How and why Tesla's approach to communication went from unconventional to nonexistent.
As the world’s most valuable automotive manufacturer, electric car giant Tesla is the largest company in the world that operates without any kind of public relations personnel.
That means no media relations arm. No crisis comms plan. No PIO.
In fact, the entire PR team was purged just a couple years ago in 2020, and CEO Elon Musk has defended the move, saying the company doesn't believe in "manipulating public opinion."
Not only does this reflect a very unsophisticated understanding of what public relations practitioners do, but it also makes Elon Musk the sole public authority authorized to comment on Tesla's wheelings and dealings... and he doesn't exactly have a history of exuding stability.
So in this episode, we revisit that history with Forbes Senior Editor Alan Ohnsman and San Diego-based crisis communications consultant David Oates.
We discuss how Tesla is now struggling to control its own narrative, what risks it's courting, and how Elon Musk's leadership model might be setting up the company... and its shareholders... for their biggest disaster yet.
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Transcript:
Dusty Weis:
Electric car manufacturer Tesla is the world's most valuable automotive company, at least by the market cap valuation that's sort of the standard except way to measure a company's value. But that makes Tesla the largest company in the world that operates without any kind of public relations personnel.
Dusty Weis:
No media relations arm. No crisis comms plan. No PIO. In fact, the entire comms team was purged somewhere in the course of Q3 of 2020. Though Alan Ohnsman, a senior editor at Forbes, says we're not really sure when they were purged because it's not like they sent out a press release about it.
Alan Ohnsman:
They're not commenting on anything anyway. They don't respond to the media anyway. So they just sort of made official what was becoming pretty apparent in the day-to-day function of that team.
Dusty Weis:
Since Tesla's inception a decade and a half ago, Alan has been covering their beat as a journalist, along with its brilliant eccentric and unpredictable CEO, Elon Musk. Instead of maturing as a company, assuming a more traditional corporate structure like we've seen from other tech startups, Facebook, as for instance, Elon Musk and Tesla have moved further and further from convention.
Dusty Weis:
The move to completely excise a communications team is just one of the most glaring examples of Elon Musk cultivating his rep as a cult of personality Maverick. But San Diego based crisis comms consultant, David Oates says it's a move that has Tesla creeping closer to complete disaster with each new calamity.
Dave Oates:
There's no backup for him. Something happens to Elon Musk tomorrow, there's no fail safe, redundant system in place from a communication standpoint.
Dusty Weis:
I'm Dusty Weiss from Podcamp Media. This is Lead Balloon, a podcast about PR marketing and branding disasters and the well meaning communications professionals who live them.
Dusty Weis:
Thanks for tuning in. We're here every month telling these kinds of stories.
Dusty Weis:
We've been nominated for a Webby, and Ad Week heralded Lead Balloon as marketing podcast of the year once upon a time. So, make sure you're following us in your podcast app of preference, and check out Podcamp Media on social for videos behind the scenes shenanigans and more.
Dusty Weis:
Being as I am a super nerd, anytime Elon Musk comes up, I am obligated to point out the parallels between him and another brilliant, beloved, albeit, fictional in this case, icon in the science world, Tony Stark. You probably know him better by his comic book superhero name.
Tony Stark / Iron Man:
Ironman.
Dusty Weis:
Now I am certainly not the first pundit to make this observation.
Speaker 5:
People have called you the real Tony Stark.
Dusty Weis:
Elon Musk doesn't require a suit anyway.
Speaker 9:
And if he reminds you of Tony Stark, Iron Man, you're right.
Dusty Weis:
But the parallels are pretty blatant. They're both powerful billionaire tech CEOs. They're both hands-on engineers pushing the boundaries of technology, and they're both self-styled renegades.
Tony Stark / Iron Man:
I prefer the weapon, you only have to fire once.
News Reporter:
You just pressed the bio weapon defense mode button.
Speaker 9:
That's how dad did it. That's how America does it. And it's worked out pretty well so far.
News Reporter:
This is a real button.
Dusty Weis:
Actor, Robert Downey, Jr. and director John Fabbro are the first to admit that they used Musk as an inspiration for the big screen adaptation of the superhero, to which they alluded with a wink and nudge cameo appearance by the real world, billionaire himself,
Pepper Potts:
Mr. Musk, how are you?
Speaker 7:
Congratulations on the promotion.
Pepper Potts:
Thank you very much.
Tony Stark / Iron Man:
Those Merlin engines are fantastic.
Speaker 7:
Thank you. Good idea. For an electric jet.
Tony Stark / Iron Man:
You do. Then, we'll make it work.
Dusty Weis:
Also, like Tony Stark, Elon Musk comes from money and got richer through shroud business dealings as well as some ruthless business practices. His first venture after graduating from college with degrees in physics and economics was an internet startup called Zip2. Don't worry if you haven't heard of that one, it was sort of a combination of Yelp and Google maps before either of those two things existed and he founded the company with his brother, Kimbal, using $28,000 that they borrowed from their father. It eventually grew to be worth 307 million.
Dusty Weis:
Pretty shoot investment there. But when Zip2 was sold, Elon used his $22 million share of the company to found an online banking concern that would eventually become PayPal and you've probably heard of that one. Selling his stake in PayPal made Musk a cool $180 million and empowered him to launch some of the brands for which he's now known, SpaceX, which has captured the pole position in the private industry space race.
