.Elon Musk landed in Spain in late June 2018, just in time for his brother Kimbal’s wedding and a needed respite. For months, his friends had grown increasingly worried about him as he eschewed their invitations to unwind, telling them he was needed at the factory. His public comments about his now ex-girlfriend Amber Heard seemed unhinged. His newest flame, Claire Boucher, didn’t fit neatly into Musk’s type.
There was no denying the gravity of what he had achieved—nor was there time to bask in it. His attention needed to turn to an equally pressing challenge: delivering cars to customers. An inability to sell the Model S five years earlier, once the factory had fixed its problems, had nearly wrecked the company. This time around, Tesla needed to deliver far more than 4,750 cars, and the goal was more than simply breaking even. This wasn’t about making a point, it was about making cash—to pay suppliers whose bills were mounting. More than just deliver cars, Tesla needed to move beyond its lone assembly plant outside San Francisco; it had to prepare to take the company global, to give it the kind of sales volume and scale it needed to compete against the likes of General Motors.
And yet despite the conflicting needs—rest, refocusing on sales—Musk’s mind was drawn elsewhere. He was on the verge of a public meltdown that might not only tarnish his reputation and distract Tesla from completing its goal of ushering in a mainstream electric car, but might do the one thing that Musk had fought so hard over the years to avoid: cause him to lose control of the company. headtopics.com
Musk’s Twitter habit seemed harmless enough. He obsessively checked the social media platform throughout his day, but then, who didn’t? Some of his earliest public blunders had occurred on the site. He’d unnerved onlookers months earlier with an April Fool prank suggesting the company was broke. He’d taken to the platform to gloat when Tesla’s market value overtook Ford’s more than a year earlier, jabbing at short sellers—those investors betting against him—who were feeling the pinch.
This time, an unfolding drama on the other side of the world caught his attention: a boys’ soccer team was trapped in a flooded cave in Thailand. As the world watched rescuers try to save them, someone on Twitter urged Musk to intervene. At first he demurred, but within days he was proclaiming that his engineers would design a mini-submarine to rescue the kids—even if it wasn’t clear that the rescuers in Thailand wanted such help. He documented his efforts on Twitter.
Tesla’s team was preparing for Musk to meet with Chinese government leaders, to celebrate the automaker’s deal to open a factory in China—a hugely consequential move that could propel Tesla beyond a niche car company. Instead of drawing attention to that triumph, Musk had other plans. En route to China, Musk had his jet stop in Thailand, where he rushed to the cave site. He posted pictures on Twitter. “Just returned from Cave 3. Mini-sub is ready if needed. It is made of rocket parts & named Wild Boar after kids' soccer team. Leaving here in case it may be used in the future. Thailand is so beautiful,” he wrote on July 9, even as a daring (and ultimately successful) rescue attempt was underway.
Musk’s sub was never used, and Narongsak Osottanakorn, head of the operation coordinating the rescue, told reporters the submarine wouldn’t have been practical for the mission. By then, Musk was in China. He received a text from Boucher, better known as Grimes, alerting him to the statement and warning that the media was turning against him. He reached out to his staff: “I just woke up in Shanghai. What’s happening?” As the team tried to figure out who Osottanakorn was, Sam Teller, Musk’s chief of staff, weighed in with an email: “He’s the fucking regional governor who has ignored our calls.” headtopics.com
Musk couldn’t let the perceived slight go. He wrote back: “We need to go all out and make this guy retract his comment.”The sentiment only grew worse. A couple days later, a British man named Vernon Unsworth, a spelunker who helped rescuers with his knowledge of the caves, was interviewed by CNN. In a passing question, he was asked about Musk’s submarine. He called it a PR stunt and said that “it had absolutely no chance of working” and that Musk had “no conception of what the cave passage was like.” He said Musk could “stick his submarine where it hurts.”
The video clip quickly began making the rounds on Twitter. By July 15, Musk was furious, attacking Unsworth in a series of messages on Twitter that included this one: “Sorry pedo guy. You really did ask for it.”This didn’t create a Twitter storm. It caused a category 5 hurricane. Shares plunged 3.5 percent, wiping out almost $2 billion of valuation. James Anderson of Baillie Gifford, one of Tesla’s largest investors, weighed in during an interview, calling the event “a regrettable instance” and saying Tesla needs “peace and execution.” Major news outlets began reaching out to Tesla’s communications department to ask if Musk was, in fact, calling Unsworth a pedophile. The team closely monitored the coverage, following more than two dozen headlines from the BBC to Gizmodo. One aide wrote a memo analyzing the situation: “Media continue to cover E’s tweet, with some stories mentioning that the ‘outburst’ comes ‘just a week after he said in a Bloomberg interview that he would try to be less combative on Twitter.’” It went on to say that a number of investors and analysts “believe his comments are adding to their concerns that he’s distracted from Tesla’s main business.”
