After Disrupting Car Business, Musk Now Needs to Remake Himself
(Bloomberg) -- For five days this summer, Tesla Inc. survived without Elon Musk on the factory floor. He attended his brother’s wedding in Spain and took his kids to Belfast so they could see the set of “Game of Thrones.”
When the wedding came up during a recent New York Times interview, the trip was described as a quick dash in and out. Musk lamented having barely enough time to savor the moment, with the newspaper reporting that he arrived two hours before the ceremony and returned to Tesla’s factory immediately after. (Bloomberg News pieced together the details of his trip from Musk’s tweets and flight data.)
The depiction of the events fit into Musk’s narrative about his role at Tesla, where he’s co-founder, chief executive officer, the top shareholder and -- according to him -- essential to keeping the company in business. The question now is whether he can follow predecessors like Steve Jobs by learning to change -- and if not, whether Tesla’s board is willing to do anything about it.
“It’s a very delicate area,” said Fred Foulkes, a professor at Boston University’s Questrom School of Business, pointing out the level of success Tesla has had up to this point under Musk. “The guy is worth billions and he’s the founder and you would defer to such a person over the years. There’s a lot of success behind what’s a pretty remarkable development. So this is really challenging for the board.”
Model 3 Milestone
The Tesla CEO has sacrificed sleep and worked into the wee hours on the factory floor, against the conventional wisdom of mental-health advocates and CEO coaches. But his sojourn to Spain showed the company could execute without him around. The trip overlapped with the end of the second quarter, when the carmaker achieved a long-sought goal to produce 5,000 Model 3 sedans in a week.
When Musk puts everything on his own shoulders instead of relying on his team, he’s making himself the hero while putting his company and his own well-being at greater risk, experts in management behavior and psychology told Bloomberg News. He’s resisted this argument -- most recently dismissing an open letter from Arianna Huffington -- and the board has done little to challenge his view, even in times when he’s appeared unmoored.
Over the years, Musk has alluded loosely to his mental health in interviews and on Twitter, sometimes with his tongue in cheek. He once told a Twitter follower he was bipolar, though “maybe not medically.” He has spoken about drinking wine, taking Ambien, and then freewheeling on Twitter -- a joke, perhaps, but also comments that were more cavalier than a typical public company CEO tends to be.
Medical professionals and management experts consulted by Bloomberg declined to speculate on Musk’s mental state for ethical reasons. Representatives for Tesla and its board didn’t immediately respond to requests for comment for this story.
Musk’s almost 20 percent ownership stake makes controlling him a challenge. Giving up power is difficult for a founder CEO, said Victor Bennett, assistant professor at the Duke University Fuqua School of Business, who has studied whether founder CEOs make good managers. But a company’s future depends on spreading responsibilities beyond a single person, he said.
“One of the great virtues of delegation is that it makes the organization less susceptible to any one part of it,” Bennett said.
Investors often push a founder CEO to work harder and faster, specifically because their company is successful, said Michael Freeman, a clinical professor of psychiatry at the University of California, San Francisco, School of Medicine. He studies the mental health of founder CEOs and specified he wasn’t speculating on Musk’s health.
The results of prolonged pressure to succeed on a founder CEO can be catastrophic, especially in conjunction with lack of sleep, which exacerbates conditions such as depression, attention deficit hyperactivity disorder and bipolar disorders, that might otherwise remain latent, Freeman said. Drug and alcohol abuse risks also rise.
“Virtually all entrepreneurs have a very specific personality profile and that personality profile is different from people who are not entrepreneurs,” Freeman said. “Associated with that personality profile are elevated levels of a couple of mental health conditions.”
In a recent study Freeman helped conduct, about half of entrepreneurs reported one or more lifetime mental health conditions, versus about 32 percent for the population overall, he said. Mental illnesses carry a stigma that’s different from an illness, such as cancer, so executives may also be wary of disclosing a diagnosis for fear of losing power, Freeman said.
Musk raised concerns about his well-being when he was quoted in the New York Times talking about his occasional reliance on the drug Ambien for sleep. The Times quoted unnamed sources saying the board is concerned that his Ambien use might contribute to his erratic tweets. In July, he accused a critic of being a pedophile. On Aug. 7, he claimed he was prepared to take Tesla private for $420 a share. Musk told the Times that no one reviewed the infamous “funding secured” tweet before he sent it.
Musk’s self-described 120-hour work weeks would leave only about seven hours a day for all other activities, including sleep.
“Ambien is a very safe medication overall,” said Rafael Pelayo, a clinical professor at the Stanford University School of Medicine in the sleep medicine division. “There’s a slippery slope with it. While you’re waiting for it to kick in, you’re dis-inhibited.” This can cause a person to act on impulses or do things that are out of character, he said.
Sanofi, which makes Ambien, said in an emailed statement that the company stands by the safety of the medication and that the FDA-approved label states: “Do not take Ambien unless you are able to stay in bed a full night (7-8 hours) before you must be active again.”
The role that the board should play in inserting itself in the health and well-being of a CEO remains a gray area. The U.S. Securities and Exchange Commission doesn’t give specific requirements for health disclosure, leaving boards to determine whether or not information is “material” to investors.
Berkshire Hathaway Inc. CEO Warren Buffett and JPMorgan Chase & Co. CEO Jamie Dimon were praised for being upfront about bouts of cancer. Jobs, the late Apple Inc. CEO, and Hunter Harrison, who was CEO at railroad company CSX Corp. before he died last year, were faulted for a paucity of disclosure.
A more recent example of this predicament was Sergio Marchionne. After the CEO of Fiat Chrysler Automobiles NV died last month, the hospital in Zurich where he spent his last month revealed that Marchionne had been seriously sick for over a year. During that period, he kept his workaholic lifestyle without informing anyone outside his family of his health conditions. As he was dying, the board had to work quickly to reassure shareholders and put new management in place.
Those eager to see Musk’s fate at Tesla be hastily decided should remember Apple’s Jobs -- not when he was ill, but in 1985, when he was fired from the company, said Neil Sims, a managing partner at executive-recruitment firm Boyden. He worked closely with the late executive as a recruiter for Jobs’s company after Apple, Next Inc.
Musk “reminds me so much of Steve, especially in the early Apple years,” Sims said. “Maybe the press doesn’t have a real clear memory of the mistakes that were made by Apple leadership and the public markets when Steve was there and what happened to Apple as a result after Steve was dismissed. It might be helpful for the world at large to take a pause. I think that Elon Musk is a flawed person, like we all are, but there are attributes of genius here that we might want to be a little more careful of.”
Yet even Jobs may have benefited from the dozen years he spent “in the wilderness” after his ouster from Apple, said Davia Temin, president of crisis-consultant company Temin & Co., who also knew Jobs from when she was in investment banking during his days running animation company Pixar.
Troubled CEOs need to be able to accept coaching, she said.
“Maybe the Steve Jobs who was totally unstoppable needed to have a pause to take a quantum leap in learning,” Temin said. “There comes a point in pretty much every wunderkind founder’s life, where there’s a mid-course correction that needs to happen. Most of us know how to accept help during that period of time, and some don’t.”
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