0:00

From The Wall Street Journal, this is Bad Bets.

0:02

I'm Ben Foldy. In our first

0:04

episode, the brand new company Trevor Milton

0:06

started, dehybrid, and passed its first

0:08

big test. The company had impressed

0:10

executives at Swift Transportation, one

0:13

of the biggest trucking companies in America. We'll

0:16

come back to that. but spoiler alert.

0:18

Dehybrid would ultimately fail. There's

0:21

a reason you've heard of Nikola and not dehybrid.

0:24

Years later, when Nikola went public,

0:26

and Trevor Milton was being hailed as a visionary

0:28

founder. He talked about his past failures

0:30

and what he learned from them. Here he is on

0:32

a podcast called The Truck Show, saying that

0:35

Nikola investors were treating it as company

0:37

worth billions of dollars. In part,

0:39

because of those failed They wanna

0:41

know that you fail. They wanna know that you've

0:44

you've been destroyed and gotten back up and

0:46

because when times get tough, wanna

0:48

know you're the right leader. So all those guys out there listening

0:50

right now, like, if you failed,

0:53

all that means is that you're gonna be a better

0:55

leader in the future, you're gonna have more compassion,

0:57

you're gonna stand more and you're never gonna give up

0:59

and people will invest in you because

1:01

of your failures. That's how Trevor

1:04

saw it. But what's interesting to me,

1:06

having reported this, is how Trevor

1:08

pitched and managed the companies that ultimately

1:10

failed. And what happened to some their

1:12

investors? Because as I dug deeper

1:14

into Trevor's past, I found patterns that

1:16

repeated themselves. Trevor,

1:19

a natural salesman, would build up his

1:21

businesses using charm and a big vision.

1:23

he had a real knack for raising money, often

1:25

making big promises to investors. And

1:28

later, just like they would at Nikola, Some

1:30

investors in those businesses would be left with

1:33

big life changing losses as Trevor

1:35

rolled on. So that's what we're going

1:37

to get into in this episode. In the reporting

1:39

behind what you're about to hear, we sent Trevor

1:41

Mountain's PR rep and lawyers and asked

1:43

for Trevor's side. They didn't answer our questions.

1:45

Okay. We'll

1:48

start where we left off. It's March of

1:50

twenty ten. Trevor seems to have switched

1:52

in his corner, and he's finding it easier

1:54

to get some local folks. friends, family,

1:56

church acquaintances to give them money. And

1:59

a lot

1:59

of these investors, they're

2:01

just regular work a day people who are giving

2:03

Trevor big sums. sometimes their

2:05

life savings towards what they hoped

2:07

would be the truck of the future.

2:11

Hi. Hey. I've been fully

2:13

from the journal. How are you? I met one of these people

2:15

in Utah this past July. His name

2:17

is Rob Chambers. We talked in his

2:19

house in a small town outside Saint George.

2:22

he'd just gotten home from a long day, working in

2:24

the field for a utility company. I

2:27

asked Rob how he first met Trevor, and he

2:29

said that actually, years before he decided

2:31

to invest with him, they'd gone to the same high school

2:33

in Knab, Utah. What do you remember of him?

2:35

Like, what was your impression? seemed

2:37

like a nice guy. He I

2:39

feel like he shared the same morals I did and

2:42

same kind of belief system. Is

2:44

it are most people in Canav LDS? Or

2:46

Most everybody is LDS.

2:48

LDS is in the Church of Jesus Christ

2:50

of latter day saints, the

2:52

largest religion in Utah. a social network

2:54

that ties a lot of its towns and communities together.

2:57

In two thousand ten, the network of folks from

2:59

southwestern Utah was buzzing.

3:01

with the story of the new hotshot entrepreneur, Trevor

3:03

Milton. And soon at Reach Rob

3:05

Chambers, who by then was a sophomore in

3:07

college a few hundred miles north. He

3:10

said his roommate, who was friends with Trevor, would

3:12

regale him with stories of Trevor's business savvy.

3:14

He'd tell us about this new

3:16

thing that was going on with the hybrid and

3:18

swift. And obviously, he would

3:20

use Trevor Milton's name. Yeah.

3:23

Trevor Milton, he's like, went

3:25

from high school to some big businessman that

3:27

does all these great deals with big

3:29

companies. Rob says he was told

3:31

that people he respected in the community were

3:33

investing in Trevor venture. And at that

3:35

exact moment, Rob says he happened to be

3:37

sitting on a large sum of money. Forty

3:39

thousand dollars, most of which he just made

3:41

at his summer job, installing alarms.

3:44

And then his roommate told him, Trevor was looking

3:46

for a new investor and that he would introduce

3:48

them.

3:49

And what do you what do you remember that meeting?

3:51

when I got there, dude, Trevor greeted

3:53

us, like, super charismatic, like,

3:57

really nice. And I was like, oh, wow. Yeah.

3:59

I

3:59

I remember you, yeah, in high school,

4:02

and he kinda treated

4:04

me like he knew me.

4:06

Oh, hey, man. How's it going? Like

4:08

like, buddies, but I

4:10

was really never his friend. Did

4:13

he call you buddy by chance? I

4:16

actually think he might have. Yeah. But

4:19

but he's really charismatic, really

4:21

nice, and he took us

4:23

to his office, which was like huge.

4:26

Lots

4:26

of glass. Seemed

4:28

fancy. Yeah. Super fancy. Yeah. Especially

4:30

for me. Rob says right off the bat, Trevor

4:32

was in full pitch mode, connecting with

4:34

Rob over his summer sales experience. he

4:37

kinda made me feel like he knew exactly where I

4:39

was coming from because he had been in alarm sales

4:42

and basically told me that

4:44

You make so much money

4:47

every summer. Why don't you

4:49

invest it and double it and you won't even have

4:51

to go to work? Right?

