
Apple, Google, Cash App alums ditch Big Tech to build on bitcoin, fueled by VC money and friendly White House
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6 months agoon
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AUSTIN — On a Friday morning last spring, Mark Suman called out sick from his job as a senior engineering project manager at Apple and made his way downtown to a place called the Bitcoin Commons, a sort of clubhouse for enthusiasts of the world’s largest cryptocurrency, situated a few blocks south of the Texas State Capitol.
At the time, Suman was, in his words, “an active hobbyist,” tinkering with the technology in his spare time. “I actually played around with it a bit within Apple as well,” he says. “There’s not a lot I can say, other than we were always exploring new technologies, and so I was playing around with some of the open-source bitcoin tools within Apple and doing some exploratory work.”
Suman was there for the annual ‘Bitcoin Takeover’ event. He had followed many of the speakers online and when he saw the gathering pop up on his feed, he took the day off to see it for himself.
“I was sitting in the crowd wanting to get into the space and really build something new and build something novel,” Suman recalled.
What happened instead was the beginning of a professional pivot: he struck up a conversation with a developer after a talk at the Commons, and was introduced to other coders who were winding down a project called Mutiny. Within a few months, Suman handed in his notice at Apple and with the developers he’d met, pivoted into something bigger — co-founding Open Secret, a startup reimagining how user data is stored in the cloud. Instead of relying on centralized databases, the company encrypts data to each individual user — even after it’s uploaded. So if there’s a breach, there’s nothing to steal, Suman explained. No honeypot.
Parker Lewis speaks at the Bitcoin Commons, where he helps lead educational efforts around bitcoin adoption and policy.
Rod Roudi/Bitcoin Commons
The leap was not without stakes.
“There are plenty of sleepless nights,” he said. “I’ve got a family, I’ve got kids, I’ve got a kid off at university.”
He had spent years working on privacy infrastructure — tackling tough technical problems around user protection at scale — but saw a way to do it better with blockchain. “Apple likes to talk a big game about privacy,” he says. “And having been there, I’ve seen very deep within a lot of their systems that they do care about privacy at every level.”
That vision — and the Commons — helped give him conviction. The builders there were all laser focused on creating something that mattered.
Inside Austin’s bitcoin clubhouse
Bitcoin Commons sits on the second floor of the Littlefield Building at the corner of Congress Avenue and Sixth Street — where the broad boulevard to the Capitol collides with the noisy sprawl of Austin’s nightlife district. It’s an apt metaphor for the space itself.
By day, it serves as a clean, open-plan coworking hub for bitcoin operators and builders. At night, it transforms into a gathering place for rogue developers and off-the-record meetups. Events here draw a blend of venture capitalists, open-source contributors, off-grid energy technicians, and Lightning engineers — developers who build software to make bitcoin faster and cheaper to use. On some afternoons, once happy hour hits, the kitchen in the back converts into a bar.
“Bitcoin is the most important technological innovation in any of our lifetimes, and it needs its due,” said Parker Lewis, one of the stewards of the Commons and the author of a new book on bitcoin called “Gradually, Then Suddenly.”
“And so while bitcoin has no CEO and no marketing team, we here at the Bitcoin Commons and Bitcoiners all over the world help educate people about bitcoin, why it’s important, what’s being built, and present a vision for the future,” continued Lewis.
“The vibe, it’s always high signal,” said Dan Lawrence, CEO of OBM, which manages energy use for industrial-scale mining farms. Lawrence said he was “thankful” that the U.S. government had become a little more pro-bitcoin under the new administration, but added, “No matter what happens anywhere, everybody here is always going to bleed bitcoin.”
The “Bitcoin Commons” functions as a sort of clubhouse for the city’s bitcoin believers. It puts on a mix of programming, including conferences and hackathons, as well as hosts a co-working space by day.
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This year, the Commons feels different — not because bitcoiners have changed, but because the world around them has. The mood is bullish. Strategic. Triumphant, even.
Bitcoin‘s price mirrored this optimism, surging to an all-time high of nearly $110,000 in January, coinciding with Trump’s inauguration. By early April, it had retraced to the low $70,000s before rebounding to nearly $85,000 as of Saturday morning — volatility that underscores the market’s sensitivity to political developments and investor sentiment.
Just a year ago, the vibe in the Commons was cautious. Even bitcoin — the asset largely spared by securities law — felt the chill of an aggressive regulatory regime. Developers were being arrested around the world. Wallet providers were being pressured. Open-source projects landed on sanctions lists. The question then was, who would be next?
