Tesla Had 5 Founders. Why Did Only Two Get Really Rich?

One is Elon Musk (duh), and the other is JB Straubel. But there were three more—and there’s a cautionary tale in why they aren’t billionaires too.

Martin Eberhard, Tesla ‘s first CEO and cofounder, left, and Elon Musk at the public debut of the Roadster in Santa Monica, California, in July 2006 .Getty Images

Electric car kip Tesla gathered reporters at a Santa Monica Airport airdock on a July afternoon in 2006 to unveil its battery-powered roadster, an audacious, $ 100,000 roadster for which few automotive experts saw much hope of success. The company ’ sulfur brash, tech-savvy CEO, Martin Eberhard, declared that Silicon Valley ingenuity would teach Detroit ’ s car giants how to make compel zero-emission cars. Tesla ’ s first attempt, a limited Lotus Elise chassis packed with 7,000 bantam lithium-ion cells, was a high-end concept that would soon be followed by a lower-priced class sedan, the foreman executive said. The vision he laid out that day ultimately came to pass, but not with him in tear.

Tesla this month became the first car manufacturer to hit an amazing $ 1 trillion valuation, but the CEO who introduced the company to the weigh 15 years ago didn ’ t become synonymous with the sword. And he surely didn ’ metric ton wind up as the wealthiest person in history. That ’ south Elon Musk, of course, Tesla ’ s earliest investor and the company ’ second stream CEO. Musk was besides show at Tesla ’ sulfur introduction in 2006, but he assumed a lower profile that day, chiefly arguing for the motivation to shift cars away from gasoline power deoxyadenosine monophosphate promptly as possible .

Tesla ’ s original CEO, Eberhard, and another early executive named Marc Tarpenning, who in 2003 dreamed up the idea of naming the company ’ s vehicles in honor of inventor Nikola Tesla, are Tesla ’ s original shareholders — the first men to claim possession of the upstart brand that would go on to shake up the Detroit constitution. But neither of them retained enough Tesla stock to achieve billionaire condition, much less Musk ’ south current net worth that Forbes estimates at $ 282 billion as of Nov. 10. It was Musk ’ s seed capital—the solution of an early payday as a cofounder of payments processor PayPal—that turned Eberhard and Tarpenning ’ s imagination into a reality. ultimately, it besides set Musk on a path to take broad control of Tesla by steadily raising his possession bet on in a series of nine fund rounds prior to the company ’ south 2010 IPO, each of which far diluted the stakes of Eberhard and Tarpenning. even today Musk ’ s stake grows as he continues to receive quarterly stock awards, in stead of wage, worth billions of dollars .

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Marc Tarpenning cofounded Tesla in 2003 with Martin Eberhard. He left the company in 2008 .AP

In an interview, Eberhard says he retains a “ relatively minor ” stake in the car manufacturer, while declining to be specific. “ I sold a good ball of my stock a long time ago, ” Eberhard, 61, says from his home in Washington state ’ sulfur San Juan Islands. “ People somehow have the idea that I was a zillionaire when I started Tesla. I was not. ”

Had Eberhard been wealthier from the sale of the Rocket eBook, an early hand-held electronic lector he and Tarpenning created in the late 1990s, there would have been no necessitate to seek initial support from Musk, he says .

Musk has frequently said he doesn ’ t care about wealth and sold his Los Angeles mansions last year to live in a humiliate, prefab box house on his SpaceX campus in Boca Chica, Texas. however, he keeps amassing wealth at a noteworthy yard. That ’ second because of an early ownership bet on of closely 20 % in the company and a long-run compensation plan announced in 2018 that rewards him with billions of dollars of extra Tesla stock every time it hits quarterly performance targets based on fiscal and valuation metrics. ( He ’ second besides preparing to sell 10 % of his impale, worth about $ 15 billion as of Nov. 9, to avoid a massive tax hit as some long-run options mature. )

“ I own no Tesla stock now. Of course I could not imagine a $ 1 trillion evaluation ! ”

Tesla cofounder Ian Wright

Eberhard, interim, sold much of his stake after being pushed out of Tesla in 2007, before the Roadster ’ s launch. He sued Musk in 2009 over his ouster and for aspersion, before settling the case for undisclosed terms. As separate of a colonization, he dropped opposition to Musk, former Tesla Chief Technology Officer JB Straubel and Ian Wright, an early on mastermind with the caller, besides being called cofounders, in addition to himself and Tarpenning .
“ When I got kicked out of Tesla I had no money—I average I actually had no money, ” Eberhard says. “ Worse than that, I had no possibility of use for about a year ” because of a restrictive intellectual property agreement with Tesla, he says. “ I did not participate in any investment rounds after I left. ”

