Brief Summary
This Nutgraph edition draws parallels between Bhavish Aggarwal and Elon Musk, highlighting similarities in their entrepreneurial journeys, particularly with Ola Electric and Tesla, and their ventures into AI with Kutrim and XAI. Both founders face challenges in their EV companies and are now relying on debt financing for their AI startups, revealing a shared struggle to attract equity investors despite their personal brand value.
- Both launched EV companies that gained market share early on.
- Both are now running AI companies financed by debt.
- Both are finding it difficult to raise equity for their AI ventures.
Intro: Babes Shagaral is finally India's Elon Musk
The author talks about the uncanny parallels between Bhavish Aggarwal and Elon Musk, especially after the Trump-Musk fallout. Both started EV companies that became market leaders, went public, and then the founders used their shares to finance other ventures. Now, both EV companies are facing challenges, and the founders are engaged in public feuds. The author notes that Aggarwal seems to be emulating Musk's actions, though hopefully not the craziest ones.
EV Companies: Tesla vs Ola Electric
The author compares Tesla and Ola Electric, noting their similar trajectories as early EV market entrants. Tesla's stock performance is heavily influenced by Elon Musk's actions, while Ola Electric's stock is declining with its market share and revenue. Both brands have suffered reputational damage due to their founders' behavior on Twitter, with Musk feuding with the US President and Aggarwal arguing with a stand-up comedian.
Beyond EVs: Twitter vs Kutrim
The author extends the comparison to Musk's acquisition of Twitter and Aggarwal's founding of Kutrim, an AI company. Musk's purchase of Twitter for $44 billion was seen as an overpayment, financed through debt and Tesla shares. Aggarwal founded Kutrim and injected funds into it, citing nationalistic reasons, similar to Musk's rationale for buying Twitter. Both ventures are financed by debt collateralized by the founders' stakes in their EV companies, making banks nervous.
Debt Financing and AI Ventures: XAI and Kutrim
The author discusses the debt financing of Kutrim and XAI. Aggarwal has pledged 8% of his Ola Electric stake for loans with high coupon rates. Musk faces billions in interest payments on Twitter's balance sheet and created XAI to shift the debt. Both Kutrim and XAI sought equity funding in April but realized it was impossible by June. Aggarwal had to provide additional collateral to assuage nervous banks.
Struggles to Raise Equity and Similar Paths
The author highlights that both Kutrim and XAI are struggling to raise equity. Kutrim is primarily funded by Aggarwal's loans, while XAI is selling debt to fund its infrastructure. Both companies have optimistic growth projections but lack significant product, revenue, or customers. Despite their founders' reputations, they can't attract equity investors, but banks are willing to lend money based on the performance of their EV companies.
Conclusion: Striking Similarities
The author concludes that Aggarwal and Musk are strikingly similar, with both relying on debt for their AI ventures due to a lack of investor confidence in their businesses. People believe in the founders' creditworthiness but are hesitant to invest directly in their AI companies.
