SCOTT GALLOWAY: Elon Musk is now the most influential person in the world – whether or not that’s a good thing remains to be seen

Elon Musk
Elon Musk.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway discusses the impact Elon Musk has on cryptocurrency, the auto industry, and the free market.
  • See more stories on Insider’s business page.

I often write about platforms (iOS, Amazon Marketplace, etc.) as they are a source of value creation and power. The platform of unprecedented wealth creation is the free market of capitalism. The global adoption of markets has corresponded with the greatest expansion of prosperity in human history. But similar to tech platforms, free markets are neither naturally occurring nor immune to collapse. The “free” market can fail.

Scott Galloway

Live from New York

This Saturday at 11:29 p.m. ET, we’ll witness the latest manifestation of market failure. A new king will seize the Iron Throne from Mark Zuckerberg, whose empire has been disarticulated. (He just doesn’t know it yet.) I wonder if Professor Tim Wu or Senator Amy Klobuchar visits the Night King in his dreams? Or maybe depressed teens, the GRU, or the ghosts of people dragged out of their cars in India and hanged because of falsehoods spread on WhatsApp. OK … that escalated quickly.

Anyway, the social network’s CEO has ceded the Iron Throne to the Launcher of Dragons, Borer of Tunnels, and Father of X Æ A-Xii. The coronation will take place before a live studio audience, with Tesla long bots and adoring CNBC personalities shaming anybody who doesn’t surrender to the narrative. Elon Musk is now the most influential individual in the world – so influential, he can distort the modern world’s premier platform, our free market system.

Is Mr. Musk a net positive for society? 100% yes. It’s the word “net” that is the problem. We do basic math on a person/firm, issue a thumbs up/down, and decide (if thumbs up) to ignore the externalities. This is tantamount to deciding pesticides are a net good (they are), so we should disband the EPA.

Read more: Elon Musk personally recruited me to work at SpaceX when it was starting up. He was a relentless problem solver and taught me valuable lessons I use even to this day.

Naked examples of Musk’s influence/externality: the tweeted endorsements of his favored assets. Bitcoin is a trillion-dollar cryptocurrency that could reshape the world economic order … and Musk can manipulate it with (many) fewer than 280 characters.

Researcher Lennart Ante found “significantly abnormal returns of up to 18.99%” after Musk tweeted about bitcoin. “I believe that cryptocurrency traders are looking for role models and validation,” Ante told us when we asked him about his research. But, “we are facing a moral dilemma” he pointed out, between free speech and the protection of investors. When Musk changed the bio of his Twitter account to “#bitcoin” on January 29, the cryptocurrency rose from $32,000 to more than $38,000. Is it free speech? Yes. Does that mean it won’t destabilize the markets and end badly?

I. Don’t. Know.

Mr. Musk can even move markets accidentally. When he tweeted “Use Signal,” referring to the encrypted messaging app, shares in Signal Advance, a Texas medical device maker, increased 5,100% in three trading days.

The musk of Musk’s influence gets stronger this week. He’s established an informal alliance with Dogecoin, a functioning cryptocurrency that’s also an extended practical joke. In the week leading up to Musk’s “SNL” appearance, and following his tweet claiming to be The Dogefather, Dogecoin briefly reached $85 billion in market cap, more than Moderna or Airbus. By midweek it had registered an astounding $45 billion in transaction volume in 24 hours. Click here for a detailed, scientific video rendering of what this level of trading actually looks like.

Reality distortion field

The theory of relativity dictates that massive objects distort the space-time continuum, and light and matter slide toward it. Musk has become a similar celestial force in our markets – but in this case, the graviton particles are genius, attention, ID, and capital.

Scott Galloway

In a healthy market, resources flow where they’ll generate the best return: Workers move to cities with strong job markets, capital flows to companies with robust growth prospects. But in Musk’s case, the power of celebrity in a social media age, a rising class of retail investors with stimulus funds, and our idolatry of innovators have combined to create a vacuum that may cauterize other naturally forming celestial objects. I’m especially proud of the last sentence.

Show me the money

None of this is by accident. Despite being one of the wealthiest people in history (on paper), Musk constantly needs more cash. He recently acknowledged that SpaceX will need “to pass through a deep chasm of negative cash flow” just to launch its satellite internet service. The company has already raised more than $1 billion this year, and $7.5 billion over the course of its history, while continuing to burn billions in revenue. Musk’s other projects, including Neuralink and The Boring Company, have raised another half-billion dollars with little revenue so far.

