Musk greatest showman in space
Tesla does not do advertising. No glossy magazine ads, no jingles, no Super Bowl spots.
Instead, it sends a car into space.
CEO Elon Musk’s successful launch last week of his red electric Roadster, driven by a photogenic dummy he dubbed Starman, was the kind of bizarre marketing masterstroke that would not occur to most corporate executives. Fewer still would have the means to do it, lacking their own rocket company.
But Musk, 46, has developed a talent for strange sales pitches. The Roadster en route to the asteroid belt came shortly after Musk’s sale of 20,000 flamethrowers to raise money for his tunnel-burrowing startup, the Boring Company.
The serial entrepreneur has evolved into a kind of showman CEO, with a devoted online following whose enthusiasm he knows how to pique.
And Tesla, analysts say, benefits immensely from that skill.
The Palo Alto company has yet to turn an annual profit, and on Wednesday, it reported losing $2.2 billion last year. But Musk has been able to sell enough people on his vision that Tesla’s shares closed the week at $310, despite dropping 10 percent since Wednesday’s earnings report.
“I used to say to myself that he’s a 21st century P.T. Barnum, but I don’t mean that to sound cynical — he’s very effective at it,” said David Whiston, an equity analyst for the Morningstar market research firm. “He’s a very good showman, but there’s substance to what he’s doing.”
Tesla’s lofty valuation — nearly as high as General Motors’ — gives Musk and the company more room to maneuver than they otherwise might have.
Tesla is expanding its workforce and facilities at a speed that, in other businesses, might prompt a revolt among activist shareholders. But while Tesla has plenty of critics — with one analyst complaining last week that Musk showed more interest in selling flamethrowers than meeting production targets — those who short its stock have repeatedly suffered.
“I would call that a license by his investors to burn a lot of money to create something great,” said Wesley Hartmann, professor of marketing at Stanford University. “There are a lot of companies out there that would like to have that kind of support from their investors to invest and make something new and change the world.”
Musk has even tried to make executive pay more exciting. Last month, he said he would either take a gigantic pay package, or zero if he fails to hit ambitious valuation and revenue targets.
Silicon Valley has a history of producing entrepreneurs who become household names even outside the Bay Area bubble, from Apple’s Steve Jobs to Facebook’s Mark Zuckerberg.
Like those two, the association between Musk and his companies — primarily Tesla and rocket builder SpaceX — is particularly close, said Subodh Bhat, a professor of marketing at San Francisco State University. He cited Richard Branson and the Virgin brand as another example.
Though Musk was Tesla’s first investor, he was not its first CEO. He’s actually its fourth. But many people find it hard to imagine the company without him.
“Basically, the brand revolves around the person,” Bhat said. “He’s so well known for trying new things that people are willing to give him some slack, and by extension, they’ll give Tesla some slack.”
Bhat points to Tesla’s 2016 purchase of SolarCity, the solar company then run by Musk’s cousin Lyndon Rive and chaired by Musk. Some Tesla shareholders and analysts considered the $2 billion deal a bailout for the solar company and feared it would divert Tesla’s attention from the introduction of the Model 3 sedan. Musk, however, insisted the companies were after the same customers and fit seamlessly together. In the end, shareholders backed the purchase.
“I didn’t think it was a good business idea to merge his solar company with Tesla, but he got away with it,” Bhat said. “And most executives wouldn’t.”
Tesla under Musk has avoided traditional advertising campaigns, preferring offbeat promotions such as authorizing Radio Flyer, the business best known for little red wagons, to make a childsize version of the Model S. Tesla also invites customers to attend events unveiling new products, such as the solar roof or the electric semi — the main reason those events are almost always held at night.
Tesla’s customers, in turn, give Tesla the kind of word-of-mouth praise many companies wish they could buy.
“In advertising, you’re paying money to put an impression in front of someone who wouldn’t see it otherwise, but the communication Tesla is getting is all opt-in,” Hartmann said. “There are people following him on Twitter, they’ll look for news articles on him.”
Musk seems to know how to appeal to his following’s tastes.
His obsession with colonizing Mars plays to those who see him as America’s Alpha Geek, as did his guest spot on “The Big Bang Theory.” Anyone looking closely at some of the Roadster photos from space last week would find on the car’s dashboard screen the words “Don’t Panic,” a nod to “The Hitchhiker’s Guide to the Galaxy” radio show, books, BBC program and movie.
Tesla’s cars, meanwhile, feature details designed for auto aficionados who adore speed for its own sake. Some of those features reflect Musk’s own distinctive way of speaking, again blurring the line between man and brand.
“‘Ludicrous mode,’ ‘insane mode’ — that has an appeal to people,” Whiston said. “And when you’re a new company, you need to grab people’s attention.”
Musk’s skill as a oneman marketing department, however, would not work if he didn’t have good products to sell, Hartmann said.
Hartmann speaks from experience. After years of driving Mustangs, the Stanford professor bought a Model S 85D in 2015 and loves it.
“It’s leading with a great product,” he said. “It’s not just that you have a bunch of groupies who have bought into everything he’s doing. You have a lot of car enthusiasts who really just love the cars.”