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Tesla’s board is too weak to stop its CEO Elon Musk from tweeting

“He paid $20 million for a tweet,” Kara Swisher says on the latest episode of Pivot. “Who says Twitter can’t make money?”

Tesla CEO Elon Musk
Tesla CEO Elon Musk
James Devaney / Getty

On the latest episode of Pivot with Kara Swisher and Scott Galloway, Kara and Scott talked about some of the biggest stories of the week, including Facebook’s massive security breach and the upshot of the prolonged Kavanaugh hearings. But they had the most to say about Tesla CEO Elon Musk, who is stepping down as chairman and will pay a $20 million fine to the SEC, with Tesla paying an additional $20 million itself.

The need to fill the chairman role might mean that adult supervision is on the way. But Galloway lambasted the existing board members for not reining in Musk’s social media activity before he tweeted that he had “secured” the funding to take Tesla private (he hadn’t).

“While we’re a nation of innovators, we are also a nation of laws, and this guy waved his middle finger in the face of us when he basically committed blatant market manipulation,” Galloway said.

“This is not only a personal failure, this is a failure of governance,” he added. “The board’s job is to hire and fire the CEO, but until they fire the CEO they are supposed to be there to support and protect him. And the fact that no individual on this board could get through to him, to say, “Hey shithead, stop tweeting” — or [no one] that he would listen to — means he has an enormously weak board.”

You can listen to Pivot with Kara Swisher and Scott Galloway wherever you get your podcasts — including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts and Overcast.

Below, we’ve shared a full transcript of Kara and Scott’s latest episode.


Kara Swisher: Hi everyone! This is Pivot from the Vox Media Podcast Network. I am Kara Swisher, editor at large of Recode.

Scott Galloway: And I’m Scott Galloway, professor of marketing at NYU Stern School of Business and founder of Gartner L2, and also kinda the Elon to Kara’s ... No, I’m sorry, I’m the Kimbal, you’re the Elon. I am here because of the cowboy hat and because you like me. Let’s be honest.

Kara Swisher: Yes, that’s it. That’s about it, except 100 percent less marijuana smoking. But we were talking a little bit earlier this week than we usually do, things might change by the time everyone hears that but: Scott. So wise predictor of outcomes, what’s happening this week that is going to keep haunting the world of tech and business for months to come? Let’s start with the big topic.

Yeah. Facebook, the data breach. What are you hearing? What’s the skinny?

Well, I think it’s a lot worse than people — you know, it’s really interesting, Kavanaugh has sort of pushed everything off the front pages. And if you can imagine a big data breach like this not being that big a deal, people just jump all past it because the news cycle is so crazy. It’s kinda fascinating. I think it’s a major thing, and once again, Mark Zuckerberg has apologized, said he’s going to do better next time, and I think it was problematic. As far as I can tell.

Yeah. You know, the one thing you know about it is, it’s only going to get worse. Right? A couple of things these guys never say is 1) your privacy standards are accidentally strengthened. You never hear that. And 2) you never hear, “Oh it wasn’t as bad as we originally reported.”

My understanding is he has already come out a second time, and on that call he sounded tired. And my sense is he shouldn’t feel that way. He should sound scared. This is just getting ... you know I wrote a blog post on this. I feel as if Facebook is turning into the information age KGB minus the charm. At least the KGB has a code. They are loyal to their country. They are loyal to each other. As far I can tell the only glue here is boundless greed and a willingness to lie over and over. Is that too much, Kara? Is that too much?

Yeah it is, but here’s the thing, last week you called it a great “buy.”

That’s the sad part. I still think it is.

Because why? Explain that for people.

Because we live in a capitalist economy and people would rather we now worship at the altar of innovators and billionaires. People are going to be outraged by this. There will be some foot-stamping in Congress. Maybe something happens, maybe it won’t. And they are going to announce the best numbers ever. They are going to continue to grow at 30 percent a year.

Despite this hacking and then the phone number scandal too. Explain that. Explain that they used your phone numbers for ...

So two-factor authentication, “I want additional security.” Facebook says, “Fine, give us your phone number.” You give them your phone number and then we found out that Dunkin Donuts was using those phone numbers to cross reference and target us. So Dunkin Donuts has your phone number they can say, “Hey we have Kara’s phone number. Can you? Do you have it?” And they say, “Oh yes we have it.” So these people, I mean technically you think this isn’t that bad but it reflects ...

