🛑 Why Apple didn’t buy Tesla - The Hustle (2024)

A recreation of Tim Cook’s conversation with Elon Musk (accuracy may vary)

The reason Apple wouldn’t acquire Tesla

It’s a deal that would have broken the internet: Apple acquiring Tesla.

According to Elon Musk, the Tesla CEO reached out to Apple’s CEO Tim Cook in 2017-18 to discuss a possible deal, but — as they say in official M&A language — Cook ghosted.

This revelation came a day after Reuters recently reported that Apple was aiming to have car production online by 2024.

Tesla was worth ~$60B when Musk reached out…

…1/10th of its current market value. Apple did have the cash on hand at the time (~$120B) to make a deal at those eye-watering numbers.

However, such an acquisition simply doesn’t fit into Apple’s M&A playbook. According to Apple analyst Neil Cybart, there are 3 business components that Apple doesn’t look for in an acquisition:

• Brand: Apple already has the world’s leading brand.
• Revenue: It grows revenue through internal efforts, not acquisition.
• User base: Apple already has 1B+ users that will happily buy anything it sells.

Neither Tesla’s sterling brand nor its loyal fan base would have been much use to Apple.

What does Apple use M&A for?

According to Cybart, Apple typically acquires a company for technology or talent.

Consider Apple’s biggest acquisition: Beats Electronics for $3.2B in 2014. While the Beats brand was well-known, the lasting legacy from the acquisition is the underlying tech and know-how that has powered Apple Music and the expanding AirPods line.

Instead of spending tens of billions to acquire Tesla, Apple has gone the much cheaper route of selectively poaching talent.

The biggest name poached: Doug Field

He is a former Apple employee who left for Tesla in 2013. After 5 years working with Musk, Field was one of 46 employees who left Tesla for Apple in 2018.

He heads Apple’s car project (“Project Titan”) and — per Reuters — must now decide if Apple will manufacture its own car or license its auto software to a third party.

While Apple didn’t get to break the internet with a Tesla acquisition, we all know it’s gonna get cray when the iCar hits in the next few years.

• Speaking of Tesla, the electric car manufacturer nearly hit its 500k delivery target for 2020, ~35% more than 2019.
• The Great Gatsby is among a number of classic works copyrighted in 1925 that have entered the public domain. Now, there’s chatter — which we 1000% support — of people wanting a Muppets remake of F. Scott Fitzgerald’s classic.
• Big News: Tribune Publishing — home to 9 papers including the Chicago Tribune and New York Daily News — is mulling a buyout bid from Alden Global Capital, a hedge fund that already owns 32% of the news organization.
• And, you’re out: The NYSE is removing 3 Chinese telecom companies from its exchange. Why? A new executive order in the US puts restrictions on firms with ties to China’s military.
• In our own backyard: Russian hackers behind the SolarWinds hack did the attack from servers within the US so as to “evade ‘legal prohibitions on the National Security Agency from engaging in domestic surveillance,’” writes the New York Times.

Anonymous shell companies will (finally) be illegal

In the ranking of “Why is this thing allowed to exist?”, anonymous shell companies are pretty high up there.

Per The Economist, the situation is so bad that America ranks 2nd-worst on another list, The Tax Justice Network’s financial-secrecy index. It barely beats out the Cayman Islands, a place synonymous with shady financial dealings.

Here’s an embarrassing fact: In all 50 states, there are more disclosure requirements to get a library card than to start a new LLC.

Things are set to change

As part of the new defense bill, anti-money-laundering rules will have stricter disclosure requirements, including naming true owners, not just people who signed the papers.

“Required ownership disclosures will help prevent terror groups, drug cartels or other bad actors,” writes the Wall Street Journal.

The US Treasury Department will outline the exact measures over the next year.

Not everyone is happy with the new rules

The National Federation of Independent Business says additional requirements — and threats of fines — will be a burden for small businesses.

However, the estimated filing time is only 30 minutes.

