Charlie Munger
Reuters/Lane Hickenbottom
Musk isn’t Munger’s kind of guy.
DEAR PRUDENCE

Charlie Munger offers advice on hiring—and a dig at Elon Musk

By Corinne Purtill

At Thursday’s annual meeting of the Daily Journal Corporation, the publishing company’s chairman, Charlie Munger—better known as the business partner of Warren Buffett and vice chairman at Berkshire Hathaway—was asked about an oft-repeated maxim of his about hiring. The rule of thumb, as summarized on his behalf by a shareholder in the audience: A person with a 130 IQ who thinks it’s 120 is often the best hire; one with a 170 IQ who thinks it’s 250 will be a disaster.

“You must be thinking about Elon Musk,” Munger shot back, to a roar of laughter from the room.

Munger hasn’t always been so publicly dismissive of Tesla’s mercurial leader. Asked about the electric-car company in May, Munger offered cautious praise for both Tesla and Musk.

“Its founder is bold and brilliant, and he swings for the fences,” Munger told Yahoo Finance. “I haven’t the faintest idea how Elon Musk will turn out, but he has a considerable chance of success and considerable chance of failure. He seems to like it that way.”

For the record, Musk isn’t the founder of Tesla but he got involved early on, got acknowledged as a co-founder, and turned the company into the car-industry phenom it is today. Also for the record, in the nine months since Munger spoke to Yahoo Finance, Musk publicly accused a rescuer in Thailand, without evidence, of being a pedophile; settled a US federal securities fraud charge caused entirely by his own dumb tweets; smoked weed during a podcast interview; and missed yet another Tesla production target.

Munger, 95, who along with Buffett has long advised prudence and morality in personal and business matters, was pressed about what makes a good hire. His response indicated that he thinks Musk may well still end up a huge success—but he’s still not the kind of person Munger wants on his team.

“Of course I want the guy who understands his limitations instead of the guy who doesn’t. On the other hand, I’ve learned something terribly important in life . . . never underestimate the man who overestimates himself. These weird guys who overestimate themselves occasionally knock it right out of the park,” he said. “I don’t want my personal life to be a bunch of guys who are living in a state of delusion, who happen occasionally to win big. I want the prudent person.”