Tesla founder and now-CEO Elon Musk chats with Mary Kathleen Flynn of TechConfidential. He’s bet $55 million on Tesla so far. He’s never failed before, and he’s not about to start now:
You’re Tesla’s fourth CEO. Why has it been so difficult to find the right person to run Tesla, and why do you think you’re the right person for the job?
[Tesla founder] Martin Eberhard was definitely not the right person. That became clear when after the Series D investors did additional dilligence we discovered that Martin was wrong about important elements of the business. He had misled us about the cost of the car and the time frame of when it could go into production. That’s why it required Michael Marks [former CEO of Flextronics International Inc. and an early investor in Tesla] to step in on an emergency basis as interim CEO. Then we launched a search for a CEO, and I thought Ze’ev Drori was the right person at that time to run the company.
Ze’ev’s background is in startups, and Tesla was a huge mess at the end of last year. Ze’ev and I worked together to fix that mess. He’s a great guy, and he was a huge help. But in the final analysis we weren’t able to raise a big equity round, and it was clear I’d have to invest much more money in the company. I thought it made sense for me to have both hands on the wheel, given that I’ve got so much on the table here with Tesla. I talked to Ze’ev, and he said he’d feel the same way in my position. There’s no negativity, and Ze’ev continues to be on the board as vice chairman. If the economy were in better shape, or if I had less personally at stake, there’s no reason why he couldn’t have done the job going forward, but I’ve got so much at stake and the economy is in such a tough position I just had to drive the ship myself.
Now that you’re in the driver’s seat, what’s the nature of the challenge facing you?
Get to cash-flow positive, reach profitability in the core business, continue developing the Model S, get the DOE loan guarantee and go public.
That’s your business plan, but what makes you the right person to execute it other than having more on the line than anyone else? If you were interviewing for the job, what would you tell your prospective employer about yourself?
I don’t think most other people would pick me, but that’s not really the point. There’s hardly anyone out there better than me at building companies.
Before PayPal, I had no real experience in the financial sector, and now it’s the world’s leading Internet payment system against Citgroup Inc. [C] and a whole bunch of established players. PayPal has 95 % marketshare. SolarCity, where I’m the primary investor and came up with the initial idea, has become the largest provider of solar power in residential installations in the U.S. SpaceX is in its second profitable year, about to go into its third. We won the NASA contract to build the Space Shuttle replacement after 2010. SpaceX is poised to be the leader in space launch, beating entrenched companies like Boeing Co. [BA] and Lockheed Martin Corp. [LMT].
That’s a pretty good track record. I’ve never had a failure, and I’m not going to add one now.
Many other innovative car makers have dreamed big over the years. What makes you think you’ll do better with Tesla than, say, Preston Tucker and John DeLorean did with their vehicles?
Neither Tucker nor DeLorean made that great of a car, quite frankly. If they had, they probably would have done OK. Another factor is that the opportunity tends to come when there is a substantial technology change. This is a huge change, the biggest technology change since Ford made the Model T with assembly line production. Incumbents don’t understand the new technology. All their expertise is in the old stuff. That’s not to say this is easy. It hasn’t been easy, and it will continue to be difficult.
I feel pretty confident with our plan going forward financially. Customers are buying our car. And the Roadster is a really great car. The new transmission is working well. It’s an upgrade of the motor and power electronics as well, and we’ve been in production on it since September. We’re offering free upgrades at no charge. And the sedan is going to be a real knockout. The company will be successful.
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