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Narcissus meets his fate.
WHO ME?

Elon Musk may not be the narcissist Tesla needs right now

By Michael J. Coren

The charge that Elon Musk is a narcissist has been floated for years. One need only watch his interviews, read his Twitter rants, or peruse the US Securities and Exchange Commission’s multiple lawsuits against the Tesla CEO to know there’s something to the charge. Or just take Musk’s self-assessment at face value.

Knowing if Musk, 47, meets the clinical criteria for narcissism from afar is impossible. But it’s undeniable that Musk’s narcissistic tendencies are not going away anytime soon. The executive’s most recent imbroglio came after the SEC filed a complaint in a Manhattan federal court on Feb. 25. It asked a judge to hold Musk in contempt for violating an agreement it had brokered months ago reining in the CEO. After Musk tweeted (and later corrected) information about Tesla production forecasts, the SEC said Tesla lacked an agreed-upon process to vet Musk’s public communications. “He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access,” it stated.

Musk, of course, rushed to the offensive. He tweeted in response on Feb. 26 that “something is broken with SEC oversight.” It followed months of needling the US government’s primary securities regulator. Last October, Musk tweeted that “the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!” In December, he told 60 Minutes that “I do not respect the SEC.”

If that wasn’t enough, Musk has spent much of past year berating Wall Street analysts during earnings calls, tangling with whistle-blowing employees, and trading barbs on Twitter with the media, investors, auto unions, nanotechnology researchers, and anyone, no matter how obscure, who questions his version of reality.

Nor was this Musk’s first brush with the SEC’s ire. Last October, Musk tweeted he was “considering taking Tesla private at $420. Funding secured,” a statement the SEC called “false and misleading” (pdf) in its first suit. The regulator forced Musk to pay a fine, step down as chairman of the board, accept two new independent board members, and get pre-approval for tweets potentially affecting Tesla’s shareholders. He does not seem to have met this last criterion. 

Musk’s compulsion to pick fights with everyone who crosses him hasn’t yet cost him control of Tesla. But his behavior could doom his ability to hold on to it. The traits that helped Musk succeed despite the odds are undermining him now that he is not only trying to beat out global automakers, but become one of them. Tesla must master mass-production and delivering reliable profits, as well as ward off US government regulators in no mood to stand down. Investors and customers are growing weary and wondering, as many have with Donald Trump, why he can’t stop tweeting. When Tesla’s fortunes take a turn for the worse, and they eventually will, shareholders could decide they value their money over Musk’s vision.

Which begs the question…

Why is Musk doing this?

For outsiders, Musk’s decision to take on so much risk for so little reward seems baffling. None of it should surprise us, says Jennifer Chatman, a professor of management at the Haas School of Business at the University of California, Berkeley. Chatman studies how narcissistic behavior plays out at the heights of corporate power. In her view, Musk’s recent outbursts reveal classic narcissistic tendencies (although she wouldn’t make a definitive diagnosis).

In Greek myth, Narcissus, a strikingly attractive hunter, falls in love while staring at his own reflection in a pool of water. Unable to look away, he drowns staring at his own visage. Modern psychologists adapted his name to describe people who possess an unshakable belief in their own status and importance, an insatiable craving for adoration, and a belief that rules do not apply to them. No matter what feedback people provide, they persist in believing in their own superiority, indulging in success fantasies without regard for the cost to others. At the extreme, narcissists are merely opportunists who ruthlessly exploit others to serve themselves.

We all have garden-variety narcissistic traits, says Chatman, but unchecked narcissism in top executives can destroy firms. Her research, published last June in Leadership Quarterly (paywall), shows how narcissistic CEOs are more likely to lead their organizations into protracted court battles. “Narcissists tend to get their organizations into significantly more lawsuits, that are more protracted, and which they are no more likely to win,” she says.

Chatman surveyed hundreds of employees in 32 of the largest US public technology firms and cross-referenced the results with other indicators. She found that firms with more narcissistic CEOs were more likely to be defendants in costly lawsuits, and less likely to settle. A follow-up study suggested narcissists’ misplaced overconfidence in themselves made them less sensitive to risk and the cost of losing, and more likely to ignore expert advice, especially if a high payoff was possible.

Given Musk’s recent outburst, Chatman predicts Tesla’s troubles won’t end with the SEC. “What this [latest] event suggests is there’s no settlement and no agreement that is going to cause Elon Musk to back off… I just don’t think he can help himself yet,” she says. 

Are narcissists necessary? 

Silicon Valley has sought out narcissists for decades to disrupt old industries. As long ago as 2004, psychoanalyst and anthropologist Michael Maccoby argued in the Harvard Business Review that “more and more large corporations are getting into bed with narcissists [because] there is no substitute for narcissistic leaders in an age of innovation.” He said the personality type’s audacity to push through massive change, and convince the masses, was the reason for their success. As Musk himself argues, narcissists may be a necessary evil when building disruptive things.

Chatman calls that nonsense. Belief in narcissism as key to corporate success is misplaced. “We have a hard time distinguishing the features that make for a good leader from the features that are associated with narcissism,” Chatman argues. “The whole point of an organization is to try to do something together. The nature of organizational action is collaborative.”

