Should You Be A Celebrity CEO?

Tesla Model S on Fire

Celebrity CEOs: A Good or Bad Thing?

Last week, a video of the Tesla Model S on fire made the rounds on the internet. Tesla’s shares began to slip immediately on Wall Street, and the buzz about the safety of the car started to get louder. They say a picture is worth a thousand words, and the prospect of the public seeing a burning Tesla could have been a serious blow to Tesla’s sales.

Here Comes Elon Musk to the Rescue

Elon Musk is the face of Tesla, due in part to his billionaire status and his successes at PayPal and Space X. He took the lead in refuting a NY Times smear on the Model S earlier this year and seemingly won the PR war. His unusual method of counterattack? Responding directly to the crisis with a well thought-out blog post.

Now, with another (though this time literal) fire to put out, he once again became the face of the company’s response, posting another quick yet measured blog post. In it, Musk provided a very analytical explanation of what happened. Here are some excerpts:

“Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse. A typical gasoline car only has a thin metal sheet protecting the underbody, leaving it vulnerable to destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and often burn the entire car to the ground. In contrast, the combustion energy of our battery pack is only about 10% of the energy contained in a gasoline tank and is divided into 16 modules with firewalls in between. As a consequence, the effective combustion potential is only about 1% that of the fuel in a comparable gasoline sedan.”

The explanation is pretty concise, scientific, yet easy for anyone to understand the point he’s making. It was an extreme event, the car’s safety features performed as designed, and despite the sensationalist images of the Tesla Model S burning, it was a contained fire. To finish off the post, Musk released the email the owner of the car had sent, praising Tesla and eager to get another car. That alone was a PR coup.

Once again, a quick rebuttal from Musk did the trick and nipped the brewing controversy in the bud. The stock price has slowly started to recover, even though some questions remain.

Is the Celebrity CEO Really for You?

For every Elon Musk there is a Steve Ballmer. Celebrity CEOs can be incredibly polarizing, not to mention a lightening rod for trouble. Elon Musk has a tremendous credibility due to his successes and is uniquely gifted in how he poses an argument.

If you Google “Celebrity CEOs Fired” one of the results you’ll see at the top of the search results is a story about the ouster of Carly Fiorina. Fiorina became instantly famous when she engineered the HP-Compaq merger, but things changed as the company struggled.

For an emerging-stage technology firm, it’s important to have a bold, decisive leader. But it’s equally important to have a leader who doesn’t overshadow the company (perhaps the exception is if your name is Steve Jobs or Bill Gates). The best leaders for companies at this stage in the game strike the right balance of being charismatic and knowing how to really make the product and value proposition shine.

What Do You Think?

Are celebrity CEOs an invaluable resource or more trouble than they’re worth?

Sudip Verma
Sudip Verma
Corporate Strategy, Sales Operations

Sudip is in charge of Corporate Strategy, Sales Operations at Alegeus Technologies. Previously, he worked at OpenView from 2012 until 2014 with portfolio companies to provide insights on the markets they operate in, their customers, and drive development of business strategies.
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