Elon has been threatening other companies with all kind of crap for stopping advertising on twitter. They have also directly and indirectly attacked Media Matters for affecting their advertising revenue.
Does the fact that his own company barely advertises on twitter be used against him now?
The article mentions a few times that Tesla is well known for not advertising, so any spending at all is meaningful. It’s not like they are spending $200m on Facebook and Google marketing, and $200k on Twitter.
Elon also Tweets about Tesla often, as one would expect. With his reach on the platform, that is likely better than actually advertising.
They seem to be ramping up advertising budgets quite aggressively, so they probably shouldn't be well known for not spending on ads.
Musk boasted that Tesla spent $0 on advertising in a tweet from 2022, but Vivvix estimated that they actually spent around $200k in ads in 2022 and $6.4 million in 2023. I'd guess that they're not done increasing those budgets since they're still quite low when compared to others in the space.
I guess its news because of his 2019 tweet, but I think its fair to say his strategy will change over time. To be really fair, he personally spend 40b+ on 'free' advertising to all his companies, every time he tweets, millions of potential people see it.
My understanding is that car advertisements are to fight buyers remorse mainly. You just bought some F150 and are having second thoughts, all of a sudden you see a commercial where its going up and down various mountains.
It’s also a tough bit of hypocrisy because he said he doesn’t believe in advertising and then bought a social media company that (like others) relies on advertising for the majority of its revenue.
Seen many opine that SpaceX is slow and expensive, which only makes sense when anchored against Musk's fantasy timelines as all the old space companies are much slower and more expensive than what SpaceX actually delivers.
Likewise with electric cars, the talking point is how Musk didn't really found Tesla, not that pre-Musk-CEO Tesla delivered 147 cars in 5.5 years for over a million dollars invested per vehicle.
There is no conflict of interest. Companies do this all the time. It's even considered a good thing in business circles. If you want preferential treatment, pricing, or scheduling, then buying the company is a great way to get it. Businesses call it "synergy."
Tesla doesn't own X/Twitter though. Elon does. If I were a Tesla shareholder, I'd be mildly[0] irritated that Elon feels it's OK to take money out of "our" company to spend it on "his" company, even if there is some nominal benefit.
[0] the amounts are so tiny, I wouldn't really care. I'd be more angry that he thinks he can reasonably function as a full-time CEO for Tesla while gallivanting about with his other ventures.
Have you ever worked for a company that bought a software package that was so bad, you thought "who on earth would actually choose to buy this?" Chances are, the decision maker owns part of that company. It's considered a value-add because that said decision maker can put pressure on that company to make changes they want made, where if they went with another company they wouldn't have that inside leverage.
To what extent is marketing via shareholders viable.
Let’s say company does $1bn a year, and my decision adds $1m/y revenue (0.1%) and my share holding is 0.1% and worth $10m. This has made me $10k. Not insignificant but a person making that decision $10k bribe to make a suboptimal decision is bad value. Especially when it is not clear it happened due to
volatility.
The real reason they may do it is favour for favours.
At least according to Elon, you have it backwards. It was the shareholders pressuring Elon to advertise, not him trying to pay one of his companies at the expense of the other.
It’s a pretty common practice. Microsoft spend 10 billion on OpenAI, but how much of that do you think makes it back into Microsoft through the Azure compute time OpenAI buys?
I think a lot of people who haven’t been involved with business laws (not sure what the correct English term would be) would genuinely be surprised with just how much you can do. I work in an investment bank, we manage around 1100 companies which are in reality investment projects. A couple of these are tied directly to ourself, so that we have a top shell company which owns the actual companies. One is an employee shell company which allows our employees to spend 14,5% of their yearly income on company shares, before taxes. Up to a certain amount of these can be sold at a 25% tax rate, it’s around $9000 a year that can be earned at a tax rate which is around 20% lower than the normal income tax rate ours employees pay. It also deducts from the amount of money they can earn before every thing they earn above that rate is taxed at almost 60%. On top of this, if they are married they can also use the $9000 of their spouse (if their spouse isn’t doing similar) and another $9000 for their household, because well, because the people who write/lobby these things are good at what they do. Anyway… it’s perfectly legal, even here in Scandinavia, and it’s maybe something 99% of our population has no idea exists.
