Drawing from his own life experience, Dallas Mavericks owner, Shark Tank investor, and basic income skeptic Mark Cuban warned Elon Musk last week that, essentially, some things just aren’t worth the fight.
Taking on the Securities and Exchange Commission in court — a scenario for which Musk appeared to be ready — would distract him from running Tesla and SpaceX, where Musk is CEO and Chief Architect, respectively, Cuban conveyed during a phone call.
The SEC filed a civil suit against Musk in on September 27, seeking monetary damages and that he be barred from being an officer or director at Tesla. Essentially, he’d have to step down as CEO. At issue was the now-infamous “420” tweet and other statements from Musk, described in the suit as “a series of false and misleading statements.” Here’s a relevant portion from the government’s complaint:
Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.
The SEC was prepared to sue Musk, and he was planning on fighting back, then Cuban called, reported the Wall Street Journal.
Cuban told the WSJ via email this when asked about the conversation between him and Musk: “I explained where the SEC used questionable practices in my case, and how he could expect the same. I asked him if he could name five people who had settled with the SEC, knowing he wouldn’t be able to name any.” Cuban was accused of insider trading and spent more than five years battling the SEC before winning, the WSJ reports.
It’s reasonable to assume that if Musk was pulled away from managing Tesla or SpaceX, each company may flounder, and at a minimum, would lose some the flash that Musk brings to each enterprise, a flash that has created a veritable fandom from engineers to sci-fi geeks, despite Musk’s sometimes erratic, outspoken behavior. The advice that Cuban gave Musk, however it weighed upon him — Musk hasn’t commented publicly on it — may have saved the futures of Tesla and SpaceX, two companies that have been in the ascendency in the last three years, but still rest on soft ground.
High-profile missteps have been less frequent with SpaceX — the two-year anniversary of its explosive “anomaly” has just passed — but achievements like the Falcon Heavy demo launch, a regular cadence of launches for customers, and the announcement it would send Yusaku Maezawa around the moon in 2023 have kept it moving forward to Mars.
Meanwhile, Tesla — which deals directly with the public and a dramatically different pace than SpaceX — has had to publicly manage growing pains related to the Tesla Model 3 production and its own stock price, which started the problem to begin with. Musk hasn’t exactly chosen easy industries in which to work, a fact he often brings up.
“If you were to do a risk-adjusted rate of return estimate on various industry opportunities, I would put building rockets and cars pretty close to the bottom of the list,” Musk said at the South by Southwest festival in March in Texas. “They would have to be the dumbest things to do.”
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