Is Elon Musk Any Good at Business?

Listen to this episode

Lizzie O’Leary: You know that scene in Godfather three? It’s probably the only one anyone remembers. Michael Corleone is old. He’s puttering around his kitchen in a cardigan, complaining that the mobster life just won’t let him go.

Speaker 2: Just when I thought I was out, they pulled me back.

Lizzie O’Leary: Admittedly not a great movie, but anyway, that is how I think about Elon Musk and reporter Ashlee Vance, who wrote a pretty exhaustive book about him in 2015.

Advertisement

Speaker 2: Yeah, the book was from start to finish. That was probably about three years and that was living and breathing a lot of long last in its universe, for lack of a better term.

Lizzie O’Leary: Ashlee got sick of talking about Musk. He was burned out.

Speaker 2: Elon and I also had a really tense go of it after my book came out, which made me wanting to write about him not that attractive of a proposition. I just thought I was writing a book about an interesting person and some interesting companies. I didn’t expect it to be this almost inseparable part of my life forever after that.

Lizzie O’Leary: But the problem is, once you have written the big Elon Musk biography, people like me want to call you up and ask you questions. What was your first impression of him?

Advertisement
Advertisement

Speaker 2: There were no handlers. And when I would ask him a question. He just answered it so openly and thoughtfully and and kind of differently than the on message billionaires and CEOs that I was used to interviewing. You know, he does have a slightly note of awkward the right where he you know he’s not always like the easiest conversationalist especially at the beginning of a chat. So there was a little bit of that going on. But I was immediately struck like, oh, this guy’s, you know, you might not agree with what he’s going to say, but he’s he’s actually saying what’s on his his mind.

Advertisement
Advertisement
Advertisement

Lizzie O’Leary: For weeks now, Musk has been saying what’s on his mind on Twitter and dominating so many conversations about the future of the Internet. On Friday morning, just as we were putting the show to bed, there was news that he might cut Tesla’s workforce by 10%. So today on the show, I wanted to ask Ashley some bigger questions about the richest man on the planet, a guy so rich, he wanted to buy his own social network and then maybe decided he didn’t want it after all. How good is Elon Musk at business? Really? Are his companies that innovative? Does he just keep showing up in the right place at the right time? I’m Lizzie O’Leary and you’re listening to what next TBD a show about technology, power and how the future will be determined. Stick around.

Advertisement

Lizzie O’Leary: To understand the evolution of Elon Musk as a businessman, you have to go back. Back before the tweets and the rockets and the controversial cars. To the late 1990s in his twenties, Musk started a company called Zip two with his brother Kimbal. The idea was to provide online directories and city guides to newspapers, and Ashlee says this Elon Musk was hardly the flashy global celebrity we see today.

Speaker 2: He had grown up something of a loner in this almost sci fi nerd. He was a little awkward. He was a little shy. And that was reflected a lot, I think, in the way he ran the two. He was the CEO but had no experience being a CEO. He was pretty rude to people that work there. You know, he would have meetings where he would just dress people down brutally. And, you know, he’s still known as being this tough bus to work for. But it was I was like a little bit different. It was almost coming from this place of insecurity, isolation and trying to let everybody know that he thought he was the smartest guy in the room and being pretty abrasive about it. I mean, this was a guy who was trying to make his way in the world and again, was was something of a kind of insecure loner.

Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

Lizzie O’Leary: Musk sold zip to just as he was starting his second company, AECOM, an online bank. It would eventually merge with another company and become PayPal. None of this sounds particularly exciting now, but at the time, Ashlee says, it was revolutionary.

Speaker 2: This is at a time when people were afraid to put their credit card numbers onto the Internet because he had no idea what was going to happen. But this guy is sitting there saying, no, you know, we need not just payments online, but you should be able to manage all of your finances and send money much more efficiently. And so he also wanted to aim the company very much toward consumers and really and really take risks.

Advertisement

Lizzie O’Leary: Then we get to sort of the Tesla and SpaceX era. And so much of the meat of your reporting has centered on those companies and kind of the place they occupy in current capitalism. What do you think makes them? Special.

Speaker 2: They come with a cause. Space X. Has this goal of setting up a colony on Mars. Tesla was always set up as this antidote to climate change and making the electric car work. So they come with this this this philosophy of this mantra that employees get behind, that customers get behind. Obviously, both companies also had this advantage of being kind of a clean slate. You had rich people that had tried to make rockets before and they’d all failed. It was thought largely impossible that that a private space company could succeed. And not only have they succeed, Space X accounts for the vast majority of government launches today and then commercial launches of satellites and now allow people to space on a level that that it’s essentially like space X versus China and that’s it.

Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

Speaker 2: Same thing with the carmakers by the time Tesla shows up. The carmakers were kind of soulless. They were just really assemblers of parts from thousands of suppliers that I felt like had lost their way. And Elan went against the grain there, with both of them being very vertically integrated and making so many of their parts inside the company at a time when it was thought that that’s really that’s not how you do it, because it’s such a money losing proposition. And and it ended up being that having all the control over that technology is really what separated them.

Lizzie O’Leary: What do you think is worth paying attention to within those companies that I guess maybe gives you some insight into Elon Musk?

Advertisement

Speaker 2: Everybody knows he’s a really hard boss who’s incredibly demanding and can occasionally go well beyond demanding to to sort of. Yeah. Just being way too hard on people. But. He does have this devotion from his employees. His greatest gift is getting thousands of people to work hard and and intelligently toward these massive goals that he has. I think just he gets knocked all the time, right, for for setting these unrealistic timelines. So this is a part where I sort of feel like his personality carries over to the companies and then over to the employees as well.

Lizzie O’Leary: I wanted to interrogate the mythology around Elon Musk. Is he some singular genius with ideas that no one else has thought of? After all, Tesla actually had two founders before Musk. Is it more that Musk spots holes in the market at the right time or takes other people’s ideas and builds on them?

Advertisement

Speaker 2: So no one no one builds a rocket by themselves or anything close to it. Space X was was the fruit of a lot of people’s labours. What I what I think I did was there were a lot of people who were in the traditional aerospace industry who felt beaten down and discouraged by all these decades of nothing changing and things just getting more expensive, slower, more cautious. And Elon presented this opportunity for all these people that have fairly similar dreams to him. I think sometimes he especially initially. Overplayed is his genius in rocket design. And people within the company would get frustrated with Eland, would take credit for things. When he’s a guy that’s read some textbooks that has a built a rocket, look for it.

Advertisement
Advertisement
Advertisement
Advertisement

Lizzie O’Leary: Do you think the same thing in principle applies for Tesla?

Speaker 2: More or less? There I would say there were there were electric car buffs and there was that same religious fervor that went with the technology, but fewer of them. I think the freeing aspect of Tesla was treating the car like a computer and and it became a technology object rather than just a car. And this this so played to Silicon Valley’s strengths and what Elan tapped into, again, these hundreds or thousands of incredibly smart people who now had this new platform, they didn’t have to go build some ad targeting engine on Facebook. You could be super smart that amazing and go work for Tesla and put this thing into a car. And it was a whole new just a whole new world to go. Apply your smarts.

Advertisement

Lizzie O’Leary: It’s so interesting listening to you talk about the broad stroke goals and aims behind these these companies and what these companies are trying to accomplish. I guess I’d also like to talk about the the day to day running of them, because as you alluded to, Elena is known for not being the world’s easiest boss. How would you describe his work style?

Speaker 2: Frenetic and sort of impossible to imagine. Elon’s modus operandi at both companies is really to go after what he calls the critical path, which is the this is less day to day operations and it’s more the single most important thing that is blocking the company from achieving its goals at any one time. And that’s where Ellen tends to devote most, most of his energy.

Speaker 2: And so so this could be this could be a problem with space X’s engines. And it’s like, you know, we just cannot get the rocket to the next stage until we’ve solved this engine problem. Then Ellen goes and he assembles a team of people and he just stays on them night and day until they solve this. It’s a horrible place to be. But people will tell you Ellen will free up any amount of money and humans that you say you need to solve this problem, you know, and and so I think at Space X, he’s been able to move from problem the problem the problem a bit more quickly.

Advertisement
Advertisement
Advertisement

Speaker 2: Tesla’s had these enormous problems where like with the model three, everyone saw they had this tent factory and they couldn’t make the car. I mean, they could not the factory was broken. They couldn’t make this car that was essential to the company’s survival. And so that is the critical path. And Elon was there for months. Right. Obviously talks about sleeping on the floor and all that stuff. And so sometimes this is a short lived thing and then sometimes it’s this multi-month thing where you have Elon Musk breathing over your shoulder for months until you get this factory working.

