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Entrepreneurs and CEO’s

I can't speak to the validity of this Business Insider blurb about Elon Musk approving every new Tesla hire, but it does trigger some interesting conversation about how hard it is for entrepreneurs to transition into a CEO position, as an organization grows.

I'm not an investor in Tesla, for a lot of reasons. They're not profitable, they have a lot of debt, they don't invest their money very well, and they don't consistently beat the street, on quarterly earnings. In short, they are a poorly run company. That being said, a friend of mine at work got his Model 3 sometime ago, and to this day he says it's the best car that he has ever owned. History is littered with defunct companies that produced great products, though.

So what is it about great entrepreneurs, that (generally) keeps them from becoming great CEO's? Entrepreneurs are control freaks. That's one reason their products are so great. Good CEO's can't be control freaks - there's too much to control, and there are people that specialize in corporate functions (money, quality, process control, etc.) that are experts at what they do. Notice all the executives that Tesla has been losing, recently? A good CEO lets smart people shine, because that makes the company better. When smart people get stepped on by someone who doesn't know what they're doing, they leave the company.

Other smart people see this trend, so the company is now stuck with 2nd and 3rd string hires, instead of the smart people. It's a mini death-spiral. This doesn't mean Tesla is going to go out of business. At some point the debt holders may step-in and put their own smart people in charge (they have the biggest little black books in Silicon Valley), but that's not a given and there could be a lot of pain for owners of the stock, between now and then.

-- Scrib