Then came the election. Trump’s return to the White House brought with it a full-court press of pro-bitcoin policy moves. Within his first 100 days, he’d pardoned Silk Road founder Ross Ulbricht and three co-founders of the BitMEX crypto exchange, established a Strategic Bitcoin Reserve, and appointed a “crypto czar” to oversee the federal government’s digital asset efforts. Even skeptics found themselves nodding.
“I was in Nashville when Trump spoke,” Suman recalled of the Bitcoin 2025 conference in Tennessee, where Trump made his first major address to the crypto industry. “I wasn’t planning on going. But you know, when someone like that is in town, you go see it.”
Suman says he feels Trump has delivered on his promises to the crypto community for the most part. Still, he remains cautious. “I am not one who embraces politicians,” Suman said. “I’m kind of apolitical as far as which side. So I only trust them until I see how it’s actually playing out in our life. So far, I think it’s going well, but it could really change.”
Austin’s “Bitcoin Commons” draws in an eclectic mix of people, including venture capitalists, bitcoin miners, and coders.
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Kevin Hurley, CTO at Lightspark, says Washington’s stance toward crypto appears to be shifting, with regulators like the SEC taking a less combative approach — moving away from lawsuits and toward clearer capital markets rules. “Hopefully now we’re actually going to have some clarity on what is and what isn’t a security, what can actually be done,” he said.
But even in a friendlier political climate, caution over government involvement remains a feature, not a bug, of the crypto community.
Joe Kelly, CEO of Unchained — a startup that helps clients store bitcoin securely by holding their own private keys — said it’s smart to be careful what you wish for when it comes to the U.S. government owning a lot of bitcoin. “That can go other ways,” he said.
To date, the government’s so-called Strategic Bitcoin Reserve has underwhelmed some digital asset advocates, since it’s limited to bitcoin previously seized in enforcement actions — not newly purchased assets or sovereign investment. Still, the administration has directed the Treasury and Commerce Departments to explore budget-neutral ways to acquire more bitcoin.
Kelly acknowledges a shift in the regulatory atmosphere, but he’s also wary of premature celebration, even with big market wins like the launch of exchange-traded funds that allow investors widespread access to bitcoin.
“If something like the ETF had launched too soon, I think it could have distracted from the people building on the actual technology itself,” Kelly said. “We’ve had the fortune that for most of Unchained’s life there wasn’t an ETF,” he added of the firm’s efforts to educate investors on how to store their crypto.
Becca Rubenfeld of Anchor Watch explains how federal shifts could allow bitcoin to be treated as an admitted asset by insurers — a potential breakthrough for institutional adoption.
Rod Roudi/Bitcoin Commons
The shift has had ripple effects across the industry, including insurance.
Becca Rubenfeld, COO of Anchor Watch, says regulatory movement is opening the door for bitcoin to be treated like any other financial asset. Traditional insurers don’t cover bitcoin directly — they insure the infrastructure around it. But if bitcoin becomes an admitted asset on insurance company balance sheets, that changes everything.
“Currently, the industry is extremely underserved,” Rubenfeld told CNBC. “But what Anchor Watch is doing is specifically insuring the asset itself. So we built a proprietary custody solution. And when customers use us for custody services, Lloyd’s of London backed insurance is included in those services.”
The demand is growing. So is the pressure to build — and secure — the technical infrastructure that makes bitcoin work.
Mike Schmidt of Brink discusses the critical need to support open-source developers who maintain bitcoin’s core infrastructure.
Rod Roudi/Bitcoin Commons
Mike Schmidt, executive director of Brink, which funds open-source bitcoin developers through a nonprofit structure, emphasized the importance of supporting the engineers maintaining bitcoin’s underlying infrastructure. “Bitcoin needs engineers,” he said.
“We have a $2 trillion asset. We have strategic reserves of bitcoin being held by countries, and there’s just this small group of engineers that are keeping this thing together at the code base,” Schmidt said. “There’s only maybe 40 full-time engineers working on this. So we want to make sure that the engineering growth can keep pace with its broader adoption.”
Lisa Neigut started as a back-end engineer at Cash App, where she worked on their internal bitcoin product, before moving to Blockstream and spending six years as an open-source developer on the Lightning Network. These days, she runs Bitcoin++, one of the largest technical conference series in the space, with six events planned across six countries this year.
“Bitcoin++ is focused on bringing together bitcoin developers and builders to talk about what they’re working on — the frontier of bitcoin,” Neigut said. “You can get an idea of what bitcoin is going to look like tomorrow.”
That sense of momentum resonates with filmmaker Alana Mediavilla, who spent five years at Google working on films about big data and cloud infrastructure. She screened her new documentary, Dirty Coin, a feature-length project looking at bitcoin’s energy footprint and the people behind the infrastructure, at the Commons.
