Tuesday marked a great achievement for Tesla Motors
For Tesla investors, though, the rocket launch also serves as a reminder that making great electric cars may not be their CEO's top priority. It's hard not to root for Musk, whose projects, including solar energy systems as well space flight and electric cars, seem plucked straight from childhood fantasy.
We've seen similar distractions stand in the way of success before. Chesapeake Energy
More than meets the eye
There may be plenty of differences between McClendon and Musk, and just because CEOs work on other projects doesn't mean they're falling down on the job. But every investor deserves CEOs who have their priorities straight and are doing their best to run the companies they've been put in charge of.
The McClendon saga also alludes to an important difference between CEO motivations. Some seem to be driven by fame and fortune, while others are obsessed with creating a great company and great products and could care less about adulation or the rewards that come with success.
Perhaps no industry exemplifies this better than banking. Much of the reason for the downfall of Lehman Brothers can be seen in CEO Dick Fuld. Even after management became aware of the risk of subprime mortgages, Fuld continued adding real estate and mortgage-backed derivatives to his firm's portfolio. He demonstrated a similar arrogant streak in an email exchange with his CFO in which they chose not to accept an investment offer from a Chinese bank, saying, "Any investor that would consider [Bear Stearns] in the same breath as [Lehman Brothers] should go fungoo themselves," among other choice nuggets.
Merrill Lynch CEO John Thain famously spent more than $1 million redecorating his office and doled out bonuses to fellow executives while the sinking ship, which had lost $15 billion in the last quarter, was sold to Bank of America.
More recently, Jon Corzine blew up MF Global by doubling down on European debt, causing over $1 billion in customer deposits to disappear. Many commentators saw Corzine as acting above the law and ignoring the advice of his chief risk officers, calling it a classic case of hubris.
By contrast, it's no surprise that CEOs like Steve Jobs and Warren Buffett created wildly successful enterprises. During his last years with Apple
Back to the space race
Musk isn't the only entrepreneur captivated by the final frontier. Richard Branson, CEO of the Virgin conglomerate, started Virgin Galactic, which hopes to provide private space flights as well as flights for scientific research. Microsoft co-founder Paul Allen, who has similar ambitions, is planning on building the "world's largest aircraft ever constructed" to launch a rocket from its wing into orbit. Finally, Amazon.com
As far as Musk is concerned, it seems like Tesla shareholders may have little reason to be concerned right now, considering that the much-anticipated Model S sedan is due out ahead of schedule in June. But with plans for SpaceX to go public as soon as 2013, investors should question how long these companies can grow with Musk at the helm of both, not to mention his stake in SolarCity and his plans to "retire to Mars."
With statements like that, you'd have to say the man is either crazy or brilliant. No doubt Musk is a big thinker, the same type of visionary that has led other great companies, but it remains to be seen if he can pull off the hat trick. For Tesla shareholders, it's clear that one way or another they're going to be on a wild ride.
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