Tesla posts an accounting profit, but in its most recent quarter, it was emissions credits (a regulatory program that rewards auto companies for making electric rather than gas vehicles) and – wait for it – $101 million in bitcoin trading profits that morphed earnings from a miss to a beat. What Tesla did not do last quarter was produce a single one of its two premium cars, the Model S or the Model X. Promised redesigns have apparently snarled production. On this topic, Musk has been uncharacteristically CEO-like (that is, discrete).

Scott Galloway

Cash burn isn’t the only challenge facing Musk’s companies. Tesla, his flagship business, now has a market cap larger than the auto and airline industries. The company achieved that value, in part, because for a decade it operated without a serious competitor. There’s never been a car like the Tesla Model S, and if you want a high-performance, luxury EV, your choice is easy … and singular. Value creation via disruption is as much a function of the incumbents as the disruptor. Imagine a world in which the only phones were flip phones and the iPhone 12. That’s the auto industry since the Model S arrived in 2012.

Scott Galloway

Or that was the auto industry. Because the Germans are coming. And the Swedes. And the Japanese. On May 2, we got a glimpse into a post-Tesla future when the New York Times ran an article titled: “Mercedes EQS Electric Sedan: The S Stands for Stunning.” The innovation gap is closing. And it’s not just car companies coming for Tesla’s fat margins. The industry’s shape-shift from a $100 billion low-margin manufacturing business to an $800 billion high(er)-margin software business has attracted some enormous sharks. The first overnight $100 billion-plus transfer of shareholder value will occur in 2022, when Tim Cook stands onstage in front of an automobile bearing an Apple logo.

What is the shark repellant for these circling great whites? Musk must keep capital and talent flowing into these enterprises while distracting us from anything regarding fundamental analysis (P/E ratios) or sobriety (it’s a car company). The embrace of crypto serves both needs: It’s consistent with his techno-utopian vibe, and it directs the conversation away from the Mercedes EQS or Apple car while providing a shock absorber for earnings misses. The “SNL” appearance, Dogecoin tweets, Elvish-letter-named kids, tickling of our senses with 420 references and suggestive emojis: It’s David Copperfield, plus 60 IQ points. To be fair, landing two rockets on barges concurrently is genius and inspires awe. But does it warrant consensual hallucination?

Carbon costs

Pumping bitcoin might buttress Tesla’s earnings, but it blows open a bigger hole in Tesla’s narrative. The narrative police demand we link Tesla’s valuation to solving the climate crisis, to reducing carbon emissions by replacing gasoline cars with electric ones. And it does that. According to the EPA, the average 22 mpg gasoline car spews out 4.6 tons of carbon every year. Powered by the US grid, an EV is the equivalent of a 68 mpg car, generating about 1.6 tons of carbon per year. (In other words, each Tesla on the road saves three tons of carbon every year.)

But bitcoin mining generates a lot of carbon, too: Current estimates put it at around 53 million tons of carbon production per year. (Yes, miners use a lot of renewable sources and may catalyze greater renewables investment – but does that compensate for incremental electricity demand rivaling that of Argentina?) Here’s some back-of-the-envelope math that’s definitely going to raise the army of the undead (i.e., TSLA longs and bitcoin bots):

In the short term, bitcoin’s carbon emissions are a function of its price – the higher the price, the more miners are willing to spend on electricity to mine. Assuming a linear relationship (a convenient if aggressive assumption), for every $1 that Musk’s pump has increased the price of bitcoin for one year, miners expel another 1,000 tons of carbon. That wipes out the annual carbon savings of 300-plus Teslas. If Musk’s bitcoin evangelism increases the price by $4,500, that effectively eliminates the ongoing carbon savings of every Tesla on the road today.

The deeper problem? Our elevation of Musk as a capitalist idol has distorted the flow of capital and talent. Healthy markets don’t take cues from the tweets of one man.

Man in the mirror

As “SNL’s” Lorne Michaels likes to say, “Here’s the thing.” Musk is going to keep tweeting, appearing on “SNL,” and ensuring he has a bigger rocket than other masters of the universe … because it works. While we’re watching the fireworks, he’s building cars and rocket ships. Is he the best person to build those things? Is the most efficient amount of capital flowing to his factories, versus those in Ingolstadt or Toyota or Detroit? A healthy market is supposed to answer that. It’s the allocation platform. It’s also hard to deny that Elon has inspired an extraordinary flow of capital into EVs and innovation in transportation.

But our idolatry of innovators and the algorithmic media ecosystem have distorted the allocation platform. In the spectacle economy, it’s about the show, the now, the short-term hit. We’re the richest country in the history of humanity, and we can’t garner the political will to fix our bridges, let alone reach for the stars.