Power supply for Whinstone’s bitcoin mine in Rockdale, Texas.
“I had put in my time in the cloud space,” she says. “I understood what data centers were, I understood where it was going, and I also understood how much energy it takes to run these huge facilities that right now are running the backbone of our society.”
Her goal wasn’t to necessarily defend bitcoin mining but to broaden the conversation. “I just want to get everybody’s data center literacy up to a certain point where we can continue to have conversations about it, because it’s not going away.”
She describes the crowd in Austin as a coming together of people “very committed to their craft” — and in her view, driven more by shared ideals than by profit-seeking.
“People think that it’s like a get-rich-quick,” she said. “Maybe those were the old days for bitcoin. Now, if you want 100x you should look at altcoins and meme coins and other stuff, but you’re probably not going to get that with bitcoin.”
“What brings them together is that they want to have better money, and they want to have a more fair world,” she added. “So the principles are solid. How we implement those principles — that’s where the variety and spice of life comes in.”
Big money meets big ideas
A surge of new funding is also reshaping bitcoin’s builder economy.
Venture investment in bitcoin-related startups soared in 2024 alongside the crypto market’s rally. The number of pre-seed deals in the space climbed 50% last year, according to research from Trammell Venture Partners, an Austin-based VC firm focused on bitcoin-native startups. Across all early-stage funding rounds, nearly $1.2 billion has been invested in bitcoin companies since 2021.
The renewed interest comes after years of technical upgrades to the bitcoin protocol and growing confidence in its long-term resilience.
“Serious people no longer question whether bitcoin will remain 15 or 20 years into the future,” said Christopher Calicott, managing director at Trammell. “So the next question becomes: Is it possible to build what the founder is trying to achieve on bitcoin? Increasingly, the answer is yes.”
PitchBook projects that crypto venture funding will surpass $18 billion in 2025 — nearly doubling the annual average from the previous two-year cycle. Much of that capital is flowing into bitcoin infrastructure and applications — payments, privacy tools, custody solutions — rather than the speculative trading platforms of previous cycles.
Read more about tech and crypto from CNBC Pro
Turning ideals — and venture dollars — into reality still requires real-world infrastructure. And that’s where entrepreneurs like Steve Barbour, the founder of Canadian firm Upstream Data, come in. He’s spent years building off-grid mining containers for remote oilfields, but this spring, he’s expanding operations into Wyoming, a bet he attributes directly to the Trump administration’s rollback of energy regulations and renewed push for domestic production.
Wyoming — home to both sprawling coal operations and some of the country’s most permissive crypto laws — has emerged as a hub for bitcoin miners and the lawmakers who support them.
The administration’s latest executive orders loosen environmental restrictions and encourage more fossil fuel development — a boon for oilfield miners like Barbour, even as critics warn it could come at a steep climate cost.
“I’m extremely optimistic and bullish on Trump’s administration,” Barbour said. “The EPA finally came out with a new stance on all these things they’ve been doing to just destroy the energy sector in America, which has affected us very negatively. I’m seeing a lot of things going the right way now with the decisions the Trump administration is making, and clearly they’re trying to attract investment in America and manufacturing.”
Zaprite’s Parker Lewis shares policy insights at the Commons, calling for federal legislation like the proposed Bitcoin Act to cement regulatory clarity.
Rod Roudi/Bitcoin Commons
Zaprite’s Lewis, one of the Commons’ most vocal policy thinkers, agrees that things are moving in the right direction — particularly around the government’s decision to establish a formal national bitcoin reserve.
While a crypto executive order is an important first step, “codifying it with law will help drive further regulatory clarity that the U.S. is open for bitcoin,” Lewis said. “It will also be good for the country … the biggest priority would be for the regulatory clarity piece, pushing Sen. Lummis’ Bitcoin Act to codify and make permanent.“
Senator Lummis, a longtime advocate for the industry, is pushing legislation to codify bitcoin protections into federal law. Her proposed legislation outlines a plan for the U.S. to buy bitcoin with “existing funds” of the Treasury Department, which includes tax revenue. The idea, in part, is to position bitcoin as a strategic reserve asset — one that could appreciate over time and reduce reliance on debt. The senator has said that the ultimate goal is to reduce the federal deficit, as well as position bitcoin alongside gold and other hard assets as a way to strengthen the dollar over time.
Without the Bitcoin Act becoming law, Lewis warns that today’s tailwinds could reverse with a single administration change.
But while Washington debates bitcoin’s role in the future of the U.S. economy, Suman was already betting his own on it.
