To understand Tesla — listen to Music
The Avant Garde and Elon Musk have something in common- they’re scary
I’ve recently come across a conversation with a music composer. The names don’t matter here since what I’m going to elaborate on has more of a general character.
It’s interesting how you can learn about investing when looking at other things. Music is a good example. For example, music offers a good way to think about the question; why so many people on Wall Street hate Elon Musk and short his stocks.
The logical answer would be that Tesla is overvalued and therefore needs to be shorted. But the logic doesn’t add up. Even the most skeptical fund managers would admit (after a few beers) that there is a chance that Tesla succeeds and in that case the shares would be up a lot. Shorting Tesla therefore is way to risky to justify a large position.
So why are people so emotionally hateful about Tesla? It’s the fear of being fooled. Fund Managers typically don’t invest their own money. So they really don’t care about the financials. What they care about much more is their status and reputation. Elon Musk is like the Avant Garde in music. He is new, unconventional and not tested. There is a risk, like with the Avant Garde, that he is taking us for fools. This is scary.
This is the main fear for people on Wall Street. That’s why they are so emotionally hateful. They fear that Elon Musk and Tesla are just making fools of them.
To illustrate:
Imagine you walk into a performance space in the Lower East Side of Manhattan ca. 1975 ish. You see a band doing weird stuff. They name is Talking Heads. This doesn’t sound like Elvis or something else you’re accustomed to. You are not sure wether they are just making a fool out of you or wether they are really, genuinely trying to push the boundaries of pop music and bring new, fresh ideas to bear. Today you know, it is the latter.
Lots of people hate Elon Musk because he is unconventional and brings new and fresh ideas to the scene. You are not sure if he is just making a fool out of you or wether he is real.
What does it mean to be real?
It means he is trying to push the boundaries. He is trying to create new knowledge about making cars which in his mind will change they way people use cars. He is working day and night to pursue a vision and the purpose is to bring something new to the car industry.
What does making a fool out of people mean? In this case he would just be doing something unconventional to stir up interest, raise money and then sooner or later blow up because there is no new knowledge created. Without new knowledge he has no chance to actually succeed.
How do you know wether it’s real or fool?
You just know. It’s like the porn thing. You know it’s real when you see it. You can’t rationalize it more than that. Elon Musk feels like those Talking Heads in their rehearsal room. New, fresh, unconventional, untested and following a new kind of purpose.
In order to recognize that you have to have a certain capacity. In music you have to have musical capacity. In business you need business capacity.
Capacity is a mix if talent, nurture and hard work, or reps, to paraphrase Arnold Schwarzenegger. If you’ve seen many Talking Heads type bands before you will quickly recognize their genius and potential. Same with Elon Musk.
Now, having said that. It doesn’t mean you will succeed. There is still a huge risk of failure. But the risk of failure is not the reason people hate Elon Musk. The reason they hate him is that they’re scared of being made fools of.
