Is Elon Nuts Or Should We Be Taking Notes?

We view leaders monolithically. They are either great or terrible, and there’s no in-between. Obviously, the reality is that leaders like Elon Musk have strengths to learn from and weaknesses to avoid. The challenge is categorizing the last month’s events. Which parts are brilliant, and what’s tragic?

The cult of personality around Elon makes the fog even thicker. Most opinions are biased by a love for his image and vision or a loathing of his views and deeds. His actions can be confused for buffoonery or 3D chess. As with most people, the truth is complicated to unravel.

Peeling Back The Onion

Elon Musk is a brand, and any attempt to learn from him must start with his brand strategy. Musk has the rare combination of money and fame. Most wealthy people don’t have rockstar status, and many secretly want a slice of fame to go along with it.

Contrast Musk with Bezos, Buffet, Zuckerberg, Gates, the Waltons, the Kochs, and other parts of the ultra-wealthy. Some people like Ray Dalio and Mark Cuban have fame, but not at the same level. Jerry Jones, the owner of the Dallas Cowboys, is the only other person who even comes close, and I’d still put him well below Elon’s pervasive brand.

I asked my 10-year-old daughter who Elon Musk is. She knew he owned Twitter. I asked what else came to mind, and she said, “Music? Because he used to be a singer, right?” That’s his brand. If you read the lyrics to ‘Rockstar’ by Nickelback, he’s taken them and built the entrepreneurial version of that song.

And that’s why he bought Twitter. If your fortune is built on a brand, anything threatening to take your microphone away becomes a significant threat. Twitter is one of Musk’s biggest microphones. The only person on Twitter with more followers is Barak Obama. He has more followers than athletes and rockstars like Taylor Swift.

On Twitter, he has built Tesla into a premium brand, and investors have rewarded him for it. Tesla has a market cap of around $900B. Ford sits at $62B. To give that a bit of context, divide Ford’s market cap by the number of cars it sold in 2021, and it’s about $18,400. Tesla’s is $959,200. The business’s valuation sits on a foundational story about a luxury EV brand that’s years ahead of competitors.

People who know cars or have investigated Tesla tell a different story, ironically on Twitter. There’s a massive Gigafactory just outside of Reno, and I’ve had a chance to talk to dozens of current and former factory workers. According to them, corners get cut, and injuries are common. The workplace culture is toxic for some, while others thrive in it.

Yet Elon has cultivated a devoted customer base with some parts bordering on fanatical. It’s similar to the devotion some Apple customers have to the brand. While Apple has a reputation for exceptional quality, Tesla has a history of incidents, especially with their self-driving technology. Still, Musk’s ability to build the Tesla brand around his vision and purpose makes customers feel deeply connected with products. They are willing to overlook flaws on the journey to something greater.

There have been 2 instances where Tesla nearly went under. Elon bought the company and funded it himself in 2008. That should have been the end of Elon because Tesla needed a lot more money to survive and build the infrastructure necessary to achieve its goals.

However, their CFO came up with a solution. They took the company public and raised money through an IPO. The massive cash infusion saved the business. How much of a role did Musk play in that turnaround?

The investment put Elon into significant debt. He was all in, risking his fortune on Tesla and SpaceX. He built the brand and story for Tesla, then evangelized it to investors before taking Tesla public. There was an impact there, but it’s impossible to quantify.

He attracted a talented workforce with purpose and vision. He was also instrumental in motivating employees during the subsequent close encounter with bankruptcy. In 2016-2017, Tesla needed a path to profitability. Purpose and vision only keep investors onboard for so long. A great story needs execution which was the challenge in ramping up production to meet Model 3 demand.

Solving that problem was expensive. According to Musk, Tesla was as close as a month away from insolvency between 2017-2019. He called those years “extreme stress & pain for a long time” and “production & logistics hell.”

Again, Musk was able to raise billions to keep the doors open, but he sent a message to workers across the company. If they wanted to save Tesla, it would take an extraordinary effort from top to bottom. Employees responded and ramped up productivity. Now Tesla is profitable.

What Is Elon Musk’s Leadership Style?