“Why did I leave this really cushy job at Apple, where I was getting paid a lot and had stock and that kind of stuff, to come here, where my future is uncertain?” he said. “It’s the possibility of building something new that I think is really needed in the world. And I hope that it pans out. … If it doesn’t, and we go down in a glory of fire, at least I will have tried something that I really believe in.”
Even after he accepted the offer to join Mutiny — later pivoting into Open Secret — things didn’t calm down. “That was right when a prominent group of developers were arrested,” he recalled. “They were developing an app called Samurai, and they got arrested. I had accepted my offer with Mutiny, but I had not yet left Apple.”
The gamble wasn’t just career-based. It was emotional. Existential.
“Knowing that people were being arrested and there was a lot of uncertainty, I still dove in,” he said. “The guys said, ‘Listen, if you’re worried, we can just call this off and you can stay at Apple,'” Suman recalled. “But I said, ‘No, I really believe in what we’re building. Let’s make this thing scale.'”

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Ride farther, climb higher, smile wider – meet the Cikada Touring e-Bike
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If you’ve been dreaming about hitting the open road on two wheels with serious power, comfort, and style, the Cikada Touring e-Bike might just be your perfect ride. Designed for modern explorers who want adventure without compromise, this premium e-bike blends high-end performance with thoughtful design.
Smooth power that takes you everywhere

At the heart of the Cikada Touring e-Bike is a BaFang M410 350W motor that packs a punch with 80Nm of torque and provides assisted speed of up to 20 mph.
Mounted at the bike’s center, the motor’s placement creates ideal weight distribution, boosting traction and handling on everything from steep climbs to winding trails. Its compact design integrates seamlessly into the frame, keeping the center of gravity low for a more stable, confident ride that feels naturally in sync with your movements.
You’ll climb hills like a pro and accelerate with ease. It’s efficient, reliable, and perfect for riders who want consistent power for touring, commuting, or weekend adventures. Plus, it’s got walk assistance for when you’re not riding.
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Worried about running out of juice? Don’t be. The 720Wh LG 21700 removable battery delivers a range of up to 75 miles (121 km) on a single charge. That’s plenty of power for long scenic routes, daily commutes, or even multi-day rides when you want to explore more and charge less. And when it’s time to juice up again, it only takes six to eight hours to reach full charge.
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Built for comfort and confidence

No matter where the road takes you, the Cikada Touring e-Bike is ready. Its 27.5 x 2.8-inch Kenda anti-puncture tires with reflector strips keep you rolling smoothly and safely, while the suspension fork absorbs bumps across various terrains. Add an ergonomic design and 6061 aluminum frame, and you’ve got a bike that feels stable, balanced, and built to last.
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Target picks Chevy Brightdrop for your next Frontdoor delivery
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It looks like retail giant Target has been reading our posts about the Chevy Brightdrop being the best deal in the commercial EV business, because the company has picked GM’s electric box van to pilot a new, dedicated last-mile delivery service in Dallas-Fort Worth.
The new pilot program will see 50 new Chevy Brightdrop vans deployed in a collaboration between Target, Circuit EV Solutions, and a last-mile logistics startup called the Frontdoor Collective that relies on its franchise owners to make its deliveries instead of outsourcing that delivery work to independent contract carriers gig workers.
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Circuit EV Solutions provides the backbone of the highly-visible Target collaboration, delivering the fleet management and charging software to monitors vehicle health, schedule depot charging, and ensure that every Chevy Brightdrop van leaves the hub with an optimally full battery and a fully optimized delivery route, eliminating range anxiety among the vans’ operators.
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Chevy Brightdrop

Chevrolet Brightbrop electric vans were designed with last-mile delivery efforts in mind, and offers a best-in-class 272 miles of combined range, large, squared-off cargo hold for maximum capacity, and lower maintenance and fuel costs than the ICE-powered competition.
For independent delivery service providers, that’s a killer combination that can help translate to higher margins and more time back in their busy days to spend with their families – which is something I think we can all get behind.
Click here to find out if your business can take advantage of special tax incentives with the purchase of a new electric van, and click the link, below, to check out a new Brightdrop van near you.
SOURCE | IMAGES: Circuit EV, via Freightwaves.

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Environment
Elon Musk’s $1 trillion stock award gets more ridiculous the more you look at it
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8 hours agoon
October 18, 2025By
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Tesla, a company that prides itself on not advertising, is in the midst of a serious marketing effort. In doing so it’s exploiting employees, attacking shareholders, and retaining outside strategy firms to help it advertise.
It’s running these ads not to boost its falling sales, but rather to advocate for another unprecedented award for its CEO, which would keep the company stuck with him for years even as earnings drop precipitously under his direction.
