Tesla had 5 co-founders – But only two really got rich

By Alan Ohnsman

One afternoon in July 2006, then-new electric car company Tesla held a press conference at a Santa Monica airport hangar to present its groundbreaking electric car, a $ 100,000 two-seater convertible that few automakers have many chances of success.

Martin Eberhard, the then-bold and technology expert at the company, declared that the ingenuity of Silicon Valley would “teach” the traditional Detroit auto giants how to build an exciting zero-emission car.

Tesla’s first attempt, based on a modified Lotus Elise chassis loaded with 7,000 tiny lithium-ion cells, involved a high-performance vehicle that would soon follow a lower-priced family car, the director said at the time. The vision he presented that day finally came true, but not with him at the helm of the company.

Last month, Tesla became the first carmaker in the world to surpass an impressive $ 1 trillion in valuation. dollars, but the CEO who first introduced the company to the press 15 years ago did nothing but associate his name with the brand. And certainly, he did not end up becoming the richest man in the history of mankind.

This person is of course none other than Elon Musk, who was one of the early investors of Tesla and now sits in the position of CEO of the company. Musk, of course, was present at Tesla’s debut in 2006, but then he kept a low profile, focusing mainly on the need for fast “decoupling” of cars from gasoline.

From founders, to … Exodus

Tesla’s first CEO, Eberhard, and Mark Tarpening, also one of its first executives and the one who came up with the idea to name the company after the inventor Nikola Tesla, were the original automotive shareholders – and the first to claim the ownership of the brand that was to shake the waters of the traditional Detroit auto industry.

However, none of them held enough Tesla shares to become a billionaire, let alone close to Musk’s current fortune, which Forbes estimates at $ 282 billion at the close on November 10.

After all, thanks to the initial capital invested by Musk – as a result of his early investment in the payment company PayPal – the vision of Eberhard and Tarpenning came true. And in the end, that paved the way for Musk to gain full control of Tesla, steadily increasing its stake in the nine rounds of financing that preceded the company’s initial public offering in 2010, as well as in each round. Eberhard and Tarpening rates are steadily declining.

Musk, on the other hand, is still raising his stake as he continues to receive billions of dollars in quarterly stock bonuses in exchange for a salary.

In an interview with Forbes, Eberhardt says he maintains a “relatively small” stake in the auto industry, although he declined to be more specific. at the other end of the line, at his home in the San Juan Islands of Washington state. “People for some reason think I was very rich when I started Tesla. I was not,” he added.

If Eberhardt had made more money selling the Rocket eBook, the early e-reader he co-created with Tarpening in the late 1990s, they would have no reason to seek Musk’s initial funding for Tesla, he explains.

Musk, for his part, has said many times that he is not interested in money, while last year he sold his villas in Los Angeles and moved to a “humble”, prefabricated house in the SpaceX company complex in Boca Chica, Texas.

Nevertheless, he continues to grow his fortune at a remarkable rate. This is due to the almost 20% he acquired in the company during his early investment and to a long-term compensation contract, which became known in 2018, under which he is rewarded with additional shares of Tesla, worth billions of dollars, each time the company achieves specific , quarterly targets for its financial performance and valuation. (Meanwhile, it is preparing to sell 10% of its stake, valued at about $ 15 billion based on its share price on November 9, in order to avoid the heavy tax it faces if it exercises the rights to buy shares that mature soon).

Eberhard, meanwhile, sold a significant portion of his shares after being ousted by Tesla in 2007, long before the company’s first electric sports car was released, and sued Musk in 2009 for’s expulsion and defamation. , before the two sides finally reach a compromise on unclear terms.As part of the settlement, Eberhard withdrew the lawsuit against Musk, former Tesla technology director J. B. Straubel and Ian Wright, one of its first engineers. company, who are also considered co-founders of the automotive industry, along with Tarpening himself.

“When I was fired from Tesla, I had no money – I really did not have one,” says Eberhard. Tesla, he says. “I did not take part in any investment rounds after I left,” Eberhardt said.

Tarpening, now a partner in Spero Ventures, a venture capital company in Silicon Valley, has said in the past that he also still owns shares in Tesla, but does not mention the company’s top shareholders. He did not answer Forbes questions.

Of those five people officially named as co-founders of the company, only Straubel, who left Tesla in 2019, is likely to become a billionaire thanks to the shares he held in the automotive industry. His share could be worth about $ 1.3 billion, assuming he retained a significant number of the shares he held when he left.

Straubel, who is now the CEO and co-founder of the new battery recycling company Redwood Materials, declined to comment.

Wright, the company’s former engineer, followed Eberhard and Tarpening a few months after Tesla was founded. He left Tesla in 2004 to start another electric vehicle company and sold his stake years ago. “I do not have a single Tesla stock anymore,” he told Forbes. dollars”.

The rule of Musk

However, in addition to making Musk the richest man on the planet, the company that became synonymous with the revolution in the global automotive industry, “gave” wealth to many more investors and its board members, such as venture capitalist Ira Ehrenprise. , Larry Ellison of Oracle, but also Elon’s younger brother, Kimball, as well as countless investors who were inspired by the vision for a future with clean energy.

Despite the company’s success in the electric vehicle universe and its recent financial stability, as well as the constant attention Musk seeks and receives, Tesla’s early days were full of problems, both administrative and strategic, that eventually led the company to control only one by its co-founders.

Other tech giants that have reached trillions of dollars, such as Microsoft and Alphabet, have made several of their billionaire co-founders, although Musk is not the only co-founder who has become so rich.

“While other high-tech companies seem to have made a lot of noise, we have had a similar story with Apple at Tesla,” said David Hu, a professor of business administration at the University of Pennsylvania Wharton School. Steven Wozniak’s fortune is estimated at just $ 100 million, while Ronald Wayne, who few know was Apple’s third co-founder, sold his fortune very early. for just $ 800, notes Hu.

Musk’s profits, then, simply stem from his dangerous initial “bet” on Tesla, which paid off.

“They owe it not only to the percentage they had as co-founders; but also to the departures of investors, whether angel investors or venture capitalists,” says Hu. for a long time afterwards, there was great uncertainty about the company’s ability to realize its ambitious vision. “Some may argue that the same is true, to some extent, today,” he added.

Citing a “non-discrediting” clause in the 2009 dispute settlement, Eberhard refuses to reveal his views on Musk today, while Musk has shown much less restraint in an interview in January 2020 on “Third Row Tesla” podcast, organized by his fans, described Eberhard as “literally the worst person I have ever worked with.”

However, the first CEO of the company, who owned “slightly less” than 5% of the company’s share capital when he left Tesla, says that today he is not unhappy, although he did not benefit much from the launch of the company.

“Its valuation is what it is. What I’m happy about is the success of the company. It’s vital that we get rid of fossil fuels, and Tesla played a catalytic role in that, something we hoped from the start,” said Eberhard. .

“Regardless of my view of Musk, he is particularly pleased that now that the electric car revolution – which we have finally begun – I would like to see this revolution succeed. It must be done,” concludes its co-founder and first “driver”. Tesla.