Dusty Weis:
And of course, Tesla, an electric car company, which Musk bought and grew into the world's primary seller of battery and plugin electric vehicles. However, even as his rockstar status has grown, there have been red flags about Elon Musk's motives and corporate conduct from spurning government regulators to fostering a racially toxic work environment.
News Reporter:
Some of these complaints are ridiculous. I mean, for someone to have swastikas and KKK and in a break room, and it takes months for it to be scrubbed down, allegedly.
Dusty Weis:
Even to accusations in 2019 that he backed a coup attempt in Bolivia. It seems that however noble his stated intentions as an electric car maker and a space pioneer, there are no moral lines he will not cross in pursuit of those goals. And that is where the comic book comparison ends, I'm afraid, because while he may have been in an irascible Eagle maniac, at least Iron Man had a hero's redemption character arc.
Tony Stark / Iron Man:
And now I'm a changed man.
Dusty Weis:
But what does Elon Musk, a man who could admittedly benefit from an improved public image, have against public relations? Why fire the entire public relations team at Tesla a couple years ago? What does it mean for such a powerful influential company to operate without this standard piece of corporate apparatus?
Dusty Weis:
To help us answer that we're joined now by Alan Ohnsman, senior editor at Forbes, working the future of transportation beat. Alan, I'm going to read you something here that I've seen in a lot of articles recently. The quote is, "Tesla did not respond to a request for comment." How many times would you say you've had to write those words over the last five years here?
Alan Ohnsman:
I couldn't begin to tell you, Dusty. I've lost track at this point. We go through the motions. We always ask for comment, none ever comes back, but you don't stop trying.
Dusty Weis:
Obviously, in speaking as a former journalist myself here, that's a frustrating position to be in, but before it was widely reported that Tesla had dissolved its PR department entirely, had you noticed anything different about the manner in which the company was engaging with the media up to that point?
Alan Ohnsman:
Well, my history with Tesla's pretty long, so I literally began covering the company from the absolute beginning. The first time they came out of stealth in the summer of 2006. There had been just an incredible evolution over the years because certainly in the first decade or so the company they had more open and active PR operation, a more standard PR operation, by the time they shut it all down, Elon Musk shut it all down in probably the year or so lead up to that, which would've been throughout 2018, 2019.
Alan Ohnsman:
Essentially, every time you reached out to Tesla, even for the most basic comment, the initial response from the PR person would be, "Okay, look, can we talk on background first?" Which was just bizarre because I've been doing this for 30 years. You go to General Motors, you go to Harley Davidson, you go to any company, you can think of any public company and you reach the PR department. The first thing they say is not, can we speak on background?
Alan Ohnsman:
They want to know your question. And then, they'll either give you some sort of answer at that point or say, "Well, we'll have to get back to you." But this very strange habit of we're speaking on background, it's like, wait a second, your role is as a communications' person for your company and you've begun with a barrier at the start of the request. That was certainly rather odd and that was unique to Tesla.
Dusty Weis:
What were they telling you on background? Was it the kind of stuff that normally just gets pushed out as company statement? Or was...
Alan Ohnsman:
Yeah.
Dusty Weis:
It like...
Alan Ohnsman:
Yes.
Dusty Weis:
You're not going to believe this, but...
Alan Ohnsman:
No, no, no. The most like boiler played boring inconsequential sorts of things. So you might call just for a very basic question about operations, about headcount at a factory or timing of a product or some specs on a product or something that wasn't available on the website. And for the most basic stuff, no one was authorized to speak at that company in the final, say 18 months before the entire department was liquidated.
Dusty Weis:
Wow. And so, did you get the sense that people were just trying to keep the information flowing in spite of the fact that there was this hard clamp down on what was coming out of the company at that point? Were they just trying to do their jobs?
Alan Ohnsman:
I believe they were doing what they were told to do. And I think as has happened over the years and, as we've all seen, a single person speaks for Tesla, no one else speaks for that company. From the most minor piece of information to the important stuff, Elon Musk is the only voice who can comment. So no one was empowered to say anything, even non controversial stuff. Again, basic operating information details that weren't readily accessible in public filings were on the website, but were not necessarily controversial.
Alan Ohnsman:
None of that would be provided by the company in that final period. And that was a huge change because if we roll the clock back to say 2010, 2011, 2012, that sort of timeframe, it was a much more normal situation. You could call or email and in a pretty brief period of time, someone could explain an operational question, a product question, something about executives, but that did change quite dramatically.
Dusty Weis:
I guess, given the shift that you noticed that last year and a half there before it became official, were you surprised then when they just axed public relations as a corporate function entirely?
Alan Ohnsman:
Yes, because that's extraordinary. I mean, in all the years I've been doing this job, I don't know of another company, a public company that does not have active corporate communications team and certainly not the world's most valuable automaker and one of the most valuable, publicly traded companies in the United States. You do have companies that have been rather circumspect. Apple, Amazon, Google are somewhat famous for being very limited on the amounts of public information they provide. But even those companies will say something, they will give you something.
