Elon Musk, the eccentric billionaire behind Tesla, SpaceX and PayPal, has seen his reputation take a few significant lumps recently, following a series of big communications blunders that cost him much embarrassment and tens of millions of dollars.
To say it’s been a tough year so far for the South African would be a bit of an understatement. He accused a diver who helped rescue a Thai soccer team trapped in a cave a pedophile. He smoked weed and drank whiskey with podcast host Joe Rogan.
And then, there was his abortive bid to take Tesla private, via a Twitter announcement.
The incident resulted in the Securities Exchange Commission bringing forward fraud charges against Musk and ordering him and Tesla to pay $20 million in fines each. The SEC stated his tweet was misleading, and caused “significant market disruption.” The admittedly exhausted founder was also forced to step down as chairman, but will remain as Tesla’s chief executive officer.
Musk’s reputation from tech-visionary-billionaire to someone who seems on the brink of having a complete breakdown offers a cautionary tale for executives who have, or want to have, a high-profile public presence.
For starters, what you say has a material impact on the company’s finances. Musk’s decision to openly speak his mind and even vent his frustrations on Twitter has caused the company’s stock to roller coaster in recent months. The day he announced his intentions to take Tesla private, the stock shot up 11%, but later sank -- before rising again a few weeks later after admitting that keeping the company public was the best option. But the ride wasn’t over just yet. The stock then dropped 9% after video of him smoking marijuana on the Joe Rogan Experience podcast went viral.
Most shareholders prefer the price of their publicly traded Tesla shares to be influenced by sales of cars and overall company performance, rather than the social media musings of its CEO. I’d be willing to bet these sort of swings irritated more than a few investors, even though for day traders who quickly jump in and out of a stock, it could have been a great opportunity to make some money.
But back to Musk. His erratic behaviour has done more than just upset the share price. It has also been attributed to senior leadership leaving Tesla. Some 41 executives have left the company this year alone, including the firm’s chief accounting officer after only a month on the job. As we wrote a few weeks ago, sometimes employees have no choice but to leave after a leader of an organization acts out of line, and it seems as though Musk’s actions have contributed to some heading for the exits.
How executives interact with the media is also incredibly important, not just to the individual’s reputation, but that of the company he or she leads. Musk has had a testy relationship with reporters, and has found himself in hot water over the past year. He lashed out at Reuters and other outlets, accusing them of publishing false, defamatory stories designed to hurt Tesla. Picking fights with the media is rarely a good idea, and the proverbial honey almost always triumphs over vinegar.
Having good relations with the press is invaluable, especially for high-profile executives. It’s also important for leaders to know the rules and guidelines for interacting with reporters. As we always stress to our clients in our media training programs, it’s a best practice to assume that all conversations with a reporter should be considered “on-the-record,” meaning the journalist is free to use the comments made in any story he or she writes. Speaking “off-the-record” or on “background” is only appropriate when it’s mutually agreed upon by both parties. Simply prefacing an email to a reporter with the words “off-the-record” doesn’t make it so. Musk learned this lesson the hard way, when he wrote one such an email to BuzzFeed. Of course, his comments were published, this time on the subject of a British rescue diver allegedly being a pedophile. That diver is now suing Musk.
Even though Musk is probably one of the world’s most famous billionaires and whatever he says is bound to generate headlines, the fact is that what happens to him can happen to anyone in a position of influence. With social media ready to massively amplify any blunder, what leaders of organizations say has a bigger impact on the bottom line than ever before.
So, how to proceed? Think before you speak. Think before you tweet. Have an issues and crisis communications plan in place if necessary. And whenever you can, be nice to the press.