And that’s just for employee benefits. You wouldn’t believe the stuff we do with our investment projects. I’m not going to tell you any of the current things, but at one point our government wanted to promote small businesses and made <=10 owner companies almost tax-exempt. Meaning that a good deal of our still running projects pay almost no tax on the revenue they generate. Including when a project is eventually sold, even though the law has since been rectified so that it’s impossible to do this for new companies and there is a grace period for when it ends for existing companies.
I square it with my personal morals because every project is either a solar park that was build or a solar park that was bought and renovated to be capable of running another 25-50 years instead of being scrapped. But on a whole… it’s just so ridiculous compared to what “regular” people do. Like… a Danish Nurse in the public sector (and honestly in virtually every private hospital/company) has none of these benefits. Often because even business owners outside of finance (or companies large enough to have big legal departments) has no clues these things exist. But in terms of income, our legal department sometimes generate almost as much revenue as our sales department now that we have as many projects as we do around the globe.
He largely owns X which is a private entity. He owns ~20% of Tesla, and the rest is owned by other shareholders. As a company officer he has a fiduciary duty to act in the interests of all Tesla shareholders, and any sales or deals to other entities he has in an interest in pose a conflict. That conflict can often be mitigated by oversight or deferral of decision making to parties that don't hold the conflict such as other board members or corporate officers.
Tesla is a publicly traded company with shareholders.
Twitter is Musk’s private plaything.
Tesla using Twitter services could be a conflict of interest because Musk is CEO of both and could be using his position at Tesla to funnel public shareholder money into Twitter, aka his pocket.
Other shareholders of the companies might bring up conflict of interest concerns, if the deal is lopsided one way or the other.
Theoretically it is a way to siphon funds from one company to the other if he forced one of his companies to take a raw deal from the other. If both sides got a fair deal, it’s probably not much to worry about though.
He owns a fraction of Tesla and a much larger fraction of X, so there's a financial incentive to pump money and reputation from the former to the latter.
no, but there is potential so its probably better off not doing it. but this sounds pretty low for a major company's advertising budget and pretty low in relative amounts to be worth risking doing corrupt things.
Maybe compare the spend to other channels? If it's significant difference then it's a problem? If all online channels are 200k and Twitter is one of 12 well, NBD.
I'm not saying that's what I want, I'm simply stating a rule of nature or rule of thumb, whatever you want to call it. What goes around tends to come around.
The article covers this. Quite well in fact. A public company where the owner had said “Tesla does not advertise or pay for endorsements” had said they were going to start doing that and this is following up on that. These sorts of things are generally note worthy for public companies.
“Instead [of advertising], we use that money to make the product great.” That they feel the need to start advertising might mean the product isn’t as good as it was once perceived to be.
The article goes into this more. Asking “so?” Makes it appear as if you just read the headline and thought you knew enough to make a worthwhile comment here. Which I know isn’t true.
You are right that is exactly what I did. I did not need to read the article to know what they are talking about.
A company maturing and doing what every other company is doing is not however interesting. The only reason it is a story is because it is an Elon company.
Personally what I find strange is how people perceive Twitter comments as somehow a contract with the public. People say lots of things, the smart ones are able to change their minds.
It’s a story, because people wonder if he’s using funds from one company he controls to prop up another company which he outright owns. Right now, the amount is small, but I expect it will increase.
So you argument is that Elon Musk is unimportant? That statements made to investors is unimportant? That changes made about quality and spending and where money is being used is not important to investors for publically traded companies?
Does the fact that his own company barely advertises on twitter be used against him now?