Alan Ohnsman:
I think Tesla's in a class by itself where it's absolute silence. When the decision was made to completely do away with the team, and again, that would've been made by one person who decided that was the way they wanted to go. It was unusual, certainly. But at that point it sort of seemed they're not commenting on anything anyway, they don't respond to the media anyway. So it just sort of made official what was becoming pretty apparent in the day to day function of that team.
Dusty Weis:
As a journalist. What do you make of this development professionally speaking? How does it impact the way that you do your job?
Alan Ohnsman:
Well, it makes it difficult. You know, again, because I've been covering the company a very long time. I have my own information. I can go back to refer if I need some historical stuff, but it's very complicated. This is a company that is large, that is highly valuable in terms of its market cap, but it's expanding rapidly. It's setting up operations all over the place. So if I want to get details on the factory in Texas or in Berlin, if I want to check, what is the status of some legal issues, recalls, there's literally no one to talk to. That information always has to come from other sources. If it's a recall, it comes from NITSA.
Alan Ohnsman:
If it relates to a factory project that tends to come from maybe the local government, local authorities, or maybe a federal regulator in some cases, but the company itself doesn't really speak clearly and in detail about what it's doing. So there is a great deal that we just don't know because the company doesn't share it. I would say, if you look at Tesla's regulatory filings, they comply with the minimum requirement of the SEC and here's a very simple example. The company sold about a million cars in 2021, which is great.
Alan Ohnsman:
We don't know the global geographic breakdown of those sales because they don't provide that. So it's a lot of guesstimates and guesswork and estimates by different outside sources. You can go state by state, see if state DMVs will tally that up. But I find that quite remarkable because I can assure you, there's not a global automaker that doesn't have regional breakdown of their sales. So we just know country by country. What General Motors sold everywhere in the world. I have a ballpark understanding of what Tesla sells in different markets, but I can't tell you for sure.
Alan Ohnsman:
And there's no one to ask nor do they provide that in any of their SEC filings or any of their public filings. As an investor, I would think... Well its kind of curious I own this stock, boy, it'd be good to know a little bit more with a little more granularity about, tell me about your business, how you doing in China versus the European Union versus North America versus Oceania. I'd just like to see that information. It would be good to see where are you growing? Where are you not really growing? We don't know, it's not available.
Dusty Weis:
And it's funny that you say that because it's almost as if Elon Musk has built up this cult of personality around himself, where there is a certain class of investors who don't care and even celebrate the fact that the company has run unconventionally. I happen to know a couple of investors in Tesla, myself, and around the time this story was breaking, had a conversation with one of them where I said, do you really want so much of your own personal financial stake tied up with a person that thinks that it's not important to have a strategic communications arm to his company?
Dusty Weis:
Does this not strike you as risky? And he said, no, it's just Elon doing Elon, man. He's just out there. He's just defying all the conventions and he's going to do. And you know, it's part of the genius of Elon Musk. And I kind of paused after that and took a deep breath and said to myself, I don't know if that's how I would personally invest my money, but there are people out there that celebrate this.
Alan Ohnsman:
Yeah, I would just say as a business reporter and as someone who covers this space for a long time, I don't know that you should make it a faith based investment, especially when you're riding on a single human being, because no matter how remarkable any, one individual might be, everyone has flaws and fouls up. And so, that's putting a lot of faith into a single human to say, "I trust you no matter what, because this is also an individual who does have some issues."
Dusty Weis:
Certainly Elon Musk has a history of being in the headlines for reasons that make seasoned PR professionals blush. Sometimes it's mostly harmless and even kind of funny, like when he announced that his underground tunnel company would be selling consumer grade flame throwers for no discernible reason, other than flame throwers are pretty cool.
Speaker 10:
That is preposterous.
Speaker 11:
It's dangerous to Eyebrows.
Dusty Weis:
Or the time that he shared a blunt, on noted meathead Joe Rogans infamous podcast,
Speaker 14:
Is that a joint?
Speaker 13:
Its marijuana inside of a tobacco.
Speaker 14:
Okay.
Speaker 13:
You probably can't because stockholders.
Speaker 14:
I mean its legal right?
Speaker 13:
Totally legal.
Speaker 14:
Okay.
Dusty Weis:
Of course, that single puff of marijuana sent Tesla's stock value plummeting 10% for the day. And there have been other antics that have caused actual business difficulties in long run. Probably the most prominent is his 2018 tweet in which he joked about taking Tesla private at $420 a share, or maybe he wasn't joking, he would later contend because it turns out if you drop a bombshell like that in public, it's not a joke, it's fraud. Regardless, the maybe, maybe not pledge to buy out shareholders for 420 a share, sent the market into a tizzy, leaving many shareholders so upset that they asked the securities and exchange commission to intervene. Musk eventually settled for $40 million, but didn't, and still hasn't admitted any wrongdoing and even has the chutzpah to blame the SEC for doing its job here.
Elon Musk:
So I was forced to concede the SEC, unlawfully, those bastards, and now it makes it look like I lied when I did not in fact lie.
Dusty Weis:
As the world's a richest person, perhaps his cavalier approach to the riches a ruin of tens of thousands of shareholders can be forgiven. It certainly has been by some folks anyway, but Alan Ohnsman from Forbes says there are many other concerning signs that the 50 year old executive and his business ventures are no closer to maturing than they were 15 years ago.