4:54

That sounds pretty good. And

4:56

it's it's somebody who's friends

4:58

with people that I trust. and

5:01

I have heard of this guy. I know him. I

5:03

know he served his church. And

5:05

so I thought, well, yeah,

5:07

great. Let's do

5:09

it. So Rob

5:10

told Trevor, he wanted to invest in dehydrogen,

5:13

the company that was doing natural gas conversions

5:15

on trucks. The one he's found in we told you

5:17

about last episode. Rob said

5:19

Trevor told him he had something better, shares

5:21

in Exxon Industries. Exxon

5:23

was the company Trevor Milton started when he sold

5:26

his alarm company. told you about that

5:28

last episode. Lexon also

5:30

did business as u pillar dot com. It

5:32

was building an online classified site.

5:34

Trevor said it would be a competitor to Craigslist

5:36

and eBay within a few years. And

5:39

Lexon, AKA u pillar, was

5:41

the parent company of d hybrid, the

5:43

truck company. according to the latter's financial

5:45

documents. It might sound a bit

5:47

complicated, but it's not. Exxon

5:50

was u pillar and was the parent

5:52

of the truck company. We heard from

5:54

a few people that wanted to put their money into the

5:56

truck company that said that they were directed to

5:58

Exxon instead. Here's another

6:00

person from Southwest Utah that I talked

6:02

with. Tad Casepole, who invested

6:04

after coming back from a deployment in Afghanistan.

6:06

I was told, yeah, this is really great.

6:09

The hybrid's awesome. Do you wanna invest

6:11

in it? Yes, I do. Okay. So

6:13

here's the thing, Tad, is that we're

6:15

actually gonna put your money into this

6:17

umbrella company called Lexon Industries.

6:19

So all the documents and stuff that you're gonna see

6:21

will say Lexon, but you're really investing

6:23

in a dehybrid. and so I was

6:25

kinda like, okay, oh, I've never

6:27

invested before. I don't know if that's

6:29

normal or not, but

6:33

why do we have to do that? and I

6:35

was sold the idea that, hey, what's

6:37

great about this is that since you're investing

6:39

into Exxon, Exxon also

6:41

controls this website called you

6:43

pillar. So if you pillar does well or

6:45

whatever, then that's an added bonus. And

6:47

Tad wasn't the only person I spoke to who

6:49

said they were told that if you pillar took off,

6:51

they'd get an even bigger return. Rob

6:54

Chambers, the college sophomore who met Trevor in

6:56

his office. He says he found Trevor's

6:58

pitch for Exxon so convincing that he

7:00

decided to go all in that day. I

7:02

actually brought three cashier's

7:04

checks, one for twenty thousand, one for ten

7:06

thousand, and another one for ten thousand.

7:08

because I was thinking, well, maybe

7:11

I'll go thirty

7:13

or maybe I'll go all

7:15

forty. And when I got done talking

7:17

to him, I felt like, dude, I wanna

7:20

put my money on these guys because I know they'll

7:22

succeed. He says

7:23

he left Trevor Newton's office feeling pretty

7:25

great. There was one detail he remembers

7:27

though. that stuck with him.

7:29

So I I looked at my

7:32

account

7:32

history on

7:33

that account. It was,

7:36

like, ten minutes after I gave him those

7:38

checks. Like,

7:41

pretty quick. You know, maybe half an

7:43

hour. So let's say half an

7:45

hour after I give them those checks, they were in

7:47

the bank. They were cashed.

7:52

Rob shared with me copies of his checks and

7:54

bank records that backed up his memory of

7:56

that day. And looking over the paperwork

7:58

that Rob signed during that meeting with trevor,

8:00

I noticed a couple of things right away.

8:03

First, the paperwork. It's

8:05

seven pages of text that doesn't say anything

8:07

about what Exxon does as a business. and

8:09

it doesn't mention dehybrid the truck company.

8:11

It does have a fair graph, three pages in

8:13

about the risk. Quote, investor

8:16

understands that an investment in the company

8:18

involves substantial risks. And

8:21

also, that the investor attests that they can

8:23

afford to lose their money. Rob

8:25

signed this paperwork. he said the

8:27

forty thousand dollars he invested was pretty much

8:29

all the money he had. He said a

8:31

few weeks after he gave the checks to Trevor, he chose

8:33

to move into a storage unit temporarily

8:36

to save money. Two other people I

8:38

spoke with say they borrowed money to invest in

8:40

Microsoft. To help me understand the laws

8:42

and regulations around investing in startups, I

8:44

called a lawyer. I'm

8:46

Maria Wyndham. I'm a securities

8:49

litigation attorney.

8:51

I've been working in

8:53

this area since two thousand

8:55

five? Do you do you do both plaintiffs and

8:57

defendant work? Or I do.

8:59

Yes. Okay. I showed Maria the Lexon

9:01

paperwork. and told about the investors I'd

9:03

spoken to who'd put money into Exxon

9:05

despite not having much in the bank. Maria

9:07

said that the federal rules for these kinds of investments

9:10

are supposed to keep inexperience non

9:12

wealthy investors from taking risks that they

9:14

can't afford. But she said she often

9:16

hears from people like Rob who say they didn't

9:18

fully understand what they were signing up

9:20

for. the

9:20

advice that I give

9:22

to everybody is other people might not

9:24

read it, but you should

9:27

because you're gonna be bound by what

9:29

you sign. That

9:31

said, whatever

9:33

it is that is being signed by

9:35

those investors, it needs to be

9:37

complete. and it's the

9:39

company's job to have made all of the

9:41

disclosures necessary. Maria

9:43

says that under the rules, a startup

9:45

like Exxon should provide its investors with specific

9:47

information laying out corporate structure, the

9:49

business plan, and the specific risk for the

9:51

business.

9:52

So for instance, if

9:54

you have technology

9:56

that doesn't work yet,

9:58

that needs to be disclosed.

10:00

Not just we think this

10:02

technology is gonna work in the future and this

10:04

future is going to be us them. Mhmm.

10:06

You also have to tell investors if

10:08

it turns out that our technology

10:10

doesn't work well,

10:11

you could lose all of

10:13

this money. The investors I spoke with said

10:15

they did not receive any documents like

10:17

that. One investor, Darren

10:19

Brooks, told me he didn't get any documents

10:21

at all. not even like the one that Rob signed.

