Elon Musk and Tesla Twitter Outbursts Smack of a Cover-Up
In the worlds of politics and business, when it comes to a crisis, the cover-up is always worse than the crime. Richard Nixon and Bill Clinton can attest to that. Cover-ups ended one presidency, while another became a hopeless media circus. The tobacco industry’s suppression of its own research is well-known. And Exxon-Mobil’s quashing of its scientists’ research on climate change became the subject of several investigations. Johnson & Johnson’s reaction to the 1982 deaths from cyanide-laced Tylenol has long been hailed as a leading example of crisis management. But this year, the company was nailed for being too slow to warn the public about the risks related to its Pinnacle hip implants. Now Tesla and its co-founder, Elon Musk, are facing similar problems. And the way they managed the fallout from the death of Joshua Brown, a former Navy SEAL and technology-lover who died while using the autopilot feature in his Tesla Model S, is creating more problems for the company than solutions. Indeed, much of the media reaction bordered on the absurd, as Nick Bilton showcased last week in Vanity Fair. Approximately 33,000 Americans die from traffic fatalities annually, largely because of human error. And the numbers worldwide are a disturbing 1.3 million a year, according to one road-safety advocacy group. The hysteria over driverless cars, and suggestions that this tragedy serves as a “wake-up” call, is shortsighted when considering the rather dreary 100-year history of human drivers. Nevertheless, for many consumers, autonomous cars are still a nascent technology. And the reactions of Musk and Tesla, on both blogs and social media channels such as Twitter, came across as self-serving, defensive, tone-deaf and lacking any compassion. The accident happened in May, and immediately, Tesla notified the National Highway Traffic Safety Administration. But it did not announce the death to its shareholders until almost two months later. In the meantime, Tesla and Musk combined to sell over $2 billion worth of stock, without any mention of the accident within its securities filings. When Fortune editor Alan Murray questioned the timing, Musk was not having any of it:
The spit-spat with Fortune continued, with Tesla slamming Fortune’s continued coverage of the stock sale and accident. In the meantime, Musk continued to tout the Model S’s “lowest probability of injury” for any car tested by the NHTSA. This could be statistically true, but it's still dismissive of any concerns the public, or regulators, may have about Tesla’s products in the wake of the May accident. And let’s face it: The bottom line is that investors have a right to be concerned — Tesla is still losing money, and has fallen short of its most recent production goals.
For autonomous car experts and those deeply vested in this young industry, one death in 130 million miles driven may not seem to be material when it comes to disclosing such information to investors. But to much of the public, including those who are considering the purchase of Tesla stock, such disclosure is important — not necessarily because of the statistical significance, but what it says about how the company will respond to adversity in the long run.
And the stubborn fact remains that no matter how well a company is run, how fantastic the products are, and how brilliant and visionary a firm’s executives may be, all companies will confront huge challenges. The way in which a company responds is about more than “optics.” It's about the agility of an organization during a time of hardship. Taking a defensive tone, as Tesla and Musk have done, heightens more suspicion instead of silencing it.
Meanwhile, Musk made it clear that “comments, suggestions and criticisms” of Tesla’s products are welcome but criticism of him, or the company, is not. Musk’s rules also apply, apparently, to any environmental concerns, as evident in his response to a recent Bloomberg article that suggested the demand for rare minerals such as lithium could have an impact on wildlife:
The reality is that all companies are under a microscope. And while publications such as Wired, Gizmodo and TriplePundit are often advocates and even celebratory of companies in the mold of Tesla, other publications, such as vanguards of yesterday’s industries such as Forbes and Fortune, often have a completely different take. That does not mean Musk and Tesla should take the bait. Instead of picking a fight, Tesla and its co-founder need to communicate transparency and cooperation in the face of a crisis.
Picking a fight with the media won’t make the problem go away. If anything, as Nixon learned, it will only encourage the skeptics. And these days, there will be more than a Carl Bernstein or Bob Woodward on a company’s tail. Anyone with a smartphone and a reasonably high IQ can call a company out on its “BS.” Musk, Tesla and the future of transportation would be better served by showing more grace, and developing a far thicker skin.
Image credit: Martin Gillet/Flickr
Published earlier today on Triple Pundit.