Alan Ohnsman:
A fascinating thing this week that I was struck by, Elon spoke at the future of the car conference sponsored by the Financial Times and among some of the things that he said, he was mentioning that he is still pulling all nighters. He's the CEO, he's the co-founder, he's been with it since the very beginning. And Tesla went through a lot of struggles, a lot of crises over the years, and they've actually entered a more stable position.
Alan Ohnsman:
They are consistently profitable for the past several quarters, operations are growing, they've opened new plants. So you would think, we're doing okay, we're at this period now where we've gotten out of the garage startup phase, we've survived some near death experiences and we're leading the industry in electrification. So it's not that you take your foot off the gas, but you would think that now is the time where the company transitions into a more sort of normal company in terms of management structure and operations.
Alan Ohnsman:
And here we have the head of the company, the most important individual in that company, still staying up night after night, not sleeping and he didn't mention what the problem was that he was working on, but I'm not sure that makes any sense that you have your top asset burning themselves out like this. You know, he's 50 years old now. So he's not old, but he's no longer like a 20 or 30 something.
Dusty Weis:
That's the time in your life where you need to start making healthier lifestyle decisions, or that catches up to you real quick.
Alan Ohnsman:
One would think, aside from that, he's got seven children and three and maybe four companies, if he buys Twitter, if that goes through. That's stretching a lot. The fact that he's saying I still don't sleep because I have to work on these problems. It's like, wait, you're the CEO, Steve Jobs wasn't inventing things at Apple. He was coming up with great ideas, but he also had a team around him that could turn these ideas into reality.
Alan Ohnsman:
He may have been spending some long nights with his team when new big products were coming up. But it does seem rather odd that at some point, should you not transition to a more normal sort of life as an executive and begin empowering people at the COO level? There's no COO. There's no president at Tesla. Like there's the CEO, the CFO, and then, I don't know what else.
Dusty Weis:
But the decision to can the entire Tesla PR team making Elon Musk's unpredictable Twitter account and offhand comments, the most prominent sources of information about the company, don't just hinder Tesla's ability to respond to crises, Alan notes. They also have a problem with too much good news.
Alan Ohnsman:
Tesla fans are quick to attack the critics and say, well, they're shorting the stock, or they're influenced by big oil or whatever. They're putting negative information out there on the company. I would say there is also like conversely, because there are so many fans of the brand with very popular social media accounts. For example, there is an amazing amount of inaccurate information coming from people who love this company very much, where they are hyping things and getting potential investors, retail investors, excited about things that may not materialize.
Alan Ohnsman:
You might have less sophisticated investors who are saying, oh, well that I read this on a blog or a site somewhere, or saw it in somebody's YouTube video about this cool thing that Tesla's going to do. I got a good feeling about this company. I'm going to buy the stock. This is where in the absence of a communications team, you can't shoot down the inaccurate good stuff, because I think most of the time, the thing is, well, there's so much negative stuff.
Alan Ohnsman:
The communications team can't go after the negative things. And that's true, like there is negative stuff, but there's also an incredible amount of hopped up, very positive stuff that's just wrong. I see tons of it. In my Google feed, these reports I get, because there are many fan sites for Tesla. I think Elon does occasionally leak to a couple of those sites. He'll give them some exclusive things and maybe he does that because he wants to gen up excitement. But there was a lot of low quality information on both sides about this company and I think the absence of having a professional communications team, it does the company no favors.
Dusty Weis:
You're almost allowing these people to get their hopes up, in a sense, about a feature or an improvement, an upgrade. That's not going to materialize and setting them up for disappointment but to me it also, it speaks to sort of this misunderstanding about what a public relations operation does. And I think we saw this on Elon Musk's Twitter, not too long ago. I remember about a year ago, it was a managing partner at investment firm tweeted at Elon and asked him, please consider hiring a PR person again and Musk tweeted back.
Dusty Weis:
And here's the quote, "Other companies spend money on advertising and manipulating public opinion. Tesla focuses on the product," end quote and that sort of notion that all public relations is the manipulation of public opinion. I think speaks to a very limited view of what public relations does because here you are, you're a journalist. The classic view is that journalists and PR people exist in this perpetual gridlock of we're working against each other. When in reality, that's not the way that it works in the world of professional journalism.
Alan Ohnsman:
That's right. I mean obviously there are cases where a company has a message they want to get out there and they will try very hard to work journalists to deliver the story to their liking, I guess. But most of the time it's actually providing clean information, making sure that you have the right facts and figures that the company's actual operations are properly understood.
Alan Ohnsman:
There's no negative to that. I think his tweet tells you more about Elon, about other things, because I think some would argue that he often uses his Twitter account and some of his public comments to shape and influence and manipulate public view. Certainly the SEC has decided that was the case in the past. So I think that's a pretty unsophisticated understanding of what PR does.
Dave Oates:
He sees it in a way a lot of people see it.
Dusty Weis:
David Oates is a San Diego based crisis comms consultant, and a former PIO for the U.S. Navy. He notes that Elon Musk's understanding of the role of public relations is probably shaped in the same way that the general public says.
Dave Oates:
There's a reason why PR Jockies are called flag and spin doctors and the like. We've seen that in our profession. There are some real ... I don't know how else to say that. Not so upfront PR people.