Oh my God, are you kidding? I didn’t want to give them my phone number for that. I gave it so that I could have better security on this service that has a data breach, essentially.

Exactly. It’s a general gestalt. You know they say, the saying is, “If you’re not paying for something you are the product.” And that’s how they treat us. They treat us like a product that is inanimate. And they just aren’t showing a certain level of respect, I think, for their consumers.

So from a … look, hacks are part of this world. There’s nothing safe, really. The fact of the matter is, this is a company that has had so many failures this year that it’s hard to count them at this point. And so a hack is ... You know, before when people were online they were like, “This is just like the Russians.” I was like, “No, the Russians wasn’t a hack, it was the way they were using the system the way it was used. This is a hack.”

What do you do from a marketing point of view inside of Facebook when this stuff is happening?

Well the key to crisis manage[ment] … there’s only three things you have to remember: 1) Acknowledge the issue, “We haven’t put in place the standards or the guard rails, the protections, we should have”; 2) Top guy or gal has to take responsibility, they have sort of done that; and then the third thing is to overcorrect. And that is where they have really fallen down is there is nothing resembling an overcorrection here because … I mean, even if they took a page out of Starbucks’ playbook, they would say, “Okay we are closing the network down for a day and just trying to figure out what’s going on.” They would never in a million years do that.

Never do that. Right, absolutely.

This will go down — whatever happens to Facebook — it will ultimately go down as a textbook case study in the worst management of a crisis, I think, in modern history. What do you think they do?

Do you think … I think they are not self-reflective in any way. I am surprised that the mirrors in Facebook show their faces. You know what I mean? They are like vampires, they are so non-self reflective.

That was a good one.

I’m trying that one out on the road.

That’s like, did you see that “Twilight Zone” when people would see their reflection knowing they were about to die?

Oh really? No!

Yeah, start watching “The Twilight Zone.” A) I told you this last week, start drinking more, and B) watch “The Twilight Zone.”

I’m not watching “The Twilight Zone,” it creeps me out. I don’t want to be creeped out.

Ah, it’s awesome!

I have enough creepy things in my life. So in general, these people don’t, I know it feels like ongoing, but as usual, they feel like victims. They act like victims versus ... It’s a little like the Kavanaugh people. They are like, “Oh we’re being attacked.” Rather than the fact that they are going for a very important job. I think it’s really disturbing that they have an attitude that they are being attacked.

And to your earlier point, Mark was the gift that kept — was really the heat shield for the rest of big tech because of his tone-deaf remarks, when you can argue that Google is probably the biggest offender of them, the scariest one. And now Kavanaugh is the heat shield for Zuckerberg because this would have been huge news had 20 million people not tuned in to find out how much Kavanaugh likes beer.

Beer. Likes beer.

So it’s ... it’s ...

I think Mark likes beer.

They are the luckiest people in the world right now. I wonder if it will stay that way.

Yeah, we’ll see. Because I think people get ...

I wonder if it will start to bubble up.

Exhausted by it. Now speaking of that, speaking of CEOs sort of losing their sheen, because you think they worship at the altar of billionaires. I think it’s going the opposite direction: You have Elon Musk settling with the SEC.

Yeah, and I just have what I’ve read. Do you know anything here?

I do.

Do you have any behind-the-scenes around what happened between the board, Elon, what’s going on here? Because initially they rejected the first settlement out of hand.

They did. And then they didn’t. I think some of it was, some of the terms were, some of the slight terms were more onerous, which was not being CEO and other things like that. And I think that he wanted to remain CEO and he’s certainly been willing to accept someone above him because he really just runs the company anyway, right?

Yup.

And I think he just, I think he probably realized what a mess it would be and what happened to the stock, it went down. I think they are actually looking at some good numbers too, like things are starting to turn around for that company in terms of financials. Even though they owe like, I mean, there’s been a number of really amazing stories about the financial situation there which is they really have a debt overhang. They are using capital like at a billion dollars a month, something like that, some number, and I think they just have three billion left or ...