10:24

His involvement with Alexon started when Trevor,

10:26

who was a friend of his, pitched him on

10:28

the company. late one night,

10:30

you know, we talked on the phone and he said,

10:32

look, he goes, I we've got to have some

10:34

investment capital. And I didn't have a lot. I

10:36

mean, I'm a nobody at that time. And

10:38

like, what are you talking? He goes as much as you've got.

10:40

And I'm like, well, I don't have a lot.

10:42

And he goes, can you do thirty thousand? And

10:45

I'm like, maybe,

10:47

I could probably scrap together and borrow some,

10:49

and I think it's gonna turn

10:51

into tremendous amount of money. You know

10:53

what? I need it right now and Yeah. I believed

10:55

him to the point where I scraped together and

10:57

wrote a personal check. Darren says he

10:59

was able to pull together thirty grand, partly

11:01

by taking out cash advances on his credit

11:03

cards. And he said when he

11:05

handed a personal check to Trevor, he

11:07

never got any paperwork at all to

11:10

sign. Nothing about risk whatsoever. All he

11:12

got was a Exxon stock certificate. I

11:14

was scared, but at the same time, I'd had enough

11:16

history with him and really his energy that I I

11:18

kind of trusted. You know, I just kind of

11:20

trusted his passion more than I

11:22

really knew about the underpinnings

11:25

of his

11:26

product.

11:29

Sir

11:29

Trevor Milton raised money for the company from investors

11:32

in his community. Next,

11:34

we'll see some of the things that the company was spending

11:36

its money on. After

11:38

the break, I'll take you to a silly

11:40

turn

11:40

right. One

11:47

day, the Metiverse will help students

11:49

learn about the Rings of Saturn, allowing them to get

11:51

up close to the planets and gain a deeper understanding

11:53

of how our solar system

11:55

works. The metaverse may be virtual, but the

11:57

impact will be real. Learn more at meta

11:59

dot com's slash metaverse

12:01

impact.

12:09

So remember

12:10

the big successful test drive that Trevor Milton

12:12

and Mike trout did in the last episode, the

12:14

one Mike told us about. Where an executive

12:16

from Swift Transportation figured out how much

12:18

money dehybrids tech could save on fuel.

12:20

And figuring in the price and the cost per

12:22

mile savings, he wrote sixty one

12:24

percent on that piece of paper in a warehouse.

12:27

Oh, wow. Everybody

12:29

was freaking out. They're like,

12:31

wow. A few months later,

12:33

Swift, of the biggest trucking

12:35

companies in the US signed a contract with the

12:37

hybrid. I'm holding a copy of

12:39

it. It's really Trevor Milton's first big deal with

12:41

a major company. According to

12:43

the contract, DE hybrid was given

12:45

two million dollars upfront. They

12:47

would need to test their systems on a handful of

12:49

swift's trucks. The stakes were

12:51

huge, If the systems worked well, it could

12:53

unlock a deal for hundreds more trucks,

12:55

potentially providing tens of millions of dollars

12:57

for their tiny startup. Their

13:00

tiny startup. That was how Mike

13:02

Shout says it had been promised to him,

13:04

a fifty fifty proposition, sealed with

13:06

a handshake in his kitchen. But

13:08

Mike says you learned soon after, that Trevor had

13:10

actually gone ahead and applied for a patent on

13:12

the system that Mike had put on Trevor's truck.

13:15

And this application, It listed

13:17

Trevor as the sole inventor.

13:19

And Trevor had incorporated the

13:21

company with himself in every leadership

13:23

position. that same week that he's up

13:25

there, filing. My design is

13:27

his design and saying that he's the inventor.

13:29

He has his lawyer to create

13:32

dehydrogen incorporated

13:34

and

13:35

he's the CEO and he's the

13:37

treasurer and he's the And the

13:39

original agreement was that it would be a fifty

13:41

fifty venture. That's how he got me to

13:43

to agree to do deal with them. How did

13:45

you shake? And it's in front of my wife. She's the only

13:48

witness. But why why the hell would I

13:50

even do this? If I didn't have equity in

13:52

it. Mike says he

13:52

refused to do more work on the technology.

13:55

And so Trevor relented.

13:57

Just a

13:57

little bit though, His lawyers

13:59

filed a new application listing

14:01

Mike Schrout as a co inventor. And

14:03

instead of a fifty fifty partnership, he gave

14:06

Mike some equity in the parent company, Lexom.

14:08

and offered him a fifty four thousand dollars a year

14:11

salary. Mike accepted. But

14:13

when the paychecks started coming in, Mike

14:15

says they were erratic, and not always for the full

14:17

amount. Mike's wife Miranda

14:19

says Trevor told them that

14:21

inconsistent paychecks were normal for a startup, that

14:23

they would make sacrifices in the

14:25

beginning but the Exxon stock would be

14:27

worth a lot more down the line. Mike's

14:29

paycheck came in monthly and I'm like, wow,

14:31

I can barely, like, pay the mortgage

14:34

and

14:35

and get groceries, but

14:37

it's

14:37

all for the cause. Right? Like, we're

14:40

building for our future. So,

14:42

okay, we just have to sacrifice now

14:45

because it'll pay off later. Right?

14:46

From

14:47

what Mike and Miranda Shout could see though,

14:49

Youpiller, the online classified ad company

14:51

Trevor ran, seemed to be spending a lot on

14:54

marketing. Around the time the Swift deal

14:56

came through, Miranda and Mike noticed,

14:58

A

14:58

lot of things seemed to change. Trevor was

15:00

buying things, not just trucks, but

15:02

things were showing up like

15:04

travel trailers. And he

15:06

got a nicer boat

15:08

looked really good parked right in the middle of the dehydrogen

15:10

factory too. And it said

15:12

u pillar on it. u pillar, AKA

15:15

Blackstone.

15:16

got a nicer boat hosted

15:18

the silly string event

15:20

in Salt Lake City. I'm

15:22

sorry.

15:22

Just what do you mean by a

15:24

silly string? event.

