"It was the best of times, it was the worst of times."
Surely one of the great opening lines in literary fiction, penned by Charles Dickens in the classic "A Tale of Two Cities." Perhaps Elon Musk, better than anyone, understands the depth of that sentence because he founded two companies that together embody the famous phrase. At SpaceX, it truly is the best of times, while at Tesla it is perhaps the worst of times.
- Two innovative companies with enormous vision, clear purpose, groundbreaking technology, each going in different directions.
- Two companies. One founder, curiously choosing to manage each company differently, then experiencing very different results.
- One innovator, leading two companies with completely different management styles. One succeeding, the other rapidly failing.
So, we should ask, "what's the difference in how Mr. Musk is running SpaceX, where it is the best of times, as opposed to Tesla, where it is the worst of times?" We should ask this question because the answer gets to the very heart of the choice you have in developing the management architecture of your company, for better or for worse. We should ask this question because investors will ask you how you plan to manage your company; how you'll simultaneously fulfill the needs of vision/innovation and the needs of structure/results.
Right now you have a choice. The same choice Mr. Musk had.
So let's learn from Elon Musk's best performance as a manager at SpaceX and contrast that with his worst performance as a manager at Tesla (the two faces of Elon Musk), so that you emulate the best, avoid the worst and ensure that your own world-changing ventures make it into a heaven of celebration and contribution rather than falling into a hell of loneliness and regrets.
Currently, SpaceX is experiencing surging growth. Robert Hilmer, global head of business development at private market analysis group Equate, interviewed by CNBC, says that "SpaceX is one of [the most], if not the most, popular pre-IPO tech companies globally." Everybody wants to give SpaceX money, even at a soaring valuation of nearly $170 per share, or $27 billion dollars. If that's not enough, SpaceX is attracting patient investors, aligned with its gargantuan mission of landing a spaceship on Mars, not to mention its' plans to launch more than 4,400 internet satellites. Investors appear to be perfectly happy waiting 10 to 15 years for any ROI, dramatically different than expectations investors have for nearly every other company. This allows the SpaceX team to raise as much capital as they want, then spend it on far-into-the-future results. Expert analysts like Mr. Hilmer attribute this very unique position as the result of "the faith and support from investors in Elon and the team to execute." Clearly, it is the best of times for SpaceX.
At the same time, Tesla is struggling. The company burned through nearly $750 million in the first quarter of 2018, while posting losses of $710 million. According to a May 18 article in the Guardian, "The loss and cash burn announced on Wednesday raised questions about the company’s future and whether it would be able to pay all of its bills by early next year without more borrowing or another round of stock sales." Investors and the Tesla Board are concerned. Recently, Musk held a "testy" conference with industry analysts, often cutting short his answers to their questions about the future of Tesla. Shortly after, Tesla stock plummeted 5% -- that's a $2 billion loss in value! Now, amid concerns about Musk's reliance on Ambien to sleep, criticism of the quality of the new Tesla Model 3, and public comments Musk has recently made without Board review, it appears the SEC is investigating the Company. By all accounts, it is the worst of times.
So, how can two companies, run by the same CEO/Founder, at the same point in time and in his career, operating in the same country, with plenty of capital available to both, be heading in such dramatically different directions?
How can one group of investors laud this CEO/Founder, extend him extreme patience, continue to fund his company even as share prices rise significantly, while another group of investors has little confidence in this man, his methods, his results and his capacity to run a company?
We have one of the most significant case studies in business management history is unfolding in front of our very eyes this month. One man, running two companies, one with great success and the other with chronic failure. We might wonder whether Musk is totally dysfunctional if we simply looked at his Tesla record. Yet we may wonder if he is the best CEO in America is we focus on his achievements at SpaceX.
So, what the heck is going on?
The answer may be deceivingly simple. Consider that Musk runs Tesla without a second-in-command, while he shares management duties at SpaceX with Gwynn Shotwell. Clearly, he needs a second-in-command Execution Master at Tesla as he has at SpaceX with Ms. Shotwell. I'm not the only one who recognizes this; it is a widely held viewpoint this week.
Space X and Tesla are a perfect case study, because it is the same CEO, at the same time in his life, in both companies, but handling the CEO role differently, with the results for all to see. Rarely has business provided such a perfect case study in contrasts. Steve Jobs also prevented a similar case study in comparing the way he managed Apple in the two stints there (the young Jobs and the older Jobs) but there we could attribute the different results as a natural consequence of maturity. With Elon, we have the SAME man, at the same time in his life, running two companies, both equally important to him from a vision point of view, both in California, one with good results and one with poor results.
It's almost like Elon has two faces, one running SpaceX and the other running Tesla.
At SpaceX, Musk has Shotwell, a classic case of Lone Ranger & Tonto. At Tesla, it's just the Lone Ranger. Britain Ladd, a globally recognized expert in strategy, digital supply chain management, operations, and M&A, in a recent article in Forbes Magazine defending Musk, joined in the chorus of experts urging him to bring on a COO. Said Brittain, "Musk has resisted hiring a COO for Tesla but I believe the time has come to do so. . . I have to come to recognize the need for Musk to become more willing to leverage others on his journey."
So the point of all this is not to say that Elon Musk is a failure because of the way he is running Tesla, but to point out the decidedly different approach he has taken at SpaceX, along with the dramatically different results being produced there. Analysts have looked at every angle here and the consensus is that Musk is the problem, because he has not trusted anyone else at Tesla to help translate his big vision into bottom-line results. In the same way, in your own company, don't make the mistake of thinking you can be both vision master and execution master. Rarely does one executive embody the vastly different skill-sets required for these two roles? Moreover, your company simply won't find success if one-half of the skill-sets needed from senior management is missing. Most importantly, investors know this. So, you're less likely to raise capital under the "I'm Superman and can do it all" approach. Especially now, when the failure of this management style at Tesla are front page news.
So, be the "good Elon," not the "bad Elon." Wear the right face. Find your counterpart, to create a greater whole to lead your company. Read my book, "Born to Star," soon available on Amazon, to learn about the different skills sets of the vision master and execution master, why they are both needed, how they complement one another and why most of the super successful companies in the world are managed this way.
Best of times. Worst of times. The choice is yours!
Key Takeaways:
- Different management styles at Tesla and SpaceX are producing vastly different results, even though one man is running both companies
- Consider that the failures at Tesla have been consistently blamed on Elon Musk trying to do it alone, without a COO to manage the day-to-day affairs
- Few executives embody the skill sets or desire to play both vision master and execution master
- Yet, both are needed for success.
- Investors know this, too and they'll be less likely to invest in your company if you're going to run it like Tesla
- Read "Born to Star" to learn why the execution master is so important to your success and how to find the right one for your company
Points missing:
- Readers appreciate that Elon is a dysfunctional executive having little EQ or ability to connect to people - Though he seems to be better than his spiritual parents Bill Gates and Steve Jobs, so there is hope.
- I'm not the only one who recognizes this; it is a widely held viewpoint this week (see here for example)
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