Thursday, May 14, 2020

What we said before, only worse

Though there were still some suckers (Rolling Stone's messianic profile was still months away), 2017 may have been the year that people really started catching on to the scam. The speed of Musk's reputational implosion was a bit surprising,but the trends have been apparent for a long time.

Tuesday, July 25, 2017

A few points to keep in mind when reading any upcoming story about Elon Musk

First, a quick update from the good people at Gizmodo, specifically Ryan Felton:

Elon Musk awoke on Thursday with the intention of sending Twitter into a frenzy by declaring that he received “verbal govt approval” to build a Hyperloop in the densest part of the United States, between New York City, Philadelphia, Baltimore, and Washington D.C. This is dumb, it’s not how things work, and requires, uh, actual government approval.

Felton goes on to contact the government agencies that would absolutely have to sign on to such a project. Where he was able to get comments, they generally boiled down to "this is the first we're hearing of it." The closest he came to an exception was the federal Department of Transportation, which replied

We have had promising conversations to date, are committed to transformative infrastructure projects, and believe our greatest solutions have often come from the ingenuity and drive of the private sector.
This is a good time to reiterate a few basic points to keep in mind when covering Elon Musk:

1.    Other than the ability to make a large sum of money through some good investments, Elon Musk has demonstrated exceptional talent in three (and only three) areas: raising capital for enterprises; creating effective, fast-moving, true-believer corporate cultures; generating hype.

2.    Though SpaceX appears to be doing all right, Musk does not overall have a good track record running profitable businesses. Furthermore, his companies (and this will come as a big slap in the face of conventional wisdom) have never been associated with big radical technological advances. SpaceX is doing impressive work, but it is fundamentally conventional impressive work. Before the company was founded, had you spoken with people in the aerospace community and asked them "what is closest to being Mars ready, who has it, and who are the top people in the field?", the answers would have been the type of engine SpaceX currently uses, TRW (which sued SpaceX for stealing their intellectual property), and the chief rocket scientist SpaceX lured away from TRW. By the same token, Tesla is pretty much doing what all of the other major players in the auto industry are doing in terms of technology.

3.    From the beginning, Musk has always had a tendency to exaggerate and overpromise. Smart, skeptical journalist like Michael Hiltzik and the reporters at the Gawker remnants have taken any claim from Elon Musk with a grain or two (or 20) of salt.

4.    That said, in recent years things have gotten much, much worse. Musk has gone from overselling feasible technology and possibly viable business plans to pitching proposals that are incredibly unlikely then supporting them with absurdly unrealistic estimates and sometimes mere handwaving.

5.    The downward spiral here seems to have started with the Hyperloop. This also seems to be the point where Musk started trying to do his own engineering rather than simply taking credit for the work of those under him. On a related note, it is becoming increasingly obvious that Elon Musk has no talent for engineering.

6.    Musk’s increasingly incredible claims have started to strain the credulity of most of the mainstream press, but the consequences have been too inconsistent and too slow-coming to have had much of a restraining influence on him. Even with this latest story, you can find news accounts breathlessly announcing that supersonic travel between New York and DC is just around the corner.

7.    Finally, it is essential to remember that maintaining this “real-life Tony Stark” persona is tremendously valuable to Musk. In addition to the ego gratification (and we have every reason to believe that Musk has a huge ego), this persona is worth hundreds of millions of dollars to Musk. More than any other factor, Musk’s mystique and his ability to generate hype have pumped the valuation of Tesla to its current stratospheric levels. Bloomberg put his total compensation from Tesla at just under $100 million a year. When Musk gets tons of coverage for claiming he's about to develop telepathy chips for your brain or build a giant subterranean slot car race track under Los Angeles, he keeps that mystique going. Eventually groundless proposals and questionable-to-false boasts will wear away at his reputation, but unless the vast majority of journalists become less credulous and more professional in the very near future, that damage won’t come soon enough to prevent Musk from earning another billion dollars or so from the hype.


  1. Mark:

    But one thing you didn't mention in your post: Tesla's stock price. It's my impression that Tesla's stock price is the backstop on Musk's reputation. Make fun of him all you like, but look at that stock price. Etc. How do you think about that? Is it just suckers keeping the price afloat? Or is Tesla just different from Musk: he's an attention-getter but they sell cars?

    1. Except Tesla doesn't sell that many, certainly not enough to justify its valuation. My best guess is that the stock price is driven by bubble dynamics, Musk's cult of personality, and some creative accounting designed to pump the stock so Elon can get his $700 million bonus (an MBA friend used the term "profitability vaporware).

      And yes, lots of people do use this valuation as validation of Musk

    2. Mark:

      I'm not disagreeing, but . . . lots of people have companies and try various tricks to keep their stock afloat, and these tricks don't always work. So whatever it is that Musk is good at, it's not so easy.

    3. Andrew:

      One thing to keep in mind. While Tesla has always been valued way beyond the fundamentals, the big run up is recent and conveniently timed. There are a lot more ways to pump a stock than to keep it inflated.

      That said, you’re right. Musk is extraordinary, both in his talents and his rightness for the times. That’s why, as Scott Adams might say, we’re talking about him; he’s not talking about us.