For Elon Musk, the company’s financial figures are not the most important issue.

Fortune said that although billionaire Elon Musk is always controversial, the Tesla founder’s management lessons are worth discussing.

In particular, the fact that Elon Musk successfully built many startups and became the richest billionaire on the planet shows that his methods have certain effectiveness.

1. Sell the vision

According to Fortune, what makes Elon Musk truly successful in creating a revolution in the car industry, overthrowing traditional gasoline cars is selling confidence in this vision and attracting investors.

Simply put, Elon Musk wants investors not to look too closely at Tesla’s profit numbers and current situation because they will mean nothing compared to the vision that this billionaire is committed to.

Elon Musk’s ability to sell vision, market ideas and manipulate psychology is truly a management lesson worth learning as this tactic has helped him succeed with both SpaceX and is currently working with Twitter-X.

Without a clever strategy of selling trust to investors, Elon Musk would not have enough capital to start so many projects.

In addition, without the stock price increase that helped Tesla’s total capitalization reach 630 billion USD, Elon Musk would not have the title of richest person in the world.

He also will not be able to pledge shares to buy Twitter, nor can he use bonus shares to stimulate workers.

“I estimate the total value of the company will grow 5 times, even 10 times compared to today,” Elon Musk confidently declared in the third quarter 2023 business results report, which did not meet Tesla’s expectations.

If Elon Musk’s forecast is correct, Tesla’s total capitalization will be 50% higher than Apple’s today.

2. Disregarding financial data

In shareholder meetings, Elon Musk usually never talks about creating specific financial value, nor discusses how to increase return on equity, or even how to increase return on equity. is not bothering to set specific goals for these indicators.

In fact, Elon Musk despises financial indicators. For example, in early 2021, Elon Musk surpassed Tesla’s chief financial officer to order the purchase of $1.5 billion in Bitcoin and eventually had to sell most of this digital currency in 2022 at a breakeven price.

Meanwhile, SpaceX is said to have lost up to 373 million USD in early 2023 when selling at a loss the cryptocurrency that Elon Musk bought.

Not stopping there, the banks that lent Elon Musk $13 billion to buy Twitter-X are also disappointed because the founder cannot provide any useful financial information.

Elon Musk fired Twitter-X’s chief financial officer as soon as he took power and has not yet hired a replacement because he thought it was not important.

 

3. Continuous firing

Elon Musk believes that not constantly changing the human resources system and eliminating weak employees will not be able to maintain maximum efficiency of the business.

This is the approach that GE’s former CEO Jack Welch used when he fired 10% of the workforce every year even though it seriously damaged the company’s reputation.

“Elon Musk says it makes sense to lay off 10% of the workforce every year. He believes that if the company does not replace 10% of its workforce every year with better labor, the company will not maintain peak performance. This is simply an efficiency problem for Elon Musk,” recalled engineer Branden Spikes, who worked with Elon Musk at SpaceX for 10 years from 2002 to 2012.

According to Spikes, working with Elon Musk is full of pressure but also extremely attractive when you can clearly improve your abilities.

“He has never fired someone without a reason and the reason for firing doesn’t have to be too big. For example, you can make a mistake but you cannot be forgiven if you repeat it,” Spikes said.

In addition, Elon Musk also trusts engineers more than other industry experts. For example, at SpaceX, nearly 100% of managers have engineering majors, including the human resources director or financial director.

4. Eliminate the communications department

Elon Musk eliminated Tesla’s public relations (PR) department in 2019 and as of today, it is the only large-scale public corporation without a PR department.

Even all of Elon Musk’s other projects do not have a PR department.

Even in an interview with Morgan Stanley in March 2023, Elon Musk also mocked the need to organize a PR department for the company.

According to this billionaire, Elon Musk is the only source of news about the company and must have the loudest voice, attracting the most attention regardless of praise or opposition.

This is probably also the reason why Elon Musk causes so much controversy, but invisibly advertises his projects for free.

5. Tax evasion with stocks

Unlike other billionaires who have assets in cash or real estate, Elon Musk only keeps money in stocks to avoid taxation.

In theory, if stocks have not yet been realized into money, they are not taxed and this makes Elon Musk prefer to accumulate assets on the stock exchange rather than buy land.

The Tesla founder himself is said to have sold all of his real estate. Even in the acquisition of Twitter-X, he also borrowed money from the bank but refused to sell all Tesla shares to exchange for cash.