This all raises the question: What do we expect? You only have to drive a Tesla around the block to know that Musk is not a grifter. He is a genius (see above: rocket ships landing on a pad floating in the ocean). Maybe a world-saving, visionary genius should deploy any weapon at his disposal to garner the resources, fend off the challengers, and most importantly, buy the time to achieve his vision. Maybe.

We say we want straight shooters. We say we want wealth to be fairly distributed. But 53 million of us follow Musk’s Twitter feed, and tens of millions of us are going to watch him on Saturday night, and the Elon show will go on.

If there is a glitch in the matrix, it’s us. One in five US households with children is food insecure, and we have a man telling his 53 million acolytes to purchase a digital currency so he can sell it at a profit to pad the earnings of a company that’s worth more than automakers producing 60 times the vehicles. And why wouldn’t he? When you tell an innovator he’s Jesus Christ, he’s inclined to believe you. Once we idolized astronauts and civil rights leaders who inspired hope and empathy. Now we worship tech innovators that create billions and move financial markets. We get the heroes we deserve.

Live from New York, it’s …

Life is so rich,

Scott

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Watch Elon Musk warn he’s a ‘wild card’ in his ‘SNL’ teaser with Miley Cyrus

Elon Musk SNL
  • Tesla CEO Elon Musk will host Saturday Night Live on May 8 with Miley Cyrus.
  • SNL dropped a teaser for the episode on Thursday and it took off on social media.
  • Musk is only the second billionaire to host the popular comedy sketch show.
  • See more stories on Insider’s business page.

Saturday Night Live dropped a promotional video on Thursday for Elon Musk’s SNL episode, set for this weekend.

Tesla and SpaceX’s CEO will be hosting the comedy sketch show with Miley Cyrus as musical guest on May 8.

The video provides a peek into what Musk’s performance might look like, as it will be his debut on the show and one of his first major media appearances. In the past, Musk has been included in brief cameos on Iron Man 2, South Park, and The Simpsons, but he’s mostly shied away from live television.

Musk is joined in the video by Cyrus, as well as SNL cast member Cecily Strong. In the video, Musk highlights the unknowns that come with bringing the controversial billionaire onto the show.

“I’m a wild card, so there’s no telling what I may do,” he said from behind his trademark bandana face mask.

Musk and Cyrus took to social media to promote the May 8 episode.

“Sorry in advance Mom. @elonmusk @nbcsnl,” Cyrus tweeted.

Last week, Musk brainstormed SNL skit ideas on Twitter. His tweets set off another dogecoin buying frenzy, as his followers speculated that “the dogefather” would send the digital coin even higher.

His scheduled appearance on the popular comedy show had been wrought with controversy since it was announced in April. Some cast members took to social media to express concern about appearing alongside the billionaire. On Saturday, Page Six reported that cast members could opt out of the episode.

Musk is only the second billionaire to appear on Saturday Night Live after former president Donald Trump hosted in 2015. Trump’s appearance provided record ratings for NBC.

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Politicians, union groups slam Elon Musk over tax after he tweets asking for sketch ideas for his SNL appearance

GettyImages 1229892852
Elon Musk, CEO of Tesla and SpaceX.

  • Elon Musk’s critics piled on after he tweeted asking for skit ideas for his SNL appearance on May 8.
  • Politicians, unions, and journalists on Twitter called on him to pay more tax, donate his wealth, and let staff unionize.
  • Musk’s ideas for his sketch included “Woke James Bond,” “Irony Man,” and “Baby Shark Tank.”
  • See more stories on Insider’s business page.

Politicians and unions criticized Tesla and SpaceX CEO Elon Musk after he tweeted asking for sketch ideas ahead of his debut as a host of Saturday Night Live on 8 May.

“Throwing out some skit ideas for SNL. What should I do?” Musk posted on Twitter on Saturday.

In response to his request for comedy advice, Twitter users, including politicians, union groups, and journalists, suggested he should pay higher taxes and donate some of his wealth.

Rep. Pramila Jayapal retweeted Musk’s post, saying “Pay your fair share of taxes.”

Meanwhile, progressive consumer rights advocacy group Public Citizen, also reshared the post, saying Musk should “do a skit where you donate the $126,000,000,000 you added to your wealth during the pandemic.”

Musk is the second-richest person in the world with an estimated net worth of $184 billion, according to Bloomberg’s Billionaire Index. His wealth more than quintupled during the COVID-19 pandemic – Insider reported in January that his net worth increased 545% from January 2020 to 2021. However, his wealth is primarily tied up in his companies.

