It’s certainly been a busy couple of months for Musk. In that time he agreed to send Japanese billionaire Yusaku Maezawa to the Moon, faced legal action for libelling a Thai cave rescue diver, is being separately sued by the SEC for fraud – and also lost his chairmanship of Tesla.
This week, Musk again muddied the already murky waters by describing his original tweet as “worth it”. I can’t imagine there are many CEOs who are equally newsworthy – or equally controversial.
It all began on 7 August, using when Musk stunned financial markets and the world alike by using Twitter to claim that he had secured funding to take Tesla private. Within a week, Musk and the SEC had agreed a settlement over Musk’s “fake” takeover offer for Tesla. Two days later, Musk promptly rejected the settlement but after the SEC filed a securities-fraud lawsuit against him, Musk quickly settled once again (though as punishment he cannot be Chairman for three year).
The events of that week can be perfectly summarised by Tesla’s share price. His late night Twitter escapade cost the company many billions, and cost Musk himself $20 million. That’s a personal cost of roughly $339,000 per character for his tweet. But the irreparable reputational damage could be priceless.
In the end, the obvious question and the one most likely being discussed at Tesla HQ and other boardrooms is how such an episode could have been averted.
Governance issues aside, there is a good reason that listed companies have strict parameters in the way they communicate to their shareholders and the wider investment community. Whether a firm values social media, or prefers more traditional channels of communication, it is a medium that must be carefully managed.
A first step is a clear ‘social media policy’ that applies to all employees – starting with the boss! We are all fallible and ensuring there is a review process in place, and guidelines to work to, can help to mitigate possible risks.
Whether the firm utilises social media channels or not, its employees – and clearly its management team – will have their own social media presence and it is vital that if such people are external representatives of the company, they should abide by the firm’s policy.
This whole episode should serve as a lesson to companies and their staff alike. Social media is a useful tool, but like any communication channel it should be used in a carefully managed manner, particularly for listed companies.
