No one can dispute Elon Musk’s success as an entrepreneur. As the co-founder of X.com (later merged into PayPal), CEO of Tesla and founder and CEO of SpaceX, Musk ranks among the greatest businessmen in history. In 2021, Time magazine named him its Person of the Year, the same year that he was named the richest man in the world.
But for most entrepreneurs, Musk’s methods should come with a “do not try this at home” disclaimer. Although Musk is best known as a business magnate, he’s also been a magnet for controversy.
Lessons to learn from Musk
While these won’t make you the richest person in the world, here are five key lessons entrepreneurs can learn from how Musk operates.
1. Develop thick skin.
Every entrepreneur must deal with doubters, and Musk is no exception. However, he hasn’t taken his critics lightly, even on seemingly trivial matters.
- A few years ago, Musk personally phoned the employer of an anonymous writer who posted critical Tesla articles on Seeking Alpha, reportedly threatening litigation if the criticism didn’t end.
- During one bizarre quarterly Tesla earnings call with Wall Street analysts, he grew agitated at what he called “boring, bonehead questions,” which sent Tesla stock down 6%.
- In what was perhaps the most notorious incident of all, Musk lashed out at a British diver who criticized the billionaire’s plans to rescue Thai children trapped in a cave, labeling him a “pedo guy” on Twitter. The diver later unsuccessfully sued Musk for defamation. Although Musk won in court, the bad publicity dented his personal image.
At least some of Musk’s outbursts can likely be traced to stress. The impact of stress on productivity can be incredibly negative, including antisocial behavior in the workplace. Rather than engaging in self-destructive outbursts in response to naysayers, entrepreneurs can try physical activity, meditation and creative stimulants, such as art projects, which are all proven mood-boosters.
2. Watch your cash flow.
During his time as Tesla’s CEO, Musk has displayed a habit of living on the edge when it comes to cash flow. One particularly trying time was during the production ramp-up for the Model 3, which Musk described as a “bet-the-company” situation. Many analysts opined at the time that the company could soon run out of cash as it struggled with the ramp-up. Musk himself later admitted that at one point Tesla came within “single-digit weeks” of bankruptcy.
Cash flow management is essential to the survival of a startup or small business. Poor cash flow management is the leading cause of business failure, which means that business owners should develop a plan for how cash flows in and out of their companies. Even when times are good, opening a line of credit can also alleviate an emergency cash crunch if economic conditions deteriorate.
FYI: A cash flow statement shows how money is flowing in and out of your business.
3. Do your due diligence.
In April 2022, Musk shocked Wall Street when he revealed plans to personally acquire Twitter for $43 billion. As part of the offer, Musk waived his right to conduct due diligence on the company. However, Musk apparently suffered buyer’s remorse, especially when he learned that the number of fake accounts on Twitter was larger than he initially believed. After a tumultuous two months, Musk announced that he would terminate the deal, and Twitter subsequently sued him to complete the acquisition.
Musk’s Twitter fiasco is a prime example of why due diligence is critical when business owners are considering a merger or acquisition. Before striking a deal, be sure that you know how to perform a merger and acquisition analysis, or hire a valuation professional for assistance.
4. Limit your social media use.
Elon Musk stands among the most famous Twitter enthusiasts in the world. The billionaire counts over 100 million followers on the platform, where he frequently posts memes, makes crude jokes and trades barbs with journalists and politicians. Musk has humorously suggested that he uses Twitter to express himself, but sometimes those tweets have landed him in hot water.
In 2018, Musk publicly mused on Twitter about taking Tesla private, claiming that he had lined up funding for the move. The infamous “funding secured” tweet prompted a fraud investigation by the U.S. Securities and Exchange Commission, and it later emerged that Musk’s assertions regarding funding were dubious at best. As part of his settlement with the regulator, Musk was forced to step down as chairman of Tesla for three years and pay a $20-million fine.
On one hand, social media is a powerful tool for reaching potential customers, which is why every entrepreneur should know how to create a successful social media campaign. We often hear about the benefits, but Musk’s experience shows that business owners need to be cautious about the statements that they post online.
Tip: Being savvy on social media is critical for businesses today. This step-by-step guide for social media is a must-read for budding entrepreneurs.
5. Rehearse your presentations (again and again).
During the 2019 unveiling for Tesla’s new Cybertruck, Musk boasted that the glass was bulletproof. To demonstrate that claim, a Tesla executive tossed a heavy ball bearing at the truck’s window, which immediately shattered.
Although Musk took the epic faux pas in stride, joking, “Guess we have some improvements to make before production,” it’s clear that he could have put more effort into preparing for the stunt. Presentations can be challenging for entrepreneurs, which is why everyone should study up on conversational presenting.
What Elon can teach us
In some respects, Musk’s flaws are inextricably tied to his success as an entrepreneur. If he wasn’t such an eccentric personality, then he probably wouldn’t be the same Elon who brought Tesla, SpaceX and other ambitions into existence through sheer force of will. But what worked for Musk probably wouldn’t work for most business owners, which is why some of his practices shouldn’t be emulated.
Despite his staggering success in business, Musk certainly isn’t a perfect character, and his mistakes can educate business owners and entrepreneurs just as much as his triumphs.