Tesla overtakes Elon Musk

The Battle of Tesla with the Securities and Exchange Commission could be the biggest corporate crisis in nearly a decade. And it all started with a tweet.

"I'm thinking of taking Tesla privately at $ 420," Musk wrote on August 7. "Funding is assured."

Tesla's shares have skyrocketed. But it soon became clear that Musk had actually made a commitment to fund a buyout – at least not in writing. This caught the SEC's attention. The SEC promptly began an investigation into Musk's tweets about a possible violation of securities laws, which prohibit manipulating markets by publishing inaccurate information.

On Thursday, after Musk rejected a draft settlement, the agency filed a lawsuit against Musk, seeking fines, an injunction against future misbehavior and an order barring Musk from being an officer or director of Tesla. Tesla shares fell more than 10% on Thursday afternoon and closed down nearly 14% on Friday.

Tesla and Elon Musk have already been the subject of numerous lawsuits. But this one is different, both because the federal government is a formidable opponent, and because there is a good chance it will cost him his job.

The trial highlights a question that has been looming over Tesla in recent months: Is Musk still the best choice for running Tesla?

Nobody can deny that Musk is a brilliant entrepreneur with an unparalleled ability to create and nurture innovative startups. But running a large public company requires different skills and personality.

Elon Musk is impulsive, he micrologically manages his subordinates and he hates to admit it when he makes a mistake. All these characteristics are bad for the CEO of a large publicly traded company, as evidenced by the debacle of "secured financing". And they will become more and more important as Tesla grows up.

Musk hate to admit mistakes

In one New York Times Last month's interview, Elon Musk called 2018 "the most difficult and painful year of my career". Some of Musk's challenges this year, such as the need to increase model 3 production, were unavoidable. But Musk's own actions aggravated the situation.

An important skill for the leader of any large organization is knowing when to defuse the conflict – settle a complaint, apologize, leave the final word to critics.

Musk is terrible to that. For example, this summer, Musk spewed with Vern Unsworth, a British cave explorer who criticized the "submarine" that Musk had built to help children trapped in a cave in Thailand. (This was not finally used). Musk inexplicably decided to aggravate the situation by calling Unsworth "pedophile" without any evidence. Over the next few weeks, it has further progressed essentially dare Unsworth to sue him for defamation. He then made more defamatory statements about Unsworth in an email addressed to a BuzzFeed reporter – until Unsworth finally sued.

This kind of scenario has been repeated over the years. In March, a Tesla customer named Walter Huang died in a Model X while the autopilot was activated. Tesla's answer was to blame Huang for the crash, triggering a highly publicized feud with Huang's widow.

In May, he denounced a Wall Street analyst at a teleconference for asking "boring questions". In July, Musk launched a tirade on Twitter against Business Insider journalist Linette Lopez, who columnist Felix Salmon described as "haunting and disturbing to the point of worrying every shareholder in any company where he is CEO." .

Musk's refusal to go back has its most serious consequences when dealing with regulators. In April, Musk reportedly hung up the president of the National Transportation Safety Board (NTSB), who was investigating the Huang crash. The two were arguing because the NTSB had asked Musk to stop making public statements about Huang's accident during the investigation – a claim that Musk had refused to honor. The NTSB finally froze Musk's investigation, depriving Tesla of an opportunity to convince the NTSB that its technology was not in question.

And this week, the same attitude led Musk to reject a draft settlement with the SEC. According to CNBC, Musk should have paid a nominal fine, but would have do not had to admit guilt. He should also have given up his position as Chairman of the Tesla Board of Directors and appointed two additional independent directors.

CNBC reports that Musk "felt that by settling, he would not be honest with himself". This attitude probably explains his conflicting position in other recent disputes. But that does not seem like a good attitude when you run a large public company. Sometimes a CEO needs to recognize that his own ego is less important than the success of his business and the well-being of his many shareholders, employees and customers.

Micromanage of Musk subordinates

A living story in The Wall Street Journal Last month, Musk asked why an assembly line had stopped when someone passed by a car. When told that it was a safety measure, the Newspaper reports, "the billionaire entrepreneur started the head before a car on the assembly line."

"I do not see how it could hurt me," said Musk. "I want cars to keep moving."

The abrasive management style of Musk and his refusal to listen to the concerns of subordinates have likely contributed to a high turnover rate among Tesla's senior executives. Tesla has lost three consecutive leaders in its Autopilot division in less than two years. the Newspaper Sterling Anderson, the first of those departures, left because he disagreed with Musk's decision to market the equipment of Tesla's cars as being able to "drive independently."

Tesla has also lost a series of financial leaders. Earlier this month, Chief Accountant, Dave Morton, resigned after less than a month of work. Morton joined the company at the time of the tweet "secure financing" of Musk. And according to CNBC, he "left the company after concluding that the CEO, Elon Musk, was not interested in the accounting details relating to a potential transaction to consider."