15:26

So Mike brings home this it

15:28

was like a printed flyer to

15:30

come to the world's largest

15:32

silly string event. silly

15:34

string event, it doesn't really

15:36

do it justice.

15:39

That's video

15:42

on you that the actual event itself, which

15:44

was called the countdown. In

15:46

the video, you can see what looks to be

15:48

thousands of people dancing and bouncing to

15:50

a d guy. Stabilites flashing deliriously,

15:53

while they're shooting eight thousand cans of silly

15:55

string on one another. It was all

15:57

sponsored by you color. And Trevor hoped it would set a

15:59

world record for the world's largest silly string

16:01

fight. Mike and Miranda

16:03

Shout, they said they weren't invited but they

16:05

decided to make the four hour drive to Salt Lake City

16:07

anyway to see what it was all about. We go

16:09

into

16:09

this warehouse and we're just

16:10

taking it in and

16:13

I'm just seeing dollar signs everywhere.

16:15

With all the printing that was

16:17

done, the

16:19

clothing, the advertised the

16:22

cases of silly string.

16:24

We

16:24

found footage of the

16:26

silly string event, and it also featured what

16:28

you feel are called money cannons. Multiple

16:31

guys on stage and u pillar shirts had

16:33

this long barreled tube that

16:35

blasted money over the screaming crowd. as

16:38

partygoers tried to snatch the bills as they

16:40

fluttered down. A promo video for the

16:42

event pledged that five hundred

16:44

dollars would be given away every ten minutes. With

16:46

the event scheduled to run from nine thirty PM

16:48

to one AM, if they stuck to the schedule,

16:50

that'd mean roughly ten thousand dollars.

16:52

In a few

16:53

weeks after that rig, Lexon

16:55

investors got an update from Trevor, celebrating

16:57

the event. One of them showed the email

16:59

to me. April twenty

17:01

eleven, quote, our hard

17:03

work is paid off. After two months of

17:04

planning and promoting, we had nearly three

17:06

thousand young men and women attend the

17:09

countdown. We broke the world record for the largest

17:11

silly string fight, handed

17:13

out u pillar advertising apparel to help brand

17:15

our name, and finish the night off with

17:17

the u pillar car giveaway. I asked

17:19

Rob Chambers, the Exxon investor, what he

17:21

made at his email. Rob, you'll

17:24

remember, was the investor who moved into a storage

17:26

unit. I guess I was kinda confused

17:28

thinking I don't know how that gets

17:30

us anywhere, but they gave away

17:32

like a car. I remember thinking,

17:35

man, I could really use a new

17:37

car. Did it seem like they were being

17:39

careful with your money as you

17:41

read those? I

17:43

didn't really feel that way. No.

17:45

And

17:45

then I remember the updates on

17:48

dehybrid were, yeah, like,

17:50

pretty mediocre. didn't

17:52

really give a lot of information. I

17:54

got my hands on dehybrid's financials from this

17:56

time period. And throughout those years, I could see

17:58

the truck company had loaned two point six

18:00

million dollars to on interest free. The documents don't

18:02

say what it was used for. Rob

18:05

Chambers says he never saw those financials,

18:07

but at the time, he and other investors I

18:09

spoke with were still excited

18:11

about the original vision they were

18:13

sold, the vision of a revolutionary semi

18:15

truck. Remember,

18:16

remember designing

18:17

a better semi truck was

18:18

a huge, huge business opportunity.

18:21

GE hybrid's financial documents showed that

18:23

the company was forecasting hundreds of millions of

18:25

dollars in profit within a few years.

18:27

In

18:28

this moment, dehybrid's projected

18:29

profits weren't going to happen unless the

18:31

technology was actually viable. And according

18:33

to Mike Shroud, the guy who built a

18:36

dehybrid prototype he said the

18:38

technology still had a long way to

18:40

go. He told us about one of the company's

18:42

first big setbacks. Mike

18:44

says Swift had asked the hybrid to

18:46

test its system with Swift's engine

18:48

manufacturer Cummins. Cummins

18:50

is one of the world's leading manufacturers of

18:52

diesel engines. In this test, it

18:54

wasn't going to be like the one we heard about

18:56

last episode. It wouldn't be scored by a guy

18:58

doing calculations on a sheet of

19:00

paper, but rather by expensive, highly

19:02

calibrated equipment. In

19:04

July of twenty ten, Mike Shout and

19:06

Trevor Milton flew to the engine maker's

19:08

headquarters for the test. Mike

19:10

felt like the system wasn't ready. It

19:12

was just a couple of months after he'd built the

19:14

prototype on his kitchen table. And

19:16

now, he found himself on the test track with some of

19:18

the best engineers in the world. So

19:20

you're you're alone in this truck

19:22

with the engineers and the testing guys. Four or

19:24

five guys. There's a driver. There's two or three of

19:26

these guys that actually help develop

19:29

sension and like, what am I doing here? This

19:31

is nuts. How do I not screw

19:33

this up? I'm not lying about a bunch of stuff,

19:35

but I'm not just blurting out, hey, I have no

19:37

freaking clue what I'm doing here and I don't

19:39

belong here. My shout out said that

19:41

unlike the first test, this one was

19:43

a disaster. The natural gas

19:45

system added plenty of power. Actually

19:47

too much power. It shredded the tires on the test

19:50

equipment. And not only was it too powerful, it

19:52

failed another critical test, They

19:54

do missions testing on this thing. And we

19:57

made them

19:57

twenty times worse.

19:59

Okay? think

20:02

the C02 was, like, two thousand

20:04

percent higher than normal and,

20:06

you know, oxides and nitrogen

20:09

were just stupid off the chart and just everything

20:11

was a skew. Like, this

20:13

is nuts. They had a absurd amount of

20:15

power, destroying equipment amount of

20:17

power, but We haven't saved the planet in you

20:19

guys. We just haven't. We asked Cummins

20:20

about this test. It declined to

20:23

comment, but we know in the end the company didn't work

20:25

with the hybrid. Sanati Hybrid was

20:27

on

20:27

its own. Mike Shout says that after

20:29

the big failed test, he was working feverishly

20:31

to solve the performance issues.

