For years, Musk has used his tried-and-true formula for building companies to build his businesses. It isn't a model that can turn the company into a profitable one. The social-media company is going to go down in flames.
Enter a field with few competitors. If you claim that your new company will solve a massive, global problem or achieve a seemingly impossible goal, you'll get a lot of attention. Raise money from a group of believers and keep them on the hook with half-baked product ideas. Don't give the government any money. Under pay, under value, and overwork are some of the things that can happen. Take it one step at a time.
The "Elon Musk company" is not the same as the social networking site. It's a small player in a field that is dominated by big players. The government is more likely to put a stop to it than it is to let it go. If you want to leave and work for companies that treat you better than Musk, you can do that.
A lot of people think that Musk's ownership of the company is a symptom of a global media problem. Without a promise to paper over his sophomoric product ideas and erratic management, the takeover is doomed.
If you've been paying attention to Musk's businesses over the past decade, you'll know that he's taken a brutal slash-and-burn approach.
His treatment of employees of the social networking site was callous. The stories coming from the company's San Francisco headquarters are ugly: thousands of workers were fired days before Thanksgiving, brutal working schedules forced the remaining employees to sleep in the office, and a general culture of fear and distrust. Musk has shown himself to be a miserable boss despite the fact that he doesn't respect his employees. Musk's companies are known for their long work hours. The company agreed to pay employees $4 million as part of a settlement after they sued for failing to provide work breaks. Workers at the California factory of the company were intimidated by the company for trying to unionize and were paid less than their unionized peers. For years, it has been accused of safety violations at its factories, and has also been sued for treatment of construction workers at its new Texas plant. Musk didn't do anything aboutracism. The judge ruled in favor of the black man in the case and ordered the company to pay $137 million.
Musk claims that his companies are capable of achieving goals. Right now, Musk is making big promises about what the future of the platform will look like to entice people to use it. Product teases are standard for Musk's presentations. He promised that the company would have more than one millionrobo-taxis on the road by the next year. The company has yet to have a single one. The faithful have been waiting more than two years for their Cybertrucks. The Model 3 arrives years later than promised. Employees complained to me that the lack of planning and testing in building the Model 3 line resulted in sloppiness and defects down the road.
Musk used a sham product launch to convince shareholders to approve the acquisition of SolarCity from his cousin. As SolarCity went bankrupt, Musk and his brother were about to lose their investment in the company. Musk staged a flashy launch for a solar-roof-tile product that didn't exist, misleading investors about SolarCity's prospects to convince them to acquire the company. Musk has had a hard time with SolarCity.
Musk's plays worked at previous stops. 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. He was the world's richest man. The same behavior is costing him on the social networking site. Musk's own strategies against him are turned on their head by the social-media company.
Every Musk company has a big, world-changing promise that they sell, whether it's climate crisis or traffic. Musk's promises are more about religion than about science. The point is not that a luxury sports car can save us from global warming or that the solution to the Earth's toxification is to move everyone to Mars. The goal of all this mythmaking is to turn people into believers.
Musk makes his employees feel like they are saving the world by keeping them on the hook. You can see how this won't work at the micro-blogging site. The values of its employees were very different from those of Musk. They are used to a pre-hardcore culture in which they could take personal days instead of sitting through late-night meetings. If they want to stay in the industry, they have options: The broader employment market is still strong, and many laid off tech workers are having no problem finding new jobs. This frenetic pace made for high turnover for employees who had to deal with Musk frequently. The culture shift when Musk took over atTesla was similar to when Death Eaters took over the halls of Hogwarts, according to a former senior employee. There will be more employees heading for the exits.
Having a mission is important for Musk. It allows him to work with governments that are willing to deal with their problems. Musk's companies are dependent on government subsidies even though he complains about them. He took over $4 billion in government funding according to a Los Angeles Times review. Over $1 billion in tax breaks and grants to build out more factories in Nevada and New York have been given to the company by the government. His ideas have taken up a lot of government money. 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.
Since going public,Tesla's stock has become a star. People bought the car to support Musk. Even though the company only became profitable last year, or that it had an unreliable lineup of vehicles, it didn't matter. Journalists and investors who questioned Musk were subject to harassment. The faithful madeTesla the most valuable car company in the world because of how Musk said it would change the future. I don't think that will happen for Twitter. Musk claims he bought the company in the name of free speech, but unlike with his other ventures, he doesn't have enough people who believe in him.
Sometimes a Musk company is the only one in a specific market. It has been the most popular option for high-end electric cars for a long time. There isn't much competition when it comes to delivering cargo to space. Sometimes new technologies fail because of the lack of competition and generous investors. When Musk tried to make an auto factory without human workers, he had to throw away billions of dollars worth of useless robots because they didn't work. In order to make up for lost time and space,Tesla had to set up a human-run manufacturing line in a tent outside of its California factory.
There will be less time for these monkeyshines. It's not at the top of the social-media hierarchy. The company's revenue comes from advertising and has been squeezed by larger competitors. Advertisers don't need a platform to reach people. The company has to pay over a billion dollars in debt every year for its own acquisition. Musk has never run a company that has ever made more than a million dollars in a year. Money from investors has burned in the past. Even though he had all of the advantages, he nearly bankrupted the company.
The house of Musk has been through economic downturns before. The economic-boom cycles of the past decade gave rise to both Musk's companies, with interest rates at zero. Debt is getting more expensive to take on as the economy slows down. Musk will likely have to sell some of his assets to pay the bill. The stock has fallen by half this year and the prospects for growth tech stocks are getting worse as the Fed raises interest rates. The company's brand is hurting because of all of Musk's social-media antics, as demand in China is waning. Any competent CEO must have a plan to deal with these challenges. Musk doesn't have one of the calls where he's supposed to talk about his plans to make more money.
There is no pivot in which Musk suddenly becomes serious. The frenzied, callous, throwing-ideas-at-the-wall boss from hell is the one person who actually gets in Musk world. It has been that way for a long time. In a decade when tech was on top of the world, that style worked. It will not now.
Linette Lopez is a correspondent.
All Rights Reserved © 2024
