“Batman has no limits.” That’s one of the (many) iconic lines in Christopher Nolan’s The Dark Knight. It’s not just a line in a comic book movie. It reflects both our vision of the capabilities of billionaire business leaders (like Bruce Wayne) and, all too often, their own self-images as well. But outside of comic books and the movies they inspire, real people – no matter how brilliant or successful – have limits. Fidelity’s announcement that X’s value has dropped by 79% since its purchase by Elon Musk – costing Fidelity alone almost $15 billion – is the clearest possible demonstration of the penalties for forgetting that simple truth about the world.
Any analysis of lessons we can draw from what’s happened at X must begin with the scale of Musk’s achievements with other companies. Revolutionizing one industry is an astonishing achievement. Doing it twice is more than twice as impressive. Tesla has likely advanced the electrification of the automotive industry by a generation; SpaceX may well be the single most impressive company in the world.
His results with X have been dramatically different. The damage done there stretches far beyond the economic. Twitter was likely the single most expensive thing ever purchased by any individual – but Musk is so wealthy that even if its value drops to zero, he will still be among the richest people not just in the world, but in the history of humanity. What buying X cost Musk was far more valuable than $44 billion – it’s the reputation for far-sighted and public-spirited genius that he had carefully built over the course of his career. The damage is done less by his endorsement of Donald Trump – although that’s certainly not helping given Tesla’s customer base of wealthy, well-educated people who are concerned about climate change – and more by his adoption of an astonishing array of conspiracy theories, defending the “QAnon shaman” who helped storm the US Capitol on January 6, and even tweeting a false story about the attack on Nancy Pelosi’s husband.
Twitter – a social network – is profoundly different in every possible way from Tesla or SpaceX. So why did Musk believe that he could be just as successful there as he was with his previous companies? For that matter, why would Fidelity, among many other enormously sophisticated institutions, put tens of billions behind Musk’s purchase of a social media company – especially when he only made that purchase under threat of a lawsuit?
The failure in judgment both made stems basically from a comic book view of genius. In Iron Man Tony Stark is the greatest weapons designer who has ever lived. Designing weapons is, in and of itself, a multi-disciplinary task. Modern weapons require huge teams, not just individual geniuses. But okay, let’s say that’s possible. By the final Avengers movie, Stark is also a physicist so brilliant he can, literally, invent time travel. He’s hardly the only example. Bruce Wayne is a better athlete than most Olympic Gold medalists, but also better at forensics than the Gotham police department and better at coding than the engineers employed by Wayne Enterprises. Bruce Banner has seven PhDs (maybe the radiation isn’t what turned him into a giant green rage monster).
Genius in the real world doesn’t work that way. Real scientists, no matter how brilliant, have one, or at most a small number, of specialties. The scientist who is an expert in, for example, both biology and physics, simply does not exist. A century ago, that might have been possible. Today, the state of the art in both fields is so great that mastering the literature in either one is a lifetime’s work for even the most gifted researcher. Jackie Robinson was likely a professional caliber athlete in four different sports. But Jackie Robinson played baseball a long time ago. A generation ago, Bo Jackson, Deion Sanders, and Brian Jordan could play in both the NFL and MLB. Today, the number of professional athletes who do anything similar is, quite simply, zero.
What’s true in science and sports is just as true in business. Research by my friends and colleagues Boris Groysberg and Nitin Nohria showed, for example, that from 1989-2001, former GE executives hired to be CEOs of other companies only succeeded when their new company was similar to the parts of GE they had previously run. Elon Musk might often be compared to a comic book character – and even have cameoed in Iron Man 2 – but he’s just as human as the rest of us. And so, like the rest of us, he has limits. The skills required to successfully run a social media company that derives most of its revenues from advertising have essentially no overlap with those needed to run a car company, and certainly nothing in common with those needed to run a company that builds and launches rockets. Had Musk and his investors realized that, they would all surely be in a far better situation than they are today