In the run-up to his controversial tweet about his desire to take Tesla private, Elon Musk, the co-founder of Tesla, Inc., an electric car and solar panel manufacturer and manages it as CEO and product architect, in a recent hour-long interview to New York Times —alternating between laughter and tears and admitting that he was working up to 120 hours a week—said that work in the current “difficult and painful year of my [his] career” is “rattling his nerves” and even gone to the extent of rhetorically offering the reins of Tesla to “…anyone who can do a better job, … They can have the job. Is there someone who can do the job better? They can have the reins right now."
His “excruciating” experiences of the past year could well be understood, for Tesla, while struggling to bring into market its Model 3 mass-market electric car in large numbers, posted a record $ 709 million loss in the first quarter of this year. And no wonder if in the process he “didn’t leave the factory for three or four days at a time.” As a result, Musk, aged 47, confesses that he is not in the best of his health.
This obviously rocked the stock market: its stock fell by 8 percent from $ 360 as on 13 Aug to $ 311 on 17 Aug. For, there are many investors for whom Musk is an “incredible leader” and it is hard for them to imagine Tesla without Musk. Some analysts wanted Musk to get a strong No 2 to run day-to-day operations. A few investors have even tweeted: “The Tesla board of directors needs to step in and hire a COO as early as possible”, so as to afford Musk some respite. Yet others wondered if he is passing through ‘founder’s dilemma.’
True, in the corporate jungle of the US the CEO who dedicates every second of his life to the company’s success is glorified as an icon worth emulating. And this trait has indeed become the in thing of Silicon Valley Startups. Young engineers, suddenly becoming bosses, in their anxiety to ‘optimise-everything’ worked so dedicatedly for achieving high workplace productivity, that it often verged on the dangerous. Their starting the day at 5 am after an hour’s workout at Gym followed by ‘bulletproof coffee’, late night dinners at office, lying under the desk in sleeping bag, attending to client calls standing in the check-in queue for the second or third international flights—all this crazy-style if working has simply eroded the boundaries between work and life and this, according to organizational behaviourists is very damaging for productivity. Such intense work-effort, they aver, is sure to reduce the wellbeing of executives—which even Musk may have to agree—besides worsening career outcomes.
Besides such intense-wok schedule, the founder CEOs, particularly from technology world, are noted to be prone for “overmanaging” the company—one of the cardinal sins of poor leadership. So, from all this what becomes evident is: Musk is stretching too thin. And with such a CEO who sometimes even resorts to Ambien to get to sleep, any wonder if Tesla’s investors dread for their stake!
Earlier this month, Musk—reputed to be an ‘eccentric visionary’— has sparked a furore in the capital markets, the media and among Tesla’s investors by tweeting his intentions to take his publicly traded Tesla private, with the assurance: “Funding secured.” There is a strong belief among the legal fraternity that this tweet may amount to violation of the provisions of the Securities Exchange Act of the US, more so if the company cannot execute the intended action, for it can then turn out to be an act of manipulation of the stock price by the company. Of course, as anticipated, in the wake of this tweet SEC reported to have opened an investigation subpoenaing Tesla. And some analysts opine that this might have prompted Musk’s interview with The New York Times listing out his rattling experiences.
That aside, this ill-judged tweet of Musk if we may call it so, has thrown open an opportunity for potential buyers to acquire it, for he has even mentioned the price of $ 420 a share. Of course, as of now there appears to be no such move in the market but who knows if somebody with deep pocket comes forward! And should that happen, one wonders if Musk with his 20 percent stake in the company had any protection to block such a bear hug offer. Amidst this storm, Tesla board appeared to have appointed a three directors committee to study the plan of taking it private.
Unsurprisingly, today’s newspapers report that Musk, heeding to the feedback from the investors, dropped the idea of taking Tesla private. It means, Tesla would remain listed on stock exchanges but has to fend off investor law suits and the probe by SEC. The take away from all this is: however incredible a leader might be, he/she should be aware of what he/she is talking.