Lizzie O’Leary: I ask that in part because of some of the complaints about both SpaceX and Tesla sexual harassment complaints. Tesla’s Fremont plant has been sued by the state of California with allegations of, you know, really shocking racism at the plant. And it makes me wonder. How much attention Musk pays to the culture of his companies, or if it’s about the the problem at hand, as you’re describing.

Speaker 2: It’s probably something that’s changed over time. It’s kind of funny because for a long time. I think Elan sort of was the culture of of the company is you know Nike sort of bought into this guys thing the work. You knew it was going to be relentless. It was these were companies that were designed for 25 year olds who didn’t have families, who just were willing to work 18 hours a day and do that for a few years. As time has gone on, obviously these companies have gotten huge. They’re a different part of their maturity and things are more complex than I would say. You know, these other elements are certainly not Ellen’s forte.

Advertisement
Advertisement
Advertisement
Advertisement

Lizzie O’Leary: Yeah, I’m thinking about an email that he wrote to Tesla employees in 2017 after some more allegations of racism had emerged in Fremont. And he he basically wrote that, you know, anyone who uttered a, quote, unintentional slur should apologize. But then any any victims of that should, quote, be thick skinned and accept the apology. And and I can see what you’re saying, that if you’re 25 and you’re all working together in a room overnight and you have have embraced the ethos of Elon Musk that might wash for you. But that certainly did not go over well with a lot of the black employees at the Fremont plant.

Speaker 2: Know that, you know, and like in the early days of Space X, I mean, there’s some stories that that definitely would not work that way. You know, people teabagging each other out of, oh, my God, I left him in the Pacific. I mean, they’re living together right on an island of the Pacific Ocean for four months. And it was like Gilligan’s Island. And so it’s different. I think there’s a part of Ellen’s personality that he’s he’s sort of an absolutist. There’s a degree to which Elon is living his life, and these companies are his goals. And you are either serving the goal of making these companies work or you’re not. And that’s really what he cares about. You know, he’s on he’s on a mission. And I think some of this is his annoying detail work.

Lizzie O’Leary: Musk rarely makes life at his companies easy. For one thing, he’s repeatedly snubbed his nose at regulators. In 2018, the Securities and Exchange Commission charged him with securities fraud after he tweeted that he was taking Tesla private. He later settled, but has continued aggressively tweeting about the SEC lately. Musk’s insistent personality and those tweets trolling musings on free speech content, moderation covered wokeism the Democratic Party and left wing bias seem like they could put mission driven employees in a tough spot.

Advertisement
Advertisement
Advertisement

Speaker 2: Well, it’s certainly got a lot more complicated over these last couple of years. Something like Tesla so obviously used to stand for. Fighting against climate change, for being pro science. Right. And there was a rich person’s bubble to some degree. But but overall, I think a lot of people would agree that it’s civilized. So they’re pretty good. You know, it was not just the cool car, but I think I think most of the employees felt like the customers. Right. It was it was clear. And we were all on the same path. I think, my God, that is not the case anymore.

Lizzie O’Leary: During California’s 2020 COVID lockdowns, Musk reopened the Fremont Tesla plant over objections from local public health officials. He called the national response to the pandemic dumb and a panic, something that Ashlee says alienated a lot of his customers.

Speaker 2: They were appalled that he was taking this stance. And so if the customers are feeling that way, obviously there’s going to be employees who feel that way as well. There used to be if you wanted to work on this kind of stuff, you would put up with a lot of crap from Elon and working at the company because that was the only place you could do it. Increasingly, people are going to have options.

Lizzie O’Leary: In thinking about the the Twitter bed. A lot of his other companies seem to be about creating something or spotting an opportunity. And and. Filling a market need. But this would be acquiring something that was already built. I wonder if it feels different to you or why you think he wants it.

Speaker 2: It feels different and underwhelming to me and a really bad idea. It’s completely surprising to me that he would take over something that is so, so far along in its existence. I mean, he he takes so much pride and pleasure in creating things from whole cloth. I feel like this Twitter thing is just a huge distraction. We happen to be living at a time where the world’s richest person just is letting everybody right into his subconscious know how to be obeyed. How? Don’t think. Say this before the edits. Wild.

Advertisement
Advertisement
Advertisement

Lizzie O’Leary: It does make me think if. However this thing plays out, if it undoes some of the Elon mythology, or does it just build mythology with a different audience?

