Voting control doesn't change management's fiduciary duty to all shareholders. The founders retaining voting control has worked out fine for Alphabet shareholders.
> The founders retaining voting control has worked out fine for Alphabet shareholders.
Only after the cofounders brought in veteran "adult supervision" who offered guided the company with a steady hand, while Larry and Sergei were safely in their moonshot hobby project play-pens, away from the core products - an arrangement that would greatly benefit shareholders in Musk companies.
Getting together a group of owners with 3% ownership by value or 3% by voting rights both seems do-able, and I'm sure would be done of there was a serious case of mismanagement.
> The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.
I've no idea about that and I won't opine. But every time I see that sort of statement it seems likely motivated by the whole Twitter acquisition. Perhaps that was just a toy or vanity project for him, one he could afford, so even if you think he's running X terribly it might have nothing to do with how he's run or would run any other companies that are not related to social media. In other words, what I read into such statements is "I don't like the politics he's brought to Twitter!", "the board should rein in the guy whose politics I don't like!!". It's like saying Bezos is bad at business because he owns the Washington Post -another vanity project- and you don't like the Post.
Do people not get bored of that sort of take?
Tell me he makes bad business decisions all you want, but in the context of everyone-hates-his-acquisition-of-Twitter I'd like to hear about his other businesses. Tell me something useful, not something political.
And, sure, politics at some point bleeds into business. Maybe Trump is out to get Bezos over Washington Post coverage, or maybe the next Democrat President will go after Musk for his politics. It's possible that X will eventually cost him dearly and personally, and it's a solid argument for these billionaires and trillionaires to stay out of politics. Or maybe it's a good argument for them to stay in because maybe by demonstrating electoral influence and power they can make the POTUS-of-the-day fear them enough to not go after them too hard. But if you made any such argument it still wouldn't say tell me anything about the rest of these billionaires' businesses.
Space GPUs are stupid, so is hyperloop, so is the Vegas Loop; robotaxis don't work, cybertruck sucks, the humanoid robots don't work, the new roadster is nowhere to be seen.
SpaceX blew up an entire launchpad because Musk thought flame diverters are gay, or something.
Every single one of those examples is both valid and - I believe, at least - misunderstood.
Musk has a singular goal as far as I can tell: to make humanity a multi-planetary species. All of those things are testing the boundaries of what's possible in areas that will or could be very important for building a permanent settlement on Mars.
I posit that while there's much room for debate around whether or not those projects are viable, as far as I can tell everything Musk has done has been in service of building the corporate framework, talent pool, skills, and technology necessary to colonize Mars.
Ok. A permanent settlement on Mars. Given the personal control structure at play in his companies giving him autocratic control there, why would anyone believe he wouldn’t be anything but a Martian autocrat, and who in their right mind would willingly submit their own sovereignty to Emperor Musk the First of Mars? It’s not exactly like you could change your mind and walk away. You’d be literally putting your life in the hands of this wildly erratic person.
While my own views are likely closer to Musk's than I suspect yours are, I share those concerns. I don't think I'd be interested in moving there, at least not in the initial waves.
My optimistic view of the future looks more like "The Moon is a Harsh Mistress" than "Total Recall".
I'm sorry, you'll have to do an awful lot of explaining to do if you want me to believe Hyperloop, a 100+ year idea proven not to work, and the Vegas Loop, one of the most asinine infrastructure projects I've ever witnessed in my life, could possibly in any way whatsoever contribute to life on Mars
Terrain is the best available protection on Mars from radiation, and is it's far easier to pressurize a structure excavated from bedrock than it is to pressurize a dome or similar.
Hyperloop and the Vegas Loop are projects used to justify the existence of the Boring Company. The Boring Company's tech is definitely relevant to extraterrestrial habitat creation.
Fiduciary duty is meaningless without recourse. The governance structure denies any recourse. A case of breach of fiduciary duty would never make it to trial under the governance structure.
I haven't read the prospectus but I would be interested to know, when he dies, to what degree the "... control the outcome of matters requiring shareholder approval" part will be inherited. Does that facility just go along with the Class B super-voting shares? And if it does what does it mean if more than one person inherits his shares?
On the subject of the governance structure this [1] is worth a read ...
