\"Elon Musk\" by Ashlee Vance
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EnglishVoice Age
Middle Aged (35-54)Accents
North American (General)Transcript
Note: Transcripts are generated using speech recognition software and may contain errors.
PayPal Mafia boss. The sale of zip to infused Elon Musk with a new brand of confidence. Much like the video game characters he adored, Musk had leveled up. He had solved Silicon Valley and become what everyone at the time wanted to be. A dot com millionaire. His next venture would need to live up to his rapidly inflating ambition. This left musk, searching for an industry that had tons of money and inefficiencies that he and the Internet could exploit, must began thinking back to his time as an intern at the Bank of Nova Scotia. His big take away from that job that bankers are rich and dumb now had the feel of a massive opportunity during his time. Working for the head of strategy at the bank in the early 19 nineties must have been asked to take a look at the company's Third World debt portfolio. This pool of money went by the depressing name of less developed country debt, and Bank of Nova Scotia had billions of dollars of it. Countries throughout South America and elsewhere had defaulted in the years prior, forcing the bank to write down some of its debt value. Musk's boss wanted him to dig into the bank's holdings as a learning experiment and try to determine how much the debt was actually worth. While pursuing, this project must stumbled upon what seemed like an obvious business opportunity. The United States had tried to help reduce the debt burden of a number of developing countries through so called brandy bonds, in which the U. S government basically backstop the debt of countries like Brazil and Argentina must noticed an arbitrage play. I calculated the backstop value, and it was something like 50 cents on the dollar, while the actual debt was trading at 25 cents, Musk said. This was like the biggest opportunity ever, and nobody seemed to realize it must try to remain cool and calm. As he ran Goldman Sachs, one of the main traders in this market, and probed around about what he had seen, he inquired as to how much Brazilian debt might be available at the 25 cents price. The guy said, How much do you want? And I came up with some ridiculous number like $10 billion Musk said. When the trader confirmed that was doable, must hung up the phone I was thinking that they had to be ******* crazy because you could double your money. Everything was backed by Uncle Sam. It was a no brainer. Musk had spent the summer earning about $14 an hour and getting chewed out for using the executive coffee machine, among other status infractions, and figured his moment to shine and make a big bonus had arrived. He sprinted up to his boss's office and pitched the opportunity of a lifetime. You can make billions of dollars for free, he said. His boss told Musk to write up a report which soon got passed up to the bank CEO, who promptly rejected the proposal, saying the bank had been burned on Brazilian and Argentinian debt before and didn't want to mess with it again. I tried to tell them that's not the point, Musk said. The point is that it's ******* backed by Uncle Sam. It doesn't matter what the South Americans do. You cannot lose unless you think the U. S Treasury is going to default. But they still didn't do it and I was stunned. Later in life as I competed against the banks, I would think back to this moment, and it gave me confidence. All the bankers did was copy what everyone else did. If everyone else ran off a bloody cliff, they'd run right off a cliff with them. If there was a giant pile of gold sitting in the middle of the room and nobody was picking it up, they wouldn't pick it up, either. In the years that followed, Musk considered starting an Internet bank and discussed it openly. During his internship at Pinnacle Research in 1995 the youthful musk lectured the scientists about the inevitable transition coming in finance toward online systems. But they tried to talk him down, saying that it would take ages for Web security to be good enough to win over consumers. Musk, though, remained convinced that the finance industry could do with a major upgrade and that he could have a big influence on banking with a relatively small investment. Money is low band with, he said during a speech at Stanford University in 2003 to describe his thinking. You don't need some sort of big infrastructure improvement to do things with it. It's really just an entry in a database