Tesla Inc. (TSLA) CEO Elon Musk peddles in the promises of a brighter future. But his status as a visionary bent on changing the way we think, act and live may not protect him forever.
According to a recent piece from innovation expert Steve Blank in the Harvard Business Review, Musk draws distinct similarities to William "Billy" Durant, the original startup leader who got the company that would become General Motors Co. (GM) off the ground.
If you haven't heard of Durant, you're likely not alone. After he founded GM in 1904, exhibited astounding capacity for capital raising and investor persuasion and led the company to what would be $10 billion in sales in today's dollars, he was ousted by the board.
The man who took over for Durant after his ouster, however, went down in history as the "Inventor of the Modern Corporation." Alfred P. Sloan became one of the most famous businessmen in the world after he served as president of GM from 1923 to 1956 and revolutionized corporate organization with his management accounting systems and now-ubiquitous decentralized divisional production strategy.
But before there was Sloan, there was Durant. Durant started out by using money from his horse-drawn carriage business to purchase Buick. He then bought 29 parts suppliers and three more small car companies - Cadillac, Oldsmobile and Pontiac - and formed General Motors. But by 1910, GM's debt grew to what would be about $250 million today and Durant was fired.
That wasn't the end of the road, though. Durant soon bought Chevrolet and turned it into GM's biggest rival. By 1916, Durant made what Blank called "one of the greatest corporate comeback stories" and retook control of GM.
Soon after, though, a 1920 recession hit, and GM was more cash-strapped than ever. But Durant continued eking out loans from his Wall Street cronies to fund rampant expansion, both organically and inorganically. "Durant kept building for a future assuming the flow of cash and customers would continue," Blank wrote. That cost him his job - again.
"While everyone around him acknowledged he was a visionary and a world-class fund raiser, Durant's one-man show was damaging the company," Blank wrote. "He couldn't prioritize, couldn't find time to meet with his direct reports, fired them when they complained about the chaos, and the company had no financial controls other than Durant's ability to manage to raise more money."
"But the spirit of Billy Durant would rise again in what would become Silicon Valley," Blank wrote. "And 100 years later Elon Musk would see that the future of transportation was no longer in internal combustion engines and build the next great automobile company."
Musk, like Durant, has a mind that moves a mile a minute. Musk is CEO and product architect at Tesla, and he also leads SpaceX, the Boring Co., OpenAI and NeuraLink. But he is still human and still has just seven days each with 24 hours.
Durant was ousted even as GM's sales soared. He died managing a bowling alley in Flint, Mich.
"Yet, as Durant's story typifies, one of the challenges for visionary founders is that they often have a hard time staying focused on the present when the company need to transition into relentless execution and scale," Blank said.
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Such a problem is arguably best illustrated in Musk's trouble with the Model 3. Despite repeated failures to meet production goals for the car, Musk has still announced new projects from an upcoming Roadster to a semi truck.
"One of the common traits of a visionary founder," Blank said, "is that once you have proven the naysayers wrong, you convince yourself that all your pronouncements have the same prescience."
The parallels lead one to wonder if Musk's rise to glory could go the way of Durant's. Musk has curried the favor of investors and Tesla fanatics despite continually reporting financial shortcomings. He prioritized automation in Model 3 production, then said it was a mistake that has cost Tesla important deadlines.
"Sleeping on the factory floor to solve self-inflicted problems is not a formula for success at scale," Blank wrote, "and while it's great PR, it's not management."
Musk has been a leader at Tesla since its inception, but many have called into question of late his ability to do more than just be a visionary. He's been raked over the coals for telling employees to walk out of meetings and instructing managers to get direct consent from him and only him for specific projects. And on Wednesday, his company is expected to report another quarterly loss.
"One wonders if $2.6 billion in executive compensation would be better spent finding someone to lead Tesla to becoming a reliable producer of cars in high volume - without the drama in each new model," Blank said. "Perhaps Tesla now needs its Alfred P. Sloan."