Recent science appears to back her up. Researchers at Pennsylvania State University studied 111 CEOs in the computer hardware and software industries between 1992 and 2004. Their 2017 study found companies led by narcissistic CEOs adopted more strategic “grandiosity,” pursuing more and bigger acquisitions, even though the payoff often never materializes. Despite increasing volatility, the firms’ performance proved neither better nor worse than firms without such CEOs. A similar 2017 study of the banking industry found banks led by CEOs who ranked higher in narcissism engaged in more risky behavior and recovered more slowly after the US financial crisis.

In other words, there is a huge difference between a willingness to take risks and an insensitivity to risk. Great leaders, Chatman insists, harness the collective effort, and set ego aside after it stops proving useful. Bringing people along, and inspiring others to greatness, rather than relying on a leader’s brilliance, brings stability that helps companies succeed.

All this naturally raises the question: Should Musk step down as the CEO of Tesla for the good of the company? Musk has now invited the fury of government regulators, alienated employees, and rattled investors with little to show for it beyond scoring points with an ardent Twitter following. Before last year’s settlement, the SEC was already seeking to remove Musk as Tesla’s CEO and ban him from holding any posts at public companies.

Tesla’s board still publicly supports Musk—despite the resignation of the company’s general counsel (after just months on the job), and an exodus of senior management. Musk controls about 22% of voting and equity rights in the company and has the allegiance (for now) of Tesla’s largest investors and officers. Without government intervention, he is unlikely to take a back seat.

Some on Tesla’s board may even be amenable to Musk’s questionable behavior. One of the new “independent” board members Tesla brought on to satisfy the conditions of the SEC settlement is Musk’s “very close friend” and Oracle founder Larry Ellison, who has fielded his own accusations of narcissism. One Oracle executive, to describe Ellison, said “the difference between God and Larry is that God does not believe he is Larry.”

Can Musk save himself? 

How much of a narcissist is Musk really? Chatman and others say his behavior fits the mold, but point out he is not the most extreme case. True narcissists relentlessly denigrate others to promote themselves. While Musk has rarely met a spotlight he doesn’t like, he has proved willing to publicly share credit and admit fault when warranted. During investor calls and onstage for Tesla and SpaceX, Musk regularly attributes his companies’ achievements to employees and colleagues. When he failed to automate Tesla’s Fremont factory for the Model 3 (and nearly bankrupted the company in the process), he took the fall. “Excessive automation at Tesla was a mistake,” he tweeted last April. “To be precise, my mistake.”

For all his grandiosity, his core ideas are not fantasies. Musk may not use conventional good sense, but he often delivers. Yes, his engineering dreams often arrive late, over-budget, and unfinished—but he does, eventually, deliver on many of them (see Tesla’s 2006 master plan). Tesla is now a $55 billion company mass-producing electric cars and clean energy systems. SpaceX is radically reducing launch costs and helping to ignite a private space race.  Even if Musk’s companies stumble, they will have already transformed the automotive, energy, and aerospace industries in the way Musk intended.

Steve Jobs, another suspected narcissistic, may be the template Musk needs to save himself from his own worst impulses. The monomaniacal founder of Apple terrorized those he disliked (and sometimes those he did) in Silicon Valley with screaming fits, temper tantrums, and acts of betrayal. Similar to Musk, he was not above crying on the job and demanding impossible feats from his employees. Famously, he was ousted from Apple in 1985 at age 30.

But he eventually matured. He went on to build NeXT Software and Pixar Animation Studios. He returned to Apple in 1997, chastened and wiser, to build what became the world’s most valuable company. By the time he returned to Apple’s Cupertino headquarters the second time, things had changed for the CEO.

He surrounded himself with people who could check his worst impulses. He built genuine, lasting relationships with people who complemented his deficits. By the time he stepped down in 2011 due to pancreatic cancer, most of the senior leadership team at Apple had been in place for about a decade. Since operators like Tim Cook took the reins, Apple’s market cap has risen 224% to $822 billion today.

What will it take for Musk?

Tesla is still in mortal danger. A wave of rival electric vehicle models will hit the market next year. The carmaker’s finances, always precarious, appear even more so. The popular Model 3 earns billions of dollars for Tesla, but Musk announced on Feb. 28 that the company would not be profitable this quarter. Tesla is slashing costs to sell a $35,000 Model 3 as promised, and shuttering most of its retail locations to sell cars online, laying off more staff in the process. 

Musk has beat the odds before. But whereas at SpaceX he has trusted lieutenant Gwynne Shotwell to clean up his messes and ensure the company delivers on promises, at Tesla—a public company in one of the world’s most expensive and brutal industries—Musk hasn’t found someone who can shield the firm from his personality’s excesses. If he wants to survive at the carmaker, he may need to find that person.

“What saved Steve Jobs was recognizing he wasn’t the only smart person,” Chatman says. “I don’t know enough about Elon Musk’s operations team, advisors, and confidants to know whether he has that… We need to wait and see.”