Despite reporting its best-ever quarterly results last month, Tesla’s stock has nearly fallen 40 percent since early April. That’s not the way this stuff usually works. When companies tell investors they’ve made a lot of money and expect them to continue to do well, their stock price usually goes up.
Right now, Tesla literally can’t make cars fast enough to meet demand, which isn’t great, but still — a lot of people want to buy Teslas. That is certainly a good thing if you are an investor. Of course, that’s not really why Tesla’s stock price has fallen.
Tesla’s real problem has almost nothing to do with its cars. Tesla makes great cars. (I speak from experience – I have a Model S, and it’s great.) It’s no problem selling to anyone who can make it. That’s largely because its CEO, Elon Musk, is one of the most effective salespeople of all time.
It’s pretty well known that Tesla doesn’t have a marketing budget or PR team. Instead, it simply relies on Musk to promote the company — which he largely does on Twitter. It has been an effective strategy as the company has become the most valuable automaker ever.
At the same time, relying entirely on the tweets of a chaotic personality like Musk is risky. Sometimes the things he tweets are funny, like memes or fart jokes.
On the other hand, sometimes the things he tweets aren’t good for the business. Sometimes they are insulting. Sometimes the things he tweets aren’t true. Sometimes the things he tweets securities fraud†
None of that bodes well for the CEO of a publicly traded company of Tesla’s size and reputation. At best, those things are a distraction.
Speaking of distractions, you know what else happened in April, the same month Tesla reported its record profits and saw its stock price plummet? Musk said he was going to buy his favorite toy – Twitter – funded in part by a loan guaranteed by his Tesla stock. Investors were definitely not excited about that distraction.
Add to that Musk’s very public spit with Twitter about things like content moderation or whether the company is lying about the… number of spam bots that are part of the daily active users that can be monetized. Then there’s the recent report that Musk’s other company, SpaceX, paid $250,000 to… dismiss a sexual harassment allegation† It’s all a distraction, and it’s getting worse for Tesla.
Look, Musk is clearly very invested in Tesla, and I’m not just talking about the stock he owns. Tesla is the thing he says he’s most passionate about, and he’s somehow managed to achieve what no other automaker has: making electric vehicles something people actually want to buy. Musk was able, by the sheer force of his will, to make Tesla succeed.
However, there are an increasing number of people who are turned off by Musk’s antics. Many of those people will not buy a Tesla because of Musk. That’s an obvious problem. It turns out that the thing that made Tesla so successful could also be his downfall.
In the long run, Tesla is not Elon Musk. He does not own Tesla. He owns part of Tesla, but so do millions of other people. Obviously Musk owns more of Tesla, which is why he is the richest man on Earth. But one day there will be a Tesla without Musk. One day someone else will run the business and if it goes well, it will be all right.
Musk’s job is to do the right thing for all of Tesla’s owners — its shareholders. Sure, some of those shareholders bought Tesla just because of Musk. They don’t care about Tesla at all, except that it’s the world’s most valuable meme stock. However, some of them expect it to do things that businesses should be doing, like making money.
They expect him to be a good steward of the company. They believe in its mission and believe it is important to the world. Right now, many of Musk’s extracurricular activities distract from that mission.
To be a steward is to manage something on behalf of someone else. That is actually the job of every CEO. It’s also his or her toughest challenge, especially when they’re running a company they’ve founded.
Knowing where the line is between yourself and your business is difficult when you’ve put everything into it. Sometimes, though, the best thing you can do is recognize that the thing you built would be better off entrusted to someone who was able to be a better steward.
Look, there’s no doubt Elon Musk won’t listen to me. He has no reason at all. However, if he did, I’d tell him that if he really, really cares about Tesla’s future, it’s time to find someone who can be the leader he needs without all the distractions.