What Elon Musk does to Twitter is what he did to Tesla and SpaceX

Elon Musk was sleeping at the office. He fired employees and executives at will. And he lamented that his business was on the verge of bankruptcy.

It was 2018 and the company was Tesla, as Mr Musk’s electric carmaker struggled to build its mainstream vehicle, the Model 3.

“It was excruciating,” he told The New York Times at the time. “There were times when I didn’t leave the factory for three or four days – days when I didn’t go out.”

The billionaire’s experience with what he called Tesla’s “production hell” became a model for the crisis he created on Twitter, which he bought for $44 billion last month . Over the years, Mr. Musk has developed a playbook for managing his businesses – including Tesla and rocket maker SpaceX – through periods of pain, using shock therapy and scaremongering and pushing his employees and himself to put aside their families and friends to devote all their energy to his mission.

At Twitter, Mr. Musk used many of these same tactics to topple the social media company in just weeks.

Since late last month, the 51-year-old has laid off 50% of Twitter’s 7,500 employees and accepted the resignation of 1,200 or more. On Monday, he began a new round of layoffs, two people said. He tweeted that he was sleeping at the Twitter offices in San Francisco. And he applied mission-driven language, telling Twitter employees the company could go bankrupt if he couldn’t turn the tide. Those who want to work on “Twitter 2.0” must commit in writing to its “hard core” vision, he said.

David Deak, who worked at Tesla from 2014 to 2016 as a senior director of engineering overseeing a supply chain for battery materials, said Mr Musk “clearly thrives in existential circumstances”. He added, “He almost creates them to light the fire under everyone.”

The similarities between Mr. Musk’s approach to Twitter and what he has done at Tesla and SpaceX are obvious, added Tammy Madsen, a management professor at Santa Clara University. But it’s unclear whether he’ll find ways to motivate employees at a social media company like he did with workers whose quest was to keep people away from gas-powered cars or send humans in the space.

“At Tesla and SpaceX, the approach has always been high risk, high reward,” Dr. Madsen said. “Twitter has been high risk, but the question is, what’s the reward for that?”

Mr. Musk did not respond to a request for comment.

On Sunday, Mr. Musk held a meeting with Twitter sales employees, according to two people with knowledge of the matter. Then on Monday, he laid off employees in the sales department, they said. Late last week, Mr Musk fired Robin Wheeler, a top sales executive, they added. Bloomberg earlier reported that more layoffs could be coming.

Twitter is also reaching out to some engineers who quit to ask them to come back, the people said. At a meeting with employees on Monday, Mr. Musk said the company was not planning any further layoffs, according to a person present.

In companies led by Mr. Musk, the tendency to say that companies are on the verge of potential bankruptcy has often returned. At Tesla in December 2008, in the depths of the financial crisis, Mr. Musk closed a $50 million investment round from Daimler, he said, at the “last hour of the last possible day, otherwise the payroll would have rebounded 2 days later”.

He said the same about SpaceX, once noting that SpaceX and Tesla had a greater than 90% chance that they “would be worth $0in their early days.

For 2017, Musk said, SpaceX had to conduct rocket launches every two weeks or face bankruptcy, recalled a former SpaceX executive, who spoke on condition of anonymity for fear of retaliation. In a company driven by the goal of making life “multi-planetary”, the threat of bankruptcy was a motivating factor, the former executive said.

SpaceX has since successfully sent numerous rockets into space and landed them safely on Earth. But Mr. Musk has returned to his favorite stick, Tweeter last year that if a “severe global recession” were to dry up capital, bankruptcy of the rocket maker was “not impossible”.

“Only the paranoid survive,” he wrote, quoting Andy Grove, the former chief executive of Intel.

An atmosphere of crisis and self-imposed austerity are giving Mr. Musk the cover to make drastic changes and lay off senior executives or eliminate large swathes of staff, two former Tesla executives have said. It also prepares those left behind to work under extreme conditions to achieve Mr. Musk’s desires, they said.

Twitter’s approach, where Mr. Musk has fired thousands of employees, “is typical of Elon,” Mr. Deak said.

The chaos of the social media company is familiar to people who worked at Tesla when the company was struggling to ramp up manufacturing of the Model 3, which went on sale in 2017. In May of that year, Mr. Musk sent an email to staff that echoes some of the language he used with Twitter employees.

“Tesla must be hardcore and demanding,” he wrote. “The passing grade at Tesla is excellence, because it has to be.”

In the year since, Mr. Musk slept on the floor in the conference rooms of a Tesla factory, fired the vice president of engineering and worked 120 hours a week to deal with a backlog in production of the Model 3s. Tesla board members were concerned about Mr. Musk’s workload and his use of Ambien to try to sleep.

Foreshadowing turmoil on Twitter, Mr. Musk spent part of 2018 on the social media service, antagonizing lawmakers and regulators, including the Securities and Exchange Commission. The SEC later sued Mr Musk for tweeting that he had secured “secured funding” to take Tesla private, even though the billionaire never followed through and settled with the agency. This summer, he spent months and millions of dollars in legal fees to renege on his deal to buy Twitter.

Testifying in Delaware last week in a trial over his Tesla salary package, Mr Musk acknowledged that his penchant for acting unilaterally could land him in trouble. “When I make decisions without consulting people,” he said, “the likelihood of those decisions being bad is higher.”

In Delaware, Mr Musk also played down comparisons between what he was doing on Twitter with the rise of the Model 3, saying on his way to the courtroom that what was happening at the social media service was “easier”.

Some of Mr. Musk’s former employees wonder if his management tactics will ultimately work on Twitter. Tesla and SpaceX were in the early stages of growth when their boss came out with his harsh language and told everyone they had to go all out. But Twitter is a more mature company that has operated inconsistently for years.

Mr. Musk’s management techniques are “a good start-up and growth strategy, but it’s not good for building a stable business,” Mr. Deak said.

Mr. Musk’s total commitment to a company is often inspiring, but can also become toxic and spawn a culture of fear and scapegoating, three former Tesla and SpaceX executives have said.

And for Mr. Musk, remaking Twitter is just a part-time job. He remains chief executive of Tesla, which he said in court will continue to lead, and of SpaceX, where he said he focuses on rocket design rather than management.

Mr. Musk also runs the Boring Company, a tunneling startup, and Neuralink, a brain-computer interface technology company. He said his long-term goal was to save humanity by developing technology for space travel or, in his own words, “making life multi-planetary in order to ensure the long-term survival of consciousness.”

Multitasking has become an issue in a lawsuit brought by Tesla shareholders who objected to the pay package that made Mr Musk the richest person in the world. Last week in Delaware, questioned by an attorney representing shareholders who accused Mr. Musk of neglecting his duties at Tesla, the billionaire said his intense involvement with Twitter was temporary.

“There was an initial flurry of activity to revamp the business,” he said last Wednesday, adding, “I plan to reduce my time on Twitter.”

Michael Isaac contributed report.