Dusty Weis:
I think that there's a lot to that because in popular media, in movies in TV, there is this image of the PR flack as this person whose job it is to tell bold face lies. I think it loses track of the fact that 95% of the people working in this field, that's not what they do.
Dusty Weis:
They help people communicate. They help craft and hone a message. They help communicate with individual stakeholders in language that is more comfortable to them. But at the end of the day, the number of PR people that have told bold faced lies, I think is a very very low percent in this field.
Dave Oates:
For sure. But they're the ones who get called on it and rightfully so, much like any other profession. Lawyers, accountants, whomever. The bad apples are the ones that get the light shined on them and really put a negative spotlight on the entire profession. You know what? In some respects that's appropriate because they're the exception to the rule. That's not the standard under which all of us want to operate. For those who don't, they should be called out from that.
Dave Oates:
And the rest of us should follow suit with good try, true ethical practices and in PR there's a national society, the Public Relations Society of America, there's a code of ethics and there are accreditations that you can achieve and maintain in order to showcase that. I wish more would do that, but yeah, they're the bad apples and you know what I call them out when I see that, because it's not good for anyone.
Dusty Weis:
Dave agrees with Alan, the Tesla's astounding success continues in spite of the fact that it is always teetering on the brink of a PR disaster without a strategic communications plan in place. And so, coming up after the break, we'll launch into a case study of several instances in which Tesla's decision to fire its spin doctors, is already costing the company dearly and we'll parse some lessons that any leader from the richest person in the world down to a lowly podcast, executive in Milwaukee can incorporate into their strategic plan.
Dave Oates:
No matter how good you are, no matter how brilliant you achieve your craft, interject a bit of humility.
Dusty Weis:
That's coming up in a minute here on Lead Balloon.
Dusty Weis:
This is Lead Balloon and I'm Dusty Weis. It'll happen to everyone in the field of public relations eventually. Someone, an executive salesperson, an engineer, God, especially engineers. So I want to look you square in the eyes and say, what do you even do? For those people who work with tangible cause and effect things like money or equipment or blueprints, a profession that deals in anything so abstract is messaging in public opinion. It's a little bit hard to wrap your head around. I get it.
Dusty Weis:
And so, as a PR person, you need to have a ready answer and demonstrable results to justify your existence, in essence, because there are plenty of folks out there who look at what Elon Musk did when he fired the entire PR staff at electric automaker, Tesla, and say, finally, someone cut the dead weight. Now this little experiment in practicing business without a public relations net is going to be looked at by many as a case study.
Dusty Weis:
And there's already reason to believe that Tesla is actually going to end up making the case for why a communications team is a must have for a major corporation. David Oates, who we met in the first segment, is a San Diego based crisis comms consultant, a former PIO for the U.S. Navy and the former director of marketing for Financial Profiles Inc. And Dave, you recently published a piece on your LinkedIn entitled, "Don't be an Elon Musk" which made me chuckle, obviously, given the topic that we're discussing today, but also kind of made me pause. We're talking about the James Dean of the American tax sector, real world, Tony Stark, without the power suit. Why is Elon Musk a cautionary tale for CEOs, would you say?
Dave Oates:
He's brilliant. Wonderfully, eccentrically brilliant. Like the mad scientist that seems to come up with these wild and crazy ideas that you think at first blush are just absolutely nuts. And obviously he makes a... I think the technical turn is crap load of money for him and his shareholders. So you can't denigrate him on that front, but from a PR standpoint, I think he spends a lot of resources that would otherwise be better served in R&D and employments and customer service that he has to spend.
Dave Oates:
Or I should say his team has to spend in investor relations costs and branding costs and things like that. I wasn't surprised that Elon Musk got rid of his entire PR staff. He didn't listen to them anyway, right? I'm sure they were paid a decent amount of money and I hope they got some stock options and I hope they still do and I hope that they're vested, but can you imagine being that person over there, who's telling Elon Musk, here's what you should say, here's how you should say it, let's go through some role playing, let's go through some Q and A, let's take you through what we would call some drills before you go out and speak and he would just go, "Nah, I got it. I'm on it. And I'm going to say what I want to say."
Dave Oates:
So in some ways you're not doing a lot of work at the second page, you're not feeling a whole lot of value. So it wasn't surprising to me that he did that video blog that you mentioned was saying, please don't follow this as the rule. It is the exception. And unless you are an Elon Musk, it's really likely to not work for you. In fact, I would say it's probably going to go very bad for you. So have some strategy around it, again, be bold, be gregarious, be yourself, but in a strategic playbook that you can run where you've thought about the what if scenarios and Elon Musk doesn't do that.
Dusty Weis:
Well and it's almost, to me, he's a victim of his own intelligence here because yes, when it comes to shooting rockets into space and building electric cars and a dozen other things in Silicon valley, yes, he is a genius and being a good Wisconsinite, I'll liken this to a figure that has been prominent in Wisconsin in recent years.
Dusty Weis:
And that's Aaron Rogers, who is the best in the world at throwing a football and not throwing interceptions and watching the football field and doing the chess master thing. But when it comes to his understanding of human health and vaccine science as just one very obvious, for instance, he is perhaps not so bright, but he is blinded by his own brilliance in other areas and unable to see and acknowledge his own blind spots and turn to people who have more expertise in those blind spots.
