Everyone makes mistakes. Not all are willing to apologize. Last night on Tesla's earnings call, Elon Musk learned how much some humility and honesty in the form of an apology can be worth: $5 billion.
The first demonstrated a lack of the control and probity a CEO must demonstrate, especially in front of investors. The second showed Tesla to be weak and desperate over cash flow. And then there was the 2018 Q1 earnings call in May when Musk had this interaction with a major equities analyst (transcripts from Seeking Alpha):
"And so where specifically will you be in terms of capital requirements?" asked Antonio Sacconaghi of Sanford C. Bernstein & Co.
"Excuse me. Next. Boring bonehead questions are not cool. Next?" Musk replied.
And then there was the analyst asking about how news reports were affecting purchase reservations for a Model 3 and Musk said, "These questions are so dry. They're killing me."
Musk basically told investors that basic questions about financial position or forces affecting sales weren't worth addressing. In doing so, he was dismissive of people who could have a big effect on share prices. It was a shocking moment, and not in a good way.
Then there was Musk taking to Twitter to try and write off deserved bad press, hinting that it had something to do with oil company influence.
Problem is journos are under constant pressure to get max clicks & earn advertising dollars or get fired. Tricky situation, as Tesla doesn't advertise, but fossil fuel companies & gas/diesel car companies are among world's biggest advertisers.-- Elon Musk (@elonmusk) May 23, 2018
Whatever has been happening, Musk displayed some real control in yesterday's call.
He apologized outright to the analysts he had treated badly. Here's the first of the apologies:
First of all, I'd like to apologize for being impolite on the prior call. Honestly, I think there's really no excuse for bad manners and I was violating my own rule in that regard. Certainly, I have some excuse. There are reasons for it and I'd gotten no sleep and been working sort of 110-hour, 120-hour weeks. But, nonetheless, there's still no excuse. My apologies for not being polite on the prior call.
And to the second analyst he had dismissed, Joseph Spak of RBC Capital Markets, he said, " And I would also like to apologize for being impolite on the last call with you. It's not right, and hope you accept my apologies."
Both the analysts thanked him. Maybe he mended some bridges with them, at least partway.
More importantly, he showed that he could control his temper and admit some degree of fault -- important when many things, including financial performance, production management, and car feature safety, had shown major shortcomings.
Although Tesla stock rose slightly upon the release of the financial results themselves, it wasn't until Musk started talking that it really took off, boosting Tesla's market value by more than $5 billion in after-hours trading.
When you're a CEO, being seen as smart or right isn't as important as demonstrating maturity, emotional intelligence, and a willingness to consider and address views contrary to your own.