When Elon Musk puffed a joint on Joe Rogan’s podcast recently, shareholders were relieved to know he was just high and not nuts.
There are three types of billionaire chief executives. The kind who change the world. The kind that, in a moment of inspired determination, announce plans to take a $45 billion iconic automotive giant private by tweeting “funding secured.” And then there is the kind who announce the next day, “staying public.” What makes Musk interesting to business writers and frustrating to everyone else despite his brilliance is he neglected a few minor details like asking his board or the SEC.
Was this the guy who launched a global car company without a dealer network or an ad agency, and ran a rocket launch company at the same time that was heading to Mars? Or is this a new age chief executive letting off steam? Or is there a more significant problem, one that fundamentally threatens Tesla and its shareholders?
Musk does two things well. He is a brilliant founder and startup chief executive of private companies. The second thing, he can match design smarts with production savvy and can build anything he can dream. He reminds us of another great industrial designer, Steve Jobs. The Apple co-founder also had two true strengths. Jobs put together a stellar board of directors who knew his strengths and weaknesses. Secondly, Jobs cultivated a team of rivals like Jony Ive and Tim Cook, both reliable perfectionists who would pick up the pieces and make everything fit together.
Musk needs help. Chief executives aren’t the only people in the world without a helmet who suffer from PTSD. The mind has a mercurial relationship with stress. Too little, we get mushy, too much and we lose it. Musk seems to be dealing with a seismic overload.
On Joe Rogan’s podcast, he admitted that inside his head is “a never-ending explosion” and the world he inhabits sees things as “very difficult” or “nobody listens.” There were inspired moments in which he played with a flamethrower and a samurai sword as he waxed or ranted on subjects from AI to production ratios. Musk came across like an emotional basket case with a CEO problem. Podcast listeners weren’t the only ones thinking that either.
Two days ago, Tesla chief accounting officer Dave Morton, a former CFO for computer-drive maker Seagate Technology, handed in his resignation after one month on the job. If you spend time in the C Suite, the least flashy person in the room is the CAO. His or her office usually has four pictures of a spouse and children, and they leave before 7 pm only for parent-teacher meetings. So when the CAO chucks a career for no discernible reason, read the smoke signals.
Morton said that “level of scrutiny” is what caused him to “reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its prospects, and I have no disagreements with Tesla’s leadership or its financial reporting.”
Isn’t that what the junior officer told his crew on the Titanic, “we see nothing but icebergs but they appear to be of no threat.” There is another question that goes to the heart of the problem as well: What was the board doing?
Musk Must Stay
The Musk boardroom is a quiet place based on the caliber of Tesla directors. If shareholders are looking for adult supervision, they won’t find it here. Tesla’s nine directors, including Musk, is composed of three venture capital cronies, and his brother Kimbal, so majorities are a cinch. Then, a former employee, a few diversity candidates, and although they may be great board members, they often do not challenge the status quo. That leaves us with James Murdoch, a half-celebrity, half business tycoon. Where’s the beef?
Although the board appears to have all the potential signs of weak corporate governance, there is hope for shareholders. One never knows how good the board of directors is until it’s in the line of fire. When things get crazy, boards fall apart and leave or hunker down and create an island of sanity. Or because they are weak, they work harder to reignite the chief executive, and in this case, that is the right decision. Because there isn’t anyone with Musk’s talent and vision. The board oversees a car company run by a once-in-a-thousand-year leader who has personally built the most iconic auto brand in the world today, a production schedule that is so grueling he has to smoke pot to keep it together.
So Musk isn’t going anywhere, or at least not right away.
It means the board has only one choice: get the CEO under control. They will need to reach deeper to find the guy who sold his first startup, Zip2 (I was CEO after Musk, by the way) to pay for the founding of PayPal, took those proceeds to start Tesla and SpaceX. The board needs to have the talk, a once a year session with the chief executive and no one else. Off the record, offsite, a full day of conversation about the future and, in Musk’s case, the past.
Related: Elon Musk’s Cry For Help