"Firing people. Talking of bankruptcy. Telling workers to be
“hard core.” Mr. Musk has repeatedly used those tactics at many of his
companies.
Elon Musk was sleeping at the office. He dismissed employees
and executives at will. And he lamented his company was on the verge of
bankruptcy.
That was back in 2018 and the company was Tesla, as Mr.
Musk’s electric automaker struggled to build its mass-market vehicle, the Model
3.
“It was excruciating,” he told The New York Times at the
time. “There were times when I didn’t leave the factory for three or four days
— days when I didn’t go outside.”
The billionaire’s experience with what he called Tesla’s
“production hell” has become a blueprint for the crisis he has created at
Twitter, which he bought for $44 billion last month.
Over the years, Mr. Musk has developed a playbook for
managing his companies — including Tesla and the rocket manufacturer SpaceX —
through periods of pain, employing shock treatment and alarmism and pushing his
workers and himself to put aside their families and friends to spend all their
energy on his mission.
At Twitter, Mr. Musk has used many of those same tactics to
upend the social media company in just a few weeks.
Since late last month, the 51-year-old has laid off 50
percent of Twitter’s 7,500 employees and accepted the resignations of 1,200 or
more. On Monday, he began another round of layoffs, two people said. He tweeted
that he was sleeping at Twitter’s offices in San Francisco. And he has applied
mission-driven language, telling Twitter’s workers that the company could go
bankrupt if he wasn’t able to turn it around. Those who want to work on
“Twitter 2.0” must commit to his “hard core” vision in writing, he has said.
David Deak, who worked at Tesla from 2014 to 2016 as a
senior engineering manager overseeing a supply chain for battery materials,
said Mr. Musk “clearly thrives in existential circumstances.” He added, “He
quasi creates them to light the fire under everybody.”
The similarities between Mr. Musk’s approach to Twitter and
what he did at Tesla and SpaceX are evident, added Tammy Madsen, a management
professor at Santa Clara University. But it’s unclear if he will find the means
to motivate employees at a social media company as he did with workers whose
quests were to move people away from gas-powered cars or send humans into
space.
“At Tesla and SpaceX, the approach has always been high
risk, high reward,” Dr. Madsen said. “Twitter has been high risk, but the
question is: What is the reward that comes out of it?”
Mr. Musk did not respond to a request for comment.
On Sunday, Mr. Musk held a meeting with Twitter’s sales
employees, according to two people with knowledge of the matter. Then on
Monday, he laid off employees in the sales department, they said. Late last
week, Mr. Musk fired Robin Wheeler, a top sales executive, they added.
Bloomberg earlier reported that more layoffs might be coming."
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"Twitter is also reaching out to some engineers who quit to
ask them to return, the people said. In a meeting with employees on Monday, Mr.
Musk said the company was not planning any further layoffs, according to one
person who attended.
At companies led by Mr. Musk, the pattern of claiming that
the firms are on the brink of a potential bankruptcy has come up often. At
Tesla in December 2008, during the depths of the financial crisis, Mr. Musk
closed a $50 million investment round from Daimler, he said, on the “last hour
of last day possible or payroll would’ve bounced 2 days later.”
He has said the same about SpaceX, once noting that both
SpaceX and Tesla had a more than 90 percent chance that they “would be worth
$0” in their early days.
For 2017, Mr. Musk said, SpaceX had to perform rocket
launches once every two weeks or face bankruptcy, recalled one former SpaceX
executive, who spoke on the condition of anonymity for fear of retribution. At
a company that was driven by a goal to make life “multiplanetary,” the threat
of bankruptcy was a motivating factor, the former executive said.
SpaceX has since successfully sent many rockets into space
and safely landed them again on Earth. But Mr. Musk has returned to his
favorite stick, tweeting last year that if a “severe global recession” were to
dry up capital, bankruptcy at the rocket maker was “not impossible.”
“Only the paranoid survive,” he wrote, quoting Andy Grove,
the former chief executive of Intel.
A crisis atmosphere and self-imposed austerity gives Mr.
Musk the cover to make drastic changes and fire top managers or eliminate large
swaths of staff, two former Tesla executives said. It also prepares those who
remain to work under extreme conditions to bring about Mr. Musk’s desires, they
said.
The approach at Twitter, where Mr. Musk has laid off
thousands of employees, “is typical Elon,” Mr. Deak said.
The chaos at the social media company is familiar to people
who worked at Tesla when the company was struggling to ramp up manufacturing of
the Model 3, which went on sale in 2017. In May of that year, Mr. Musk sent an
email to the staff that echoed some of the language he has used with Twitter
employees.
“Tesla has to be hardcore and demanding,” he wrote. “The
passing grade at Tesla is excellence, because it has to be.”
In the year that followed, Mr. Musk famously slept on the
floor in a Tesla factory’s conference rooms, fired the vice president of
engineering and worked 120-hour weeks to cope with a lag in the production of
Model 3s. Members of Tesla’s board worried about Mr. Musk’s workload and his
use of Ambien to try to sleep.
Foreshadowing the turmoil at Twitter, Mr. Musk spent part of
2018 on the social media service, antagonizing lawmakers and regulators,
including the Securities and Exchange Commission. The S.E.C. later sued Mr.
Musk for tweeting that he had the “funding secured” to take Tesla private, even
though the billionaire never followed through and settled with the agency. This
summer, he spent months and millions of dollars in legal fees to back out of
his deal to buy Twitter.
Testifying in Delaware last week in a lawsuit about his
Tesla pay package, Mr. Musk acknowledged that his penchant for acting
unilaterally can get him in trouble. “When I make decisions without consulting
people,” he said, “the probability that those decisions will be wrong is
higher.”
In Delaware, Mr. Musk also downplayed comparisons between
what he was doing at Twitter with the Model 3 ramp-up, saying on his way into
the courtroom that what was happening at the social media service was “easier.”
Some of Mr. Musk’s former employees question whether his
management tactics will ultimately work at Twitter. Tesla and SpaceX were in
earlier stages of growth when their boss whipped out his tough language and
told everyone they had to go full tilt. But Twitter is a more mature company
that has performed inconsistently for years.
Mr. Musk’s management techniques are “good start-up and
growth strategy, but it is not good for building a stable company,” Mr. Deak
said.
Mr. Musk’s all-in commitment to a company is often
inspirational, but can also turn toxic and engender a culture of fear and
scapegoating, three former Tesla and SpaceX managers said.
And for Mr. Musk, remaking Twitter is only a part-time job.
He remains chief executive of Tesla, which he said in court he continued to
lead, and SpaceX, where, he said, he focuses on designing rockets rather than
management.
Mr. Musk also leads the Boring Company, a tunneling
start-up, and Neuralink, a brain-computer interface technology firm.
He has
said his long-term goal is to save humanity by developing technology for space
travel, or, in his words, by “making life multiplanetary in order to ensure the
long-term survival of consciousness.”
The multitasking has become an issue in a lawsuit filed by
Tesla shareholders who objected to the pay package that made Mr. Musk the
world’s richest person. Last week in Delaware, under questioning by a lawyer
representing shareholders who have accused Mr. Musk of neglecting his duties at
Tesla, the billionaire said his intense involvement in Twitter was temporary.
“There was an initial burst of activity to reorganize the
company,” he said last Wednesday, adding, “I expect to reduce my time at
Twitter.””
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