Elon Musk Didn’t Just Leave Delaware — He Started a Stampede

Tiny Delaware is a corporate behemoth, but the trickle that began with Elon Musk — as so many things do — is now a flood worth more than three trillion dollars in corporate value. "Since 2024, over 61 companies have left or filed to leave Delaware," Leave Delaware reported on Thursday, including "Tesla, SpaceX, Coinbase, Roblox, Dropbox, Simon Property Group, Dillard's, and Fidelity National Financial."

An additional seven "pending shareholder votes are scheduled in the next two months" to reincorporate elsewhere.

Delaware’s business-friendly reputation is why the state has just about one million residents, but two million registered business entities.

That is, until the state's corporate-focused Court of Chancery twice denied Tesla's proposed pay package for Musk, even though it was fully shareholder-approved. The decision was exactly the kind of nanny-statism that companies incorporated in Delaware to avoid.

So Tesla reincorporated in Texas — Wall Street firms have major outposts there now, too, as well as in Florida — and SpaceX quickly followed.

Serving as a corporate P.O. box accounts for as much as one-third of Delaware's state revenues. But clearly that's changing almost as quickly as the Court of Chancery sabotaged the state's reputation in a fit of suicidal pique over Musk's politics.

Today's news goes back to something I've written about California several times over the last five or six years.

The Big Tech firms that dominate Silicon Valley — and whose profits and income taxes keep Sacramento afloat — likely aren't going anyway. I'm talking the real big boys like Alphabet (Google's parent), Meta (Facebook), and Apple. Steve Jobs didn't devote so much effort while he was dying to get the company's five-billion-dollar "spaceship" headquarters designed and approved, just to have Tim Cook hang a "For Rent" sign on the front door someday.

But their Bay Area footprints haven't grown very much, while all three firms have expanded out-of-state in big ways. Meta alone plans hundreds of billions worth of new U.S. infrastructure by 2028, mostly in states like Texas, New Mexico, Indiana, South Carolina... pretty much anywhere but business-hostile California.

While those massive HQs aren't going anywhere, the problem California Democrats have yet to recognize, at least publicly, is where the next Apple, Facebook, or Google pops up. Tech firms almost always go from Too Big to Fail to Too Big to Innovate. It's almost a sure thing that the next generation of startups — the ones that turn today's giants into tomorrow's also-rans — will launch in Texas, North Carolina, or... well, pretty much anywhere but business-hostile California.

But that's in the medium-to-long term.

What's amazing about Delaware's "bad luck" is just how quickly things began to unravel. It's been more than a century since Delaware became the favorite place for businesses located anywhere to incorporate, thanks to expert Chancery Court judges, predictable corporate legal precedents, and a light regulatory touch. The First State quickly became the legal home for most Fortune 500 companies. No factories. No fancy headquarters. Just a P.O. box.

California's growth stalled a decade ago, and unless the business climate improves, the Bay Area will get slowly nibbled to death by out-of-state upstarts.

Capital finds a way, to misquote Dr. Ian Malcolm.

But as Elon Musk could tell you — and probably did, if you follow him on X — it's a helluva lot easier to move a corporate P.O. box than it is to relocate a billion-dollar HQ.

Delaware forgot that. The exodus has begun.

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