Bill Fischer, Visiting Professor, Operations Management
No, it hasn’t gotten to this just yet, but we shouldn’t even be having this conversation.
The SEC’s decision to sue Tesla CEO Elon Musk, with the intention of barring him from serving as an executive or director not only of Tesla, but of any corporation under the jurisdiction of the SEC, was the height of folly. Do any of us, including the SEC commissioners involved, really believe that our society would have been better off with Elon Musk on the sidelines? Do they really think that anyone else could do the job of representing Tesla, or the future, better than Elon Musk?
Let’s be clear, there are a lot of smart people in Silicon Valley. But, most of them are not named “Elon Musk.” What we discovered over the weekend was that that name was worth at least $6 billion in value, and possibly a lot more, based on the fall in market capitalization on the day following the announcement of the SEC action. It’s hard to imagine very many other people whose suspension from work life would bring such a hit on the very next day. Yet, I suspect that very few of us are actually surprised. In our minds, Tesla is Musk, and without Musk, what is Tesla?
Golub Distinguished Visiting Professor of Finance, Chester Spatt
The past few months have been turbulent for Tesla CEO Elon Musk.
From publicly accusing a Thai rescue diver of being a pedophile (without evidence) and conducting a radio interview while smoking marijuana to insulting equity analysts on one earnings call and threatening to take Tesla private — then reversing those statements, triggering a SEC and a criminal investigation — Musk has engaged in some reckless behavior.
Then there are production problems with Tesla not being able to deliver cars on time. A big question is whether Musk should step down. While investor confidence in Musk has taken a big hit, he is a visionary leader and there would likely be great disappointment if he left the company.
What Musk does need is a lot more checks and balances by his management team. Investors would like Musk to have more self-control and act more like other legendary leaders, such as the late Steve Jobs of Apple and Amazon.com’s Jeff Bezos.
For that to have a chance, Tesla’s management team must play a bigger role in guiding the company’s strategy both internally and externally. If Musk is required to step down as CEO for a period of time by the SEC, the management team must be ready to take the wheel.
Tesla also needs to step back and review the basics of corporate governance. U.S. securities laws and common business practices are meant to keep market participants honest, so that they effectively represent their own best interests and those of their shareholders.
Thomas W. Malone Professor of Information Technology
Elon Musk’s sometimes antagonistic relationship with the press is no secret. But last week, the billionaire chief executive of SpaceX and Tesla exhibited a new level of hostility.
In a series of tweets, Musk referred to journalists as “holier-than-thou” hypocrites, said that news organizations had lost their credibility and the respect of the public, and blamed the media for the election of President Trump.
Then things got interesting. Musk proposed creating a “media credibility rating site” where the public would be able to “rate the core truth of any article & track the credibility score over time of each journalist, editor & publication.” He suggested calling this site “Pravda”—the Russian word for “truth” and also the name of the longtime Communist newspaper. He likened the rating platform to Yelp for journalism.
Despite the bluster, Musk may be on to something. At a time when public trust in the media is at an all-time low, a reputation system that allows citizens to gauge the reliability and accuracy of news they consume could be a step in the right direction. Read More
MIT Sloan Assistant Professor David Keith
From MIT Technology Review
Such has been the remarkable success of Tesla Motors that news of its production and financing challenges came as a surprise for some. Tesla plans to raise an additional $640 million from capital markets, and downgraded its 2015 delivery forecast by up to 5,000 vehicles, citing potential complications with supplier qualification and the ramp up of manufacturing for the Model X SUV.
This news serves as a timely reminder of the enormity of the challenge that Tesla is pursuing in bringing its high-performance electric vehicles to market. Basically, building cars is a very expensive business. A new vehicle costs at least $1 billion in development and tooling, and Tesla is developing two new vehicles concurrently (the Model X SUV and the smaller Model 3).