Elon Musk, Enron, and the Imperial Corporation

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Little rocket man

In many ways, this summer is not going well for Elon Musk, the man behind Tesla, SpaceX, and the personal flamethrower. Though the executive is accustomed to fawning press coverage, lately some business journalists have asked if Tesla will suffer the same fate that Enron did in 2001. The unflattering comparison to the disgraced natural gas company arrived soon after Tesla’s Model 3 began to have problems, but seemed especially appropriate when Musk insulted analysts by calling their questions “boring” during a conference call in early May.

It appears that historical precedent does not bode well for Musk. As some observers were quick to point out, Musk’s meltdown on the May earnings call was reminiscent of the time Enron’s CEO, Jeff Skilling, called an analyst an “asshole” during an earnings announcement in 2001. (Just a few months later, revelations of accounting fraud ruined the company.) In a defensive response to all this bad press, Tesla’s founder floated the idea of a website that would allow visitors to “rate the core truth” about a news report. Here, too, the connection to Enron seems to hold up. As Fortune journalist Bethany McLean has recounted in interviews, Skilling accused her of dishonesty when it seemed as though she might write an article suggesting his company’s stock was too high.

In another strange echo of Enron’s final days, a Tesla whistleblower came forward in June, claiming the company had duped the public and investors by grossly understating how expensive and inefficient its Model 3 production had become. By the end of the month a very ugly back and forth over email between Musk and the former employee went public.

Ultimately, though, Tesla is not Enron. As those sleek cars moving through expensive neighborhoods can attest, Musk’s successes are tangible in ways that Skilling’s rarely were. (This lack of a physical product was one of the reasons Enron was able to prop up failing ventures with illegal accounting.) But even if the current comparisons are not exact, Tesla’s recent PR mess – like Enron’s fall before it – is an opportunity to remind ourselves of the problems that arise when business executives command the sort of cultural authority that Musk now seems in danger of losing.

Much as Elon Musk has appeared to many to be a prophet of progress, in the late 1990s Enron’s executives helmed a company that seemed to have made a huge leap into the future. After initial success using financial products in the natural gas business, by the late 1990s Enron – and chiefly Jeff Skilling – claimed to have cracked some sort of universal business code. During an interview for a business school case study about the company, Skilling compared the company’s evolution to an artist’s development. The “canvas” Enron was painting on kept getting bigger, but the “brush stroke” remained the same.

The metaphor is more revealing that it may first seem. Describing a business strategy (which in Enron’s case more or less amounted to coming up with new derivatives to market in different industries) as an artistic, creative work is to suggest a grander, visionary, and more inspirational role for that most commercial and capitalistic of modern institutions – the corporation. To be sure, business moguls with comically large egos are not new. The Gilded Age extravagances of the Robber Barons, for instance, transformed landscapes such as Newport, Rhode Island. However, someone like John Rockefeller would never have argued that Standard Oil was the economic equivalent of a museum piece. By contrast, the barely sub-textual claims to greatness and genius in Skilling’s comparison to artistic achievement (along similar claims from other contemporary executives) are a far distance from providing goods and services to fill market needs – the ostensible reason corporations exist in the first place.

Enron’s television commercials from 2000 (which offered a strange mix of images, such as a man in a metal suit wandering around a busy street) reflected this outsized sense of ambition. Enron’s managers and marketers ultimately hoped that the advertisements’ tagline – “ask why” – would become a “rallying cry of a new generation of business.” Corporations, in other words, needed be more aggressive. The “rallying cry” was to encourage other businesses to adopt the same will to change the world that had taken hold at Enron. As internal documents testified, that company’s executives possessed a “restless dissatisfaction with the status quo” and assumed that “most things can always be improved.”

This sense of bettering the world is laudable when it is directed at a concrete goal, such as fighting climate change, but when untethered to specific details, it is practically Napoleonic in its imperial sensibility. Enron might now be dead and gone, and the “ask why” tagline might not have caught on, but that “new generation of business” appears to have come of age. Musk’s own side projects and off-hand musings – from SpaceX to his imagined “Hyper Loop” – are echoes of the imperial ethos in Enron’s advertising campaign.

