By James Rogers
Elon Musk’s decision to move forward with his purchase of Twitter sent the social media platform’s stock skyrocketing, but has also raised questions about how the entrepreneur will manage his growing business empire.
Musk, of course, is also CEO of Tesla Inc. /zigman2/quotes/203558040/lastsale TSLA -0.34% and SpaceX , as well as the founder of The Boring Company. So, how will he avoid being spread too thinly across these different businesses?
Andy Wu, assistant professor of business administration at Harvard Business School says that Musk has already been stretched thin and operating seemingly at his limits. “In 2018, Musk said that he has already been working 120-hour weeks,” he told MarketWatch. “It would be hard, and some would think impossible, for Musk to maintain the level of attention he gives his existing businesses with Twitter now added to the portfolio.”
Set against this backdrop, Musk will have to pull back his time and attention from somewhere, Wu added. “He will have an even more complicated routine of switching his attention between companies with very lofty and divergent goals,” the professor said.
For Eric Flamholtz, professor emeritus at UCLA’s Anderson School of Management and president of Management Systems Consulting Corporation, Musk is a visionary whose success will depend on delegation. Musk, he says, should set up a special leadership team, or what he calls “a leadership molecule” in each of the companies.
“It’s usually, two, three or four people,” he said, noting that each team spans vision and strategy, culture, day-to-day operations, the development of systems and processes, and innovation and change. “They are overlapping circles,” he added.
Flamholtz points to Warren Buffett as an example of someone who has successfully achieved “positive laissez-faire leadership” across businesses. “If [Musk] husbands his resources, including himself, and his own energy, carefully, he can pull it off,” Flamholtz said. “He will fail if he’s a micro-manager of everything.”
But he sees a lot of positives in the Tesla and SpaceX CEO. “Musk is in the style towards a Buffett,” the academic added. “He’s not Buffett, but he’s a variation on that theme.”
Worries about CEOs managing multiple companies are nothing new. Former Twitter Inc. CEO Jack Dorsey, for example, prompted concerns that he was spread too thinly while running both the social media platform and payments company Square.
“Dorsey is an interesting guy but his actions or inaction on Twitter suggest that he simply grew tired of the company or became more interested in Square,” Charles King, principal analyst of tech research firm Pund-IT , told MarketWatch. “Musk seems more engaged with his various enterprises but Twitter is a significantly different business than his other technology-driven ventures.”
“It isn’t clear to me how or if Musk’s considerable talents will successfully translate to a social media company,” he added, noting that he could follow Buffett’s model. “But Musk’s love of the limelight seems at odds with that approach.”
Harvard’s Wu sees a possible comparison with former Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.21% CEO, the late Steve Jobs, noting that, after his resignation from Apple in 1985, Jobs went on to found computer company NeXT while deeply involved in the development of animation studio Pixar.
While the diversified nature of Musk’s companies is unlikely to create conflicts of interest, it could make it harder to pinpoint synergies for Musk’s money and time, according to Wu.
Tesla shares ended Wednesday’s session down 3.5% compared with the S&P 500 Index’s /zigman2/quotes/210599714/realtime SPX +0.75% fall of 0.2%. Twitter shares were down 1.4% on Wednesday, after gaining 22.2% on Tuesday.