In September, Tesla’s board proposed a stock award worth up to $1 trillion for CEO Elon Musk. It includes several milestones regarding Tesla stock and product performance, each of which unlocks tens of billions of dollars for Musk.
It’s the largest award proposed for any CEO of any company by multiple orders of magnitude – with previous proposed Musk awards holding the second and third place positions as well. The proposal will be voted on by TSLA shareholders at Tesla’s shareholder meeting on November 6.
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Previously, Tesla’s board has attempted to propose smaller, but still absurd, stock awards. A previous proposal to give Musk a ~$55 billion pay package was ruled illegal after the board misled shareholders and was found to be too closely tied to Musk. Tesla then put that same pay package up to another vote, using the same dishonest tactics, where it passed again.
Unsurprisingly, given that the same Elon-tied board engaged in the same misleading behavior as it had before, the pay package was again voided, saving Tesla shareholders $55 billion. That award is now in court again, with another decision soon to come.
The decisions were made by Delaware’s Court of Chancery, a famously pro-corporate court, and this resulted in Musk recommending a knee-jerk move of Tesla’s incorporation to Texas, a state with little established corporate law but where Musk thought he could exercise greater control over shareholders.
But the story has continued. Tesla’s board moved in August to give Musk an “Interim Award” worth ~$26 billion, which would still be the largest pay package for any CEO in history. It’s also more than the total profit Tesla has made over its lifetime (Tesla’s quarterly profits have been dropping for the last couple years, under Musk’s leadership).
Despite all of this, and Musk currently holding position as the richest man in the world, the company he runs has been engaging in underhanded marketing efforts to push its new proposed trillion-dollar reward, which would have tangible harms for shareholders and for the company they’re invested in.
Tesla ‘doesn’t do ads,’ but that’s changing for Musk’s $1T
Tesla has long prided itself on not relying on traditional paid advertisements. Instead, it has relied on word of mouth marketing, social media posts, and press coverage of the company’s ambitious promises in order to stay forefront in the public eye. Musk has stated that he “hates advertising” and that running ads is the equivalent of lying (even as he runs ads with lies in them).
But that’s changing. Tesla hired then quickly fired an ad team, but continues to do social media marketing largely on Twitter, the platform that Musk overpaid billions of dollars for and then turned into a white supremacist haven, causing advertisers to flee (who Musk told to leave and then sued to try to force them back).
After chasing away advertisers, Musk resorted to a common tactic of his – channeling money from one of his public companies into one of his private companies, in the form of paid Tesla advertisements.
Most recently, those advertisements have been focused not on marketing Tesla’s products to twitter users, but rather on marketing Musk’s stock award.
In fact, Tesla even recently broke the last bastion of its reluctance towards certain marketing efforts, and started running paid TV ads, but it wasn’t to market the company’s products, rather just to market Musk’s $1 trillion pay package.
Running any ads in the first place for a shareholder vote seems odd – shareholder proposals usually do come alongside a board recommendation, and that’s usually enough to convince shareholders to vote alongside the board (at least, if the board has proven itself to be working in the best interests of the company, which may not apply here).
But it’s exceptionally rare to see a company undertake a whole advertising campaign, with produced videos, paid ads, and an outside strategy firm to help, especially when those ads don’t just target shareholders, but are on platforms for the general public (though this is perhaps a recognition that a huge percentage of Americans own TSLA stock via their retirement plans, whether they purchased the stock themselves or not).
And the ads are… questionable.
Tesla’s marketing effort has been exploitive to say the least
Just about every day, Tesla has filed a new document with the Securities and Exchange Commission detailing another solicitation it has made regarding the upcoming shareholder vote.
Often these are just tweets by the company or by Musk related to the shareholder vote. Musk has made several statements supporting the vote to his millions of followers on the social media app that he purchased so that he could control narratives and quash free speech on it.
Tesla has also purchased several ads on Google, moving beyond just Musk-owned properties.
But these solicitations also include produced videos by the company telling shareholders to vote on it. Two of these ads include testimonials by Tesla employees, stating how Tesla stock improved their lives.
In the videos, the two Tesla employees state that they wouldn’t have been able to own a home if it weren’t for Tesla stock.
One, Kiyoko, invokes her dead father, who would have been proud to see her owning a home.
Another employee, Sarah, invokes her daughter, who couldn’t have had a quinceañera if not for Tesla stock (notably, Musk is also the largest individual funder of a group that is racially profiling Mexican-Americans, staking out high school graduations to break up families and putting pressure on local businesses, including quinceañera dress-sellers).