Early the next morning, July 17, Teller, the 32-year-old chief of staff, tried to reason with Musk, saying it was time to apologize. He told him that he had talked with all of the people Musk held in deep regard—board member Antonio Gracias, CFO Deepak Ahuja, general counsel Todd Maron (his former divorce lawyer), and others—and they all agreed that an apology and a break from Twitter “sets you back on the right path internally and externally.” Teller had even taken the liberty of writing out what an apology letter could say. He told his boss: “Everyone will love and respect you more for openly admitting the mistake and showing how much you care about your employees and the company mission.”
An hour later, Musk responded. “After sleeping on this, I’m not happy about the suggested approach.” Musk worried an apology offered so quickly after Tesla’s shares had dropped would be dismissed as disingenuous and cowardly. “We need to stop panicking,” Musk said. headtopics.com
Later that night, however, Musk relented. In another tweet, he said: “My words were spoken in anger after Mr. Unsworth said several untruths & suggested I engage in a sexual act with the mini-sub, which had been built as an act of kindness & according to specifications from the dive team leader.”
As the Twitter winds swirled, Tesla’s executives kept their heads down. They had met the goal of churning out five thousand Model 3s in a single week at the end of June, but re-creating that and more, as Musk promised, was proving an uphill battle. The delays meant Tesla hadn’t been generating the kind of sales it had hoped for to keep the business afloat. Cash on hand had fallen to $2.24 billion at the end of June. Now Tesla not only needed to increase sales, it needed to cut costs—and quickly.
The gravity of Tesla’s financial situation weighed on Musk. At one point, he thought aloud about how Apple and its war chest of $244 billion might help. By all accounts, the iPhone maker’s efforts to develop a car had been a struggle.Musk reached out to Apple CEO Tim Cook about meeting for a possible deal. Perhaps Apple would be interested in acquiring Tesla for about $60 billion, or more than twice its value when Cook had originally inquired? A back and forth began between the two men’s camps to find a time to meet, but it quickly became clear that Cook’s side was dragging its feet, seemingly uninterested in finding an actual meeting time, a person familiar with the situation said. Instead, Apple hired back Doug Field, fresh from his work on the Model 3, to help guide its own car program.
Musk awoke at one of his Los Angeles mansions on August 7 and was greeted with a story in the Financial Times that revealed something that had been quietly brewing at Tesla. Saudi Arabia’s sovereign wealth fund had reportedly taken a $2 billion stake in the company, instantly making it one of the carmaker’s largest shareholders. Minutes later, as Musk headed to the airport to fly to the Gigafactory in Nevada, he typed out a fateful message on Twitter: “Am considering taking Tesla private at $420. Funding secured.”
It was the kind of half-cocked, uncensored messaging that Musk was known for—precisely what made his Twitter account a must-read for tens of millions of people, fans and detractors alike. Musk wasn’t remotely prepared for the onslaught that these nine words would bring.
The reaction on Wall Street was instantaneous. Shares, which had already been rising, soared. Musk arrived at the Gigafactory almost giddy, asking managers if they knew what 420 stood for? It was a marijuana reference, he told them. He laughed.Normally, a company alerts the NASDAQ ahead of the maneuver Musk was now casually proposing, and trading is halted. It isn’t a courtesy, it’s the trading exchange’s rule; companies are supposed to notify the exchange at least ten minutes before any news that might create significant volatility in the stock price, such as an intention to go private, so trading can be stopped to allow investors to digest the new information. The announcement caught them off guard—Tesla hadn’t said a thing. NASDAQ officials frantically tried to reach their contacts at the company.
Little good that did. Tesla’s head of investor relations was caught off guard, too. He messaged Musk’s chief of staff, Sam Teller: “Was this text legit?” Reporters reached out, too. “Quite a tweet! (Is it a joke?),” one wrote. Another emailed Musk directly: “Are you just messing around?”
About thirty-five minutes after the tweet, CFO Deepak Ahuja texted Musk: “Elon, am sure you have thought about a broader communication on your rationale and structure to employees and potential investors. Would it help if Sarah [O’Brien, head of PR], Todd [Maron, general counsel] and I draft a blog post or employee email for you?” Musk said that would be great.
The next day, the Securities and Exchange Commission opened an investigation.Musk’s approach wasn’t inconsistent with the way he had run Tesla for much of its history: Announce something, then figure out how to make it happen. The problem here was that as the CEO and chairman of a publicly traded company, his public statements about Tesla took on greater weight. It’s a prosecutable crime to say something about your business that you know to be false. Given that his announcement on Twitter seemed so off-the-cuff, and the scant details that emerged seemed not fully thought through, suspicion was immediately ignited. Companies normally introduce such deals only after extensive vetting, with statements well parsed by lawyers. Tesla was racing to put together a team to evaluate the deal, post-announcement.
Musk tried to put out the fire he’d set; instead he fanned the flames. He wrote a blog post indicating that the details of the deal were far from complete, that all would come in due time. “It would be premature to do so now,” Musk wrote. “I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do so since I would like for Tesla to continue to have a broad investor base.” As for the “funding secured” part of his tweet, he explained that he’d met with the Saudi fund at the end of July, when he “expressed his support for funding a going private transaction for Tesla at this time.”
He concluded that “if and when a final proposal is presented,” the company’s board would consider it and, if approved, shareholders would get a chance to vote. Read more: VANITY FAIR »
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