"The company significantly limits shareholders' rights to sue. SpaceX's bylaws will make it clear that anyone who owns shares "irrevocably and unconditionally" waives all rights to pursue a jury trial. Shareholders will also be prohibited from bringing class actions against the company, its directors, officers, controlling shareholders or bankers tied to the IPO, according to the filing.
Instead, shareholders will be subject to mandatory arbitration, which had long been illegal in the U.S. The Securities and Exchange Commission reversed its position, opens new tab in September, allowing companies to adopt mandatory arbitration policies, which are private proceedings overseen by arbitrators."
... I can't remember how much he spent in Pennsylvania but you might argue it was money well spent.
The voting issue is problematic, but the limits on shareholder class-actions seems like a good idea. Do you know of any shareholder class-action lawsuit that actually benefited the shareholders? They only ever seem to benefit the plaintiff lawyers pursuing the case.
That's because they often don't go far enough, and that's because of limits on things like shareholder class-actions.
If you haven't wiped out their corporate savings and sent the stock price tumbling, you haven't really done anything to get the needed recompense and to discourage the behavior in the future. Right now, many companies are effectively sole proprietorships or partnerships with window dressing made to look like there's real accountability. If it becomes impossible to oust the CEO, you're not a shareholder, you're a bagholder.
This should frankly be disqualifying for any company trying to go public. Super voting shares have their place but there's no scenario in which overall control of the company can be retained by super voting shareholders who make up a small minority of the overall shareholders.
The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction, in particular by offering escape hatches like being able to eject a CEO who's lost their mind and is no longer acting in the fiduciary best interest of the shareholders, which will so obviously happen here.
> The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction
The point is to raise money from investors. The investors get a voice in exchange.
Technically, it is described. It's described in the S-1. Trouble is that most (active) investors don't read the S-1.
Fund managers and the like do, which covers a lot of passive investors, which is good until a company joins one of the major indices at which points funds may be obligated to buy in.
It's a deeply distressing moment, and I see it as a time to renew calls for consumer-protecting regulations and antitrust laws with more teeth in the markets where this kind of behaviour's currently flourishing.
I'm pretty sick of everyone labeling points they don't like "whataboutism". The reason I brought it up is if you're going use that as a reason to get the SEC or Congress or whomever more involved you're going to have to come up with a reason beyond "I don't like Elon Musk".
It's really not a public company at all in the sense people are accustomed to. The super voting shares plus the 3% rule for a lawsuit plus the arbitration clause make Musk almost totally unaccountable. It certainly should not be included in stock indices that are used for passive investing, because it is a different category of asset.
- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"
In theory (were we talking about any other man, in any other time) that's very strictly illegal with a whole area of law dedicated to it (fiduciary duty).
Truly, in the face of this, caveat emptor has never been truer.
If/when Musk’s misadventures turn his companies to shit, I may spare a thought for the collaterally damaged, but not a single tear will I shed for the shareholders.
Tons of people are already buying you don't have to sell it to them.
I'll happily take Musks proven and superior leadership with guarantees over letting the company decline chasing short term sugar hits that destroy it long term.
>I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.
If social capital was an indicator , then Tesla stock would've cratered 2 years ago. Despite demand for tesla vehicles dropping. I don't think social capital matters these days.
Tesla still has the benefit of selling actual cars and being a profitable company, plus they’re already in all the important index funds receiving automatic investment.
SpaceX doesn’t really have those advantages from day one.
Tesla may be overvalued but I think the stock would have been negatively impacted if they spent the two years losing money.
I think this is a very big issue. If SpaceX is very successful, will he pay out dividends, or will he spend everything on a mission to mars at a massive loss or something like that?
If SpaceX is very successful he will spend everything on a mission to mars. He's pretty up front about this. If it costs a lot and the company runs at a loss then it costs a lot and the company runs at a loss. Read the S-1
> We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond. In particular, we believe our goal of establishing a lunar presence will enable terawatt-scale annual AI compute growth, support deeper space exploration and industrialization, and serve as a stepping stone to establishing a civilization on Mars.
There is no secret about this. If this scares you, do not invest. Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it. If you don't want to lose your money on a Mars mission then the guys who are saying they're going to spend your money on a Mars mission are not the guys for you.
I wonder if the scammers have been doing this already. Remember when you could buy naming rights to a star, or acreage on the moon? Elon selling lots on Mars might not feel far fetched to at least one demographic he already caters to.
