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Comment by skissane | Hacker News Reader

Apparently, SpaceX has used Tesla engineers in the past, to help them evaluate/integrate Tesla parts into SpaceX designs. If Tesla is okay with doing consulting for one of Musk's other businesses, why not another?

Legally, Musk has to pay Tesla for this, and someone very senior at Tesla (the board or the senior executive team) has to approve – without Musk being in the room. But, why wouldn't they say "yes"?

So I don't think this story is fundamentally implausible. (As I pointed out in a comment on another post, the "code review" was probably actually an "architecture review", but it is easy for non-technical people to elide the difference.)

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> Legally, Musk has to pay Tesla for this, and someone very senior at Tesla (the board or the senior executive team) has to approve – without Musk being in the room. But, why wouldn't they say "yes"?

that's not true at all. there's no law that says Twitter/Musk has to pay Tesla engineers anything. it's only up to Tesla's management to decide what they want in return for those resources. Also, as CEO there's nothing stopping Elon from using all of Tesla's resources to help Twitter or any other company. it is entirely up to Tesla's board and shareholders to punish Elon for what should be a gross misappropriation of Tesla's resources

You are correct that (at least as far as I know) there is indeed no explicit legal provision saying Tesla can’t just give SpaceX/Twitter/etc endless free services. However, Tesla is a Delaware corporation, and under Delaware corporate law (same as in most other jurisdictions), directors and officers have to take special care in conflict of interest situations, to avoid contravening their fiduciary duties (especially the duty of loyalty). The easiest way to make sure that duty is being appropriately discharged, is to ensure that those services are provided on commercial terms, which would normally involving paying for them. So while there may not be an explicit legal rule saying they have to do it this way, in practice their lawyers will be telling them this is their recommendation to minimise legal risk, and I have no doubt that they’ll listen to their lawyers and do what they say.

As well as the corporate law issues, the accounting and taxation implications of non-commercial transactions with other firms with which you have significant common ownership can be quite messy in many jurisdictions, which is another compelling argument for keeping those transactions on a commercial fee-for-service basis.

> in practice their lawyers will be telling them this is their recommendation to minimise legal risk, and I have no doubt that they’ll listen to their lawyers and do what they say.

there isn't even a need to see a lawyer about this. there's literally no issue here for the company to ever get sued over. the only risk here is for Elon himself to be reprimanded by the Tesla board. and the chances of that happening are below zero.

> there isn't even a need to see a lawyer about this.

All major companies employ in-house lawyers. Issues like this always go through in-house legal. Rather than a question of whether they “need to see a lawyer”, their own lawyers will be advising them on it as a matter of course.

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