At Tesla and SpaceX, Elon Musk was a jerk with a grand vision. At Twitter, he's just a jerk.
At Tesla and SpaceX, Elon Musk was a jerk with a grand vision. At Twitter, he's just a jerk.
Elon Musk has a pretty tried-and-true playbook for doing business — he's used it for years to build companies from Tesla to SpaceX. Unfortunately for him, it is not a model that can turn Twitter into a profitable company. It's one that will take the social-media company down in flames.
Here's the Musk playbook: Enter a field with very little competition. Claim that your new company will solve a massive, global problem or achieve a seemingly impossible goal. Raise money from a fervent group of true believers and keep them on the hook with flashy, half-baked product ideas. Suck up billions from the government. Underpay, undervalue, and overwork your employees. Repeat.
Twitter is the antithesis of an "Elon Musk company." It's an influential but small player in a field that is dominated by giant, well-funded competitors. The government is more likely to put the clamps on Twitter than give it some windfall contract. And Twitter's employees have options: They can leave and work for companies that treat them much better than Musk ever would.
But perhaps most importantly, a lot of people think Twitter — and Musk's ownership of the company — is part of a global media problem, rather than some grand solution. And without a big, world-changing promise to paper over his sophomoric product ideas and erratic management, Musk's Twitter takeover is doomed.
Elon is trying to run the same playbook
Musk's Twitter takeover has led to a lot of shocked pearl-clutching, but if you've been paying attention to his businesses at all over the past decade, the brutal slash-and-burn approach he's taken is unsurprising.
Take his callous treatment of Twitter's employees. The stories coming from the company's San Francisco headquarters are certainly ugly: thousands of workers fired days before Thanksgiving, brutal working schedules that have pushed the remaining employees to sleep in the office, and a general culture of fear and mistrust. The lack of respect for his employees is galling, but across all of his business ventures, Musk has proven himself to be a miserable boss. Tesla and SpaceX are known for their grueling workplace culture. SpaceX agreed to pay employees $4 million in 2016 as part of a settlement after they sued the company for failing to provide work breaks and adequate wages. Tesla factory workers have been intimidated by the company for trying to unionize, and as part of the union push, workers at its California factory said in 2017 they were underpaid compared to their unionized autoworker peers. Tesla has for years been castigated for safety violations at its factories, and has already been hit with lawsuits for its treatment of construction workers at its new Texas plant. And of course, there's the racism that Musk refused to do anything about. A judge ruled in 2021 that Tesla had to pay $137 million to a Black man who was subjected to racist taunts while working as an elevator operator at the company's factory in Fremont, California.
This chaotic management stands in contrast to the goals that Musk claims his companies are capable of achieving. Right now, Musk is making big promises about what the future of Twitter will look like to entice people to the platform: amazing video tools, 4,000-character-count tweets, a suite of premium features, an end to annoying bots. These sort of product teases are also standard for any Musk-led Tesla presentation. In 2019, he promised that the company would have "over 1 million robo-taxis on the road" by the next year. So far, Tesla has none. More than two years after taking initial orders, the faithful are still waiting for their Cybertrucks. Even products that do materialize, like Tesla's Model 3, arrive years later than promised. And as it was being built, employees complained to me that Tesla's lack of planning and testing in building the Model 3 line led to sloppiness and defects down the road.
Back in 2016, Musk used a sham product launch to convince Tesla shareholders to acquire SolarCity — a solar-energy company that at the time was helmed by Musk's cousin. Musk, his brother, and SpaceX were heavily invested in SolarCity and were about to take it on the chin as the once fast-growing company went bankrupt. In the lawsuits that followed, emails revealed that Musk staged a flashy launch for a solar-roof-tile product that didn't exist, misleading Tesla shareholders about SolarCity's prospects to convince them to acquire the company and absorb its losses. SolarCity has been a headache for Musk and Tesla shareholders.
At previous stops in his career, Musk's employee-punishing, product-pushing plays worked. Customers seemed satisfied with what he gave them, and he was able to keep around enough workers to eventually build the cars or mount the solar panels or launch his rockets into space. This made him, until recently, the world's richest man. But with Twitter, this same behavior is already costing him. The social-media company has key differences from his other holdings that turn Musk's own strategies against him.
O come all ye faithful
At the core of every Musk company is a big, world-changing promise — they sell the idea that their products and services are saving humanity from some intractable problem, whether it's climate crisis or traffic. But Musk's promises track more with religion — he has been sent to save us from our earthly sins of waste and pollution — than with science. Think about it a bit and the idea that a luxury sports car can save us from global warming or that the answer for the Earth's toxification is to move everyone to Mars falls apart, but that isn't the point. The goal of all this mythmaking is to turn investors, employees, and customers into evangelists.
