The latest events at Twitter are familiar to those who worked at Tesla or SpaceX, former employees said. Photo / Jason Henry, The New York Times
Firing people. Talking of bankruptcy. Telling workers to be “hard core.” Elon 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 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 US$44 billion last month. Over the years, Musk has developed a playbook for managing his companies — including Tesla and 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, 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 per cent 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 Musk “clearly thrives in existential circumstances.” He added, “He quasi creates them to light the fire under everybody.”
The similarities between 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,” Madsen said. “Twitter has been high risk, but the question is: What is the reward that comes out of it?”
Musk did not respond to a request for comment.
On Sunday, 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, Musk fired Robin Wheeler, a top sales executive, they added. Bloomberg earlier reported that more layoffs might be coming.
Twitter is also reaching out to some engineers who quit to ask them to return, the people said. In a meeting with employees Monday, Musk said the company was not planning any further layoffs, according to one person who attended.
At companies led by 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, Musk closed a US$50 million investment round from Daimler, he said, on the “last hour of last day possible or payroll would’ve bounced 2 days later.”
Tesla financing round closed at 6pm Dec 24th 2008 – last hour of last day possible or payroll would’ve bounced 2 days later. I gave Tesla last of my remaining cash from PayPal. Didn’t even own a house or anything sellable.
— Elon Musk (@elonmusk) June 21, 2021
He has said the same about SpaceX, once noting that both SpaceX and Tesla had a more than 90 per cent chance that they “would be worth $0″ in their early days.
For 2017, 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 Musk has returned to his favourite 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 CEO of Intel.
A crisis atmosphere and self-imposed austerity gives Musk the cover to make drastic changes and fire top managers or eliminate large swathes of staff, two former Tesla executives said. It also prepares those who remain to work under extreme conditions to bring about Musk’s desires, they said.
The approach at Twitter, where Musk has laid off thousands of employees, “is typical Elon,” 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, 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, 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 Musk’s workload and his use of Ambien to try to sleep.
Foreshadowing the turmoil at Twitter, Musk spent part of 2018 on the social media service, antagonizing lawmakers and regulators, including the Securities and Exchange Commission. The SEC later sued 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, 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, 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 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.
Musk’s management techniques are “good startup and growth strategy, but it is not good for building a stable company,” Deak said.
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 Musk, remaking Twitter is only a part-time job. He remains CEO of Tesla, which he said in court he continued to lead, and SpaceX, where, he said, he focuses on designing rockets rather than management.
Musk also leads Boring Co., a tunnelling startup, 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 Musk the world’s richest person. Last week in Delaware, under questioning by a lawyer representing shareholders who have accused 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 Wednesday, adding, “I expect to reduce my time at Twitter.”
This article originally appeared in The New York Times.
Written by: Ryan Mac and Jack Ewing
Photographs by: Jason Henry and Justin Kaneps
©2022 THE NEW YORK TIMES
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