Season 3, Episode 1: Tesla

**Ben Gilbert** (0:00)
Do you know the codename for the Model S?

**David Rosenthal** (0:02)
White Star.

**Ben Gilbert** (0:03)
Yeah.

**David Rosenthal** (0:04)
Yeah.

**Ben Gilbert** (0:05)
It's amazing how cool you feel doing this and learning the codenames of projects, and you're like, ah, that was a codename, even though it's not secretive, it's just boring, but I think it's cool. Welcome to season three, episode one of Acquired, the podcast about technology, acquisitions and IPOs. I'm Ben Gilbert.

**David Rosenthal** (0:34)
I'm David Rosenthal.

**Ben Gilbert** (0:35)
And we are your hosts. Today, we are covering a company that was not founded by Elon Musk, Tesla.

**David Rosenthal** (0:42)
Debatable. Depends who you ask.

**Ben Gilbert** (0:46)
Tesla is an unbelievably complex and nuanced company to research. They're without a doubt one of the most innovative companies in the world right now. They have created the electric vehicle era that we're in. They've invented the most adored cars on the market through sheer force of will, brilliant design and world-class engineering. In fact, the most recent US automaker to reach success before Tesla was Ford, and that was 111 years ago. Tesla is also a solar energy company, semi-truck company, autonomous vehicle pioneer. They're becoming the world's largest lithium ion battery manufacturer. They're a creator of large-scale charging infrastructure across the country. They have a car in orbit and by all accounts, their CEO appears to be the love child of Tony Stark and Steve Jobs.
They've also strung together, David, before you get too excited about this company, a series of miracles to stay alive and make this all happen. Both financial, engineering, PR. You string the miracles together correctly and thread the needle exactly right, and you get Tesla. In fact, as we'll talk about in the latter half of the show, they're in a pivotal moment right now to see if the company can even stay alive. The public markets right now are made up of Tesla diehard never sellers and a tremendous amount of short sellers. And for those who pay attention to short ratios, which is the amount of money being shorted on a company relative to the number of shares outstanding, 27% is their current short ratio. So that's 27% of the amount of shorts, the ratio, the number of shorts to the ratio of the...

**David Rosenthal** (2:15)
The number of people who hold the stock.

**Ben Gilbert** (2:17)
The number of people, yes, is 27%. So everybody's got an opinion. There's lots of incentives. Everything you read is probably charged with somebody that knows somebody or that actually represents somebody that has a lot to gain by Tesla moving one way or another. And there's high risk and high reward everywhere. So David, can you feel it?

**David Rosenthal** (2:37)
Oh boy, can I ever. This is a word of caution to listeners. This is going to be a long episode. We wanted to really do this justice and give the full acquired treatment to Tesla. So we have gone very deep. I won't claim in advance for this to be the definitive take on Tesla, but it will be the definitive acquired take on Tesla.

**Ben Gilbert** (2:59)
It's not like nobody's ever in the Slack requested, hey, you guys should do Tesla before. I mean, we've gotten a ton of this. And I think we've been almost a little daunted by it because it's really, there's an incredible amount of nuanced corporate structure here, evolving strategy. You could look like a complete fool by being too bullish on Tesla or too bearish on Tesla because something amazing is going to happen to this company over the next 10 years or six months. And I think in retrospect, you could either be looking like the guy that said the car wasn't going to be a thing or the guy that says that Enron was going to be the next big company. We really wanted to do our diligence to make sure that not necessarily that we took a stance one way or another, but that we did the company justice in telling the story.

**David Rosenthal** (3:41)
Indeed.

**Ben Gilbert** (3:42)
So what are we covering today? It's Tesla, Tesla writ large. We're going to be talking about the IPO as sort of the way that we structure the episode, but then also doing sort of an extended take later in the episode on where's the company today, what's its future, what are key risks and opportunities for it. And so unlike other required episodes where it's purely centered around a transaction, this is loosely around the IPO, but really about the company as a whole.
All right, a little bit of an administrative work before diving in. If you like the show, I guess if you don't like it too, but we like it more if you like it, leave a review on iTunes. It helps us grow the show. If you're ever wondering sort of how can I help the show review on iTunes is a great way. If you're new to the show, you can join the Slack at Acquired.fm, where we are always chatting with the 1,400 strong and growing group of people that, you know, talking about the most recent things that are going on, which David and I sometimes talk about the show, but don't always talk about on the show. So if Amazon's buying Whole Foods, that's the place to be for that day where there's lots of hot takes and good insights on it. This is a great time to tell you about one of our very favorite companies, Crusoe.