This is how Musk manages to keep employees on the hook despite the miserable conditions: They are made to feel as if they are saving the world. You can see how this won't work the same way at Twitter. Its employees joined a company with values very different from Musk's so-called "free-speech absolutism." They're used to a pre-"hardcore" culture in which they could take personal days (the horror!) instead of sitting through late-night meetings or submitting to the random whims of the CEO. And if they want to stay in the industry, they have options: The broader employment market is still strong, and as my colleague Aki Ito reported, many laid-off tech workers are having no problem finding new jobs, some with even higher salaries than their previous stops. Even at Tesla — where he is most relentless about his mythmaking — this grueling pace made for extraordinarily high turnover, especially for employees who had to deal with Musk regularly. One former senior employee told me that the culture shift when Musk took over at Tesla was like when Voldemort's Death Eaters took over the halls of Hogwarts. Do not be surprised if more Twitter employees head for the exits.
For Musk, having a mission is key, because having a mission attracts money. It allows him to rope in governments, which are more than willing to outsource their intractable problems. Despite his complaints about government subsidies, Musk's companies are dependent on them. A Los Angeles Times review in 2015 revealed that he had taken over $4 billion in government funding at that point. And since then, Tesla has received billions in government-created regulatory credits from combustion-engine-car companies, over $1 billion in tax breaks and grants to build out more factories in Nevada and New York, billions in contracts for SpaceX, and even payroll benefits from the pandemic stimulus bill. Even his more far-flung ideas have soaked up government cash. According to a Wall Street Journal investigation, The Boring Company, Musk's tunnel-based solution to urban traffic, has been trying to collect government subsidies all over the country (and in Canada) despite only building a single tunnel in Las Vegas.
Selling the dream is what turned Tesla's stock into a superstar since it went public. People bought Tesla to be part of Musk's mission. It didn't matter that the company only became profitable last year, or that it had an unreliable lineup of vehicles, or that more-established automakers were poised to catch up to its technology. Any journalist or investor who questioned Musk or his mission then — just like now — was subject to bullying and harrassment. The evangelists, the faithful, made Tesla the most valuable car company in the world (for now) based on how Musk said it would change the future. Call me cynical, but I don't see that happening for Twitter. Musk may claim he bought the company in the name of free speech all he wants, but unlike with his other ventures, he simply does not have enough people out there — be they the media, his customers, his employees, or his users — who believe.
No time to waste
A Musk company is usually the first, and sometimes the only, company in a specific market. Tesla, for most of its existence, has been the sexiest option for high-end electric cars. SpaceX has little competition when it comes to delivering payloads to space. Doing business in a field without competitors (and with generous investors) creates room to test new technologies, and sometimes fail at them. Musk tried to make an auto factory without human workers, and ended up having to trash billions of dollars worth of useless robots when it didn't work (just like industry experts told him it wouldn't). To make up for the lost time and space, Tesla ended up having to set up a very human-run manufacturing line in a tent outside its California factory.
There won't be as much time for these shenanigans at Twitter. I probably don't need to tell you that it is not at the top of the social-media pecking order. The company — which derives over 90% of its revenue from advertising — has been squeezed by larger competitors like Facebook and Google and lapped by newer, hotter platforms like TikTok. In other words, advertisers don't need Twitter if they want to reach people. Revenue is shrinking, but Twitter still has to pay $1.3 billion in debt annually for its own leveraged buyout. Twitter has never made $1.3 billion in a year, and Musk has never run a company in this situation. In the past, he has had time — and money from investors — to burn. And even with all of these advantages, he still almost bankrupted Tesla in 2018.
The house of Musk has never weathered an economic downturn. Both Tesla and SpaceX rode decade-long economic-boom cycles with interest rates set at zero to gain the footholds they have today. Now that the economy is slowing down, debt is getting more expensive to take on, and money is becoming more scarce. To pay Twitter's bills, Musk will likely have to sell some of his most liquid assets — Tesla shares. This year the stock has fallen by half, and the prospects for growth tech stocks are worsening next year as the Fed continues to raise interest rates. Demand is weakening in China, a huge market for Tesla, and the company brand is hurting as a result of all of Musk's social-media antics. To deal with these headwinds, any competent CEO needs to have a plan. Based on his most recent quarterly calls with investors — the ones where he is supposed to talk about plans to make more money — Musk does not have one.
There is no pivot in which Musk suddenly becomes serious and starts acting like a normal executive. The frenzied, callous, throwing-ideas-at-the-wall boss from hell you see on Twitter is the one people actually get in Musk world. It's always been that way. Somehow, during a bull market, in a decade when tech was on top of the world and he was the king of it — that style worked. Now it won't.
Linette Lopez is a senior correspondent at Insider.
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