By Gene Munster and Doug Clinton of Loup Ventures
- TSLA is down ~8% following an NYTimes article about Elon Musk.
- Investors are likely most concerned about Musk’s overall mindset and burn out in addition to the use of Ambien and possibly other drugs. The article is an interesting insight into the mental toll of building multiple businesses that fundamentally change the world.
- While concerns about Musk’s stability aren’t surprising given the article, we believe it could be a turning point for Musk to get some help and help himself, which will be a net positive to the companies he’s building.
- Double down to Elon: Erase Twitter.
A few observations from the article:
If there’s a common denominator to Elon Musk’s troubles over the past two months, it’s Twitter. Social media is neither inherently good nor evil but can certainly distract one from purpose and obfuscate truth with emotion. For Musk, Twitter has served as a microphone for the public distribution of outbursts that all of us have in our mind from time to time, but never share. Ambien may have also been a factor in reducing the barrier between internal and external monologue. That’s not an excuse, but a chemical reality. Ambien doesn’t make anyone a bad person, but it seems to reduce inhibition as to the standards with which one would normally conduct him or herself.
There may be an argument to be made that Twitter helps Musk with his own personal brand that augments the brands of his many companies; however, it seems clear now that Twitter is doing more harm than good for Musk. As we advocated in our open letter, Elon, you should take a break from Twitter. Erase it from your iPhone. It might feel like the weight of the world gets lifted from your shoulders to not have to deal with the negativity from a small but vocal part of the population. It will let you focus on dealing with building great companies, and hopefully, let you get some sleep.
Finding a COO for Tesla is mission critical and should be a top priority for Musk over the next few months now that Model 3 production is under control. Running two companies is difficult. Musk runs Tesla and SpaceX plus his interest in Neuralink, the Boring Company, and roles at other organizations like OpenAI.
When Steve Jobs was CEO of both Apple and Pixar in the late 1990s into the early 2000s, he had Tim Cook as his right-hand man at Apple and Ed Catmull/John Lasseter at Pixar. Jobs had world-class operational help at both companies; he didn’t have to handle all of the leadership on his own, which seems to be the case for Musk. That may also involve a personality trait different between Jobs and Musk, as Musk seems to have a difficult time relinquishing control. If that’s true, Musk needs to overcome that flaw not only for his own well-being but the well-being of his companies and stakeholders.
Silicon Valley Mentality + Enhancement
Musk’s Tesla is a case study in an unstoppable personality willing something impossible into existence. The mentality necessary to create an electric car company — grit, perseverance, willpower, all to the extreme — is something the vast majority of people will never understand. Unfortunately, exercising that power to the extent Musk has takes a mental and physical toll.
The article describes Musk’s use of Ambien to sleep. It also mentions Musk’s use of recreational drugs, which is obviously disconcerting to investors. While we don’t know whether this is true or not, it seems part and parcel of the prior reality, which is that the mentality required for Musk to build what he’s building can be lonely because so few can empathize with him. If true, it wouldn’t be the first time that a Silicon Valley visionary used drugs to cope with the stresses of the burden of greatness, perhaps even to augment their abilities in chase of greater pursuits, and it won’t be the last. This doesn’t excuse drug use but simply acknowledges that the crown doesn’t come without significant consequences. Hopefully, Musk and any others that use drugs to deal with ambition can find other ways to cope. It may not always seem like it on Twitter and in the media, but there’s a large public cheering him on. Maybe larger than he realizes.
The article details Musk’s concern around short sellers of TSLA, which we continue to view as overblown. There’s a relevant quote from Reminiscences of a Stock Operator, a legendary book about the stock market: “No manipulation can put stocks down and keep them down.” The logic is that good companies have buyers and stocks will bounce back. Bad companies don’t have buyers and manipulation is their death knell. To the extent Tesla delivers on its promises and continues to build great cars as a good company, noise generated by short sellers will be just that. If Tesla slips and doesn’t meet its promises or lets quality slip, shorts will be vindicated. The shorts are valuable as an enemy to want to defeat in that sense, but they cannot do anything meaningful to disrupt Tesla’s operations long term. Undue worry about what shorts are saying, so long as what they are saying is false, shouldn’t matter.
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