Baron Capital's due diligence process is four years of deep questioning — not about quarterly numbers, but about the CEO's character, mission, and ability to vertically integrate and dominate.

28:33they are with uh with anthropic. >> What did you What did you see in Tesla in in 2014 that the rest of Wall Street didn't? Because that predates all of the the models. It obviously predates profitability. It's it's a fairly early stage. I think the IPO was 2010. >> U very little coverage on Wall Street. I know Adam Jonas was writing about it and uh I don't think any asset manager had

28:59come in and made a big bet on it. So you were probably the first. What were you why were you able to see more of the future than everybody else? >> Can I jump in for one second just to clarify? We weren't the first and and I don't think we're ever necessarily early on things. You know, we we we met Elon on the IPO. But we had a very small

29:20stake right uh due to a private equity investment. >> This is 2011 10. Okay. >> And we spent a lot of time with him, a lot of time with the management team. Took us around four years of of diligence on the company, diligence on on him, what makes him tick, what is he trying to achieve? And at the time, what were they doing? Around 30,000 vehicles a year.

29:41>> Yeah. >> Something in that ballpark. Uh one facility over over in uh Fremont, over in California. And we didn't spend time talking about, you know, what are you doing in this one facility or or or or you know, how many vehicles you can actually do in this this one place, but what are they trying to achieve? And and one of the things I noticed in the first

29:59one of the first visits is there's a big mission. You know, my dad was just speaking about what our mission is in terms of changing lives. And Elon has a mission for all of his businesses. you know, the and the the mission over at Tesla was to drive humanity to I'm I'm probably butchering a little bit, but drive humanity some kind of renewable resource from energy perspective and

30:20nothing to do with with with with vehicles, nothing to do with transportation. It it's, you know, doing good for society, changing us to to a better uh way to consume energy. And when you understand that he is going to be a lot more dynamic than a single business, that's what kind of got us excited. And all of our questioning was really about that. You know, how do you

30:38become this much greater business and and what Elon's famous for doing both in Tesla now doing kind of the same similar playbook over at SpaceX. It's about vertical integration. So all the prior automobile companies was about outsourcing. You know, get your seat belts from someone, get your get your airbags, your wheels from someone else, and everyone takes a little bit of margin. >> If you really want to change the world,

31:00you need to do it yourself. You need to drive down costs as low as low as possible. Um and and he's able to make vehicles now that others cannot possibly uh catch up to. He can and and and I think that Tesla is on the cusp of really transforming itself from a hardware company, you know, selling a selling a box on four wheels, earning a earning a one-time profit to a software