Name: 3 of Elon Musk's highly unusual leadership principles
Uploaded: 2023-11-14
Duration: 5 min 50 s
Description: The Tesla CEO has a reputation for being unconventional and unpredictable, but his accomplishments are undeniable. These are the leadership tactics he deploys when building and running companies.

The Tesla CEO has a reputation for being unconventional and unpredictable, but his accomplishments are undeniable. These are the leadership tactics he deploys when building and running companies.

3 of Elon Musk's highly unusual leadership principles

Leadership

How you fun. Elon Musk is one of the most fascinating business people in the world. His approach is so unconventional. The guy has a very belligerent management style. He's very hard to work for. Were he not the owner or the lead shareholder or the controlling shareholder? All of these companies, some of which don't even have boards of directors, any conventional board of the actors. Were he a hired hand would have fired him a long time ago. But look what he's accomplished. Everyone wants to know how he does it right? What are his daily management principles? It really made it worthwhile to dig in and look at kind of the tools that he uses that have built him an empire but also an empire that many question may be built on sand. One of the principles I learned about it from one of his engineers who spent 10 years with him at spacex is that he loves to keep turning over the workforce. There were a lot of people doing things that didn't seem to have a lot of value. And I think that's true. Probably most Silicon Valley companies maybe not to the degree to which it was at Twitter. But yeah, there's a potential for significant cuts. I think out of the companies without affecting their productivity. In fact, increasing their productivity, his personnel policy is extremely demanding and extremely belligerent. This engineer was telling me if I made a mistake in February, I'd spend the next 11 months worrying about making a second mistake because if you make two mistakes a year, you're out at this point. I think I know more about manufacturing than anyone currently alive on earth. I can tell you how every damn part in that car is made. He demands that everyone know everything there is to know about what he calls the idiot index and the idiot index is knowing what the raw materials are that go into every part, what the cost of each of them is adding them up and then knowing what that finished part costs. And if you don't know that number twice, you're out. Musk's greatest talent may be his ability to sell a vision. He doesn't want his shareholders or his investors to think too hard about returns on equity or what dividends are going to be or any of these kind of conventional metrics because you can never get to a $650 billion market cap for Tesla using conventional metrics. You really have to believe and he gets people to believe it's going to move to just a truly massive scale scale that no company has ever achieved in the history of humanity. The vision is essentially the Teslas that are out on the road and the ones he's going to sell in the future are going to be worth multiples of what you paid for them. Here's why he's going to send you self driving software that you can install in the car. You drive the car nine hours a week on average. But with this software, your car can circulate all day as a Robo taxi, 50 hours a week, you've got this money making car picking people up. Therefore, the Tesla that you paid $40,000 where it's going to be worth $200,000. Therefore, he's saying, who cares about what our margins are? Who cares that they're going down? The point for us is to sell as many Teslas as possible. We're going to discount, we can sell this software for so much money. That's where the big money is going to come from. This is a tech company, not a metal vending car company, like all the others that have market caps that are 10% of Tesla. Frankly, Tesla, cars are robots on wheels. Um Anything that's connected to the internet is effectively an endpoint actuator for artificial intelligence. One of his tactical strengths is his ability to spin these situational arguments that we'll use completely different points of view depending on what he wants to accomplish for the same company at the same time. For example, in the case of X, it's in his interest to paint a very bad short term portrait of what's going on there. That philosophy is aimed at his banks, the worse they think things are going, the better his chance of buying out the debt at a huge discount because they can't get rid of the debt because the interest rates are too low. On the other situational side, he's looking at the future. It's another gauzy vision that he's promoting about how it's going to be worth $150 billion be among the biggest market cap companies in the country. And that's aimed at satisfying all of his big investors who are probably not so happy right now. Kind of a good cop, bad cop argument in the short term. We're doing horribly that's aimed at the banks in the long term. We're going to do great. That's aimed at placating the shareholders. I think there's a certain music man element to Elon Musk and that his arguments have to be taken with a lot of skepticism and that has not been the case so far. But now you're in a situation where a lot of people are getting disappointed. Clearly, all of the big names that he pulled into X. These folks can't be happy with what's happened to the valuation of that. He's got 13 billion in debt. The interest rates are eating him alive. They're absorbing most of the cash flow. A lot of Tesla investors are not happy either with the decline in the margins and the decline in the share price, who knows how much lower it's going to go? So really things are not going well for him now and we may be in for something of a revaluation of his promises and pledges.