Earlier this week I was asking why the number of listed companies is in decline, and suggesting we need new ways of telling which owners and which forms of ownership are fit for the future.
Now along comes Elon Musk in a timely but confusing case study. He says that taking his company private is all about avoiding the ‘headaches’ of being listed. And in his message to staff that ‘the quarterly earnings cycle puts enormous pressure on Tesla to make decisions that may be right for a given quarter but not necessarily right for the long term’. This was distracting to employees who own stock and also large numbers of people who have shorted Tesla shares have an incentive to attack the company.
Two months ago at the Stewardship Asia Round Table in Singapore I invited the business leaders and investors present to name the companies they thought best placed to maintain their Stewardship through a time of disruption. They said ‘Apple, or Baidoo or Google.’
‘This surprises me’, I said. ‘All these are listed companies, with the pressure on quarterly earnings do you really think these will be able to make the long term decisions to ensure their survival as good stewards?’
So Elon Musk seems to share my scepticism.
Except that he then goes on to say that the company would in time return to listed status once Tesla enters a period of slower and more predictable growth.
Really? Who’s he kidding?
The real answer he is seeking is to be found in the hybrid ownership models that combine some exposure to public markets with the stability of one or two anchor shareholders. Tata and Sons has got through its succession problems thanks to its ownership stability and is now once again one of India’s most successful global companies.
So my advice to Elon Musk is this; Move beyond the seesaw of IPO and buyback. Set up a trust and start channeling a small slice of your wealth and, when they arrive, the company’s profits into a fund dedicated to the long term ownership of Tesla in ways that underpin its admirable social purpose. By all means bring in like minded sovereign wealth funds and big pension funds. Put yourself in the position where you can ignore the more piratical hedge funds and stick to your knitting.
Once you start looking you will find there is no shortage of investment capital just waiting to invest in businesses that care about Sustainability, stewardship, their employees and the long term.
In the end it is bold people like you who will point the way beyond the discredited self seeking of the quarterly earnings game and its many hangers-on.