Tesla dominates the EV market, and Elon uses his Twitter microphone to amplify the story and vision. He has investors bought into a future with electric vehicles, and he positions Tesla as the market leader at the front of this wave. He adds purpose to the vision by explaining the environmental benefits. Solar power and massive batteries are another Tesla growth engine that fits that narrative.

Musk’s brand always has a combination of vision and purpose. At SpaceX, his vision is to launch rockets to Mars. He launched a Tesla with a robot into space to showcase SpaceX’s ability to deploy payloads successfully. Give people a grand vision and purpose, and they’ll work hard to make it happen.

In my leadership and mentoring career, I have learned that most people are waiting for permission to do great things. I enable people and sometimes encourage radical thinking. It’s effective because people need a shock to get out of their own way. No one gets to the top of their profession without radical belief in themselves. It takes irrational confidence to tackle the really big challenges.

After the euphoria wears off, engineers always return to reality and realize the trick I’ve played. I guide them to the next stage, making it real. What would convince you that you could achieve that big hairy goal? That’s where the hard work begins. Everything is ridiculous until someone figures out how to make it real.

Step 1 is seeing the problem differently. Only then can someone see the assumptions that have prevented them from finding a solution. Step 2 is believing in themselves enough to start the work. So many people have greatness trapped inside them and won’t let it out because they don’t believe it.

We all aspire to greatness and believe we will do great things. When the moment comes to step forward and accept that we are capable of greatness, our conviction is tested. Most people are stuck on this plateau at the 15-20 year mark in their careers. I call this phase ‘Rise.’ People must grow into their greatness, and that only starts with they rise to meet pivotal career moments.

It’s a progression, and I use simple mantras for each step.

• Believe

• Rise

• Become

There is no order to the journey but believing is the hardest step. It’s made even more difficult by the false narratives we must avoid believing in. We must find a truth built around our exceptional capabilities, not the perception of capability. This is relevant for understanding Musk’s leadership of others and his self-awareness.

Elon is a masterful enabler of grand visions. That’s why innovators work for him, often in spite of him. Elon must be managed for his companies to succeed. The companies he built or took over have evolved with defense mechanisms to prevent him from derailing them. As great as Musk is at vision and purpose, his past feels utterly devoid of strategy and personal execution. Is it?

There’s no static plan. Musk’s journey with PayPal, Tesla, SpaceX, and The Boring Company shows an approach inspired by water. He goes around obstacles. His path is in a constant flux of adaptation, responding to changes or opportunities he sees.

He is relentless and incrementally breaks down resistance. His brand, mission, and purpose are the constants. He uses Twitter to deliver those to a massive, committed following, and they amplify it until the narrative is inescapable.

Contradicting his narrative requires an equal force of will, vision, and purpose. Some have that, but without the same following, success is out of reach. It takes a coalition to oppose his narrative, and that’s the only way investors have succeeded in holding him accountable for results at Tesla.

Take Twitter away from Musk, and opposition gets significantly easier. The brand that supports Tesla’s premium valuation would suffer. Musk needs Twitter and either instinctively or intentionally understands the threat that being de-platformed poses. He took an initial stake in Twitter to mitigate that risk. When he was denied a seat on the board, the next move was acquisition.

The Twitter Takeover

And now we’re finally at Twitter. Musk put his fortune at risk again. Tesla stock, the primary source of Musk’s massive fortune, has taken a hit in 2022. He’s had to sell billions of dollars to cover the Twitter purchase, manage its debt, and fund continuing operations. More shares are leveraged as collateral for the loans he used to finance some of the purchase.

By all accounts, he massively overpaid for Twitter. Some put the actual value of Twitter at around $25B. He tried to work his way out of the deal, but a recent court battle forced his hand. An embarrassing series of texts were publicly released as part of the trial. There were threats to his credentials as an engineer and allegations he had overstayed his visa while at PayPal. Again, the threat to his brand forced him to withdraw and take a bad deal.

This wasn’t a well-thought-out offer, and no due diligence was performed. Musk reacted to a threat with a massive offer that Twitter’s investors and the board could not refuse. Was there critical thinking and analysis involved in the decision? I believe a case could be made for multiple answers to that question. It appears there was a rationale but not a strategy or measured approach.