Put aside for a moment the nightmare scenario where housing is so unaffordable that workers need to feel lucky to be able to afford a place to live after having held a job for 12 years (and apparently are unable afford that house through salary alone, instead needing to rely on a highly overvalued stock to get them there), these emotional statements seem designed to distract from the rational case against this stock award, and to pull on heart strings instead.
They also conflate stock options for the employees that keep Tesla running, and who are counting on those options to help pay for their housing, with an unprecedented stock award for its part-time CEO so he can, uh… bribe more political candidates?
And if you’re wondering how giving the world’s richest man a trillion dollars will help Kiyoko afford a home or Sarah afford a quinceañera, you’re not wrong to wonder. These ought to be two different concepts, but because of the nefarious structure of the shareholder vote, they’re not.
Tesla stock helped employees. Now it can’t, since Elon took it all
One of the questions being asked is whether or not to refill Tesla’s “general share reserve” of shares set aside to be granted to employees as compensation.
Proposal 3 not only fills the general share reserve with 60 million shares as compensation for Tesla’s current and future employees (of which the company currently numbers ~120,000 strong), but also fills a “special share reserve” with nearly 208 million shares for one single part-time employee, Elon Musk, who spends most of his time working for companies other than Tesla (and whose interests can be directly opposed to Tesla’s). The board would be able to give these shares, currently worth around $91 billion, to Musk at their discretion without further shareholder approval.
This is one of many issues brought up by several pension funds who named their concerns with the shareholder proposals. Normally, it would seem reasonable to split up the “general” and “special” share reserve votes, but Tesla has seen it fit to combine the two – such that if you want Tesla to be able to compensate employees with shares, you must also accept that Musk will have 3.5x as many shares set aside for him personally as will be set aside for every other employee at the company combined.
It must feel incredibly insulting for the engineers who actually design the cars, the manufacturing associates who build them, the software team that continues to improve the best software out there, the best-in-the-biz charging team, et cetera, to see a guy who spends most of his time working for other companies (or pretending to be good at video games on his private jet) and be told that he’s worth hundreds of thousands of times more than you are.
Even worse, the reason this vote is necessary is because the share reserve was recently drained… to pay Elon Musk.
When Musk’s friends on the Tesla board decided to hand him an “Interim Award” of $26 billion without a shareholder vote, the process through which they did this was to simply award shares to Musk that had previously been set aside in Tesla’s share reserve.
Those shares had been intended to be available for years to come, as compensation for employees, to help Tesla attract and compensate talent (as the heartstring-tugging videos above suggest). But instead, almost the entire reserve was drained to give to Musk, with only one stipulation: that he continue working at Tesla for two years.
But that’s only part of the shares that Musk would get if these shareholder votes pass, because those 208 million shares aren’t even associated with the separate $1 trillion award in Proposal 4, which would include over 423 million shares. So now we’re up to 630+ million shares for Musk (~276B at current TSLA valuation), and only 60 million for every other employee at Tesla combined, being voted on at this shareholder meeting.
And even if proposal 4 is voted down, the board could still give Musk $91 billion worth of stock, and it’s holding employees’ compensation hostage to ensure that it be able to do so.
Musk gets largest payday ever for being a bad employee
The Interim Award was given with the rationale that it might “focus and energize” the CEO, who has been distracted with his running of several other companies and his world famous social media addiction as Tesla earnings and sales have been dropping in an otherwise rising market.
Tesla’s sales drops are largely due to the brand damage Musk himself is doing, and also its lack of innovation under his direction – but at least he can sell some cars to himself to try to hide this failure.
Tesla got saved in Q3 by a pull-forward in demand due to the end of US tax credits (which Musk himself backed, despite that his actions have hurt Tesla in more ways than one), but otherwise its earnings have been trending dangerously close to unprofitability.
Thus, this marks not only the largest payday in the history of the world, but the largest payday given with explicit acknowledgement that the payee is an underperforming and distracted employee, leading the company in a worse direction.
And yet, the board wants shareholders to approve even more pay for that bad employee, and has attached no strings to require he stop distracting himself with other companies, merely hoping that the promise of a large payday will coax Musk into being less terrible at his job than he has recently.
But it has to be an exceptionally large payday if Musk is to complete his goals (and to be clear, they are Musk’s goal, not the company’s), given the inflated nature of TSLA stock.
This is about power… and money
Musk wants this award because he wants more control over Tesla. He has stated clearly many times that he “doesn’t feel comfortable” with his current ownership percentage, even though it’s the result of him continually selling Tesla stock to fund his white supremacist, anti-free-speech project on twitter.
