Back in 1999, a relatively unknown 28-year-old entrepreneur named Elon Musk was filmed on the streets of Palo Alto with his fiancée, Justine Wilson, for a CNN special acknowledging the burgeoning technology bubble emanating from Silicon Valley. The young Musk actually looks something like what one imagines an old Musk may look like a few decades from now—hunched, balding, poorly dressed in an oversized blazer stolen from an AARP ad. But it’s easy to recognize a devilish streak clearly evident today. At the time, Musk had recently sold his software company, Zip2, for $400 million, a fraction of which he had spent on a present to himself: a McLaren F1. The CNN cameras observed the car being offloaded from a truck, and an excited Musk looking at his new toy in awe.
Some time later, as the fable now goes, Musk was trying to show off how fast the car could go to Peter Thiel, his friend and co-founder of PayPal. Musk hit an embankment, sent the car several feet into the air, and almost totaled it. The part of the story that Musk now likes to tell with a little chuckle, and a lot of pride, is that he had “forgotten” to insure the car when that happened. Oh well!
Recently, Musk appears to have demonstrated a similar blithe recklessness at Tesla. During the past year, Musk tweeted an April Fool’s joke about Tesla going bankrupt; he referred to the man who rescued the kids trapped in a Thai cave as a pedophile; and he broke down in tears during a mildly deranged interview with The New York Times. All this stoked outrage and vexation across social media, but he inarguably crossed a line when he tweeted that he had secured the financing to take Tesla private—the sort of attention-grabbing ploy that the S.E.C. and institutional investors don’t find amusing.
Over the past week, Musk has faced the recriminations for his actions. He went from being sued by the S.E.C. for allegedly making “false and misleading” statements to quickly settling with the organization after it became clear that a protracted fight could cost him everything. Under the terms of the agreement, Musk will be allowed to remain C.E.O. but must resign as chairman of Tesla’s board and pay a $20 million fine. Tesla will also pay another $20 million fine, and must appoint two new independent directors to its board. (He can return as chairman in three years.)
At Tesla, there are three common themes among current and former employees I’ve spoken to about Musk. First, many truly believe that Musk is brilliant—a technical genius, a Renaissance man like Einstein or Teddy Roosevelt, who can solve massive problems almost extemporaneously. Second, many people seem to agree that Musk is also incredibly erratic. The employees who love Musk (and there are plenty), say this is just part of his brilliance. He is a mad scientist who is a little too electrified himself, prone to arrogance and egomania. Then there’s the third theme, which happens to be the most pervasive. There isn’t a single person that I’ve ever spoken with who works with, or has worked with, Musk, who doesn’t wish that he would just stop using Twitter. There have been almost half a dozen high-level employees at Tesla who have always cringed when Musk withdrew his phone and started tapping out 140- and 280-character missives without any control or oversight.
The integral part of Tesla’s settlement with the S.E.C. may assuage these concerns. As the settlement specifically notes, Tesla must “implement mandatory procedures and controls to oversee all of Elon Musk’s communications regarding the Company made in any format.” And any format means Twitter. This single stipulation might end up being the company’s biggest saving grace, and could even help end the mass exodus of executives over the past year.
From the outside looking in, it appears that Musk is the kind of person who doesn’t like losing, or being told what to do. As my colleague Maya Kosoff has reported over the past year, Musk’s indiscretions exceed what I’ve delineated above. He has repeatedly gotten himself into trouble berating analysts; going on Trumpian rants against the media who reported facts Musk didn’t like; picking fights on Twitter with reporters who cover his company critically, and even occasionally accusing them of being in cahoots with short-sellers. So when the S.E.C. told him they wanted him to step down as chairman of Tesla for two years and pay a $10 million fine, which was the first request the oversight group made, Musk said no, forcing the agency’s hand.
But there’s also another theory about why Musk acts out. One that a former Tesla investor told me was why he pulled out of the company: he thinks Musk is more concerned with being famous than with building a successful business that stands the test of time, like Ford or General Motors. “In a similar way to Trump, Musk is someone who loves attention. They are the kind of people who love to be famous,” the investor said. In his mind, “Musk smoked that joint on Joe Rogan to create a buzz. All publicity is good publicity, and the only thing he’s scared of the most is when you’re not talking about him.”
Musk isn’t Henry Ford, this person contended; he’s Kanye West, a star addicted to his own stardom who pulls the indecent levers of social media to amplify his audience and stroke his ego—someone who will “do or say anything to the detriment of their lives, their companies, and the rest of us, as long as people are talking about them.” Ironically, as I type these words, it’s still working. As someone joked (I think it was a joke) on Twitter, “That tweet cost him approximately $327,868 per character.” One could say that’s a lot of money for a lot of nothing, but for Musk it was the cost of doing business to purchase a news cycle. “Musk’s erratic behavior isn’t going away because the attention he receives when he acts out isn’t going to go away,” a former investor told me.
But it seems that not all the investors in Tesla understand that. On Monday, after news of the settlement with the S.E.C. was announced, Tesla’s stock shot upwards by almost 50 points, a sign that investors are happy with the S.E.C. settlement, happy with a chairman that isn’t Musk, and likely even happier that Musk can’t make the stock go sideways with a single tweet. There are plenty of opportunities out there for investors, without having to deal with the erratic behavior of a C.E.O. who doesn’t seem to care if he totals his company. As I watched it all play out, I was reminded of a comment that Musk’s former fiancée made in that old CNN special. “My fear is that we become spoiled brats,” she said, “that we lose a sense of appreciation, and perspective.” Turns out, she was right about all three of those predictions.