Though it can be hard to remember, the idea of the visionary corporation is relatively new. Historians such as Bethany Moreton and Ben Waterhouse have demonstrated that businesses had serious public relations problems in the 1960s and 1970s. In 1971, the future Supreme Court justice Lewis Powell was so concerned about the reputation of business that he wrote a memo to the Chamber of Commerce exhorting “businessmen to recognize that the ultimate issue may be survival – survival of what we call the free enterprise system.”

What Powell worried about the most was the reputation of corporations among college students – but it seems we have come a long way from the 60s and 70s. My partner’s undergraduate students, for instance, frequently reference Elon Musk when she asks them to name contemporary public intellectuals. No doubt this is due in part to the sense that Musk is addressing real world environmental problems with Tesla or literally reaching for the stars with SpaceX. Still, regarding executives as “thought leaders” and visionaries can blur the line between a sense of corporate social responsibility and a more imperial frame of mind that Musk’s recent comments seem to exemplify.

Dismissing questions as “boring” or challenging the legitimacy of negative news coverage suggests a broader sense of balance that has been lost. Corporations are enmeshed in a web of cultural relations imbued with shifting power dynamics. At times, these companies make big decisions in response to prevailing cultural attitudes. Even Enron – which was fundamentally a fossil fuel company – assumed a “green” image in the early 1990s as Americans grew alarmed over issues like acid rain and global warming. The company even began investing in wind and solar power, and (despite the firm’s many connections to George W. Bush) Enron executives were vocal supporters of initiatives like the Kyoto Protocol.

A similar power dynamic – where corporations respond to cultural and social attitudes ­– can be seen today. For instance, conservative pushes like anti-LGBTQ bathroom laws have struggled in part because businesses have not been able operate in such places without losing some cultural and social legitimacy. However, problems arise when this power dynamic changes directions and CEOs no longer feel that they must respond to social pressures and cultural trends, and instead attempt to direct and shape these cultural flows. The result is a more aggressive and imperial vision of the corporation and its CEO. Musk’s petulance, in other words, is not wholly a product of an inflated ego, but a sign that he has lost sight of the back and forth between business and culture.

Here, again, Enron’s history proves instructive. At the end of the nineties, Skilling admitted that nailing down Enron’s “vision statements” had become harder over the years. Perhaps, some at Enron joked, the company’s vision statement should declare Enron to be the world’s “coolest” company. In the end, Skilling and his people settled on “World’s Leading Company.” He may have been joking, but the progression of corporate vision statements has a certain logic – moving from cool to visionary to imperial are relatively short conceptual leaps. The end result of such thinking can be located in the arrogance of men like Elon Musk who have no patience for criticism, and who insist that their specific businesses are indispensible to securing a bright future. The attitude is surely addictive, and it usually takes a severe publicity crisis to shake it off. Much like Skilling before him, Tesla’s founder could well be in the middle of learning a very hard lesson.

I am not convinced that Tesla will go the way of Enron. That company was so thoroughly discredited, and Tesla’s cars are too impressive for the two corporations to meet the same fate. Still, even if Tesla survives its current problems in a way that Enron never could, it is hard to imagine that Musk’s reputation will make a full recovery. After all, in his wild reaction to negative news coverage, he did seem to endorse a website run by a sex cult. Amid such nonsense, though, we have a rare opportunity. The aggressiveness of Enron’s “ask why” campaign and of Musk’s tantrum eighteen years later reflect an antidemocratic and imperial spirit in business that has been with us for too long. In the wake of Musk’s public stumble, we can begin to push back against the idea of infallible “thought leaders” and against similar grandiose corporate claims to cultural power.

Gavin Benke is the author of Risk and Ruin: Enron and the Culture of American
Capitalism, published by the University of Pennsylvania Press.

Author: Gavin Benke

Gavin Benke is the author of Risk and Ruin: Enron and the Culture of American Capitalism, published by the University of Pennsylvania Press.

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