Tesla’s Chair Needs To Get Five Things Right To Succeed

Newly-minted Tesla board chair Robyn Denholm’s real title is Elon Musk’s alter-ego - someone he can bounce ideas off and keep him out of regulatory trouble.
Tesla chair Robyn Denholm.

Well, that didn’t take long.

Two hours after Tesla announced Robyn Denholm’s appointment as independent board chair, Musk tweeted that he would like to “thank Robyn for joining the team.”

That sounded a bit off key, especially to governance minded readers at the SEC. Boardroom etiquette requires that chief executives keep a respectful distance from their independent board chairs, and this is very much what the SEC had in mind when it tossed Musk out of the chairman’s role and had him fork over $20 million Muskolians. When the latest tweet was released, Car and Driver called him the ‘famously mercurial’ Elon Musk, and the corporate governance fraternity muttered to itself, will she be independent? Will she even be a chair?

Musk’s Alter Ego

The answer is yes and no, and that’s precisely why this is a good move. Announcing that an independent board chair is joining the team is bad form, as Denholm was technically on the board or in Musk-speak, already on the team. It was also wrong optically, akin to John Henry calling out that he’s glad the first base umpire is joining the Red Sox, a hybrid of frat bro and overseer.

But Musk’s casual comment belies a more profound significance for Tesla. Denholm is not going to be an independent chair in the mold of Ira Milstein, preaching the conventional wisdom that good governance holds its highest praise for a hands-off mentality by the CEO, a sense that pervades the American boardroom today. Every disaster from Enron to VW emissions and even to privately held Bernie Madoff can demonstrate obeisance to the grand dicta of the governance community. By the book, all the way to the bank, and then to the hoosegow.

Denholm’s real title is Musk’s alter-ego. The tech visionary and design wunderkind needs someone he can bounce ideas off, keep him out of regulatory trouble in the Twitterverse, and make sure the cash flow stays abreast of the production schedule, so Musk can focus on what he does best, create great cars.

And that is what Tesla needs in an independent chair.

Model T to Model 3

For Tesla, the fastest growing automotive concept in history since Henry Ford designed the Model T in 1908 for $850, the care and feeding of its visionary chief executive and designer is paramount. The company has just surpassed Mercedes Benz and is scheduled to launch ahead of BMW by year’s end. Like the Model T Henry Ford introduced in 1908, Musk is working on the lower end of the car spectrum with the Model 3 which rhymes, coincidentally with Model T. It is interesting to note that Musk’s version will retail for $35,000 which is barely 30% higher than Ford’s T in today’s dollars.

Musk has a vision and a dream, and Denholm is there to make sure it doesn’t turn into a mirage and a nightmare. Keeping him out of trouble and away from his worst tendencies is job #1, but Muskologists are wondering aloud, how does she do that?

Denholm needs to develop what I call the five gets. I speak from the perspective of someone who has served on a dozen public boards in my career, and coincidentally, was CEO of Musk’s first startup, Zip2, which he sold and used to pay for the PayPal launch.

Get credible. Wall Street (and the SEC) is watching her every move.

The board chair has to be an iron-fisted charmer to maintain the company spirit but keep an eye on the temptation to manipulate numbers.

Get a board. By which I mean a real board. What Denholm needs even more than Musk’s approval is a group of heavyweights who can back her up at times when the Tweeter in chief is mucking around.  Alan Mulally and Boeing’s Jim McNerney come to mind. And, if he can be coaxed out of retirement, I would advocate for Jeff Immelt.

Get technology. Musk has real faith in Denholm’s technology savvy, and her roles at Juniper and Sun suggest she earned her way up the ladder the hard way, from finance to the stars. He needs someone who gets his madness and his vision, so he doesn’t have to slow down to explain things.

Get control. Denholm’s role as COO of Telstra has given her a window into network buildout, capacity, and regulatory issues, which Musk needs to align his production fantasies with cash flows and financing.

Get a life. Denholm is giving up her day job in Australia to take on this assignment. She sees Musk as a godlike chief executive. That’s stimulating but dangerous. He can be ever so captivating. His first wife once said, “it’s Elon’s world. The rest of us just live in it.” Denholm should understand the job is a life changer; her investors don’t want it to be a life destroyer.

RelatedElon Musk’s Cry For Help


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