And so I think they are showing some good signs that this is starting to work and they are starting to make money on these cars. And so, I think they didn’t, this idea of just rolling the dice at this point probably was not a good one. And I think adding more people to the board will be interesting. It’s just that I never think boards are particularly effective around these charismatic CEOs, anyway. I don’t know, I think he’s sort of, I think he had a come-to-Jesus moment.

Yeah, this is a smart trade for him. This was. This would have been a great settlement had the SEC done, they stripped him of the wrong title. He should have been stripped of his CEO title, quite frankly.

Yeah. No, he wouldn’t’ve settled for that.

This is an individual ... well then he doesn’t put up, once again, I am not sure I agree with it. Where does he go? Does he go to the CEO of Ford, Fiat Chrysler? I think Musk needs Tesla almost as much as Tesla needs Musk. And the bottom line is while we’re a nation of innovators, we are also a nation of laws, and this guy waved his middle finger in the face of us when he basically committed blatant market manipulation and then tried to enlist the board to cover up his ... cover up his ...

From what I understand, he doesn’t think he did anything wrong. People inside think he didn’t do anything. He thought he had met with the Saudis and the Saudis, he was taking them at their word, and that makes him kind of a little bit willfully naïve but he thought he had, pretty much had a deal. That they were interested and he had several more meetings that had been talked about and he thought it was further down the line than it was and obviously he misunderstood or people … That’s what I understand from inside, is that he thought he had a deal so he didn’t think he did anything wrong. He was just wanting to tell all his investors that when he was telling the bigger investors, and so that’s their story and they are sticking to it kind of stuff.

Yeah, I would agree that’s their story.

Yeah, well. It’s not out of the realm of possibility that he thought he had a deal. I have to say, I think he’s, I think he hears, you know, I think these people hear what they want to hear. And I think he just assumed that he would be able to get the Saudis to cough up the dough. And, you know, it doesn’t matter he paid $20 million for a tweet, that’s pretty much it. Like, I mean, which is an enormous amount. Who says Twitter can’t make money? I mean ... the federal government ...

Yeah, okay, but it’s all relative, right? This is $20 million from a guy who got weepy about almost being late for his brother’s wedding because his Gulfstream 650ER didn’t get him there in time. This is a guy worth $20 billion . So imagine you getting a fine ... Okay, I’ll do, one thousandth of my total net worth is not a big fine.

Right.

So this is all relative. 20 million to the company, okay, big deal. The most important thing here is the one you mentioned, two new independent directors. Cause this is not only a personal failure, this is a failure of governance. The board’s job is to hire and fire the CEO, but until they fire the CEO they are supposed to be there to support and protect him. And the fact that no individual on this board could get through to him to say, “Hey shithead, stop tweeting” — or [no one] that he would listen to — means he has an enormously weak board. And I don’t know if you saw the non-charm tour that his brother Kimbal ...

No I did not see the non-charm tour.

He went on, on CNBC? But it literally validated your worst fears about the board of Tesla. I mean, this is a guy who showed up to CNBC in a cowboy hat. He made no sense, it’s like okay, there literally is no adult supervision at this company.

Kimbal Musk on CNBC: My brother is doing great and he just brought on Jerome as President, Board of Operations. He’s doing a great job structuring the company. It’s mostly right now is for folks is deliveries. We are trying to get great, very happy customers with Model 3s in their hands and that’s the total focus. And it’s going to be a bit of an exciting month for us.

I think the question is who they are going to pick and who they are going to pick as chairman. Which should be interesting. I have some ideas. There’s, you know ...

Who are your ideas? I have some ideas too.

Indra Nooyi would be interesting.

That’s a great ... from Pepsi. That’s a great one, that was on my list.

Oh sorry. Gary Cohn from Goldman.

Boom! Gary Cohn from Goldman?

Yeah, I like it. Just think about it.

Basically the guy on the Trump administration who couldn’t handle people, who could handle white nationalists but couldn’t handle tariffs?

Well ...

That guy?

Well he didn’t ...

“That’s it, tariffs, I’m out of here!”

No, anyway, he would be, I think he would be an interesting choice. That’s one of the names. What are your names?

