Elon Musk is a guy who refuses to follow the rules. He builds a car company to do something much more credible organizations could not manufacture electric vehicles on a large scale that people want and can afford. It has been so successful that they can’t produce enough of them.
He defies traditional economics and common sense by launching one company to commercialize space travel, and another to dig massive transportation tunnels under cities. Both of these ventures require mind boggling amounts of capital and have decades-long (if ever) ROI.
His demeanor is similarly out of bounds. He has a reputation for treating employees poorly and was once so rude to a stock analyst on an investor call that even he later apologized.
For his brash style and big thinking, Musk has become a rock star CEO. The media hangs on his every word, and throngs follow him wherever he goes. This guy has a huge and adoring following.
But now he may have gone too far. For nearly the past year, Musk has waged a Twitter war against the Securities and Exchange Commission (SEC). It started in 2018 when, during trading hours, Musk tweeted that he had secured funding to take Tesla private at $420 a share. The company’s stock took off like a SpaceX Falcon 9 rocket. But the tweet turned out to be false.
In response, the SEC, which was created to stop just this kind of activity, fined him and the company $20 million dollars each. They also required that Musk step down as chairman (though he retained the CEO title). Tesla also agreed that, going forward, any of Musk’s potentially market-moving tweets would be reviewed by what has become cheekily known as a twitter sitter before they are posted.
This did not sit well with Musk. He posted a series of sarcastic and totally gratuitous tweets about the SEC, including one in which he referred to the agency as the Shortsellers Enrichment Commission.
Then, on February 19th, he did it again. Musk tweeted that Tesla would produce about 500,000 vehicles in 2019. This too turned out to be wrong. Four hours later, Musk clarified that he really meant annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.
Big difference.
This time, it was the SEC who had enough. The agency asked a judge to hold Musk in contempt of court for violating its earlier settlement. Institutional investors also reacted badly, and are suing the company. This kind of behavior could cost him and his company dearly. By now, nearly everyone who is watching is asking, What is this guy thinking?
Wait. Could it be that Musk knows exactly what he is doing? Perhaps he has been wildly popular and successful not in spite his irreverent, bad boy behavior, but because of it.
People who invest in his companies know he’s an erratic genius and these kinds of antics should not come as a surprise.
Could he be pursuing the age old PR strategy that any press is good press, as long as you spell my name right?
Some may conclude that Musk isn’t impulsive and childish at all. He is a bold and brilliant steward of his own brand.
The reality is, however, that Musk is trashing the most fundamental rules of reputation management. First, he isn’t being truthful. On at least two occasions, he has tweeted things that are demonstrably wrong. That is never the right strategy to build a solid reputation. Be honest or be quiet.
Second, he broke the rules. Enough said.
Third, Musk has lost sight of the fact that his reputation and his companies’ reputations are inextricably linked, at least for now. By playing fast and loose with the facts, misleading markets, and antagonizing regulators, he is not only threatening his own future, he is running the risk of negatively impacting thousands of employees, investors, and, for the brave of heart, retirees.
Finally, for a guy who is building businesses that could have a real impact on big things the environment, our nation’s transportation infrastructure, space travel engaging in name calling with the SEC, and tweeting dubious information about production numbers is small and sophomoric. It doesn’t build his brand, it diminishes it.
So, we say, Elon, the twitter antics aren’t helping your brand. It’s time to keep your impulses in check and your ego down to earth.