I confess: I completely missed the Tesla Roadster parked outside when I walked into Joey & Eddie's, the San Francisco watering hole where Valleywag used to hold weekly meetups with readers. But there was no mistaking the guy parked at the bar: It was Elon Musk, the CEO of Tesla Motors. He had driven up to surprise me at the behest of Adeo Ressi, the founder of VC-ratings site TheFunded.com, who was Musk's housemate in college. Matt Marshall, the editor of VentureBeat, also dropped by. Musk pressed a set of keys on me and offered a Tesla test drive; I turned them down. Honestly, I figured I'd crash the thing, and I didn't want to put a further dent in Tesla's already parlous cash balance. But I finally agreed to go for a ride with Marshall. How was it, you ask?Kind of boring. If you like amusement-park rides, you'll love the Tesla Roadster. If, like me, you sit there calculating the infinetesimal odds that the operator's insurers will allow a rollercoaster to actually pose any real danger to you, you'll hate it. I spent the ride up to Coit Tower and back thinking about how much coal was burned to generate the electricity now being thrummed away by the Roadster's motors. Back at the bar, Musk was affable enough, considering I've hinted he's taking out his midlife crisis on his employees and may be scheming to take over Tesla Motors completely by running it into bankruptcy. He laughed at the last idea, and then thanked me for the suggestion, saying he hadn't thought of that particular financial maneuver. Musk still blames cofounder Martin Eberhard for Tesla's current straits. When Tesla raised its fourth round of funding in 2007, Musk says, Eberhard, then CEO, told investors that the Roadster's cost was $65,000, giving it a $25,000 gross margin. "It's right there on the slide, with Martin's name on it!" Musk told me. The company, he adds, was already in the middle of a search for a CEO to replace Eberhard. A private-equity firm which had invested in Tesla sent some consultants to help Tesla sort out supply-chain issues, and they found that the Roadster's parts actually cost the company $140,000. "We might as well have sent customers $50,000 and saved the bother of making the car," said Musk. Former Flextronics CEO Michael Marks, a Tesla investor, confirmed their findings — and that's when Musk decided to fire Eberhard and replace him temporarily with Marks. Just as now, the company's cash position was running low, and Tesla tapped existing investors for new funding, despite having just raised a round. He revealed none of this at the time, he says, because it would have jeopardized the company's ongoing CEO search. (Not that that worked out particularly well; Musk installed Ze'ev Drori, then replaced him last month.) That's Musk's version, anyway. I'm skeptical, if only from experience with Musk; when he was running PayPal, I remember him making statements that company insiders told me didn't match the facts. But as he was leaving to drive back to the Valley, Musk mentioned that his divorce from his sci-fi novelist wife Justine was a mutual matter; he got the paperwork in first, but she was getting ready to file papers, too. That, at least, checks out. I'm still not sure if I should trust Musk's account of what led Tesla to these perilous straits. But I do believe now that he's brave enough to drive a Roadster up to San Francisco and deliver it in person.
Matt Marshall, the founder of tech-startups blog VentureBeat, is a former newspaperman. As such, he's handwringingly scrupulous about his ethics. In a recent story about Glam Media's layoffs, he included this disclaimer: "Disclosure: VentureBeat recently employed a business manager who was related to one of Glam’s cofounders. However, he no longer works at VentureBeat." Why not name names?Shown above is Jacob Mullins, the manager in question. He started at Microsoft last week, but is still listed as VentureBeat's ad-sales contact on the site. We take that to mean Marshall has yet to find a replacement. Odd: Marshall seems eager to explain a now-irrelevant personal connection that couldn't possibly prejudice his reporting. But he's reluctant to come out and state the obvious: He's lost the only guy bringing in money for his blog. That's worth disclosing. Matt, consider this a gratis job listing.
Team VentureBeat assembles for the obligatory group photo. The setting: a launch party for VentureBeat's DigitalMedia blog. Left to right: Well-paid tech-CEO transcriptionist Dean Takahashi; mopheaded cleantech writer Chris Morrison; skinflint business manager Jacob Mullins; Jimmy Olsen-lookalike and VentureBeat founder Matt Marshall; stylishly underdressed Anthony Ha; expert Techmeme gamer MG Siegler; and Eric Eldon, who's wearing his great-grandfather's three-piece suit. Yesterday's winner: Once again, WagCurious, for labeling Pete Cashmore "The face that launched a thousand ship-dates." (Photo by Brian Solis/Bub.blicio.us)
We hear Michael Arrington is in advanced talks to acquire VentureBeat, a smaller tech blog which, like Arrington's TechCrunch, is trying to expand from the niche of covering startups. When Arrington issued a rant about the dangers of tech blogs raising venture capital, it was easy to dismiss his talk of a blog rollup as drunken fantasy. Arrington's concern: That his competitors, by raising money one by one, would make it financially impossible to assemble a "dream team" of bloggers. But why on earth would anyone accept a lower valuation just to be part of Arrington's team? Arrington, we're told, has tentatively secured venture backing from Eric Chin of Bay Partners, a longtime business associate. That would give him the capital to buy up at least some of his rivals.
Matt Marshall's VentureBeat airs a rumor that John Battelle's online blog-ad network, Federated Media, has sold a large stake to Oak Hill Capital. There's logic to it: Oak Hill is a private-equity firm with which his bankers, GCA Savvian, has previously done business. Battelle, left, was on a conference call when I tried to reach him, but in the past he's offered no comment on investment rumors. Another source dashes cold water on the notion that a deal's been done. I'd be the first to tell you not all rumors pan out. What I find more interesting about the report is this line:
ATHERTON — I'm told I left the party too early, but once Third Eye Blind started playing, Thursday night's iLike bash was pretty much over for me. Don't get me wrong — I like Third Eye Blind. It's right in tune with my utterly bland and more than slightly gay musical tendencies. But this is exactly why I will never, ever use a service like iLike, which makes a Facebook app that allows you to reveal your musical taste, or lack thereof, to your friends by posting songs, and find people with similar tastes by seeing who's going to concerts. Here's the thing: I know my taste in music is egregiously bad. I don't want to advertise the fact to the world, and if anything, I want to meet people who specifically dislike the music I listen to. That's all right, though — what I really wanted to listen to was the buzz in the room.