This saga is playing out in public. Someone had to explain the sink joke to me. From day 1, Musk has created a spectacle. It started with actors posing as laid off Twitter employees, and several media outlets were taken in. They ran the story and had to apologize quickly. Musk later posed with those actors to troll the media.

Hate speech spiked immediately, and there’s a complex dynamic here. Moderation, regulations, user protection, and advertiser sentiment are nightmarish balancing acts. Critical teams who support those efforts have been eliminated or cut back significantly.

He fired half the company via email and ordered engineers to print out their code for review. Next, Musk offered highly coveted blue checkmarks to anyone with $8. The feature was withdrawn after several public incidents of impersonation. Engineers were pushed to commit to hardcore engineering and levels of effort, which pushed another wave of employees out. He took late-night pictures with the engineering staff who remained.

We’re still in the first month, but it’s been a hurricane, and there have been more notable events than the small list above. Many have predicted Twitter’s demise as a platform and business. Advertisers have balked and pulled back spending. Users are threatening to leave in droves. The takeover has been declared a catastrophe by many.

Diving Into The Reality Of The Twitter Gambit

Is it, though? The initial surge in hate speech has dropped off. Elon claimed most came from 1500 accounts and high-frequency tweeting. He said that had been brought under control through tweet caps. His stated policy is to allow most speech, but hate speech will be “deboosted and demonetized.” People will have to actively look for those tweets to find them. It’s an interesting approach, but will it work long term? Every system can be gamed, and time will tell how fast people can bypass this one.

In the visual, there’s not enough information to tell what the long-run levels were before Musk took over. There are plausible counterpoints. If the targets of hate speech have left Twitter in significant numbers, there would be fewer people to direct hate at, reducing the amount of it on the platform. The changes might have other explanations beyond moderation.

People have claimed to be leaving Twitter in significant numbers. Others have expressed concern about platform stability. Neither has materialized. According to another Musk tweet, user activity and quantity on the platform have risen. It looks like there have been 9M more daily users since the beginning of October. The World Cup has added to recent increases in traffic, but the uptrend started before those effects took hold.

There have been no reported critical degradations in the platform, but many reported bugs. There are anecdotes about slowdowns and glitches, but the platform seems stable. Will that hold in the long run?

A platform like Twitter doesn’t fail all at once. It’s a cascade that starts small but rapidly accelerates. Load does not seem to be the trigger that will start the cascade. That doesn’t mean something else won’t or hasn’t already.

Twitter has also rolled out a new advertising paradigm. It’s too early to determine its functional substance or revenue impacts. However, it’s clear that progress is being made and implemented at high speed to bring advertisers back into the fold.

I would call the Twitter gambit a directed trainwreck. Some tasks have failed successfully, as designed. It’s imperfect, and most analysis of the long-term outcomes is overextended. Elon’s leadership style is on display, and we can draw substantive conclusions about how he leads. What comes next is much less certain.

We Can’t Ignore The Layoffs

The firings and layoffs are another facet of the story. Musk immediately fired most C-level leadership. He continued cutting for three weeks. Some firings came after individuals were critical of Musk on Twitter and internally. How does that fit into Twitter’s content moderation policy and approach to free speech? As with everything else, there are multiple points of view with merits and flaws.

The only people left are those who are fully committed to Elon’s vision and purpose or don’t have a choice. Employees in the US on a visa have limited options for leaving the company. Recent pictures have emerged showing late nights and people sleeping in their offices. Musk has torn out the parts of the company that don’t align with his vision and purpose.

Those who remain appear very…male-dominated. What I take away from the images is an intentional angle. There are women in the office but it’s almost as if the photographer is choosing angles that minimize their presence. Or is someone choosing to publish photos that captured that angle and ignoring the others that don’t?

In a more holistic assessment, tech has never been very diverse. Is the current composition representative of Musk’s brand and the types of people he attracts? Or is this an extension of existing trends and atrocious records of diversity?

Doing the difficult work of reducing staff and cycling out existing leadership is common after an acquisition. Musk has gotten through this phase quickly, which is the best way to go about it. Doing this over the course of several months is the worst approach because the chaos takes longer. There’s no less drama. It just lasts a lot longer. Chaos is inevitable; the only question is how long does the train wreck take to play out?