I liked your ... the Pepsi CEO. I think Jeffrey Sonnenfeld from the Yale School of Management. I think Jeffrey is turning into the kinda, the conscience of capitalism, and he would be a great individual.

That’s not gonna happen.

No way, right?

Not gonna happen. Someone else?

What about Mark Fields, CEO of Ford?

No.

Former CEO of ... okay, I’m out. I’m done.

I tried Alan Mulally, but I think they thought he was too old-school … [Mulally] ran Ford and then was over at Boeing. He’d certainly have the chops but they think he’s too old-school.

Got it.

But I like Alan Mulally. He’s a very funny ... anyway. All right, so it’s essentially, Elon has gone through the, he’s gonna be just fine.

Well that’s the problem, he ... literally you can imagine a scenario where in six months absolutely nothing has changed.

Okay Scott, the Supreme Court and women at large, not having a great week. But tell me who is your win of the week. I want something positive. I want something positive. Who is having a good week?

I think that the individual who basically became a viable candidate for president last week was Senator Jeffrey Flake.

Flake? What? Really?

Yeah.

I thought Amy Klobuchar. I thought Amy Klobuchar would come out of your mouth. Versus Jeffrey Flake?

But no one expected Jeffrey. I think he showed real leadership here. I think the image of him sitting in the elevator and just listening to this woman. I mean, that’s an ... he was in ...

He looked scared. Come on, Scott, he looked like he was terrified by a tiny little woman.

And I like that.

She was yelling at him.

I like that.

Yeah?

He didn’t say ...

Okay.

He didn’t say ...

What’s he going to do? Push the close button?

He didn’t say, he didn’t say, “This is an improper way to handle this, let’s go into my office.” He sat there and he took it. And then he listened and I think he was genuinely moved. And then he’s a guy that hopefully has brought something that these guys are supposed to do, and that is create some sort of bipartisan consensus and deal with each other and have respect for one another.

Unless it’s a feint. Everyone says it’s … that he’s done them a favor by letting them lead the investigation.

Yeah there’s a bunch of ... obviously there is concerns that this is just kind of a bit of a ruse and it’s not really an investigation.

A trick. It’s a ruse. A ruse, yes.

I think Jeffrey Flake basically had the best week of any individual I can think of. Other than Elon Musk.

I gotta say ...

Who basically dodged not even a bullet. He dodged a mortar.

Yeah, I think Jeff Flake, his name is perfectly chosen. I disagree with you completely. I think he’s been nothing but weak, most of the time. And I am glad that he did this but it’s as if he should get a medal for doing his job. You know what I mean? He’s the only non-crazy Republican who wants to show ... like Lindsey Graham and his giant hissy fits.

Oh my gosh, that was crazy! That was actually, I thought that was kinda fun. By the way Flake really has the No. 1 criteria for any president. He has really good hair.

Oh, he does have good hair.

He has good hair.

He is a very handsome man.

He is handsome. He’s dreamy.

Here’s the thing.

He’s dreamy.

Scott, I don’t want to hear about your man-crushes.

Hashtag Flake.

I don’t want ... Come on.

I’ll raise money for him and I’m a hardcore Commie.

Not that there’s anything wrong with that but that’s enough, okay?

Okay.

I think that, I think Amy Klobuchar was the one. I’m going to give another win of the week but Amy Klobuchar, I thought, handled herself really well.

Yep, agreed.

Well [Kavanaugh] attacked her ridiculously and she didn’t throw a shoe at his head. I thought she handled it with class and then she went on and talked about it. I think she’s got the kind of even-handed mentality that you kinda want in a legislator. Question is, could she go up against someone like Trump who will scream at her?

I don’t think the Democrats are going to put another woman forward. I think they are worried that ... I think they are going to end up ... I don’t think they have the backbone to push a woman to the front. I think it’s too bad.

We’ll see. We’ll see. She’s a different kind, she’s a different kind.

She’s very strong. She feels like VP. She feels like she’s got Vice President written all over her.

I don’t know. I like her for Prez.

Yeah.

I like her for Prez. My win of the week is Jeff Bezos with the $15 dollar thing.

Good one!

He just dropped that one down. I know you’re all over him but that was a nice move by him.

Smart.