After his many stock sales, his ownership percentage has diluted from around a quarter of the company in 2021 to around 13% today. Musk has threatened Tesla shareholders, saying that that “the future of the world” relies on him getting $1 trillion and that if he doesn’t get 25% of the company he will take AI and robots elsewhere (nevermind that he already has sent Tesla resources to his private company in multiple ways, and wants Tesla shareholders to bail twitter/xAI out, another proposal on the current slate of votes).
Musk having more voting power would protect him from shareholder proposals that seek to improve Tesla’s corporate governance, as several proposals in front of shareholders right now would do. These include modifications to Tesla’s bylaws enabling changes through majority vote rather than supermajority vote, and repealing the threshold requirement to bring derivative actions against the company.
If Musk had 25% of the company, that makes it a lot easier for him to vote a chunk of his shares towards consolidating his power, and makes him less accountable to shareholders who are rightly concerned about Tesla’s current dropping sales and earnings under his direction.
And given that the vote on the current pay package somehow allows Musk to vote his own shares in support of it (unlike the last one, where he was recused), there’s no reason he couldn’t continue to do the same in the future, and have even more opportunity to enrich himself and consolidate power at the cost of all other Tesla shareholders.
But beyond the power, it’s also about money (as Fred here at Electrek pointed out). If Musk wanted to increase his ownership percentage, he could have Tesla engage in stock buybacks, which would not only decrease dilution for him but also for other shareholders who hold long term. This would also increase share prices, something shareholders might like to see (but then again, it would also require profits, which have tanked recently under Musk’s direction).
Instead, the plan increases dilution for everyone by printing hundreds of millions of shares – dilution for everyone except Musk, who gets far more shares than everyone else combined.
But you better not bring that up, because if so, Tesla might put out a mean tweet about you.
Tesla pays for PR to attack its own shareholders
We covered a group of pension funds who brought up many of these legitimate concerns in a dispassionate letter sent to Tesla investors, including the draining of the share reserve to pay Musk, the negative effect of dilution on current shareholders, and others. The concerns are well-argued and the letter is signed by several public pension funds, whose interest is generally in stable long-term returns, rather than volatility or speculation.
Many public funds are required to invest significantly in funds like the S&P 500, of which TSLA is an outsized member. They are also interested in a generally less volatile economy overall, and thus, it makes sense that they would argue in favor of stability.
The funds also stated that the requirements for various tranches of Musk’s share reward are somewhat arbitrary, and that many could be met easily with creative interpretations. Others have pointed out the same, recognizing even meeting the easiest targets would pay Musk more than the lifetime pay of the next 8 highest-paid CEOs combined.
But after these valid criticisms were lodged, Tesla responded in a way that should not be a surprise for longtime watchers of the company – by doubling down and firing back.
Tesla put out a tweet titled “setting the record straight,” essentially just making the same argument it has already made. It claims that there is no way to creatively interpret product goals, that the board is “disinterested” (that is, they do not hold a personal financial interest in the outcome, which is an odd thing to say about the personal friends and family of Musk on Tesla’s board), and that this plan, which will dilute current shareholders’ holdings in order to retain a bad CEO for the next decade, is “in the interest of shareholders.”
It also claims that none of the operational milestones are “easy” and that previously-cited creative interpretations would not be possible. However, even with only below-average share growth and flat vehicle delivery growth, Tesla is on course to easily reach some of the simpler milestones (well, perhaps this is hard with a CEO who is seemingly doing his best to ruin company performance…), which would still result in a record payday many times over.
And it ends the tweet with a slight against the performance of the various public funds who signed on to the letter. Tesla claims that it has provided much better returns than each of the funds, which have had 6.51%-13.3% annualized returns since 2018. Notably, these are in line with the expected returns that a public fund counts on (with S&P averaging ~8%), who typically invest in stable companies rather than speculating on high-risk investments or tech companies with unheard-of 250:1 P/E ratios (which only gets higher as price goes up and earnings go down).
Sending this tweet about an active shareholder vote is already a rare move as far as public companies go, but Tesla, who does not advertise, also seems to have retained an outside firm to further publicize its rebuttal. Due to our previous article on this matter, we got an email from FGS Global, which bills itself as “the world’s leading stakeholder strategy firm,” directing our attention to the tweet. We asked FGS why it thought diluting shareholders by $1 trillion was truly the optimal strategy for stakeholders, and did not receive an answer.
Since then, proxy advisory group ISS, the largest independent advisor for institutional investors which offers disinterested insight into shareholder proposals, has also recommended against voting for the proposals. Tesla responded by attacking ISS in a tweet.
