriptions have only become more fitting, so it’s not hard to fathom why advertisers and users fled X as if they were escaping from a burning building.

That last part explains why Elon felt compelled to look for an exit strategy he could spin as being far more graceful and justified than it actually was. Yeah, the data’s great for training Grok, but who really believes he wasn’t feeding it X data anyway? His overhaul to the terms of service permitting X to do so wasn’t even subtle. Sure, some advertisers may have come back to X after being all but extorted by the shadow president’s frivolous lawsuits, but it’s nearly inconceivable he plugged such a massive revenue hole so quickly no matter what unofficial power he accumulated.

Where Have We Seen This Before?

Nothing emboldens someone to do something more than having gotten away with it or something similar before. In 2016, a solar energy generation systems company called SolarCity was facing liquidity issues, and its future was very uncertain. Fortunately for them, the sky never fell because of a well- timed acquisition byTesla, apparently because it made business sense to fold a solar panel maker into the burgeoning clean energy division of an electric vehicle manufacturer.

On its face, this acquisition made sense. It gets murkier when you realize the founders of SolarCity, Peter and Lyndon Rives, are Elon Musk’s cousins. They originally got the idea for SolarCity from Elon, who served as chairman of the company for a time.

In the end, the shareholders approved the acquisition and more than eight years later it seems to have worked out. So, all’s well that ends well I guess.

Why Does This Matter?

However, another maxim that has stood the test of time is “Caesar’s wife must be above suspicion,” words supposedly uttered by Julius Caesar when asked why he divorced his wife despite testifying up and down he was certain she was not involved in a scandal she was accused of playing a role in. The meaning is that the appearance of impropriety is as bad as impropriety itself. Whatever the outcome, it still looks like this deal was made to bail out Elon’s cousins, at least, to everyone who isn’t still enamored by the man, a group whose numbers are swelling by the day.

And that is a problem, even if the end result is not. It’s not good enough to get what you want for the wrong reasons. Decisions made for self-interested purposes and disregarding conflicts of interest, with little or no justifiable business reasons, cannot be relied upon and will usually end badly It’s why the Delaware Court of the Chancery has resolutely rejected Elon’s exorbitant compensation package despite apparent shareholder enthusiasm in favor of it.

As Elon’s own emails revealed, he was “negotiating with myself” when deciding the parameters of the package, and there was no review by the board of directors. While shareholders may not object to such lavish compensation, allowing Elon to receive it without unfettered exercise by the board of its fiduciary duty to protect the shareholders’ interests sets a dangerous precedent, one that would almost unavoidably permit him to perform more nefarious deeds in the future.

Not that the dispute in Delaware is actually impeding Elon from ignoring any other blatant conflicts of interest. It was only severe public backlash that stopped the federal government from purchasing $400M worth of Tesla’s abomination of a pickup truck with the towing capacity of a Pomeranian. There’s no discernable reason why the government would make such a head scratcher of a purchase. At least, there’s no good reason. The actual reason is obvious-to juice the abysmal sales numbers of that hideous behemoth.

Much more concerning is Elon’s attempts, in his not-quite-defined leadership role at DOGE, and as shadow president of the United States, to replace Verizon as the provider of the Federal Aviation Authority’s main communications platform. It’s unimaginable that the migration of systems wouldn’t cause both inconvenience and danger to flight passengers throughout the country. I’m not very technically informed about this sort of thing, but I’m certain inclement weather will disrupt a satellite based service far more than any cable based equivalent would. As if flying during bad weather weren’t painful enough, a completely unnecessary overhaul will undoubtedly worsen the experience.

The malfeasance has permeated to the lower levels of the company. Four Tesla showrooms in Canada outrageously claimed to have sold 8,653 cars in a single weekend, qualifying them for $30M in subsidies from the government, all, coincidentally, occurring during the waning hours of an expiring rebate program. How many cars does a regular dealership or showroom have on the lot at any given time, 200-300? The temerity of such an obvious cash grab speaks to the sense of entitlement, or perhaps desperation, the company feels, undoubtedly having pervaded its way down from the top.

I realize I’ve gotten a bit far afield from my originally stated purpose detailing Elon’s past history of questionable choices and their implications, speaking now for some time about the present. The past informs the future, including, and up to, when it becomes the present, but what’s currently occurring and what will occur in the immediate future are what really matters, so I felt it germane to touch upon. If we continue to allow the world’s most ostentatious oligarch to indulge in his self-interest without regard to the spillover effects of those decisions we risk not only incurring drastic costs, but also courting calamity.