20:33

had to.

20:34

He'd put everything

20:35

into somehow pulling this off. But

20:37

he says he was told that there was no money for the equipment

20:39

he needed. Somehow, the hybrid,

20:41

despite the two million dollars advance from Swift,

20:43

seemed to be short on cash. Its

20:46

financial documents show that it only had four hundred and

20:48

fifty three dollars in the bank at the end of twenty

20:50

eleven. We weren't

20:50

very many months into it until

20:53

I'm hearing We gotta raise money. This

20:55

project's been expensive. You know, we gotta raise money.

20:57

Like, what do you mean? We gotta raise money. They

20:59

gave us two million bucks to do this. I don't

21:01

see two million bucks around here. I would

21:03

have spent most of it. I

21:05

was a guy buying the parts. I was a guy ordering

21:07

this and that and all that. Yeah. I

21:09

I didn't spend anywhere near that.

21:11

Mike started

21:14

to worry that perhaps something strange was going on

21:17

here. And Mike being a

21:19

natural archivist was saving documents.

21:21

like his pay stubs. He showed

21:23

them to me. You see him being paid by a

21:25

mix of company names. Every time I get

21:27

a little, you know, a little chunk of

21:29

change for monthly maintenance, It's

21:32

either at his account or it's from you pillar

21:34

or it's from Axon or it's from whatever. It's from

21:36

a whole bunch of different random bank accounts

21:38

and stuff. Sometimes it's me and my bank, I'll

21:40

do a withdrawal and just Super random.

21:43

On top of that, bikes paychecks

21:45

were continuing to shrink. By twenty

21:47

twelve, his tax returns show he got about

21:49

eleven thousand dollars from dehybrid for whole year.

21:52

And it's not around to flip on. But

21:54

I'm still busier than

21:56

ever been. I mean, it's not like

21:58

the work cut in half. The

22:00

work got worse. So Mike is working day and night

22:02

and his wife Miranda is working

22:04

construction to help keep the household afloat.

22:07

They told me a story about a very bad setback they had around

22:09

this time. And for me, what's

22:11

striking about it isn't the setback. It's

22:13

the reaction to it.

22:16

It shows how pretty much no matter what happened to

22:18

them. They both kept laser focused on

22:20

trying to make this dream of a new kind

22:22

of truck into a reality. the

22:25

So one day, Miranda is on the

22:27

job. Mike's

22:27

at work. I knew that he had

22:30

this deadline and it's four

22:32

fifteen and I fall. I

22:34

fall

22:34

into a basement hole and I break

22:36

my back.

22:37

I fracture three vertebraes.

22:40

At this time, I don't know that I have a

22:42

broken back. but I know that I

22:44

freestyle nine feet and I can wiggle my

22:46

toes, but I can barely breathe.

22:48

So

22:48

I I crawl out of this

22:51

basement hole. And

22:51

I honestly could not

22:53

bring myself to tell Mike

22:55

because I knew if he just had a

22:57

couple more hours to work,

22:59

He should probably get the deadline done and

23:02

he'll be able to help me for the rest of the

23:04

weekend. There's a

23:05

term

23:06

in business,

23:07

sweat equity. Basically, it's the

23:10

contribution of labor rather than

23:12

capital that people put in towards making a

23:14

business or investment succeed. And

23:16

I've heard some pretty wild stories about startups

23:18

and the sacrifices and sweat equity that

23:20

people put into them in their early days. But

23:22

I don't think I've heard anything quite

23:25

so brutal. And in the

23:27

end, all that work and

23:28

the broken bones, it

23:29

was all for not. By the end of

23:32

twenty eleven, d hybrid was in

23:34

rough shape. according to its financials. Remember that

23:36

two point six million dollars it loaned to its

23:38

parent company, Lexan? Much of

23:40

that, about one point nine

23:42

million had been repaid to dehybrid.

23:44

But the documents show that the truck company

23:46

ended the year with just over four fifty

23:48

dollars cash on hand. They don't

23:50

explain what happened to that one point nine million that

23:52

have been repaid. Dehybrid's financials

23:55

also show the company borrowed eight hundred

23:57

thousand dollars and paid more than forty

23:59

thousand dollars in interest on those loans.

24:02

One of those loans, it took from Trevor's father, Bill Milton.

24:05

We reached out to Bill Milton, who declined to

24:07

comment while his son's trial is

24:09

ongoing. And then in twenty twelve,

24:12

Dehybrid lost its major customer, Swift.

24:14

Two years after signing their deal,

24:17

Swift sued d hybrid. Swift said that

24:19

the trucks d hybrid provided for testing had

24:21

engine issues and didn't perform as

24:23

promised. And while Trevor was not

24:24

named as a defendant,

24:26

Swift alleged that

24:26

some of the two million dollar advance was spent on

24:29

dehydrates, quote, officers or

24:31

directors personal use and or other

24:33

purposes unrelated to

24:35

the technology. and quote.

24:37

Dehybrid countersuit,

24:40

alleging that Swift and its chief executive had

24:42

taken advantage of Trevor Milton,

24:44

quote, a young unsuspecting entrepreneur

24:46

and was attempting to steal

24:48

his company's trade secrets. Both

24:51

sides denied the other's allegations,

24:53

and they settled in twenty fifteen. Details

24:55

were kept private, but in the letter to

24:57

Exxon investors, Trevor wrote that dehybrid

24:59

received one point seven million dollars as

25:01

part of the settlement. But this is

25:03

one of those tough lessons that years later, Trevor

25:05

Wood's site is crucial in his becoming

25:07

a businessman who could raise more than a billion

25:10

dollars. For instance, Here he is on a podcast called

25:12

Rise of The Young. Saying that back

25:14

then, dehybrid had been doing great but got

25:16

involved with the wrong partner. We did really

25:18

well, but We

25:20

ended up with some intellectual property

25:22

lawsuits where we were, you

25:24

know, it was just a really tough time

25:26

in my life where we

25:28

where we ended up having to close that company down,

25:31

not because of our fault, but primarily

25:33

because people wanted our IP and they came

25:35

after us and sued us for it. didn't

25:37

have the resources or the people to

25:39

defend me at the time. That's the Trevor version

25:41

of the story. The none of the drama was

25:44

his fault. and that Swift was out to steal his ideas and his

25:46

IP. What is certainly

25:48

true is that by twenty twelve, operations

25:50

at d hybrid were starting to wind

25:53

down. The looming legal fights and debt really

25:55

were strangling Trevor's companies.