Extended layoff cycles and slowly removing leadership holds back transformation. People who resist change become barriers to it. With Twitter’s debt, lack of user monetization, and advertiser spending pullbacks, Musk must move quickly. Twitter has never been healthy or run with a focus on profitability. With as much as Musk has put at risk, that’s now imperative to address.

Elon is doing difficult work and making equally difficult choices. There’s no good way to reduce headcount after a merger. Rapid culture change and transformation cannot happen without disruption. No matter how this played out, there would be criticism and mistakes made.

Many leaders hesitate and second guess themselves. They waffle between approaches. Elon has to an extent as well. One example is the callback of some fired Twitter employees. There wasn’t enough attention paid to who is essential before the first round of layoffs.

Musk needs everyone bought in and moving in the same direction for Twitter to survive. Cutting from 7500 to roughly 2700 reduces the long-term cost of running Twitter significantly. There is a much easier path to profitability with all the employee compensation factors taken out of the equation. The one-time cost hit is massive and probably part of the reason behind Musk selling billions in stock.

Musk says the layoffs are over, and Twitter will soon begin hiring. According to reports, recruiters are appealing to candidates by asking them to join “Twitter 2.0 – an Elon company.” The brand returns, and now it’s the center of everything Twitter. He’s removed people he cannot lead with vision and purpose.

Musk has also removed many of the highest-paid employees from Twitter’s ranks. The new hiring push will likely take advantage of the tech hiring downturn. Salaries will be lower, and Musk has already indicated that stock will be a significant part of compensation.

At SpaceX, employees can cash shares out every 6 months. Outside investors have the opportunity to buy shares at the same events. Musk is saving money on compensation by leveraging Twitter shares to offset those costs. Employees are also incentivized to improve Twitter’s valuation to maximize share price. Their objectives align with Musk’s. The new wave of employees will be bought in and betting on Twitter’s success.

Musk’s Twitter Vision

Elon’s vision and purpose are to rebuild Twitter as a town hall that protects free speech. He is elevating Twitter with a mission to serve a higher purpose and greater good. Those who remain at Twitter could be buying in. New hires certainly will.

Musk is rebuilding a leaner organization and packing it with supporters. He will craft a story and try to attract the best engineers. He will enable them and give them permission to do great things. His past shows that he can execute on those objectives.

He has reinstated banned accounts. As some people exit Twitter, these reinstated accounts pull a different crowd back onto the platform. They have reason to be loyal supporters of Elon’s vision and purpose. They will amplify his brand for Twitter, Tesla, and SpaceX. The advantages and protections for Musk’s moat are clear.

However, it’s a risky plan because advertisers are sensitive to offensive content. If Twitter becomes what many are predicting, an unsafe environment for marginalized groups, the work to lure advertisers back to the platform will fail. Advertisers, like Tesla’s investors, can influence Elon’s actions if they maintain a coalition.

What he’s counting on are breaks to form. The rise in daily users, new targeting features for advertisers, and competitive pricing will put pressure on brands. Elon’s massive following will add to that pressure. Some companies will probably cave, and enough companies returning to the platform give holdouts cover to do the same.

The short-term vision is apparent, but it’s not enough for long-term success. A big hairy problem is central to Tesla, SpaceX, and The Boring Company. What is Twitter’s going to be? The super-platform or super-app.

WeChat is a super-app that offers users access to a range of services. Users never have to leave WeChat, and most don’t. Transforming Twitter into something remotely resembling WeChat is a years-long journey. Due to US regulations, it might not be possible.

Even getting close to super-app status would add a zero to the $44B that Elon paid for Twitter. The stock-based compensation plan incentivizes new employees to work towards the same massive payday. There’s reason to believe that new hires will build a tight connection to Elon’s vision and purpose.

Musk has implemented a tested and proven strategy. I did not believe Elon had a strategic side in the past, but there’s one emerging. My opinion is that he’s found an advisor, but I don’t have anything to substantiate that. You could argue that Musk will not listen to an advisor or trust someone enough to learn from them.

I think the existential danger of losing his fortune is enough to motivate change. Two years of uncertainty at Tesla is the type of long-term shock that can drain even the strongest will. Belief eventually turns to doubt, and that’s when an advisor can insert themselves. If they helped Musk succeed during that time, he would turn to them again for help now. What’s playing out at Twitter, chaos aside, is taken from the same playbook and relies on the same fundamentals.