Read more: Elon Musk’s optimism is his most polarizing trait. Leaders everywhere should take note.

Twitter users took the opportunity to ridicule him for his riches after he asked for sketch suggestions.

Author Marianne Williamson replied to Musk’s tweet, saying: “Announce that you’re giving away half your fortune to help eradicate deep poverty, fight climate change and promote world peace.”

American journalist Max Berger replied to Musk, saying he should “let your workers form a union.”

The Workers First Agenda retweeted Musk’s post, asking him to do a sketch on treating his staff with respect. “Then we will know you are acting,” the union added.

The Service Employees International Union also replied: “Let your workers form a union without trying to intimidate them,” and linked a New York Times article about Tesla firing an employee for organizing a union, which the National Labor Relations Board ruled illegal in March.

The tycoon also received suggestions from other Twitter users about how his sketch should revolve around him denying the coronavirus pandemic.

Since the start of the pandemic, Musk has spread misinformation about coronavirus case numbers, calling the panic around the deadly virus “dumb” on March 6.

Karl Bode, journalist at VICE, replied to Musk’s tweet with: “How about some hilarious Covid impact denialism.”

Musk’s own ideas for his sketch included “Woke James Bond” and “Irony Man” who “defeats villains using the power of irony.”

The billionaire also suggested “Baby Shark & Shark Tank merge to form Baby Shark Tank.”

NBC announced in late April that Musk would be hosting the May 8 episode of the long-running, late-night comedy show SNL. Donald Trump was invited to host the show in 2015, which brought the show’s highest ratings in years.

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Mellissa Carone, Giuliani’s star witness in the Trump campaign’s election fraud case, harassed her fiance’s ex-wife by sending her sex tapes

Melissa Carone
Melissa Carone, who was working for Dominion Voting Services, speaks in front of the Michigan House Oversight Committee in Lansing, Michigan on December 2, 2020.

  • Mellissa Carone, a witness in the Trump campaign’s election fraud lawsuit in Michigan, was recently on probation for harassing her fiance’s ex-wife, it emerged on Saturday. 
  • Over two years, Carone harassed the woman and sent her tapes of herself having sex with the boyfriend.
  • Carone told the Huffington Post that it was her fiance who had really sent the sex tapes, and she agreed to a plea deal to avoid further court appearances. 
  • Carone’s sweeping election fraud claims and confrontational testimony at a hearing in Michigan Tuesday went viral. 
  • The testimony was even satirized in a Saturday Night Live skit, where Carone was played by Cecily Strong. 
  • Visit Business Insider’s homepage for more stories.

Mellissa Carone, a key witness in the Trump campaign’s bid to overturn the result of the presidential election in Michigan, was on probation for sending her fiance’s ex-wife sex tapes, it emerged on Saturday. 

According to police records first obtained by Deadline Detroit, Carone harassed the woman for two years, stalking her and sending her explicit videos from an anonymous account of herself having sex with her boyfriend, the woman’s former partner. 

Investigators managed to trace the email account sending the videos to Carone, according to the report, and Carone later told investigators that she had been the person sending them. 

She was initially charged with obscenity and computer crimes, but these were later reduced to a misdemeanor disorderly conduct charge as part of a plea deal. 

A spokeswoman for the Wayne County, Michigan, prosecutor’s office confirmed the charges in a statement to the Huffington Post,  and said that her 12 month probation ended just before Election Day.

Carone told the publication that in fact her fiance, Matthew Stackpoole, had sent the tapes, and that she had agreed to the plea deal so they didn’t have to spend any more time in court. He told the outlet that this account was true. 

“The reason I got charged for it is it was sent off of my phone,” Carone told the outlet. “I just said screw it, I’m going to have to take it.”

Business Insider has attempted to reach Carone for further comment through what appears to be her Facebook account. Wayne County prosecutor’s office did not immediately respond to a request for further comment. 

Carone, who describes herself as a cyber security expert, was contracted during the presidential election by Dominon voting systems to work at a Detroit polling station doing IT work. There, she claims to have witnessed widespread voting fraud. 

She appeared as a witness for the Trump campaign at a hearing of the Michigan House Oversight Committee on Tuesday, where the campaign’s chief attorney, Rudy Giuliani, is challenging Biden’s victory. 

In her testimony Carone angrily confronted state officials, and Giuliani appeared at one point to be trying to dissuade her from speaking out further. 

The Trump campaign’s allegations of election fraud have been rebutted by state officials in Michigan, and rejected by courts across the country. 

Footage of the testimony went viral, and was even satirized in a Saturday Night Live skit over the weekend,where Carone was played by Cecily Strong. 

 

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