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JB Straubel, Tesla ‘s long-time CTO, left the company in 2019 to found Redwood Materials .Tim Pannell for Forbes

Eberhard won ’ t provide details of his Tesla bet on, but he confirms he ’ s not a billionaire. Tarpenning, these days a spouse at Spero Ventures, a Silicon Valley venture capital firm, has said he, excessively, silent owns Tesla stock, but he isn ’ t listed among its top shareholders. He didn ’ triiodothyronine react to inquiries from Forbes .
Of the five official cofounders, alone Straubel, who left Tesla in 2019, is probably to have attained billionaire status from his holdings. His post may be worth about $ 1.3 billion, assuming he retains a significant dowry of Tesla breed held when he left. Straubel, presently CEO and cofounder of battery recycling startup Redwood Materials, declined to comment on the matter. Engineer Wright, who joined Eberhard and Tarpenning a few months after they created Tesla, left in 2004 to start another EV company. He sold his stake years ago .
“ I own no Tesla stock now, ” he tells Forbes. “ Of course I could not imagine a $ 1 trillion valuation ! ”
Beyond making Musk the earth ’ randomness richest person, the company that ’ second become synonymous with a ball-shaped car revolution has besides enriched investors and board members including venture capitalistic Ira Ehrenpreis and Oracle ’ randomness Larry Ellison, adenine well as Elon ’ south younger brother, Kimbal, and countless investors inspired by the potential for a clean energy future .

“ Whatever my impression is about Musk, I am still super felicitous to see the electric car revolution—that we after all started—I ‘d like to see that revolution winning. ”

Martin Eberhard

For all the ship’s company ’ sulfur success in the electric fomite space and newfound fiscal constancy, angstrom well as the non-stop attention Musk seeks and generates, Tesla ’ s earliest days were marked by a high gear degree of management and strategic turbulence that left a individual cofounder in control. early tech-oriented giants that attained trillion-dollar valuations, such as Microsoft and Alphabet, created several billionaires among their cofounders, though Musk ’ s singular fiscal gains aren ’ t sol unusual .
“ While it does seem true that early noteworthy engineering firms minted multiple fiscal winners, a slightly similar dynamic at Tesla played out at Apple, ” says David Hsu, professor of management at the University of Pennsylvania ’ s Wharton School. Cofounder Steve Jobs ’ Apple venture was deserving an calculate $ 2 billion at the time of his death in 2011 and Steve Wozniak ’ sulfur wealth is an calculate $ 100 million, though Ronald Wayne, Apple ’ s little-known third cofounder, sold his impale early for $ 800, Hsu says. Musk ’ mho rewards today simply flow from a hazardous early bet that ’ s paid off boastful for him .

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Ian Wright, an engineer who joined Tesla in its earliest days, left the ship’s company in 2004 .ASSOCIATED PRESS

“ It ’ s not alone ownership stakes of cofounders ; we could besides point to cases of missing out by investors, including angel and VC investors, ” Hsu said. “ At the time Musk invested in the Series A round, and for a considerable amount of meter subsequently, there was a lot of doubt about the ability of the fast to execute its bold vision. Some might argue that opinion is silent reasonably true today. ”
Citing a “ non-disparagement ” article that was depart of the 2009 colonization, Eberhard declines to elaborate on his views about Musk these days. By contrast, Musk himself has shown far less restraint. He described Eberhard as “ literally the worst person I ’ ve ever worked with ” in a January 2020 interview for the Third Row Tesla podcast, hosted by Musk fans .

Tesla cofounder Martin Eberhard at a conference in New Delhi in February 2019 .AFP via Getty Images

still, the company ’ s master CEO, who owned “ reasonably less ” than 5 % when he left Tesla, says he ’ s not infelicitous these days, despite not profiting more from its tide.

“ The evaluation is what it is. What I ‘m happy about is the success of the party. It ‘s crucial that we get off of fossil fuels and Tesla has been the major driver of that, which is what we had hoped for from the begin, ” Eberhard says .
“ Whatever my opinion is about Musk, I am silent superintendent felicitous to see the electric car revolution—that we after all started—I ‘d like to see that revolution winning. It has to. ”

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