Full transcript of “Bhavish Aggarwal is finally India’s Elon Musk”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:02 [Music] Today's edition of the nutgraph published on 7th June 2025 is titled Babes Shagaral is finally India's Elon Musk. Over time the parallels between them are becoming eerily similar. [Music] I guess the biggest story of the week is the whole Trump Musk fallout. Uh I didn't get much time to read the details, but I did find some time to think about it. Then I discovered that if you really step back and zoom out, you can clearly see the series of events that got us here. First, a slightly unconventional billionaire and seasoned entrepreneur launches an electric
0:49 vehicle company at a time when EVs were far from mainstream. The EV company becomes quite successful and quickly becomes the market leader. It goes public and becomes the stock market darling. Then the billionaire gets a bit bored of this EV company and decides to use his shares to finance another company through a series of complicated loans. Nobody quite understands how this works or what this new company does. Next, the EV company's stock has dropped by double digits this year and its market share is shrinking. a decline driven partly by the founders's erratic behavior and partly by rivals launching superior products. Then the billionaire founder engages in a public and messy feud on Twitter. I
1:36 still can't call it X with another influential and equally eccentric figure. And now the billionaire finds himself in a bind. The once thriving EV company appears to be faltering and the flashy new venture that he funded by pledging its shares is neither generating revenue nor showing signs of a sustainable business model. But enough about Pavves Shagarwal. It's almost a cliche these days to call Agarwal as the Indian Elon Musk particularly because it's no longer evident if the comparison is meant to be complimentary or derogatory. However, it's one thing if India's business media or anonymous internet users do this, but increasingly it appears as though Agaval himself
2:23 seems to be actively fanning these flames by adopting whatever Elon Musk seems to be doing. Fortunately, thus far, Agaval seems to be copying the least crazy thing that Musk is up to instead of, say, injecting himself with ketamine or asking strangers on the internet to have his babies. So I guess it could be worse. Anyway, my point is that while these parallels started off in a somewhat lazy fashion, I think that they have converge to an interesting place eerily at the same time, notably over the past week. Of course, there are some significant differences that set them apart and some of them are quite pivotal and will decide their respective futures. I'll start with their EV companies. It's easy to make the
3:09 argument that both Tesla and Ola Electric seem to have followed somewhat similar journeys. They are EV companies that hit the market ahead of their time, got a significant market share and went public. However, the companies diverge at this point. Tesla, despite losing sales to upstarts like BYD and declining sales, is still relatively overperforming as a stock. A lot of this has to do less with Tesla's business performance and more to do with the halo that Elon Musk gives the company. In fact, Tesla's stock price seems to be much more closely correlated with what its founder is doing that day more than how many cars it sold. Ola Electric, on the other hand, seems to be a much more conventional company. Over the last few
3:56 quarters, it has lost market share to competitors. Its revenue has declined. Its losses have grown and alongside all of this, Olric stock price has also fallen in lock step. I'm not sure how many of Ola Electric's investors look at Bav Aaral's behavior on a daily basis to decide whether they feel like buying or selling the stock that day. But the one thing that Tesla and Olricct have in common is that both these brands seem to have been hit and are less desirable in the minds of their consumers. Apart from concerns about poor service for old electric scooters, the founders had a role to play in this on Twitter in their own ways. One of them picked a fight with the president of the United States
4:41 and the other decided to have a go at a stand-up comedian. I have a point of view about which of these was more stupid, but I'll let you decide for yourselves. The parallels don't just extend to their EV companies, but it goes far beyond that, to their other companies. When Elon Musk bought Twitter for about $44 billion, the general consensus was that he was significantly overpaying for a social media company that had a long history of not making money. Depending on how credulous you are about Musk's acumen, you can either believe that this was part of a long game to choose who would become the next president of the United States, or that it was simply an egotistical, bored billionaire who wanted a toy to play with, regretted