I called him the mogul genius on ... he always manages to do that. Like, always do something. How can you argue with you when you’ve got Bernie Sanders tweeting for him, which was sort of this surprise. I know there was a lot of pressure on them on those prices. But he does lead the way for everybody else to ... he’ll have the best employees with ... And some people think the minimum wage should go up even higher than $15 dollars, but it’s a pretty bold move, I think.

It’s a great move and not only that but it’s a shareholder driven move cause it’s going to force their competitors to match him.

Right.

Who can afford $15 dollars an hour better than Amazon? Nobody, is the answer.

Right.

Even Walmart that’s averaging about, I think about $11.50 for some of their warehouse workers, so basically just what Amazon has done with fulfillment where they’ve gone under water with the largest oxygen tank of free capital and forced everyone to follow them and everyone else is drowning.

On everything.

They potentially could do the same thing here and that is put pressure on every retailer to raise their minimum wage to 15 bucks an hour. So this was not only the right thing to do, it was the smart thing to do.

Mm hmm. It was, and it was interesting, what Amazon does, which I don’t think people realize, is that they put moats on everything. They have always been building moats.

Yeah.

That people cannot cross. And this is another one. It’s a really ... people can match it but they are out there first. They get credit for it. And then it’s just one thing the data moat, it’s a customer service moat, it’s a speed thing. I just, I just got a second home in D.C. and I’m living here. I have to tell you, I have tried to shop retail. I’ve tried to shop in stores, and there is some great stores in the neighborhood I am in, but Amazon is so easy and so good.

The other night I was trying to find a clothes rack for my son and I could not find ... I went to like six stores. It was so frustrating, and then I looked on Prime. I was standing there in the bus stop and Prime Now could’ve had it to me in two hours and I had it. That’s what I had and it was 30 bucks and it was shocking how easy it was to do that. And it was exactly what I wanted which was really ... I am thinking about writing a column about it because everything in my house I could get from Amazon.

I stopped listening ...

I hated myself for it almost.

I stopped listening when you said “second home in D.C.” I just can’t imagine you in D.C. I just don’t see it.

I love it here. I go to dinner ... speaking of which, I had a dinner sitting next to the head of Walmart and he certainly is worried about, I can’t say, it was an off-the-record dinner at the business roundtable, but I think he’s got some concerns about Amazon, too. And they are trying very hard to step it up. And they have done in a lot of ways.

This is Doug McMillon?

Yes, Doug McMillon. Very smart guy.

And by the way ...

He’s an impressive guy.

By the way, Walmart is probably the one company that is landing counter-blows on Amazon. Click and collect is probably ... If you think about the ability to pick up. It’s genius from Walmart because what’s the best thing about Walmart? It’s their groceries. What’s the worst thing about it? Their in-store experience. So click and collect their groceries, boom! Great experience.

Yep, he’s doing a lot of stuff, but I still think it’s going to be hard. He was in fact ... I think they were speculating at the price, on the cost, how much the employees are going to cost him. And this is going to put them in ... they are going to have to do something around their associates. Which you know, they all have varying degrees of success with this, but it’s certainly ... but having been in a lot of these stores this week it’s really astonishing how bad ...

They are bad.

... their customer service is in stores. I was in Target. I was in Best Buy.

It’s rough.

Others.

Best Buy is pretty good with the blue shirts.

Best Buy was great. I was just going to say that. It was really great customer service.

I think Home Depot does a great job with their golden aprons. And as you know, everyone is rushing to move, invest in artificial intelligence. I think that the gangster move in retail is to invest in organic intelligence as evidenced by what Amazon is doing.

Yep.

People no longer go to stores for product. They go for people.

Yep. 100 percent.

Whether it’s Sephora or what have you. You know what? This is really a hopeful moment, because if you look at the tension of capital or the owners and labor of the workers, there is always a tension and it’s been a healthy tension since World War II. And in the last 30 years, labor has gotten the shit kicked out of it. So let’s hope this is the start of something where we start to see some of that unbelievable increase in productivity. Those trillions of dollars and wealth creation begin to finally move into the middle class and workers.

Let’s hope, Kara, that this is a hopeful moment and this starts to infect ...

So you like Bezos now after you eviscerated him?