That talks about trillion dollar markets. Nothing wrong with investing in Mars if money can be made. The problem is if he decides to create a mars base just because it's cool, not because it's profitable.
And yes, I don't plan to invest unless SpaceX stock somehow becomes cheap, which is very unlikely.
SpaceX has gotten reduced cost engineering since its inception, due to telling their employees that the entire purpose of SpaceX is to put humans on Mars. Everything was about making money while developing the technology to do, and then using that money to achieve that goal. Going public in this way fundamentally creates a conflict there. Given that Musk has already used SpaceX to bail out his Twitter acquisition, it feels like both investors and hopeful engineers are going to lose.
The one thing you can say though, is that “benefits himself” does not mean: buying a super yacht, a casino, an island, etc.
So yeah, he’d YOLO and do the Mars trip before any of the above. Which is what most nerds on HN would love, except their blind hatred for Musk would make them despise even that.
He’s certainly said things to deserve some hatred. I’m also lost why anyone thinks his mars trip is real. He has a long history of promising and not delivering.
There's no way in hell I'd even remotely consider trying to build a Mars base if i had all that money, either. It's a fucking stupid way to waste money.
This isn't even a theoretical concern and it goes well beyond unfettered control of a single company. Look at the history:
1. One of Elon's companies (Tesla) bought out another of Elon's companies (Solar City) that was going bankrupt because it owed a lot of money to yet another of Elon's companies (SpaceX) [1];
2. Elon diverted $500M of NVidia H100 GPUs reserved for Tesla to xAI [2];
3. Elon made a buyout agreement for Twitter then tried to back out. Twitter sued (for specific performance) and a Delaware judge agreed. Elon completed the purchase before the court ordered him to [3]. That purchase was secured by his Tesla shares. He ran Twitter into the ground and then created xAI in 2023 [4]. Both Tesla and SpaceX "invested" billions into it. Elon ultimately used the funds to buy out Twitter at an inflated price (and still less than he paid) [5]. He ultimately then bailed out the xAI investors by having SpaceX acquire xAI [6]. IMHO this made SpaceX a significantly worse company. It was also used to inflate the value of SpaceX by using some wildly optimistic made up numbers about the AI total addressable market; and
4. The Cybertruck has been an unmitigated financial disaster. It's a terrible car and sales are awful. But that's OK because Elon uses SpaceX to buy Cybertrucks [7].
At least with the Google founders and Mark Zuckerberg, they only had one company so they weren't playing corporate shell games or using it as a personal slush fund on this scale.
It's quite simple. xAI bought a shit ton of GPUs for Grok thinking they would be competitive. When that didn't pan out they found themselves with either giving away Grok for mostly free or renting out the capacity to someone else for a shit ton of money. They chose a shit ton of money.
The word "fake" draws attention but I think the article obscures two real problems:
Training is missing from the analysis entirely (as someone else noted)
Inference water use is indeed minimal per prompt no argument there, but training the old GPT-3 consumed roughly 5.4 million liters of water. LLaMA 3: ~22 million. These are huge events, happening multiple times a year across the industry, folding them into national averages seems like the statistical simplification he article criticizes everyone else for doing…
"Small nationally" ≠ "fine locally"
The Dalles, Oregon is the clearest example. In 2012, Google used 12% of the city's water supply. Today it consumes a third, around 1.19 million gallons per day, and well a sixth data center comes online in 2026, in the same area.
The city is now pursuing a $260 million reservoir expansion into a national forest (!), where 95% of the projected new water demand will be industrial, not residential. Residents are looking at a potential 99% rate increase by 2036 to fund infrastructure that may exists primarily to serve one company. Apparently the city fought a 13-month legal battle just to keep those numbers secret, that’s like a community being reshaped around a single tenant.
Hays County, Texas residents sharing the Edwards Aquifer with incoming data centers voted to block one. Memphis is watching xAI draw 5 million gallons per day. Bloomberg found two-thirds of new U.S. data centers since 2022 are sited in high water-stress zones. Arizona have already passed ordinances capping data center water use.
This to me looks like a problem in the making, AI water use isn't a national crisis for now, but local impacts are already real, training costs are systematically underreported, and the five year trajectory in water stressed regions deserves serious attention indeed