25:57

That may. Trevor texted Mike Shrout,

25:59

and it sounded dire. In the

26:01

text, Trevor wrote, quote, I feel like

26:03

you're

26:03

mad at me and I don't know why. I'm trying to

26:05

get

26:05

us out of this mess we are in. We owe

26:08

millions of dollars and no way to

26:10

pay it. End quote. The next month,

26:11

Trevor called

26:12

Mike. Hey, buddy. Yeah.

26:16

We're just Yeah. There's, like, no more

26:18

money and, you know, there's there's no there's

26:20

no money to pay you.

26:22

And I signed

26:23

up on A beaten

26:25

down mike sprout called it quits. He

26:27

was broke and his marriage was in

26:30

crisis. And just some two years after shaking

26:32

hands with Trevor Milton and his kitchen to

26:34

start a fifty fifty partnership. He

26:36

was left with no savings, a worthless

26:38

stake, and a failed company, and a hell of

26:40

a grudge. What Mike

26:41

didn't know? What most

26:43

of the investors didn't know is

26:45

that Trevor Milton was quietly building

26:47

himself a lifeboat. Within a

26:49

few months, he and his father, Bill Milton, would start

26:51

another company. And this new company sounded

26:54

a lot like the old one. It was called

26:56

Dehybrid Systems, LLC

26:58

instead of dehybridting. And it

27:00

took with it some of the natural gas tank

27:02

systems that Mike Shrout had been working on at

27:04

the original dehybrid. And the thing that

27:06

happened next was pretty remarkable. Trevor

27:09

would somehow roll the failures at

27:11

dehydrated into much more money, much more

27:13

investment, and a much larger

27:15

stage. In late twenty

27:17

fourteen, another big national company,

27:20

Worthington Industries, bought into the promise of

27:22

Trevor Milton. Worthington makes things like

27:24

the special steel tanks, the d hybrid

27:26

systems, LLC, was buying to store the

27:28

gas in their system, and it purchased a

27:30

majority stake in the new d hybrid

27:32

systems, LLC. for twelve million dollars in

27:34

cash. I heard from people

27:36

involved at both dehydrated systems and

27:38

Worthington that there wasn't much due diligence done

27:40

on deal. and that dehybrid's

27:42

technology ultimately had crucial engineering

27:44

issues and led to costly recalls. We

27:46

reached out to Worthington. It declined to

27:48

comment. after Trevor

27:50

negotiated the sale of his new company,

27:52

Dehybrid Systems LLC. News of

27:54

his successful exit reached some

27:56

of his early investors. The ones

27:58

who had invested in Exxon hoping to fund the new

28:00

truck technology. At this point, some

28:02

of those people I talked to thought that their long

28:05

awaited payoff had finally come. like

28:07

Rob Chambers, the college student who'd invested his

28:09

life savings with Trevor four years earlier.

28:12

After hearing about the sale, he heard that

28:14

some investors were getting paid back.

28:16

but he wasn't able to find out what the process was. He

28:18

asked his college roommate who'd first introduced

28:20

him to Trevor for advice on what to

28:22

do. He said the roommate told him to forget

28:24

about his money. he's

28:25

like, dude, your best option

28:28

is to write it off. You

28:30

know,

28:30

take take the tax write off

28:32

as a loss. Take pennies on

28:35

the dollar. We tried to reach the roommate but didn't get a

28:37

response. But Rob said at that

28:39

point when the roommate told

28:40

him that he wasn't ready to

28:41

just walk away. I was just

28:43

like, well, I'm gonna try my my

28:46

luck with Trevor. So I I actually ended

28:48

up calling Trevor, and I have

28:50

that audio recording. Oh,

28:53

Now now our eyes light up.

28:56

Yeah. Rob Chambers went upstairs to grab a

28:58

laptop with the recording. It's from

29:00

twenty

29:00

fifteen. a few

29:01

months after the multimillion dollar sale of the

29:04

second d hybrid. He

29:05

played it for us.

29:11

This is

29:12

Trevor. Hey, Trevor. How

29:14

are you doing? Good.

29:16

Awesome, man. This

29:19

is Robert Chambers. If

29:22

I don't ring

29:24

a bell Well, just give me a you mean, if

29:26

you can if you can hold on, I gotta get

29:28

off the line here. It's taking a minute. Okay?

29:31

I I can't. I need to talk to you

29:33

about it. I mean, I'm not not upset

29:35

or anything. And I know they they explained to

29:38

me that

29:38

you're working on. lot of talkers calling in a hold on

29:40

a second. Give me about thirty second drop off.

29:43

Okay. Thank

29:43

you. Hold on. One second. Trevor put him

29:46

on hold for almost two minutes.

29:48

And then Hi. On that what's going so who am I

29:50

speaking to? I'm sorry. I'm completely lost. Oh, no.

29:52

You're fine. This is my

29:55

name is Robert Chambers. Unlike

29:58

when

29:58

Trevor Milton first pitched Rob, when Rob said Trevor

30:01

remembered him from high school, he had to remind

30:03

Trevor of who he is and all their friends

30:05

in common. And then Rob got to

30:07

the point. He heard from a mutual

30:09

friend that Trevor had a plan to pay back his

30:11

investment. You guys are working on some

30:13

things to to pay back

30:14

those that needed

30:16

to be paid back or whatever. He said you're working

30:18

on something? Yeah. I mean, me

30:20

personally, I'm I'm, you know, working on buying some

30:23

people back. I a really useful meeting. You know, can't

30:25

do everyone

30:25

and want it. You know, we're

30:27

just it's it's not anything, like in

30:29

other words, what we're trying to do is just helps for

30:32

people out Rob

30:32

Chambers asked if Trevor could help him

30:35

out. What

30:35

can I do to get on that list?

