When CEO and Company Are Synonymous, Risks Can Overshadow Rewards

Like an auteur of the 1960s and 1970s, I feel compelled to revisit certain themes, not so much to repeat them as to explore them further.

An early composition on this forum dealt with the evolving behavior of ultra-rich industrialists. In the age of the Robber Barons, the obscenely wealthy business class had the decency – and, frankly, an unerring sense of self-preservation – to maintain a relatively inconspicuous public profile. They didn’t want to be in the firing line, nor did they want the public to know too much about them.

Even in later epochs, masters of commerce and industry were more than content to confer celebrity and fame on their hired help — the actors, for example, who worked for RKO Pictures, which was owned by the immensely wealthy and increasingly reclusive Howard Hughes. Meanwhile, the magnates making the big money were more than content to sit in well-appointed smoke-filled backrooms, drinking scotch on the rocks and puffing imperiously on Cuban cigars. They fully reaped the rewards of their business enterprises, and they saw no need to attract undue attention, which could only bring more downside than upside.

Celebrities, who had to work for a living, might adhere to the adage that there’s no such thing as bad publicity, but the richest of the rich knew better. When you’re in the spotlight, you get scrutinized. Even worse, you lose whatever mystique you might have cultivated or affected. Light is a powerful disinfectant, and the brightest lights reveal every imperfection. Suddenly, you’re not the business genius everybody thought you were when you were pulling strings from the shadows, ensconced in plush wingback chairs behind elegant mahogany doors. Now everybody can see that, despite your success, you’re as human as everyone else.

Strangely, however, today’s billionaire tech moguls have walked, or run, toward the blinding lights of fame. The piercing brightness has shorn them of any enigmatic charm. We’re left to consider the obvious question: Why did they succumb to temptation?

Perceptive observers and pundits have their theories, as they always do. Some think the tech billionaires’ attraction to the limelight results from the seemingly irresistible pull of social media. Even the most privileged and rich among us, the theory goes, cannot resist the temptation to accrue more power and wealth by engaging with an adoring mass audience.

In the Shadow of the Celebrity CEO

Other theories relate to the egotism and narcissism to which the exceptionally successful, recipients of fawning deference, are sometimes subject. Whatever the reason or reasons, we can say definitively that we live in the age of the celebrity CEO, quite a different beast from its ancestors.

Perhaps nobody personifies the celebrity CEO more than Elon Musk, who is nominally the CEO of multiple companies while apparently living full-time on social media. What time-twisting trickery allows Elon Musk to discharge his executive responsibilities while talking nonsense and trolling endlessly on social media? Is there more than one of him, perhaps multiple robotic Elon Musks designed and manufactured at Tesla factories? Probably not.

All of us pass through and experience time, but there’s only so much of it in a day. How does Musk bound in so many directions within the finite constraints of time? Well, the simple answer is that he doesn’t. Elon’s day and yours spans 24 hours, and we all need a complement of sleep that takes away a quarter to a third of that time. You can do the rudimentary math. How much work do you think he’s putting in at all these companies, if he’s also playing around on social media and schmoozing like a real-life Tony Stark for most of his waking hours?

Do shareholders of Musk's companies ever wonder whether they’re the victims of an executive rug pull, a bait-and-switch ruse in which they were sold a transcendent entrepreneur with the Midas touch, only to discover, to their dismay, that what they really got was a social-media shitposter and relentless bullshit artist who spends as little time as possible discharging the responsibilities for which he is so amply compensated? There’s a point — isn’t there? — at which shareholders need to ask themselves whether they’ve been deceived. With regard to Musk’s absentee stewardship of Tesla, we blew past that point several quarters ago.

For Tesla’s presumably still-smitten shareholders, the situation was concerning well before Musk decided to join the Trump Administration (Part II). As we know, the situation went from bad to much worse. In a flash, the AWOL Tesla CEO spent nearly all his time at Mar-a-Lago and the White House, running the quasi-official and wholly disruptive Department of Government Efficiency (DOGE). DOGE: The juvenilia of the acronym reaches for humor, but can only grasp nose-picking insolence.

Musk presumably perceived a self-interested benefit in jumping aboard (and largely financing) Trump’s ramshackle electoral bandwagon, but it’s all gone wrong for Tesla shareholders, who watch in car-crash horror as their shares plunge in value and Tesla’s image suffers potentially permanent damage from Musk’s seemingly endless spree of senseless brand vandalism.

When they were ascending the mountain, striding confidently into the thin air of higher altitudes, Tesla shareholders celebrated the synonymity of Musk and Tesla. Many who invested in Tesla did so because they were betting on Musk. They thought he was a sure thing, but, as one learns growing up with degenerate gamblers, there is no such thing as a sure thing. Shit happens, and the craziest shit can happen when you least expect it. In Tesla’s case, the madness materialized in the disheveled form of a rogue CEO who suddenly bolted down a murky graffitied alley of baseless conspiracy theories and rabidly partisan political memes.

Gratuitous Value Destruction

As I’ve said many times before, predicting the future in anything more than general directionality is a fool’s game. How could one have predicted, just a few short years ago, that Elon Musk would spin so far off the interstate that he’d irrevocably alienate Tesla’s target market of environmentally conscious liberals? The damage he did to Tesla was self-indulgent and self-inflicted, utterly gratuitous in every respect. Musk did it to himself, though he steadfastly refuses to accept responsibility for driving his company off a cliff and into a flaming abyss. Instead, he blames others, including people who weren’t even remotely in the proximity of his misdeeds.

None of what Musk did was necessary, and none of it would have happened in a properly run company, which Tesla, as currently constituted, is not. A serious board of directors, rather than a bench mob of sycophants — nearly all of whom are beneficiaries of cronyism and nepotism — would have called time on Musk’s nonsense long before the situation reached a crisis point.

