A Pain in the Neck: Elon Musk and Tesla's Revolving C-Suite

Dow Jones2023-08-13

Tesla's surprise turnover in the CFO chair is yet another reminder of a looming challenge facing Elon Musk in preparing the automaker for the next generation: succession.

Zach Kirkhorn, by many accounts, had been a calming influence at the electric-vehicle maker following years of turbulence surrounding the mercurial leader.

As Kirkhorn served more than four years as chief financial officer, a complementary public portrait of the two men emerged. Musk offered the big picture; Kirkhorn handled the details. Musk blustered; Kirkhorn reassured. Musk could afford to get distracted -- whether it be with Twitter-turned-X, the OpenAI rival xAI or talk of cage-fighting Mark Zuckerberg -- because he had Kirkhorn minding the store back at Tesla headquarters.

Then this past week hit.

Monday's announcement of Kirkhorn's departure showed cracks in the support system that the 52-year-old Musk had been touting and became part of the broader pattern of churn among the company's senior leaders.

It is too soon to say how disruptive -- if at all -- the change might be. But it isn't a good omen ahead of the Cybertruck launch, which is supposed to begin initial deliveries within the next seven weeks, and a push to build out global manufacturing capacity.

The 38-year-old Kirkhorn, who had been considered a possible successor to Musk, will be the second named officer to leave since the spring of 2021. Chief Accounting Officer Vaibhav Taneja was tapped as Kirkhorn's replacement.

Grooming a next generation of successful leadership under a strong CEO is a common challenge. See, for example, Disney, Ford Motor, General Electric and Starbucks.

While Musk's SpaceX has benefited from a No. 2 who has been at the rocket maker from its earliest days, Musk has said that he has struggled to find somebody to play the role of Tesla's No. 2 or take over as chief executive officer.

And unlike many other business leaders, Musk is managing a sprawling business empire of stand-alone companies across industries. Despite his tech prowess, he hasn't cracked a way to create more hours in a day.

Musk's lifestyle often has him shuttling between the companies he oversees, including Tesla, SpaceX and the social-media platform X, formerly Twitter.

He doesn't sleep much and has suffered from neck and back pain for years, an issue that resurfaced in recent days.

Musk had suggested this could be a reason he would avoid going head-to-head with the increasingly swole Facebook co-founder Mark Zuckerberg after publicly challenging him recently to a physical duel. On Friday, Musk tweeted that testing showed his spine wasn't a problem but that he would require minor surgery on his right shoulder blade. "Recovery will only take a few months," he said.

Given all of the distractions in Musk's life, it is understandable that Kirkhorn's center-stage appearance in March at a shareholder day helped soothe jittery investors worried that his boss wasn't focused enough on Tesla. They are betting that the company can execute on Musk's aims of transforming Tesla into the world's bestselling car company by decade's end.

Kirkhorn helped orchestrate the event, trotting out colleagues to describe how Tesla could pursue dramatic growth while keeping its high levels of profitability.

"When we were preparing for today, folks were asking, 'Well, Zach, what should we talk about?' And really, the only guidance we gave folks is: talk about the things that you're working on," Kirkhorn told investors.

"What did almost everybody talk about today in great detail? All of the work that they're doing to take cost out. Because in this industry, in this business, you survive or you die based upon the ability to manage our costs."

That is the kind of corporate speak investors like to hear and the sorts of "boring, bonehead" discussions that have irked Musk in the past.

Kirkhorn's rise came toward the end of a painful period in Tesla's history that saw more than 50 senior executives depart in the midst of the troubled launch of the Model 3 sedan. Musk was sleeping on the factory floor in 2018, and the executive churn stoked concern that his leadership bench was too small.

Kirkhorn's promotion to CFO in March 2019 from backbencher in the finance department also marked a new era in the makeup of Tesla's top ranks, one of relatively less turnover.

His ascent came a few months after another longtime loyalist, Jerome Guillen, rose to the highest levels of the company as president of automotive operations. Then, a few months following Kirkhorn's promotion, engineer Drew Baglino essentially assumed the role of chief technology officer when co-founder JB Straubel departed. (Straubel joined Tesla's board this year.)

Together, the three became Tesla's only named corporate officers beyond Musk. Today, of the three, only Baglino remains. Guillen left in 2021.

Their rise felt fitting. They were homegrown leaders, people who had been in the trenches from the early days, gaining increasing levels of responsibilities and, more important, Musk's trust.

After years of big-name hires from the likes of Apple and Google, Tesla was finally turning inward to find experienced hands for its most important jobs, helping guide it to the status of the world's most-valuable automaker and to become consistently profitable.

Whatever the reason, outsiders hired to big Tesla jobs from corporate shops, with few exceptions, haven't lasted. As time went on, insiders, even if they lacked the résumés, increasingly had something that outsiders sorely lacked: experience managing up to Musk.

Or so it seemed.

Between Kirkhorn's stepping down on Aug. 4 and Tesla's announcing the move the following Monday, Musk took to tweeting cryptically again regarding a longtime hobbyhorse, belittling the kinds of job titles corporate soldiers spend a lifetime trying to attain.

It is the kind of comment that informs how Musk has long run Tesla.

"CEO is fake title. You need a president, a controller and a secretary for a C Corp, but all the chief [whatever] officer stuff is superfluous, " he wrote during the wee hours of Sunday Aug. 6.

Still, the next day, Musk mused about his own limitations, when he added: "Nobody lives forever."

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Comments

  • breAkdaWn
    2023-08-14
    breAkdaWn
    It's true, nobody lives for ever. It's also true that no job is permanent!
  • Chrissimo
    2023-08-13
    Chrissimo
    Quoted "It is too soon to say how disruptive -- if at all -- the change might be. But it isn't a good omen ahead of the Cybertruck launch,...."  This auther just contradict himself? He said it's too soon too say, then he said it isn't a good omen. What kind of shit load article am I reading. I jace just waste 2 minites of my life on a BS article.
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