Dave Oates:
The issue with Aaron Rogers and I think that this is probably a good lesson learned for other high profile individuals and CEOs is no matter how good you are, no matter how brilliant you achieve your craft. There is an opportunity that I think everyone should take advantage of in the course of their career, which is interject a bit of humility. Now Aaron Rogers and Elon Musk are told every day by their inner circle how amazing they are. And I think that clouds the judgment when they're being called into question for things that wind up not actually going their way. So interjecting a little bit of humility with some action would be a better strategic choice, but that requires having people around you and your own proper mindset to do that and Elon Musk in that case, Aaron Rogers a year ago, didn't do that.
Dusty Weis:
So how is this no PR experiment going so far for Tesla? Well, Dave says that there are some parallels we can draw in the automotive industry that show how things have only gotten more volatile at the cutting edge auto maker.
Dave Oates:
Just about a year ago, June 2021, Tesla had this product in development. It was a long range sedan, the Plaid Plus, and they decided for probably proper reasons, not the least of which was market demand relative to the rest of their products, to cancel that line of development.
Dave Oates:
In other words, just decide they're not actually going to take it to production. Now, keep in mind, Tesla had been talking about this up to the investor community for some time and they decided to announce the cancellation in a tweet and the tweet read something like canceling it, not necessary. These are good products. That's the end of that one.
Dusty Weis:
That was it. Just the tweet, no pre-messaging to the investors, no outreach, just a tweet.
Dave Oates:
No calls, no forewarning, no bringing in key folks to sort of test the messaging. It was a tweet that basically said, "We're done, thank you very much."
Dusty Weis:
Rip it off like a bandaid.
Dave Oates:
Which you could say, Hey, look, we were being candid and forthright from that and investors decided to shed their shares of Tesla to the point that their stock market fell 2.7% that day. It's a huge drop. And I think unnecessary, the reason that people get spooked and the reason a crisis communications situation exists for most organizations because they are surprised by it. It calls into question things that they were not expecting.
Dave Oates:
And that then puts your reputation on the line. People are wondering if you truly are capable of doing the things that you said they were supposed to do, not only for customers and investors, right, but your employees who are doing this whiplash kind of deal. And in this day and age of the great resignation, reshuffle, whatever you want to call it, people will go find other jobs. It's not hard as it certainly has been in years past.
Dave Oates:
And so, that was a terrific example about how a strategic PR plan to sort of soften that announcement could have saved them a lot of money. Contrast that, about four months later Ford, an electric car company, Rivian, had been working on a joint electric vehicle project and in November, through a concerted joint announcement effort where they went through some of the standard playbooks of pre announcing, letting folks know what was going on and then making sort of the general news announcement, they canceled their joint development.
Dave Oates:
This was in November 2021. Ford stock didn't move. People had absorbed the issue. They had understood the reasons why they felt it was consistent with their strategy. No surprises. Ford went on to do other stuff. And you know, they're developing their own electric vehicles, as is Rivian. They just decided it wasn't really in their strategic interest anymore to do a joint venture on that and the market got it because they actually communicated it effectively and they didn't spook them. Prime example about doing something well and having a lower cost basis to make that announcement as opposed to Tesla who spent a lot of money, just trying to un-spook their audiences in the process.
Dusty Weis:
Alan Ohnsman from Forbes says, you can also get a sense for this new precarious approach to public relations when you look at how the company has responded to crashes and fatalities involving self-driving autopilot feature.
Alan Ohnsman:
In the initial crashes, the company still had a more proper communications team function. And so, there was more information available. Right now, it seems that there might be a blog post that will pop up at some point on the Tesla's site, probably written by lawyers with Elon determining what it would say, but there's no interaction beyond that. Many of us will do foyer requests to access communication between the company and different officials to see if we can learn a bit more that way, but a foyer request takes time.
Alan Ohnsman:
It's not instantaneous. It can be weeks, months in some cases. So that seems again, an unnecessary risk, as the saying goes, if you're not telling your own story, someone else is, and essentially not having an actual communications function within that company allows people that are pro and con on Tesla to set the narrative in many cases and that's unfortunate. Elon has a powerful platform. I mean, he's got 92 million Twitter followers at this point. Maybe Twitter ultimately becomes his new PR team.
Dusty Weis:
I had wanted to ask you actually, given that he sees himself as the defacto and only spokesperson for the company and that he uses Twitter as a platform to get a lot of his message out. How much do you think that his attempted takeover of Twitter is tied up in just wanting to have a firmer hand on the till?
Alan Ohnsman:
I think a big part of it actually, because if you step back and think this is a person who created this electric car company, who started a rocket company, who has a tunneling company, who has an AI company, and Neuralink, this brain implant thing, doing all of these very sort of out there, new types of industries and building them from scratch and then turning around and saying, you know what, I'm going to buy a social media platform that someone else built that has very low revenue potential relative to something like Tesla or SpaceX. It doesn't really make any sense as a business move. I mean, fundamentally whether you agree or disagree that he should buy Twitter and own it doesn't make any sense as a business investment, Twitter doesn't make that much money. It's the smallest of the social media platform. So why would you do it?