Well, you know a man, a man worth more than the GDP of Denmark raising minimum wage to $15 an hour, yay, let’s throw him a fucking party. Anyways, so but look, I do hope, give credit where it’s due. And not only that he was big about it.

Yeah I did.

Did you see that? He retweeted his tweet saying thank you Senator Sanders.

Why wouldn’t he say thank you Senator Sanders? I think President, President Bezos.

Smart. He’s smart.

I’m starting it right now.

He’s smart. There’s going to be a big bromance between him and Senator Sanders, I’s just going to be so uncomfortable and gross.

[Bernie Sanders voice] “Jeff, I really like Prime Now, I think it’s really good. It’s really good.”

I didn’t know you did impersonations.

I could do anybody.

That’s pretty good.

[Arianna Huffington voice] Hello there, Scott! How are you doing?

I’m sorry. What? I’m sorry, who is that?

That’s Arianna. Arianna. I could do ... I can do a lot of people. But I’m not going to do them right now. I’m going to roll them out slowly for you.

Good!

All right Scott, it’s always a pleasure, for the most part, but I have to get out of here. I have to go to ... you know, I’ve got to order things on Amazon and then do SoulCycle or something like that. Actually, I have to go meet my kid.

You do SoulCycle?

Yes of course.

You pay $35 for SoulCycle?

Yes! And I love millennials giving me life advice. That is why I go. Because I love when young people tell me, “You know what, if you just pedal harder, you can change your life.”

You can change your life?

Whatever, they have all kinds of crazy, like, advice from 22-year-olds. And it’s my favorite thing because they are all wrong.

Yeah.

So I’m thinking of doing my own SoulCycle class where I just, I put Madonna on endless loop and then, or Barry Manilow, someone, something that will just make them sicken. And then I’m going to go like, “Okay everyone, you know that relationship you can ‘change’? Not really. Probably not. And your job, it’s probably a dead end. Like, you will find out in 30 years when they replace you with someone younger,” like stuff like that.

Yeah, you should call the studio Half Empty.

No I’m going to call it Soul-sappingCycle

Soul-sappingCycle, I like that.

It will be the most popular thing. Anyway, so what are you doing this week?

So more importantly, you didn’t ask me about my trip to Harry Potter.

How was it?

It was, you know, that is probably the best amusement experience of its kind. And it was absolutely awful, but what I decided is, I’m giving in completely to love in terms of loving my kids and that’s what my 8-year-old wanted. I can put up with something. I had to put up with nausea, with heat exhaustion and some of the worst food that I have ever eaten. But I decided it wasn’t that bad because I was with my 8-year-old and he was just so happy. So it was awful and wonderful at the same time, Kara.

I love it there. I think it’s a really incredible marketable ...

They do a really good job.

It does. It does. It does. I had a rather busy week. I was in with Samantha Bee.

Oh how did that go? What is she like? Did she ask about me?

Uh, yeah, no.

Did she ask about ... does she know ... You brought me up, right?

No.

Okay.

No.

Thanks. Thanks for that. What’s she like?

She’s lovely. She’s very ... it’s a very sobering ... it was a very sober talk. It was a lot about refugees. It was about the things that happened with her. I’m not going to repeat the word because I don’t like it myself. But when she called Ivanka the “C” word. It was good. It was very good. It was a very good talk. It was quite an excellent talk. And I have some upcoming talks in New York which I might invite you to. I’m interviewing Hillary Clinton.

You’re interviewing Hillary Clinton?

Again. For the second time or third. I don’t know. I’ve interviewed her a lot.

And what’s the venue, and why are you interviewing her.

In 92nd Street Y in New York because I’m going to let her talk ... Two years ago, she made all these allegations about Russia and they all came true and so I’m going to let her take a little lap and talk about that. And then I’m interviewing Eric Garcetti who is supposedly running for mayor and Sean Hayes from Will & Grace. I have a lot of interviews coming up.

Oh my God! I am so Kimbal Musk. I’m going to crossfit.

Yes.

That’s what I’m doing this week.

All right. Anyway.

Seriously.

Thanks for listening to Pivot from Vox Media. Join us next week for more breadown of all things tech and business. If you like what you heard, please subscribe on Apple Podcast or wherever you’re listening.

This article originally appeared on Recode.net.