ENTREPRENEURSHIP
What to Do When Entrepreneurs No Longer Bring Value
A discussion about how humanity can get lost in ego
Elon Musk is not one to shy away from sharing his thoughts online. Twitter is one of his favorite channels. With over 30 million followers his voice is heard.
In recent years some of his tweets have got him into a spot of bother.
The purpose of this article is to consider the ‘tipping point’ as to when an Entrepreneur no longer adds value to the business they founded.
Social Sabotage
Musk’s most recent tweet is unlikely to be well received by Telsa investors. Just today he shared a 7-word tweet that wiped billions off Tesla’s share price, $14 Billion to be exact. He said, tweeted rather:
“Tesla stock price is too high, IMO.”
This single tweet, a complaint about Tesla’s share price, saw their stock market value plunge off a cliff this morning.
Quite literally.
Moments after Musks’ tweet, Tesla’s share price tanked a jaw-dropping “10 percent over the course of an hour before recovering slightly” (Waters, 2020).
Timing
The timing could not be worse for Tesla given that the motor industry is in the midst of a volatile market. That said, Tesla “slumped more than 60 percent after coronavirus hit”, but soon “rebounded by 120 percent” (Waters, 2020).
The controversial chief executives’ outbursts have got him into trouble in the past. In 2018 he indicated that he was close to an agreement, a buyout to gain full control of Tesla.
Again via Twitter.
This tweet led to a “complaint from the US Department of Justice and a settlement that involved Musk agreeing not to issue market-moving tweets in future without first clearing them with his company’s legal department” (Waters, 2020).
After his 2018 outburst Musks’ settlement witnessed him stepping down as the chairman of Tesla for three years. As part of this deal, he also agreed to seek approval from in-house lawyers before making any communications about Tesla, including social media comments.
What’s interesting is that “Tesla lost three general counsels last year, one of them quitting after only two months” (Waters, 2020).
Toxic games
This raises a valid question — are entrepreneurs like Elon Musk the best people to be leading such an emerging brand in 2020.
My point is that after the startup phase, when do entrepreneurs stop adding value? Or worse, what should shareholders do when founder-behaviors teeter on the brink of destruction.
You see Musk seems to be playing games too, with short-sellers. He’s well aware of the impact that his voice has on his company’s share price. And the stock market.
Elon seems to be irked.
The same short-sellers raised concerns about Tesla’s share price, implying that it’s “artificially inflated”. One short-seller even took to Twitter indicating that accounting irregularities “lay behind the company’s latest strong set of results” (Waters, 2020).
Either way, $14 billion that existed 24 hours ago disappeared into thin air.
Final Thoughts
Social media can be damaging to people and companies if mismanaged. Even Sean wrote a story about this topic in his recent article: “The Most Damaging Tweet Ever”.
Sean’s piece brings another question to the fore — if an entrepreneur costs a business $14 billion is it time to part ways?
This month Oxfam predicted that more “than half a billion more people could be pushed into poverty unless urgent action is taken” (Elliott, 2020).
With this in mind, here are two choices, two actions:
- Discredit your company’s’ share price
- Sell 10% of your company shares and donate the proceeds to charity
Both cost the same financially, $14 billion, but one serves humanity whereas the other strokes your ego.
Which is which?
