There is a great deal of risk associated with the cult of the celebrity CEO. Many tech firms have been driven by founders that have gone on to become celebrity CEOs. The risk is that any erratic behaviour on the part of the CEO will greatly impact the business itself.
Bill Gates had to carefully manage his exit from Microsoft. Larry Ellison has been quite outspoken as CEO of Oracle. More recently Alibaba co-founder and chairman Jack Ma has unveil a succession plan and a path towards retirement.
You also have founders that speak out after their companies are acquired, as the WhatsApp Brian Acton co-founder recently did saying: ‘I sold my users’ privacy’ with Facebook acquisition. Indeed he had also tweeted in March that users should “#deletefacebook,” as the social network dealt with its Cambridge Analytica scandal. We have also seen Instagram’s joint founders send a direct message to Facebook by quitting the parent company.
Elon Musk is a particularly high profile and a particularly volatile CEO. He has been very outspoken on social media about everyone from short selling and critics to a British cave diver. Without knowing more about the private discussions that Musk had with potential investors, it is hard to know how serious the plan was to take Tesla private. All this will no doubt come out during the SEC enquiry, but if there was little substance to the plans and he was simply seeking to spook short sellers then this is a dangerous move.
This is not the end of his legal worries. He may also face a defamation lawsuit from the British cave diver after he recently doubled down on what appear to be unsubstantiated allegations of a particularly sensitive nature.
In this video interview Bill comments on the importance of clarity and accuracy in disclosing market sensitive information.