30:37

Well, everyone's

30:38

on the list. I can't show preference as

30:40

to the random. Okay. So, I mean, there's

30:42

certain there's certain things. There's certain people that that

30:45

had, like, their stuff collateralized that

30:47

they come they obviously come

30:49

first, but since you're what I'm doing right now

30:51

is I'm working through, you

30:52

know, kinda depends on what kind of money I have and

30:54

and who I'm able to who I'm

30:56

able to do what, you know, to buy out at

30:58

the time Rob

30:59

asked about Trevor's deal with Worthington and wondered if

31:01

it meant that he'd get paid back from that money.

31:03

And I know the hybrid

31:05

was sold to Worthington. Correct?

31:08

No.

31:08

the No. The average

31:09

still operating as the average distance completely

31:11

different company that went to the

31:13

alternate, just doing natural gas tanks.

31:17

So so Well, that's a completely different

31:19

time. It has nothing to do with the hybrid

31:21

heat.

31:21

Okay. Well, III

31:24

don't I don't understand.

31:25

Rob told us he

31:26

was confused. Because for years, he thought his money

31:28

had gone towards a company called the hybrid, run

31:31

by Trevor Milton, that

31:33

did natural gas conversions on

31:35

trucks. But now he was being told that actually

31:37

the company that just sold for twelve million dollars

31:39

wasn't the dehybrid he had invested

31:41

in. It was called the hybrid systems, LLC,

31:43

run out of

31:44

same office, and making natural

31:46

gas delivery systems for trucks.

31:48

but

31:48

Trevor was telling him this new company had nothing to do with the

31:50

one that Robidsunk has life savings to do.

31:53

And public filings by Worthington

31:55

confirmed that. It purchased d hybrid

31:57

systems, LLC, a separate

31:59

entity from the other d

31:59

hybrid. So Rob just goes

32:01

back to the question that he started his call with.

32:03

A mutual friend had told him that there was a plan to pay

32:06

investors back. Could he get

32:07

on the list? He is the one that

32:09

told me that you guys have

32:12

some in the pipeline to get everybody paid

32:14

back pretty quickly. But

32:15

I Yeah. I think I

32:18

think I need to buy back as I I mean,

32:20

I can't do it when we got over eight million

32:22

dollars invested. Eight

32:23

million dollars. That's the only time

32:26

I've ever heard Trevor. acknowledge just how much money he

32:28

brought in from investors in those

32:30

years. The SEC documents filed in two thousand

32:32

nine show Exxon was only aiming to

32:34

raise two million dollars. No

32:36

subsequent documents were filed with the

32:38

SEC. By the end of the call,

32:40

Rob was left just trying to get any kind of

32:42

acknowledgment that he'd invested with Trevor Mountain

32:44

at all. He told Trevor he'd never

32:46

received his actual stock certificate. Just

32:48

for my situation, my

32:50

sake, can you look and see

32:52

you know, the documents that signed or maybe, like, send me

32:54

an email of, like, documentation of

32:57

it? Yeah. It's gonna

32:58

take honestly, it'll probably take me a good two

33:00

months to get there because commits

33:02

are in a different location. I'm I'm working at a

33:04

Salt Lake in that Columbus. They're all

33:06

in Phoenix,

33:07

Georgia. Yeah. I haven't I don't have those doctors.

33:09

I gotta go down and dig them out of the out of the

33:12

face. Okay. So it's a really big

33:14

process. The whole call,

33:15

not that long, just

33:17

fifteen minutes, but it feels like a slog.

33:20

And Rob says that when he hung up, he felt

33:22

sure that his forty grand was gone. I

33:24

asked him what it would mean to not get that

33:26

money back. Oh, dude. That was everything

33:29

I had. I was,

33:31

like, looking back on it, I was so stupid.

33:34

Who who dumps their life

33:37

savings into and do

33:38

a company that

33:40

isn't verified, like,

33:44

isn't publicly traded or isn't

33:46

doesn't have that behind I've

33:49

looked a little

33:52

defeated. When we talked, we were sitting at

33:54

his kitchen table. It had been a long

33:57

work day. supporting his two young kids and his wife. So I'm

33:59

gonna I'm gonna be working at nine to five

34:01

forever, man. I

34:04

don't have anything to fall

34:06

back on. This was the impact that losing all that

34:08

money had in Rob Chambers.

34:10

And Trevor said the company had raised so much

34:12

more. Eight

34:14

million dollars from investors who thought they were buying into the truck of the

34:16

future in Dehybrid Inc. or soon to

34:18

be competitor to eBay and

34:20

New Pillar. Darren

34:22

Brooks, the friend of Trevor's who

34:24

after a late night phone call borrowed money to invest

34:26

in Exxon, he was also trying to get his

34:28

money back. In

34:30

twenty fifteen, after swift and the old dehybrid settled their

34:32

lawsuits? Trevor wrote emails to some Exxon

34:34

shareholders, offering investors a small

34:36

cut of the settlement proceeds. If

34:38

the investors agreed

34:40

to give up any legal claims they had against Trevor and his father. Darren

34:42

read to us from that email. We wish

34:44

to make each of the remaining stockholders

34:46

the offer noted below which is

34:48

contingent upon receiving a full release of any claims that you feel you

34:51

may have against me, my father, Alexander Hybrid.

34:53

Let me be clear that I do not believe

34:55

that there are any bases what soever

34:57

for any such claims. And this is simply an

35:00

effort to try to help repay those

35:02

that have invested and waited so

35:04

patiently for so long. So We know it does not

35:06

represent the full amount you've invested, but it's a

35:08

lot better than just calling it quits and losing

35:10

everything. This offers above and beyond

35:12

what is obligated in the

35:14

fiduciary duty. Darren

35:16

came to the offer for his amount based on the thirty

35:18

thousand dollars he'd invested more than five years

35:20

earlier. Here's my proportionate

35:22

payout amount to the stockholder.

35:24

nine hundred and thirty one dollars and six cents. In

35:27

return for an original investment

35:29

of thirty thousand.