Alan Ohnsman:
Well, he loves Twitter, he always has, since its early days, he's been a heavy user of it and perhaps he has determined that actually works as his favorite means of communicating with the world and to set his message and I think his ownership of Twitter certainly could influence what's happening with his other companies, the way in which they communicate with the world. You know, I'm still trying to understand exactly why would he want to acquire Twitter? What purpose does it serve because certainly it doesn't make business sense.
Alan Ohnsman:
I think it does become his defacto communications platform for all of his businesses, especially Tesla, of course. But I think across all the things that he's doing, he now has one of the largest communications platforms on the planet. It's bigger, potentially more influential than Jeff Bezos owning the Washington Post or Mike Bloomberg who owns Bloomberg and all these other billionaires that have different... Rupert Murdoch at Fox and name your billionaire in their and their media outlet. Elon has decided that rather than buying a newspaper, a magazine or traditional news site or at TV network, that his media outlet is going to be social media and it's going to be Twitter.
Dusty Weis:
The place where people post pepe memes.
Alan Ohnsman:
Exactly.
Dave Oates:
I have no unearthly idea why he was willing to buy Twitter at the valuation that he is and he still might.
Dusty Weis:
Dave Oates says the wild and very public way Musk's recent acquisition attempt has played out, is just another cautionary tale for why just because someone is a brilliant engineer, who's made a lot of money. That doesn't mean that they don't need other business professionals around to help them navigate their blind spots. To recap, earlier this spring, Elon Musk revealed that he was Twitter's largest shareholder accounting for 9% of outstanding stock at the company. This followed weeks of his tweeting ideas for revamping the social platform.
Dusty Weis:
So Twitter offered Musk a seat on its board, which he accepted under the Crawford condition that he acquired no more than 14.9% of the company, only to change his mind five days later and reject the offer for a seat on the board. Five days after that, Elon Musk has put up $43 billion to buy the company, threatening a hostile takeover, Twitter resists, but then accepts the offer.
Dusty Weis:
All the while tech stocks are tanking in the tumultuous market and Musk is left holding the 43 billion bill for a company that's worth many, many, many billions, less than that. Now the future of the deal is still uncertain. Musk has tried various tactics to wheedle down the price he's threatened to back out multiple times, but Twitter holds some leverage to force the deal through and no one is really certain how this might play out. Only that it'll be months until we know for certain. And Dave Oates says, no one involved comes out looking like any kind of business genius.
Dave Oates:
The question is, what would you have done with the strategic communication plan? And while it takes a little longer and you certainly don't want it to be so bogged down with time that you lose the opportunity. You walk people through that in order to make sure that the deal goes through. And I think that's the part that would be of betterment to him because he's got a lot of cash now and a lot of efforts that are being bogged down because he seems to be changing his mind by the nanosecond. And that's just a lot of wasted energy that didn't need to be there for what ultimately may be a busted deal or an overvalued sale price. Either way, it seems to me that there was a better way to go about it, sitting from the sidelines,
Dusty Weis:
Regardless, the whole saga calls question, how much of Tesla's value is tied up in the actions and even the continued wellbeing of its CEO.
Dave Oates:
There's no backup for him. Something happens to Elon Musk tomorrow, there's no fail safe redundant system in place from a communication standpoint. And it leads people in question, what are the operational backup measures? So business 10, and you mentioned I was a Navy officer and we used to train to this prior to being a public affairs officer. I was a surface warfare officer. We would go through battle drills. And part of the battle drills would be you're senior people. You're senior war fighting, capable veterans within the ship in a wartime drill scenario, we would kill them off. We would say, you just got injured you're out. And the next person up would be the one that would have to command the ship, fight the fires, launch the weapons, do all of those things because you can't rely in an operational standpoint that the one top person who knows the job better than everybody else is going to be there when you need it.
Dave Oates:
Baseball, football, everything, next man up right, is what they save when somebody gets injured, who's stepping in, who can actually quarterback the team and actually drive the play to a successful outcome. It's the same thing with any business and Elon Musk has put himself in a position and I think consciously so, where he's the guy, if he is done, there's nothing else from there. Even Steve Jobs, as bold and as gregarious as he was.
Dave Oates:
And as visionary, when he was sick with pancreatic cancer, he had his team in place and Tim Cook stepped in pretty much seamless, totally different personalities. They were almost completely opposite in terms of how they presented themselves to the public. Steve Jobs is bold. Steve Jobs is visionary. Steve Jobs doesn't give a crap what you think about him and Tim Cook is a fairly reserved guy, but still bold, still committed to that one there, but definitely has a different style.
Dave Oates:
And yet Apple moved on without a hitch. And I think that's a great example about having redundancy in there. Elon Musk doesn't have it. So God forbid, knock on whatever wood surface you've got near you, that I don't wish ill will on anybody, but if something were to happen to him and he's no longer able to do that there, there's going to be a major drop in share price and investor confidence, because no one knows who will be in charge. No one knows what will happen. Because Elon Musk has put him in a position where he is completely indispensable.
Dusty Weis:
Obviously there's no crystal ball. Elon Musk could live to be a hundred and five years old and still be bench pressing Cadillacs at that point. But where do you think this all ends for Tesla? I mean, is it inevitable that eventually there will be something where this all catches up and Elon gets his comeuppance?
