How Elon Musk's Buddy Rode Tesla Shares To Become A Billionaire

Forbes

Chance led investor Antonio Gracias to meet Musk and put money in Tesla early on. That–and his focus on problem-solving at the manufacturing level—has been key to his outsized success.  Read the full story on Forbes: https://www.forbes.com/sites/phoebeliu/2024/03/22/how-elon-musks-buddy-rode-tesla-shares-to-become-a-billionaire/?sh=527abf021c31  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Monday, March 25.

00:05 Today on Forbes, how Elon Musk's buddy rode Tesla shares to become a billionaire.

00:13 During a grueling time for Elon Musk six years ago, his friend, Antonio Gracias, a board

00:18 member at Tesla and an early investor in the company, proved his mettle as both a supportive

00:23 buddy and invaluable problem solver.

00:26 It was the summer of 2018, and Gracias and Musk were working nearly around the clock

00:31 to ramp up production of the electric carmaker's Model 3.

00:35 They were busy sorting out supply chain issues and manufacturing problems.

00:39 For a few hours each night, they slept in adjacent conference rooms off the factory

00:43 floor.

00:44 Gracias, now 53 years old, described it as a "all hands on deck, 24/7" operation,

00:52 calling it the hardest thing he'd ever done.

00:55 The two men rarely left the premises, even celebrating Musk's 47th birthday with a

00:59 cake from the grocery store next door because they couldn't step away long enough for

01:03 a proper party.

01:05 Gracias, a fast-talking, Midwest-born and raised investor, became one of Tesla's first

01:11 institutional investors in 2005 via his firm Valor Equity Partners and started investing

01:17 in SpaceX about three years later, per Valor's website.

01:21 For the nearly two decades since then, Gracias' hands-on investment strategy and bets on Musk's

01:27 companies have paid off.

01:29 Forbes estimates that he's now a billionaire thanks mostly to his Tesla shares and other

01:34 investments made by Valor Equity Partners, which he founded in 2001 and which has $14.2

01:40 billion in regulatory assets under management.

01:43 Along the way, he's become close friends with Musk, skiing and going on family vacations

01:48 together.

01:49 And Musk has invested in Gracias' Valor Equity Partners, putting $2 million in both

01:54 its first and second funds, which surely lent the firm more credibility.

02:00 Gracias declined to comment on his net worth or be interviewed by Forbes, but he has acknowledged

02:04 in court proceedings that he amassed "dynastic or generational wealth" from investing in

02:10 several of Musk's companies, including Tesla, SpaceX, and SolarCity.

02:15 Gracias' friends, co-investors, and portfolio company executives describe him as intense,

02:21 demanding, and always working.

02:24 Keller Renaudo-Clifton, the CEO of delivery drone maker Zipline, says, "Antonio is surely

02:31 the most wildly successful, impactful investor who nobody knows."

02:37 Those who know him say what sets him apart is his willingness to help solve a company's

02:41 unglamorous problems.

02:44 Valor has a 20-person so-called "scale team" whose job is to work full-time to help portfolio

02:48 companies do exactly that.

02:51 Gracias' manufacturing expertise and a passion for cognitive science, inspired by his neurosurgeon

02:57 father, have informed the strategy behind Valor's portfolio of early-stage and growth-stage

03:02 companies, which have ranged from produce delivery, misfit markets, to artificial intelligence

03:07 data, data miner, and defense software, and a reel.

03:13 At an investors' conference in Florida in February, Gracias described Musk's and his

03:17 firm's relationship with him as such.

03:20 He said, "We can't all be genius engineers, but we can take the garbage out.

03:24 We're good at that."

03:27 Gracias was born in Detroit, Michigan, to immigrant parents.

03:30 His dad is from India and his mom from Spain.

03:34 His dad was a neurosurgeon and his mom is a trained pharmacist who ran a lingerie shop.

03:39 When Gracias was in middle school, his mom gave him the money to make his first investment,

03:43 $300 worth of Apple stock, which he still holds today.

03:48 While in law school, Gracias launched an investment business, calling it MG Capital, a reference

03:53 to his mother's initials.

03:55 Using $400,000 from family, friends, and earnings from his few years working at Goldman Sachs,

04:01 as well as a bank loan, MG Capital started more like a buyout firm, buying small, struggling

04:06 manufacturing companies, aiming to turn them around and sell them for a profit.

04:11 His first bet was on a California-based electronic plating plant, where he learned about operations

04:16 by running it himself, flying back and forth between Chicago and Los Angeles to spend time

04:21 on the factory floor.

04:24 After Gracias told Zipline's Clifton that story, Clifton recalls thinking, "That sounds

04:29 like the story of how someone lost a lot of money.

04:31 I mean, how many law students would go and buy a factory that's probably on its way out?

04:36 It's actually mind-blowing."

04:37 Gracias agreed.

04:40 In 2022, on the podcast Invest Like the Best, he said, "Only someone who's 24, 25 years

04:47 old, super naive, could ever do something quite so dumb."

04:52 But he added that they actually took the company from $10 million to $125 million in revenue

04:58 before selling it.

05:01 For full coverage, check out Phoebe Liu's piece on Forbes.com.

05:06 This is Kieran Meadows from Forbes.

05:08 Thanks for tuning in.

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