Is Elon Musk A Great Leader?

Elon is a successful leader. The companies and people he leads have built batteries, solar panels, EVs, rockets, and semi-autonomous driving capabilities. Long-term shareholders have been rewarded with significant returns.

Musk is a motivational leader. The people who work for him have risen to the occasion and saved his companies from bankruptcy. Employees have overcome logistical and technical challenges that other businesses have not. He has motivated investors to pump billions into his companies when there was only him and his story to believe in.

Elon is a visionary leader. He takes on challenges most avoid and is willing to stake his fortune on success. He overlooks reality and convention in pursuit of grandiose objectives. Musk has the strength of will to force people to his side or out of his way. He is fanatically committed to the vision and purpose.

Elon Musk is a deeply flawed leader. By all accounts, working for him is chaotic. There are widespread accusations of toxic work environments. Investors are punishing Tesla’s stock price because they believe he’s a distracted, unpredictable, and some say unreliable CEO.

Musk is willing to take shortcuts and employ questionable tactics to achieve his grandiose visions. He has been willing to share fringe bordering on conspiratorial theories to bolster his brand and increase engagement on Twitter. He enables trolls, emboldens lunatics, and stokes the mob. Tesla’s quality standards have been called into question for autonomous driving, battery, and build issues. Shortcuts were taken during the 2017-2019 production ramp-up.

Musk is an insecure leader. He has potentially deceived people about his college degrees. He claims engineering capabilities that have been called into question by people who have worked with him. He blocks people who are critical of him on Twitter and fires employees who won’t bend their knees to his will. He demands fanaticism and his companies develop coping mechanisms to deal with his personality.

Elon is all gas and no brakes. His worldview appears binary and rigid. I would argue Musk’s natural response to any situation is to dive in with no plan. He embodies the startup mantra of building his parachute while falling to earth. He succeeds by outthinking, outworking, and overpowering the people and problems he faces.

Can Someone Lead Without Flaws And What Defines Acceptably Flawed?

Could Elon Musk succeed without his flaws? We ask people to do difficult things and solve the hard problems. These are challenges most of us will never choose to take on. In the same breath, we ask those people to act like everyone else and fit the same mold as people who will not do what we ask. A typical mindset does not achieve progress at the speed Elon Musk has.

A leader’s greatest strengths are also the source of their weaknesses and flaws. Personality shapes leadership style and the sources of authority leaders gravitate towards. Personality drives the challenges leaders choose and their methods to overcome them. Personality shapes a leader’s self-awareness and willingness to improve. Personality has duality.

Elon Musk’s public persona provides a view into leadership that’s rarely possible. Every leader has flaws, but they often avoid situations where those flaws will be exposed. That means walking away from challenges or covering up their actions. Musk’s strengths and weaknesses are on full display. Profiling leadership requires symmetry, and Elon’s is more apparent than others but in no way unique.

What can we learn from Elon Musk about leadership? Everything. If a leader chooses to do difficult things, their sources of authority will be challenged and often taken away altogether. What leaders do next defines them.

If they hold to their leadership traits, strengths and weaknesses will emerge. That is a fundamental characteristic of being human. When we elevate leaders beyond ourselves, expectations become unrealistic. That tendency is also very human. When someone does what we cannot, it’s in our nature to see them as better and expect them to be better in every way.

Our disappointment, rejection, and ridicule have their roots in dissonance. Leaders are not better. Elon Musk isn’t greater. He’s just like all of us. You and I could do the same things. The anger people direct at his public humanity hides a secret doubt in themselves.

If Elon Musk is no better than any of us, why haven’t we achieved the same success? There are several answers to that question that touch on everything from equal opportunity to self-image. What can we learn about leadership?

Anyone can lead, take on grandiose challenges, and bring followers along if they believe in themselves. Every leader can build teams who will solve the hard problems if they rise to the occasion and get their followers to do the same. Every leader can overcome grandiose challenges if they become and help their team do the same.

In the process, every leader will have their flaws exposed, but without those flaws, they wouldn’t have the strengths to do any of it.