5:27 making a commitment, tried to get out of the deal, and was eventually forced to buy it. Anyway, Musk had bought Twitter partly by selling his Tesla shares, partly by finding other equity investors. And this is important by raising nearly $13 billion in debt financing from multiple banks. Agaval thankfully didn't follow suit and acquire a social network. Instead, he founded Kutim, an AI company, and injected funds into it. One could argue about his motivations for starting Kutim. I shared my theory about this last year, which I'll link to in the show notes below. Of course, Agaval has made it clear that he's doing it for nationalistic reasons, which may or may
6:15 not sound similar to what Elon Musk did when he acquired Twitter. However, both Prutim and Twitter have one thing in common. Both have been financed by big banks who have extended debt. debt that is directly and indirectly collateralized by founders and their stake in their EV companies and right now the banks are getting a bit nervous. I'll start with CRI as per Bloomberg Agaval has pledged or encumbered about 8% of his 30% electric stake according to exchange data. Aenders Group, Incred Alternative Investments and Modulus Alternatives Investment Managers had lent him the money in exchange for bonds issued by Kutim carrying coupon rates of
7:02 about 14.9% to 15.9% and backed by Ola Electric shares. Elon Musk on the other hand has somewhat bigger problems. He needs to pay billions just in interest to these banks. And this debt is recorded on Twitter's balance sheet which makes it a big liability that's nearly impossible to reduce. So Musk did a crut. He created an AI company called XAI gave it an absurd valuation after raising some money from friendly investors and use that company to acquire Twitter. Now, the debt is on the AI company's balance sheet, but as we know, it's much easier for an AI company to raise capital than a social network. For a while, this plan
7:48 seemed to work. Then, a few months back, coincidentally, on the same day, 21st April 2025, two news reports emerged about both these AI companies. A CNBC report about XAI claimed that the company was about to raise capital financed through equity. On the same day, the Indian publication Mint reported that Kutim was also looking to raise about $300 million from investors. It quoted anonymous sources who said that Kutim led by its founder Bhavesh Agarwal is quote confident of bringing multiple big ticket investors to the cap table end quote in the coming months. Back in April both Kutrim and XAI signal that
8:35 they were looking to raise money through equity. By June, both of them independently realized that this was impossible. Nearly all of Kutam's capital has been funded by Pavves Shagarwal who in turn has taken loans from banks by pledging his shares. Last week after watching Ola Electric's stock price slide, the banks got nervous. Besaral reportedly had to pay about 20 crores in cash to top up his existing collateral to assuage them. He'll probably have to do this again unless electric's position as a business improves. To be clear, I don't want to overstate this as some kind of a crisis. Agarval has pledged a small chunk of his
9:21 shares. Founders do this all the time. It's not out of the ordinary. The real story is that KRM still does not have any major investor who has pumped in money in exchange for equity. XAI on the other hand also took the scenic route and got to the same destination. Here's the news from earlier this week as published by the Indian publication Mint titled Musk taps investors for billions days after Washington exit. Days after announcing his departure from the Donald Trump administration and as chief of the department of government efficiency, Doge, billionaire Elon Musk has refocused his efforts towards raising funds for his companies. According to a
10:08 Bloomberg report, Elon Musk is selling $5 billion in debt for his artificial intelligence company XAI Corp. with Morgan Stanley as the banker for a doubledigit interest rate, the report said, citing sources. The move likely comes as the AI startup looks to fund its expansive infrastructure with a massive data center in Memphis, Tennessee. The report added that a spokesperson for XAI declined to comment while the Morgan Stanley representative did not directly and immediately respond to queries. End quote. In a sense, both Growth Rim and XAI are at the same place. Both of them are AI companies with strange, wildly
10:56 optimistic growth projections, but with little to show for the present. They do not have much of a product, revenue or even customers. Also, despite the halos of their respective founders, they do not seem to be able to raise capital through equity. But banks are perfectly happy to give them money tied to the performance of the other company that they both run. Put another way, there are enough people who believe the founders are creditw worthy. It's just that much fewer people believe that their businesses are good enough to directly put money into them. Last week, more than any time in the past,
11:41 Bavagarwal and Elon Musk look much more similar to each other. This edition of the Nutgraph is available on the Ken's website. You can find it at the ken.com/thenutgraph. I'll be back again next week with another edition. Sound and production for today's episode has been done by Rajiv Cen. [Music]
