‘Brilliant and relentless’: what Musk’s inner circle think of him
The tweet-happy chief may increasingly have to rely on them as Tesla prepares to appoint a new chairperson
In the chaotic days after Elon Musk wrote the fateful tweet that kicked off two months of high drama at Tesla, his tight circle of friends and advisers scrambled to rescue the car maker from the chaos he unleashed.
Now, as Musk prepares to give up control of Tesla's board – a key plank of a deal struck with US regulators to end his legal troubles – the question is whether he can bear to set the company free and hand more power to members of that same group.
When the tweet was sent at 12.48pm on August 7, it came as a surprise to even his most senior executives. Martin Viecha, the company’s head of investor relations, was so startled at Musk’s claim he had “funding secured” for a $420-a-share buyout of the company, that Viecha had to check whether it was serious.
“Was this text legit?” Viecha asked Gabrielle Toleda, Musk’s chief of staff at the time, 12 minutes after Musk’s tweet was sent. Deepak Ahuja, Tesla’s chief financial officer, was also caught off guard. Half an hour after the tweet, Ahuja texted Musk: “Elon, am sure you have thought about a broader communication on your rationale and structure to employees and potential investors. Would it help if [I, communications chief Sarah O'Brien and chief lawyer Todd Maron] draft a blog post or employee email for you?”
Musk replied: “Yeah, that would be great.”
Despite an army of advisers and legal experts, including former SEC bulldog Hughes Hubbard & Reed lawyer Roel Campos, the Tesla chief paid dearly. On Saturday, Musk settled fraud charges with American regulators. The Securities and Exchange Commission, which claimed his tweet was “false and misleading”, had sued him two days earlier.
As part of the deal, Musk will have to give up his chairmanship of Tesla’s board for at least three years, and pay a $20m (R286m) fine. The company, which has also been fined, will have to appoint two new independent directors.
The scramble in the minutes after Musk’s tweet shows just how close he keeps his cards to his chest. Musk is known for exercising final control over his companies (as well as Tesla, he runs the space exploration company SpaceX), and dissent among leaders or investors is rarely welcome. Jim Cantrell, who was part of the team that founded SpaceX with Musk in 2002, and now runs the space start-up Vector, says Musk was rarely one to consult fellow employees. Instead, he would typically seek the advice of friends or family members, in particular his former university housemate Adeo Ressi, also a Silicon Valley entrepreneur.
“I wouldn't call it autocratic but he’s very sure of himself,” says Cantrell. “We had a hard time disagreeing with Elon, he’s such as fierce personality. I really found it hard to argue with the guy, he’s very smart. He gathers a lot of people around him but in the end he makes his mind up.”
Cantrell says the one executive at SpaceX who Musk relies on is Gwynne Shotwell, its president and chief operating officer. “He doesn’t have a close cadre of executives except Gwynne. She is one of the few people he really trusts; she does push back and he seems to accept that.”
It is perhaps unsurprising that Musk has stronger relationships with people from his past than newer recruits. Shotwell has been at SpaceX since the beginning, but many of Tesla’s executives are relative newcomers. Most have been at the company for less than five years, with a handful of notable exceptions.
Ahuja, the finance chief, has been at the company since 2008, barring a two-year retirement between 2015 and 2017, and chief technology officer JB Straubel has been at Tesla since it was set up.
Aside from that, the company has seemed like a revolving door of executives.
In the place of trusted lieutenants, Musk has often confided in family members, most notably his brother Kimbal, who sits on the board of both Tesla and SpaceX, and his cousins Peter and Lyndon Rive, who co-founded Solar City, the energy company Musk chaired before Tesla bought it two years ago.
“My experience was that he put a tremendous amount of value on trust relationships,” says Rich Sorkin, who was chief executive of Musk’s first company, Zip2, and as a result one of the few people who has been Musk’s boss. “Those [relationships] first and foremost were Kimbal and his cousins and [late Zip2 co-founder] Greg Kouri. I think Elon has a challenging relationship with authority,” adds Sorkin.
“Elon is brilliant and relentless and very focused and generally extremely well informed. Once he comes to conclusions he typically has a very high level of conviction.”
Many of Musk’s inner circle have invested in more than one of his companies. They include Ira Ehrenpreis, a venture capitalist who sits on both Tesla and SpaceX’s board; Luke Nosek, who worked with Musk at PayPal and was a major early investor in SpaceX; and Antonio Gracias, who has invested in several of his companies and also sits on both boards.
Musk has also bounced ideas off love interests: he recently said he had mentioned a design for an electric plane to “friends and girlfriends”. His recent relationship with Canadian musician Grimes (real name Claire Elise Boucher) was notable for her defending Musk against claims he had opposed Tesla workers unionising; the SEC claimed the $420-per-share price at which Tesla was going to be taken was a cannabis culture joke meant to impress her.
Last year, in response to investor pressure, Tesla added two independent directors –James Murdoch and magazine executive Linda Johnson Rice – to its board. That is seemingly not enough. The board has been criticised for being stuffed with Musk acolytes. At its annual meeting this year, 16% of shareholders demanded an independent chairperson and 25% voted for shareholders to be able to nominate new directors. Tesla had opposed the proposal, saying it was helped by Musk’s “day-to-day exposure to the company’s business”. It added: “Separating the roles of chief executive and chairman at this time would not serve the best interests of the company or its stockholders.”
Following the spat with the SEC, Tesla is now getting an independent chairperson whether it likes it or not. Musk will have to step down from the position within 45 days from last Saturday. Whoever is given the job is unlikely to find it easy. “This is not someone that’s used to reporting to somebody else,” says David Larcker, a corporate governance expert at Stanford University. “Having somebody with duties that would be above his in certain dimensions; bringing someone in who can provide some constraints, whether it will work or not, we will have to stay tuned.
“There’s lots of chief executives that get in a little bit over their head and they reach out for some high-level coaching, but you have to want to be coached.”
Reilly Brennan, an investor at Trucks, a venture capital firm that specialises in transport, says that there are few candidates who would be qualified. “Tesla would benefit from an independent, preferably a female chairman,” he says, suggesting Fidelity chief executive Abigail Johnson or former Pepsi chief Indra Nooyi as potential candidates, although he floats another name.
“If there was a perfect fit it might be Richard Branson,” says Brennan. “There’s less transplant risk and the Tesla fan base would receive him as one of their own.”
Many people might think Tesla’s boss needs someone to cut him down to size. Musk himself might prefer a fellow dreamer.
– © The Daily Telegraph