Speaker 2: Elan has become this religious figure already, and all the Twitter stuff plays into it more and more. You either love him or you hate him, apparently. And the the zealots on both sides are quite, quite dramatic. I think that this whole Twitter drama only plays into all that, especially if he ends up owning it, and it will exacerbate it even more. It’s so funny to me because I don’t think I’ve ever seen someone, a public figure quite like this, go through these these changes. You know, he was because of Tesla and somewhat because of Space X, he was just hated by the right for so long. I remember Mitt Romney in his debate with Obama just held Tesla up as this loser.

Speaker 3: You put $90 billion like 50 years worth of breaks into into solar and wind to just Solyndra and Fisker and Tesla that are one. I mean, I had a friend who said, you don’t just pick the winners and losers. You pick the losers.

Speaker 2: Of the government’s mistaken policies around funding green tech. And and so the right completely hated them. I mean, even in Texas, I still think today you still can’t buy a Tesla at a Tesla store. You know and and and yet here’s the company is headquartered there and he’s he’s now embraced by so many people on the right of the all these people on the left that have bought their Tesla who are who are out there signaling their good intentions to the world. It’s all muddied now. I think it’s so funny. I it’s hard to think of a figure who’s gone through a transition quite like this.

Advertisement
Advertisement
Advertisement

Lizzie O’Leary: Is there any way to kind of clear that stuff aside and look at these companies and say. Are they? Are they successful? Is he a good businessman?

Speaker 2: It’s complicated. The. Space X, without question, is the most successful rocket company that’s ever been created. The problem is that launching rockets is not traditionally a very profitable business and Space X is not miraculously more profitable. But anyone that’s done this before. It’s a brutal business. It’s one that they are very successful at. But most of the company’s value and future revenue and profits hinges on its satellite business, which is StarLink, and this constellation of satellites being built around the world to be almost like a global Internet telecommunications provider. And, you know, so is business a success in many ways a million times?

Speaker 2: Yes. You know, will it be around in 40 years? It kind of hinges on StarLink to a big degree. That’s all the hopes and dreams and profits of the company. Tesla obviously went through so many years of not being profitable. I give it some leeway because they had to build all these manufacturing plants, a global charging network, but have reached a point now where they have been churning out profits pretty, pretty on a regular basis, although some of that is tied to these TV credits that they get.

Speaker 2: But, you know, to me, Tesla looks like it will survive, it will be successful. It is the dominant electric car company at a time when the entire world is moving towards electric cars. Even if Tesla went away tomorrow, we’re talking about electric cars for the decades to come and space x, if it went away tomorrow, it would be a problem in the short term. But he has kicked off this huge revolution where everyone wants to be like Elon Musk. He wants to be the next space X and commercial spaces here.

Advertisement
Advertisement
Advertisement

Lizzie O’Leary: Just one last question before I let you go. You mentioned in one of your answers offhandedly that, you know, he wouldn’t be great without blah, blah, blah. Is he great? Do you consider him great?

Speaker 2: I think his companies have accomplished tremendous, tremendous things. You know, the way I think about it a lot of the time is. Like if you’ve had 20 years of your life, just take any 20 year span. I mean, imagine in 20 years building. An enormous rocket company, an enormous electric car company, having the entire world shift. To what those companies were doing. And and business strategies shift and philosophies shift. I mean, that is like I don’t I can’t even think of somebody else who’s been able to do all that in 20 years. It’s kind of like unbelievable. It makes me feel like an underachiever, you know?

Speaker 2: And and I so like in those terms, I do think that is kind of great because I think that is I think that’s exceptional. And I don’t think there’s many people that could do that. And I think he’s maybe people will definitely the Elon haters will hate on me but I think he’s he’s very clearly net good to me.

Lizzie O’Leary: Ashlee Vance, thank you so much.

Speaker 2: Thank you.

Lizzie O’Leary: Ashlee Vance covers technology for Bloomberg Businessweek. You can check out his book. Elon Musk, Tesla Space X and the Quest for a Fantastic Future wherever you get books. All right. That is it for our show today. TBD is produced by Evan Campbell. Our show is edited by Jonathan Fisher. Joanne Levine is the executive producer for what next? Alicia montgomery is vice president of Audio for Slate. TBD is part of the larger what next family. It’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. We’ll be back next week with more episodes. I’m Lizzie O’Leary. Thanks for listening.