Currently with a 21% stake in Tesla, Elon Musk is said to hold $137 billion in shares of this electric car company alone.

6. Promise a lot

Fortune said that Elon Musk always knows how to make big promises, bringing about new revolutions on a large scale.

Thanks to convincing investors that Elon Musk is still changing the world, they forget that many of his projects are still unprofitable, continuing to let this billionaire burn money until success.

Despite success with Tesla and SpaceX, some of Elon Musk’s projects have not yet brought real profits beyond their commitments.

Even Tesla’s promise of growth has made many current investors skeptical, or the launch of a new electric pickup truck line has also seen Elon Musk break his promises, repeatedly delaying appointments and then rescheduling them. debut.

In 2019, Elon Musk pledged that the world would have 1 million automated electric taxis running on the road by 2020, but this commitment has not yet come true. The promise of an electric pickup truck by 2021 has been pushed back until 2024.

A series of doubts about the technical difficulty in producing Tesla’s Cybertruck electric pickup truck as well as the high cost of putting it into large-scale production make many experts skeptical about the company’s profitability in this line. this product.

Not to mention the Boring Company project to dig cheap tunnels and Tesla Energy to sell 1,000 solar panels per week have been almost forgotten even though Elon Musk once made such a commitment.

7. Strict control

For Elon Musk, business is mainly pure invention and engineering. Most of this billionaire’s projects are to create a new invention at super low cost, create an industry revolution and benefit from it.

In 2008, Elon Musk moved the design engineers’ office from a separate place to the assembly factory to witness the results and correct any problems immediately.

This billionaire even built an index called “Idiot Index”, thereby measuring how much it costs to produce a finished part compared to the cost of raw materials to make it. create them.

This index helps Elon Musk separate costs and find a cheaper production process to lower costs.

Elon Musk biographer Walter Isaacson says that Tesla and SpaceX engineers must know exactly this stupid index for each department they are responsible for.

The goal of these engineers is to lower production costs or face the boss’s wrath.

SpaceX is currently producing up to 70% of its components, in contrast to the traditional aerospace industry when it outsources to professionalize and speed up performance.

Although many people compare Elon Musk to Apple’s Steve Jobs, this billionaire doesn’t think so.

Although Steve Jobs also manages all aspects of production and design, Apple still outsources iPhone or iPad production.

On the contrary, Elon Musk considers self-production of components in his closed ecosystem a prerequisite for being able to control the company’s destiny.

8. Gain market share at all costs

For years, Tesla has benefited Elon Musk by leading the electric vehicle market.

But now this boss’s top concern is no longer ensuring profit growth as committed to investors but gaining market share.

“Small changes in profit growth are only a small part of the overall long-term context. Paying too much attention to these numbers will become silly,” Elon Musk declared.

To increase sales, Tesla has lowered the price of its electric vehicle products from an average of 65,990 USD/unit to only 49,000 USD. This move has lowered the operating profit margin from 17.2% in the third quarter of 2022 to 7.6% in the same period in 2023.

The Tesla founder pledged that automatic driving technology would help the company’s profits explode like other information technology corporations or software producers.

However, if this gamble fails, Tesla will be no different from a normal car company that is “sold out”, the only difference is that this car selling business has a total value 3 times higher than Toyota.

9. Complain about poverty and suffering

“We may fail as many people predicted,” Elon Musk once said about his adventure with Twitter-X.

The fact that Elon Musk always whines to creditors about Twitter-X’s weak situation is not without effect.

Banks are stuck with $13 billion in debt for Elon Musk in this deal and cannot sell it to anyone when the business situation is bad.

Therefore, when Twitter-X gets worse and worse, the opportunity for Elon Musk to buy back these debts at cheap prices or at discounts from banks becomes higher.

Of course, Elon Musk also has to choose investors to talk to. Fortune said that with some people like Prince Alwaleed bin Talal of Saudi Arabia or investor Marc Andreessen, Elon Musk highly praised Twitter-X’s prospects.

10. Side projects

At SpaceX, Elon Musk’s goal is to build a spacecraft to take humans to Mars. But this business is losing money, so Elon Musk has to find a way to support it by launching a side project: Starlink satellite network.

The Starlink project is easy to do and can be profitable faster than sending humans to Mars.

SpaceX is currently launching its 4,400 satellites in many markets, and aims to expand to 30,000 satellites to make a profit to fund Elon Musk’s dream of conquering Mars.