Dave Oates:
I don't think so, right. This goes back to, we have to look at Elon Musk as the exception to the rule. I don't know where it goes for him. He might never have that sort of catastrophic moment and for the investors of Tesla, for which I know many, I hope it doesn't, right. I hope it's continues to be successful and I hope all of his ventures do for the people that are working for him and the people that buy the products. But we have to look at him as the exception to the rule. We can't look at him as the standard under which organizations and individual should operate from a strategic communications perspective. So I don't know where it goes for him. I hope it goes well. I just hope that CEOs, marketers, PR professionals and individuals don't look at him as someone to emulate, because it is a big, big game of chance that I think for most of us will lose on that. The house always wins, even if one person seems to be able to defy the odds.
Dusty Weis:
Flip side of that, what do you think are the chances that better angels win out and somebody gets to Elon, a shareholder or a trusted confidant. If he has those and says, look, man, the Renegade thing, it's been a good ride, but you've got to get a little bit more conventional, bring in some expertise in these areas that are your blind spots. Do you think there's anybody that can talk to him like that?
Dave Oates:
Nobody that I know of, not to say that I hang out with Elon Musk, but certainly I think history has shown that no one's been able to at this point, as we talked about earlier, he's doubled down on this. So I don't think he's going to change. I would be shocked if he does and you know, I hope it works out.
Dusty Weis:
Alan Ohnsman, the senior editor of Forbes, who's been covering Teslas since its infancy says he also can't help but ponder how long the no net circus act can last at the automaker.
Alan Ohnsman:
I think about that a lot actually, because I want to go back and say it is still remarkable what he and that company have accomplished right now. The global auto industry is changing. There is a revolution happening right now in terms of electrification of transportation and autonomy as well. Certainly on the electrification side, he has been such a massive force in putting all of this into play. At the same time, he's created a company that is essentially a one man operation. He is the sole voice. He decides everything. He's down in the weeds. He's not getting sleep, working with his engineers on new problems. I don't know that's sustainable. I don't know how much longer that's sustainable. Does he have five more good years? 10 more good years? I don't know. I think the failure to put in place a strong management team, a strong executive team where it's clear that there is a plan for succession, a plan for what this company looks like in the post Elon era.
Alan Ohnsman:
I don't know that he's ever really thought about that. I don't know that he sees the company beyond his own connection to it, so that is a tricky thing. It's an enormous question mark. As you say, he could get hit by a bus and I think you would end up seeing the stock completely tank all of a sudden that there's so much value tied up into this one individual that seems a little risky. And in every Tesla SEC filing one of the disclosures they put in there is we are highly dependent on the services of Elon Musk and they sort of say, should anything happen, it would be bad. That's true. Mary Barra doing a good job at GM, Jim Farley, doing a good job at Ford. If anything happens to Jim or Mary, I don't think anyone's worried about the plan of succession at General Motors or Ford, but there is no such roadmap at Tesla.
Dusty Weis:
So while the vision might be big and bold, the person behind it brilliant and charismatic, without a traditional corporate apparatus, the fate of the world's most valuable automaker and its shareholders is intertwined with the fate of one eccentric billionaire and without a public relations operation, Tesla is just one PR disaster away from total calamity.
Dusty Weis:
Thanks to both our guests on this month's episode, Alan Ohnsman from Forbes and crisis comms consultant, David Oates, Dave, by the way, is the author of several books on crisis communications, including communicating during a ransom wear attack, which is available on Amazon. Also, I'm obligated here to note, we reached out to both Elon Musk and Tesla. Do I even need to say it? They did not respond to a request for comment. This month on the Lead Balloon comms gripe line, it's Ruthie from Annapolis, Maryland with her marketing pet peeve.
Ruthie Bowles:
One of my big gripes lately is the limited seats, or we only have three seats left or two seats left or whatever it is and all of these email marketing and on the sales pages. But let's say you actually buy. And then, you're like, there's five people here. Why did you tell me there was only three seats left? I hate the dishonesty that false scarcity gets on my nerves. Thanks for letting me share.
Dusty Weis:
Preach it Ruthie and hey, as long as we're on the topic of Elon Musk pet projects, let's not forget that every NFT in the digital world right now is basically just a 21st century take on order now while supplies last. Thank you Ruthie for sharing your gripe and you can drop your gripe, whatever cliche or tactic is driving you nuts in the world of PR and marketing. Get it off your chest. Leave me a message on the Lead Balloon comms gripe line. The link is in the episode description. Don't forget to follow this show on your favorite podcast app.
Dusty Weis:
There's only three seats left for Lead Balloon podcast subscribers. So get in while the gettings good and also follow Podcamp Media on social while you're at it. Lead Balloon is produced by Podcamp Media, where we provide branded podcast production solutions for businesses. Our podcast studios are located in the heart of beautiful downtown Milwaukee, Wisconsin, but we work with brands all over north America. Check out our website podcampmedia.com. Larry Kilgore III is our dialogue editor for this episode and Beatrice Lawrence, a segment editor and production assistant, not to mention our new intern for the summer. Until the next time folks, I am Dusty Weis.
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