The board had help, unfortunately. Other enablers and facilitators deserve blame, too.

Prominent among the culpable parties are institutional investors who kept their money in Tesla long after they should have noticed that the circus was in town — or perhaps not in town but on a tour of the political hustings. Probably the most powerful vote you have in this world is the one you exercise with your wallet. Market-moving investors could have exerted some discipline on the wayward Musk.

Also to blame are sycophantic Wall Street analysts who, rather than noticing that Musk was away without leave, maintained the risible fiction that the nominal CEO could break all the rules, as well as the laws of physics and the rigors of time management, and somehow still thrive. These analysts bought into delusional fantasies, damaging their own reputations and clients' portfolios.

Hubris Strikes Again

With all due respect to his accomplishments, Musk is not superhuman. Humans differ in their capabilities and strengths, as well as their weaknesses, but they are all fallible. Wall Street analysts, for reasons that they should be forced to explain, thought that Musk was a demigod of the boardroom, even after it became readily apparent that Musk was spending precious little time in the boardroom or the office.

Even the Wall Street analysts, however, have begun to notice that their hero might have feet of clay. From a Barron’s article:

Tesla delivered 336,681 vehicles in the first quarter. Wall Street was looking for about 378,000. The most recent analyst estimates were in the range of 360,000.
Results missed consensus estimates by more than 10% and some of the lowest analyst estimates by about 20,000 vehicles. Deliveries fell 13% year over year, the worst quarterly decline in the company’s history.
Shares of the electric-vehicle maker were down 1.6%, at $264.21, in early trading, while the S&P 500 was off 0.2%, and the Dow Jones Industrial Average had dipped 0.1%.
Coming into Wednesday trading, Tesla stock was down 34% so far this year and off 45% from a record high of just under $489 a share reached in mid-December.
Delivery expectations contributed to the declines. Since mid-December, Wall Street’s estimates for first-quarter deliveries have fallen from an average of about 470,000 vehicles to 380,000. Two issues explain why estimates have fallen.
For a start, investors fear Musk’s political activities are turning off some core Tesla buyers—politically left-leaning people looking to go green.
Musk needs “to navigate [the brand crisis, or else,” wrote Wedbush analyst Dan Ives in a Wednesday report. “We are not going to look at these numbers with rose-colored glasses, they were a disaster on every metric.”

Should I say I told you so? I don’t like patting myself on the back — it’s unbecoming, and I put myself at risk of a shoulder injury — but I was right all along about the implications of Musk’s CEO ghosting at Tesla.

A Shot at Redemption?

I want to end this screed on a positive note, if only because of my inherently sunny disposition. So here goes: Politico reports that Elon Musk will be leaving DOGE and the Trump Administration to go back to running his businesses, including Tesla. I suppose the news represents a case of better late than never, but it doesn’t excuse Musk’s prior wayward behavior; nor does it mitigate his reckless and wanton destruction of Tesla shareholder value. Still, the news prompted a rise in the price of Tesla shares yesterday, before Trump’s strident rendition of Tiptoe Through the Tariffs in the White House Rose Garden.

Perhaps Elon is still on his way out, but not imminently. The White House challenged the accuracy of the Politico report, but didn’t say exactly which parts of it were inaccurate. So who knows? We’re in deep waters here, folks, and the tide isn’t following the predictable gravitational pull of the moon. Still, my gut, when it isn’t rumbling, says Musk will leave the Trump Administration soon, a word that carries a measure of ambiguity that is open to varying interpretations.

If Musk does return to his real job(s), will it improve Tesla’s prospects? Perhaps so, perhaps not. Much depends on whether Tesla gets Musk the focused showman or Musk the political provocateur and social-media addict. Tesla needs the former, not the latter.

A more relevant question is whether the Musk of business folklore can be reanimated, or whether he ever really existed in the first place. This industry, as so many before it, is vulnerable to the rampant mythologizing of its stars’ exploits and achievements. Anybody who has enjoyed tremendous business success will tell you, if they’re honest with themselves and others, that vision, acumen, proficiency, and execution, are necessary prerequisites. But they’ll also tell you that timing and serendipity are essential attributes of any major success. Timing might not be everything, but it counts for a lot. Unfortunately — or conveniently — the hagiographies of tech’s luminaries omit those aspects of the narratives.

There’s a chance that Musk will never recapture his glory years, that what’s left of his business career will be nothing more than nostalgic epilogue. In the last few years, and especially this last year, he has displayed awful judgment.

Worse, he doesn’t take responsibility for his mistakes, which means he isn’t learning from them. If I were a Tesla shareholder, which I am not, I would be concerned about his lack of discretion and emotional volatility, not to mention his lack of any sort of personal accountability. He can say what he wants, of course, but he also should be able to anticipate the implications, and accept the consequences, of his behavior.

How could Musk fail to anticipate that what he says and does publicly — including his chainsaw-wielding antics at DOGE and his strange compulsion to reflexively perform Nazi salutes, a la Peter Sellers in Dr. Strangelove — would have consequences for himself and for his companies? That’s bad judgment, folks, and there’s no excuse for it. He should step up and take the blame for what he’s done to himself and to Tesla. If he did that, I’d have some confidence that he’s learned a lesson from this debacle. There’s a greater probability, however, that he’s learned nothing from the experience, that hubris has blinded him to his own mistakes.

For Tesla to recover, it needs one of two scenarios to occur: Either Musk realizes the error of his ways, apologizes for the harm he’s done to the company, and charts a restorative course; or the Tesla board, perhaps with new members, decides to replace Musk with a leader who will spend more time working at the company than posting incendiary memes on social media.

If the latter happens and the celebrity CEO is sent packing, Musk will look for someone to blame. Somebody should tell him to consult a mirror.