They say the key skill in leadership and successful entrepreneurship is storytelling. Humans are compelled to act on stories more than on anything else. Leaders and entrepreneurs need to tell and sell captivating stories to the people who matter. They need them to believe in a future that is bright, viable and, above all, profitable, so that they buy into the promise and walk the distance to see the vision through.

By that measure, Elon Musk is a storyteller par excellence. Since he came into the mainstream in the late nineties, he has cemented his reputation as a business visionary. He embarked on a series of groundbreaking ventures that held the promise to change the face of a number of industries. They included proven successes such as Confinity (which became PayPal and was eventually acquired by eBay) as well as ‘work in progress’ ventures such as Tesla (electric vehicles), SpaceX (Space exploration and tourism), Solar City (energy efficiency), Open AI (human-friendly AI development), The Boring Company (mass transportation) and Neuralink (brain computer interfaces).

At the heart of these ventures was Musk. Unlike his contemporaries, he put his engineering and business education to use and is heavily involved in product development to see his vision through. More importantly, he is involved in the management of his companies, spinning the entrepreneurial stories that keep investors patient and engaged.

Although Musk’s ventures have all generated public interest, nothing has captured the interest of the public and investors alike as Tesla. Launched in 2003, the company has a huge fan following and went public in 2010 with a successful IPO. It has also garnered considerable investor support with multiple rounds of funding, as well as state and federal subsidies valued close to five billion dollars in 2015.

The tweet about taking Tesla private and its retraction will be counted as among the most costly tweets in history. The consequent lawsuit filed by the Securities and Exchange Commission (SEC) in the US now sees Musk stepping down as Chairman of Tesla’s Board (he retains his CEO position) and paying a $20 million fine – although Musk has not accepted or denied any of the charges brought against him.

Yet, it seems that Musk has lost his magic. Tesla has been mired in a number of controversies and a spate of bad news revolving around both its ability to produce cars in significant numbers as well as the ability of its founder to see his vision through. As the bad publicity gave investors the jitters, Musk pushed back at the media, claiming that the unfairly negative coverage of Tesla was putting at risk the future of the company and that investors had to stop believing everything they saw or read in the media.

Then Musk announced his intention to take Tesla private again, stating at one point that he had secured funding at $420 a share (Tesla at its IPO was valued at $17 a share and the current value of the stock is around the $300 mark). There were rumours of Saudi money and of a sovereign wealth fund involvement. Three weeks into the saga, Musk announced that he had abandoned the plan because stockholders wanted the company to remain public and that going private was proving more difficult than anticipated.

The tweet about taking Tesla private and its retraction will be counted as among the most costly tweets in history. The consequent lawsuit filed by the Securities and Exchange Commission (SEC) in the US now sees Musk stepping down as Chairman of Tesla’s Board (he retains his CEO position) and paying a $20 million fine – although Musk has not accepted or denied any of the charges brought against him.

Most legal experts agree that the SEC was kind to Musk, perhaps because it too believes in the promise of Tesla’s story. Most CEOs in the same predicament would have lost both positions but by removing him from the chairmanship, the SEC has impaired his ability to impact long-term regulatory and investor decisions (albeit marginally), although it can be argued that by retaining him as CEO, he can still impact Tesla’s operational future and business vision execution. In fact, the settlement is largely the SEC’s attempt to punish the probable slight to investor interests without taking long-term steps that may impact Tesla’s viability or ability to stay in business in the near term.

Where does Tesla go from here? Industry analysts believe Musk has two options. The first is for Tesla to reposition itself as a niche player (like Porsche) and build high-value, high-price, high-performance vehicles. However, this would cause a significant reduction in the company’s valuation (Porsche is valued at around $20 billion and manufactures 200,000 units a year). This however will have long-term implications for Musk and his other businesses as his prestige and standing will take a monumental hit, especially in the aftermath of the SEC settlement and will impact his ability to raise capital in the future. The second is to bite the bullet and make Tesla hit the required critical mass of production and turn it into a disruptive industry leader like Toyota (with a market valuation of nearly $200 billion). However, this requires all of Musk’s storytelling panache and more patience from customers and investors who, despite everything, remain committed to Tesla’s story.

Musk’s erratic behaviour over the past few months has caused a great deal of harm to Tesla’s standing. He needs to take control of the brand’s narrative and come clean on those issues which are giving the company bad press. The settlement with the SEC on the terms announced about the needless ‘going private’ controversy is a good first step.

As for what happens next, here are a few pointers to how the next few chapters of Tesla’s story may unfold.

1. Strengthen the core

Tesla hitting its production goal is a HUGE deal. Musk needs to capitalise on this and focus on engaging customers. Despite everything,Tesla is immensely popular. When Musk announced the Model 3 in April 2016, customer response was ecstatic and has not changed since then. Over 465,000 people (an average of 1,800 bookings a day) paid $1,000 to reserve their Model 3 and many are still waiting on deliveries. Hitting the production target also means that Musk needs to deliver on the sales already made, which are valued at $14 billion at base price. This cash flow will help ease Tesla’s current burn rate of one billion dollars per quarter.

2. Seek professional help

Musk has spoken about his spending 120 hours a week working and not having time for anything else. This proved something industry watchers have long been saying about Musk. Even without being the Chairman of the Board, he is too involved in all aspects of running his ventures as opposed to providing direction and vision. Many argue that Musk needs a COO to run operations, leaving him free to focus on the bigger picture.

3. Deliver on the bottom line

Nothing will make the Tesla story more stellar than financial performance. In July 2018, Tesla delivered 14,600 Model 3s, which was an excellent start. However, the company still has issues with throughput and has not met the original $35,000 price point (now slated to be offered to customers in early 2019). The company needs to meet and exceed production targets not only to engage customers and investors, but to finance ambitious growth targets. In the years ahead, Tesla plans to open a huge two billion dollar plant in China and with billions of dollars of debt due this year, Musk will require another round of financing to tide Tesla over until sustained profitability kicks in.

4. Clear the skeletons in the cupboard

Musk’s erratic behaviour over the past few months has caused a great deal of harm to Tesla’s standing. He needs to take control of the brand’s narrative and come clean on those issues which are giving the company bad press. The settlement with the SEC on the terms announced about the needless ‘going private’ controversy is a good first step. These include SEC investigations on Tesla on issues such as union-busting, not reporting crashes of its test vehicles, as well as Musk’s ill-advised Tweet storms about securing private funding that may have manipulated stock values and been a breach of ethics. Tesla needs to close out these investigations and the accompanying stockholder lawsuits and reinstate confidence among customers and investors.

5. Calm nerves and stop shooting the messenger

Musk needs to stop his war on the press and learn to take negative reviews in his stride. His recent Twitter rants against the press and a professional diver who attempted to rescue the Thai boys trapped in a cave and short selling investors have not done him or Tesla any good. If anything, they have further highlighted a negative narrative of an unhinged visionary. Investors need to be reconnected to the long-term story and for this, Musk needs messengers in the media.

Tariq Ziad Khan is a US-based marketer and a former member of Aurora’s editorial team.
tzk999@yahoo.com