Even if you think Musk is necessary, this isn’t Tesla’s best option
Defenders of the plan will argue that shareholders will benefit if share targets are met. But that’s a big “if,” and even if they are met, how much of that can we attribute to the direction of a distracted CEO (with no requirement to not be distracted), and is it really necessary to give that CEO a full trillion dollars worth of dilution in order to get the performance requested?
Again, Musk has already been given the largest payday in history out of shares that were earmarked for employees, and now a payday that’s over thirty times larger than that has been proposed. Even at the inflated share prices that would be necessary to meet milestone targets for the award, shareholders would still have their voting rights and share appreciation diluted by about 12%.
Could a similar goal not be achieved with much smaller dilution, say around 1%, which would still be the largest payday ever proposed for a CEO? And is Musk even worth that much to begin with, given his poor recent performance and his behavior that has proven to be hostile to his own company’s interests? (via lobbying for anti-EV policy, doing Tesla brand damage, self-dealing to benefit his own private companies with Tesla’s public assets, firing Tesla’s best teams on an ego trip, and so on)
Heck, even the option of buying xAI in an all-stock deal, at its absurd $200B valuation, would cost Tesla less than these two proposals would (~$276B, at current TSLA valuation). This idea would also do more to ensure Musk’s focus as then he would no longer split his time between his private companies which have his current interest and his public one, since all would be under the same umbrella.
To be clear, that would also be a terrible idea, due to ethical concerns that are currently subject to a lawsuit over Musk conflicts of interest (and surprise surprise, that terrible idea is also up for a shareholder vote). But the fact that there are potential legal problems with each of the options the board did consider is perhaps an indication that another individual, one without such a history of working in his own interests rather than the company’s, would be a better fit for Tesla.
Bad for employees, shareholders, and Tesla’s mission/ethics… so why is Tesla pushing it?
It seems quite clear that the option given to shareholders is not the optimal solution, but due to Tesla’s captured board, it’s the option that’s been put on the table. And since it benefits them (in fact, so much that the board had to return nearly $1 billion in excessive compensation) and their personal friend Elon Musk, it’s the only option shareholders get to vote on.
Were the board interested in Tesla’s best interests, some other options might be on the table. But they aren’t; they’re interested in their friend Elon’s best interests. The driving factor isn’t the goals of Tesla or its shareholders, but the goals of Elon.
If the board were independent and truly interested in Tesla’s best performance, it wouldn’t saddle the company with a hostile CEO for a decade, it wouldn’t overpay that CEO, it would be more sensitive to dilution, it would engage in options that are less likely to result in legal challenges, it would at least ensure that CEO work in the company’s interests, and it would use a more deliberative process than having a few of that CEO’s friends propose a comically large payday just so he can get himself out of the hole he dug for himself with a social media addiction so bad that he overpaid for his favorite app (twice).
The only concessions the board has made to any idea of reasonable governance is that it made the adoption of a succession plan a prerequisite for the last 2 (out of 12) tranches of stock. So Musk can still get ~558 million shares of stock without even giving a thought to what future the company might have with competent corporate governance.
Will shareholders finally reject this ridiculousness?
And yet, shareholders may vote for it, just like last time. That last vote had about the same downsides as this one, but TSLA shareholders voted for it anyway (twice, even after it was revealed they were lied to on the first vote).
But shareholders must currently feel trapped by Musk’s rhetoric. Even though he’s a bad CEO in terms of company performance, his constant overpromising has led to high appreciation of Tesla stock, with the market seeming much more interested in Musk’s constantly-delayed fantasies than in Tesla’s current performance. Essentially, Musk is saying “give me $1 trillion or I won’t lie for you anymore.”
Shareholders are worried that if Musk is gone, the market will no longer overvalue its future performance, and there might be a correction towards more realistic share price levels. Even though a competent CEO might benefit Tesla’s financial performance as a company, it may harm TSLA’s status as a meme stock.
And that’s what this particularly frothy market has become. Rather than investing in a company to focus on its products or even its future, “investors” have become consumers of the stock first, and focused on maintaining whatever illusions have resulted in these absurd price levels. TSLA shareholders have made the wrong decision before on an intrinsically similar issue, so it wouldn’t be a big surprise if they do the same here, only even dumber and ~20x bigger.
It is perhaps heartening that Tesla has seen it necessary to market the award so heavily, as Tesla can see results as they come in.
The more Tesla markets, the more it may suggest that the company may not like the numbers its seeing, and is desperate to swing the vote in its favor. (Either that, or the whole thing is engineered to give Musk something to act victimized about after the fact, when inevitably the award sees legal challenges again.)
For Tesla’s sake, for the EV transition as a whole, and perhaps for the future of the world, let’s hope it’s the former.
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