35:32

I mean, it's just a slap in the face. Right? Like, that's that just

35:34

doesn't make any sense to me. It just doesn't make

35:36

any sense at all to me. Darren

35:39

refused the deal. Rob Chambers

35:42

got a similar offer and also refused

35:44

it. In twenty

35:46

nineteen, Darren got another offer. Trevor

35:48

would repay him fifteen thousand dollars, half of what he had invested. And

35:51

Trevor sent him an email saying the

35:53

offer was, quote, out of the

35:55

goodness of my heart. End quote.

35:57

Darren accepted. A few months

35:58

later, he saw an article that

35:59

Trevor bought the most expensive home in Utah

36:02

for thirty two

36:04

million dollars. As

36:06

we were finishing this episode, Darren received another letter from a lawyer

36:09

representing Trevor, offering another fifteen

36:11

thousand dollars. Again, The letter

36:13

specified that Darren would waive all potential claims if he

36:16

took the money. He told us he's

36:18

discussing it with

36:20

a lawyer. The stories we heard from early investors and partners and businesses

36:22

were a lot different than the stories Trevor

36:24

himself tells about those days. Here he

36:26

is back on the truck show podcast.

36:29

shortly before Nikola went public in twenty twenty, talking

36:31

about how his failures made possible what would

36:33

come later. Then I finally

36:35

got my break. I

36:37

sold my hydrogen storage company to a group called Worthington

36:39

Industries. And that's what propelled me in

36:41

my life to build

36:44

Nikola. Just

36:45

to clarify, the hybrid systems LLC sold

36:47

storage systems for natural gas, not

36:49

pure hydrogen. because at that

36:51

point, I had money. and I

36:53

was able to pay off all my debts. I went back and I actually paid off

36:55

a lot of my old investors that were that were in my old companies

36:57

that failed and I didn't

37:00

have to do that. I was like, I made amends. I was like, you know what? I'm gonna

37:02

even though I'm not obligated to do it, I want you

37:04

guys to know that I know how much your money

37:07

meant to you. Did

37:08

any of these people come back to you? Did you did you was that relationship

37:11

building where they were, obviously, people get their money

37:13

back, but did I believe many of them tried to sue

37:15

me again? It it was really

37:18

a hell. Wow. You go no good deed. You ever goes unpunished in

37:20

this life. But you know that you did the right

37:22

thing? Hell yeah. You know

37:24

what? I woke up. I never felt better in my life.

37:27

Last episode,

37:34

Mike Shroud couldn't possibly imagine that the young alarm salesman who

37:36

charged him ninety nine dollars for a free alarm install

37:38

could ever be in charge of a company

37:40

with a multibillion dollar market

37:43

value, doing deals with GM.

37:46

Now,

37:46

Darren Brooks and

37:47

Rob Chambers say they couldn't possibly

37:49

fathom, but the man that they had

37:51

invested with would be a billionaire within a few years.

37:53

But they didn't have Trevor's vision.

37:56

Trevor still had his big idea. The

37:58

locomotive semi truck and he

38:00

was about to share it with

38:02

the world.

38:08

On the next episode of Bad Bets. Trevor starts

38:10

building Nikola and a new truck,

38:12

and a pivot to hydrogen leads

38:15

to its biggest sales patchy. Ask

38:17

some of the engineers, like, what's the plan for hydrogen? And they're

38:20

like, we have no idea.

38:22

We have no

38:24

hydrogen anything we're

38:26

on. He's telling everybody

38:28

all these diplomats and governors,

38:30

a big fat lie. And

38:32

Nikola goes public with Trevor at the

38:35

helm. So

38:35

I think the first time I heard

38:37

about Nikola was someone saying to me this

38:39

is gonna be the next Tesla.

38:41

I just see this like,

38:43

Nicola stock, something something higher market cap than Ford.

38:45

I'm like, wait, Nicola. Like Trevor,

38:47

Nicola. Like, what?

38:50

That episode is out next week October first. Bad bets is a

38:53

production of The Wall Street Journal. This season

38:55

is produced with Jigsaw production in

38:57

collaboration with Storyforce Entertainment.

39:00

This episode is hosted by me, Ben Foldy. The series

39:02

is directed by Sruthi Pinemon eighty.

39:04

Scott Saloway is the supervisor a

39:08

producer. Ken Brown is WSK's financial enterprise editor.

39:11

Shane McKeehan, Frank Matt, and

39:13

Garrett Graham are the producers. editorial

39:16

consulting by PJ Boat, pack

39:18

checking by Elizabeth Moss, sound

39:20

design, original composition, and mixing

39:22

by Armin Bazarian, For The Wall Street

39:24

Journal, Daniel Rosen is the co

39:26

executive producer of WSJ Studios. Ben

39:28

Waltman is the senior

39:30

executive producer. For jigsaw productions, Stacey Hoffman and Richard

39:32

Perrello are executive producers. For

39:34

Storyforce Entertainment, Bli Pagan Faust and

39:36

Cory Sheppard Stern

39:38

are executive computers.

39:40

Special things as well to WSJ Charles

39:42

Farrell, Jamie Heller, Brent Kendall, Christina

39:44

Rogers, Corey Ramey, James

39:46

finale, Mike Kalias, Rick Brooks, Emma Moody,

39:48

and Jessica Fenton. If you're enjoying the series, please take

39:50

a moment to subscribe and rate us

39:52

on your favorite podcast platform. And

39:55

thanks for listening. See you next

39:57

week. Welcome to Free

40:00

Xression. A

40:01

new podcast from The Wall Street Journal

40:03

with me, Jerry Baker, editor

40:05

at large of the Wall Street Journal. So podcast in which we're

40:08

gonna be trying to do something a little different, dig

40:10

a little deeper into the

40:12

issues behind the headlines that are in

40:14

the news all the time. So please

40:16

join me for my new podcast free expression with

40:18

Jerry Baker at The Wall Street Journal. We're very

40:20

much looking forward to really having some fascinating

40:22

conversations and I very much hope you

40:24

join us.