The new bill will also create new avenues for whistleblowers to report on financial crimes, per the WSJ. Together, these moves should improve America’s dubious standing on that good ‘ol financial-secrecy index.

We’re entering crisis mode: Our copywriter keeps losing weight and gaining confidence

As of this week, he’s down 13 lbs and up one heaping dose of swagger. And frankly… it’s a problem:

• He signed off our all-hands Zoom meeting on Monday by doing the double-finger-guns and winking at Sam
• He said he’s getting into the “riverboat gambling business” but won’t elaborate (he thinks it’ll “spoil the surprise”)
• He just started rocking an earring

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Amazon’s podcast play, explained

Last summer, Spotify had a very noteworthy job posting on its website: “Head of Audio Books.”

It was a logical step for the streaming giant, which has aggressively expanded from music to podcasts.

Amazon — which owns the current audiobook leader, Audible — must have taken notice, and its $300m deal for podcast studio Wondery (“Dr. Death,” “Dirty John”) is likely in response to the rising Spotify threat.

Amazon is building a moat for Audible and Amazon Music

According to leading podcast analyst Nick Quah, Amazon made 2 notable additions in the fall designed to keep users on its platform:

• Podcast distribution: It now hosts third-party podcasts so that users don’t have to jump to another app for podcast playing.
• Original content: A slate of exclusive “podcasts” were created, allowing Amazon to differentiate its audio offerings.

While Wondery content will initially appear on Amazon Music, the deal can clearly help Audible down the line, too.

Podcast listeners are projected to hit 2B by 2025…

… up from 800m in 2019, per data firm Omdia.

Amazon’s move is the latest in a space that has seen a frenzy of activity:

• Spotify scooped up talent like Joe Rogan, The Ringer, and Gimlet Media as well as tech for production (Anchor) and ads (Megaphone)
• The New York Times acquired Serial Production, an audio production company
• Sirius XM (which owns Pandora) acquired podcast player Stitcher and hosting service Simplecast
• Apple acquired Scout FM, which uses AI to curate custom podcast playlists

The land grab is so crazy that The Hustle is mulling a new job posting: Head of WTF is Going On in Podcasts.

What were the top stocks of 2020?

If you were invested in the S&P 500 on January 1, 2020, and fell asleep for the entire year, you would have woken up on December 31, 2020, with a +16.3% gain.

That is nuts (as if nothing happened!).

The index would have gone even higher if its top 2 performing stocks (Tesla, Etsy) were added to the index earlier in the year.

Across the entire S&P 500 index, 6 stocks gained at least 100%:

1. Tesla ($TSLA): +743%
2. Etsy ($ETSY): +302%
3. Nvidia ($NVDA): +122%
4. Paypal ($PYPL): +117%
5. L Brands ($LB): +106%
6. Albemarle ($ALB): +102%

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Land Rover ad… pls do not try this at home

The car industry is no stranger to M&A deals, with many huge ones taking place in recent decades:

• Daimler-Benz’s takeover of Chrysler for $38B in 1998. At the time, it was the world’s largest cross-border deal ever, but the “marriage made in heaven” saw a huge clash of cultures between the German and American car manufacturers. Following a number of lawsuits, Daimler sold Chrysler off for $6B in 2007.

  Chrysler filed for bankruptcy in 2009, which started a process that would see Fiat take over the car company by 2014 (costing $10B+ in total).

• Ford sells Land Rover and Jaguar to Indian carmaker Tata Motors for $2.3B in 2008. At the time, Ford was fighting for its own survival amidst a challenging economy. Tata’s “hands-off” policy has helped UK-based Jaguar Land Rover revive the brands.
• Volkswagen acquires Porsche. This one is pretty wild. Porsche’s chairman acquired ~50% of Volkswagen between 2005-08. At 75% ownership, he would receive “€8 billion cash back on its purchase.”

  Amidst worsening economic conditions in Europe in 2012, Porsche ran out of financial ammo, and Volkswagen turned around and “swallowed” the luxury car company for €4.5B.