Tesla’s (Quote, Chart NASDAQ:TSLA) Elon Musk may possess a number of the qualities required of a successful CEO —passion, confidence and drive, to name just a few— but his transparency and tell-all nature are a problem, says entrepreneur Bruce Croxon, who thinks Musk should step down for the good of the company.
So far, 2018 has been a rough ride for Tesla and Musk.
On the business side, Tesla has faced difficulties in meeting production targets, while operating costs continue to deplete its store of cash. And after a banner 2017 where Tesla’s share price grew by as much as 78 per cent, this year has been marked by tonnes of volatility, as investors react to each new headline about the company and, as has often been the case, about Musk himself.
Musk’s oversized impact on Tesla’s fortunes is the concern of the moment, summed up by the reverberations caused by his now famous tweet where the CEO mused about taking Tesla private, bragging that the funding had already been secured.
The announcement initially drove TSLA’s share price higher but over ensuing days the stock nosedived, in part due to a New York Times interview where Musk broke down and admitted that he was facing tremendous stress, was working 120-hour weeks and had been taking the sleep-aid Ambien to help cope.
It’s that type of confession more than Tesla’s and Musk’s difficulties themselves that are most concerning, says Croxon, who argues that public companies need to project an air of stability despite whatever issues might be going on behind the scenes.
“I think we’re witnessing a pretty public meltdown,” says Croxon, co-founder of Round 13 Capital and co-host of BNN Bloomberg’s The Disruptors. “Remember when we used to be able to meltdown in private? Things have changed. He’s a pretty transparent guy, another reason why I don’t think that this guy should be at the helm of something that’s public. This has got the need to be private written all over it but he just doesn’t play that game very well.”
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“At the very least, they need a strong Number Two to take over some of these operational capabilities, and from what I understand, they’re looking for it,” he says.
Reports say Tesla’s board of directors has met a number of times to discuss the possibility of taking the company private while at the same time they are conducting a search for a potential Chief Operating Officer.
“It may also be a story where it doesn’t always pay to be first,” says Croxon. “To be a trailblazer, you burn a lot of cash doing that. [Musk] has opened our eyes to the power of electric vehicles, to cool design — [if] somebody else comes in and does it responsibly, they could own the market