A former client I will only identify as Dave taught me about the correlation between humility and CEO success. Although I had the greatest admiration and respect for Dave and he set the benchmark against which I measure all CEOs, Dave always shunned publicity and wanted only to be judged by his financial results and the value he delivered for shareholders. In stories about CEOs who delivered the biggest bang for their compensation bucks, Dave invariably ranked at the top of the list.
Most big mergers fail or don’t deliver the promised benefits, but Dave orchestrated one of the biggest of his day. Not only did he achieve the goals and objectives he promised Wall Street, he did so on a faster time frame. Although the successful Fortune 50 company he created was very much his doing, Dave never regarded the enterprise as his personal ATM machine.
Dave’s compensation was considerably less than his rivals, despite outperforming them. He led by example: Dave’s company operated on razor thin margins and did everything on the cheap. Dave’s office had mismatched and well-worn furniture, and his company’s lobby had plastic plants so it could save on a watering service. Dave flew coach, often in the middle seat, and when he was traveling with salespeople and they offered him their business class upgrades, he wouldn’t take them.
Readers of this blog know I’m not a fan of GM CEO Mary Barra and Ford CEO Jim Farley. While it’s painfully obvious that Barra and Farley have failed miserably transitioning to electric vehicles, I was skeptical of them when they were still talking a good game about becoming EV leaders and dethroning Tesla. It was their braggadocio, and their obscene compensations, that tipped me off. Barra received more than $200 million in compensation in her nine years on the job, while Farley was paid $44 million in his two full years.
Tesla was founded in July 2003, and it took the company 14 years until it delivered its first Model 3 sedan and 17 years to deliver its Model Y SUV crossover; the two vehicles are Tesla’s cash cows. Common sense dictated that GM and Ford couldn’t overnight successfully manufacture electric vehicles, if ever. Money manager and longtime Tesla bull Cathie Wood nailed it with her prescient prediction in 2021 that GM and Ford didn’t have the DNA to make the transition for “this brave new world” of electric vehicles.
Tesla was co-founded by JB Straubel, who designed the company’s initial battery architecture and launched the successful Nevada Gigafactory. He also was the visionary credited for launching Tesla’s charging network, without which Tesla possibly would be a niche company selling novelty electric vehicles. Those in the know about Straubel’s Tesla accomplishments were among those cheering in May when Straubel was officially declared Tesla’s newest board member.
Straubel in 2017 launched Redwood Materials, a battery recycling company that has successfully raised more than $2 billion, a level of funding TechCrunch says few startups have ever reached. Although Redwood is already valued at more than $5 billion, Straubel emphasizes the company’s success is predicated on maintaining its startup mindset.
“We’re at the very earliest stages of revenue, we’re at the earliest stages of executing a multi-year capex deployment plan and building plan,” Straubel told TechCrunch. “I feel like we haven’t really turned a corner on having a massive impact on what we’re trying to achieve yet. We don’t have the systems built out to be a stable, historied company that hasn’t changed very much for many years. Month to month, quarter to quarter, we’re still changing dramatically.”
Straubel said that even if a company is publicly traded, it should strive to feel as small as it possibly can and “to never have this sense that you’ve somehow made it.” Although Straubel could no doubt realize an embarrassment of riches cashing out and taking Redwoods public, he maintains that would hurt the company at its current stage of development because he doesn’t want to be subject to the insatiable expectations of Wall Street.
“We don’t have predictability yet,” Straubel said. “And actually I don’t want us to have that level of predictability yet. We have to give up something of our innovation and creativity and dynamic nature to have the predictability.”
Consider how Straubel’s cautious approach to growth and success compares to that of GM’s Barra and Ford’s Farley. Even before they demonstrated they could successfully manufacture EVs, they were talking smack about overtaking Tesla. Barra went so far as to boast that she’d be selling more EVs than Elon Musk by the end of 2025. She also boasted that Cruise, GM’s driverless taxi subsidiary, would be generating $50 billion revenue by the end of the decade.
California’s DMV recently yanked Cruise’s license because it deemed the company’s vehicles unsafe. GM acquired Cruise in 2016 and has invested billions into the company, yet seven years later regulators determined the company’s technology is unsafe.
RJ Scaringe, a co-founder of Rivian, is also imbued with considerable humility (what is it with these tech guys that they go by their initials? Maybe I should start calling myself EM Starkman). I took notice of Scaringe during the pandemic when he opted to return a $1 million grant the town of Normal, IL, owed Rivian for meeting certain benchmarks. Normal is where Rivian has a manufacturing facility.
“The impact of COVID-19 has reminded us all of the importance of community,” Scaringe wrote in a letter to Normal’s town council. “The main asset of any community is its people, and as resources stretch thinner for every community across the world, we want to do whatever is possible for a pre-production company in our position to help alleviate pressure on our home.”
My sense is that Scaringe didn’t return the money to generate positive PR, and even if he did, Rivian deserved the paucity of coverage the gesture received.
My impression of Scaringe’s humility was reaffirmed watching the accompanying “Next Generation Podcast with Blake and Will.” What makes the podcast so fascinating to watch are not only Scaringe’s insights, but the impressive questioning of Blake and Will, who are only in the 8th grade. Blake and Will asked more intelligent questions than most of the anchors I’m familiar with on CNBC, CNN, and MSNBC.
It speaks volumes that Scaringe, who holds a PhD in mechanical engineering from MIT’s Sloan Automotive Lab, was willing to take the time to do the interview, and he took one of his sons along to watch. Lots of people talk pay lip service about leaving a better world for the next generation, but Scaringe thought it worth his time to meet and educate them.
Google founders Larry Page and Sergey Brin never pursued the limelight in the early days of Google, and still don’t. The publicity seeker at Google was Marissa Mayer whose PR person generated legions of puff pieces crediting her with successes that weren’t even her doing. When Yahoo hired Mayer as CEO, Google insiders were delighted to see her go.
Notably, Mayer decidedly ranks among the worst CEOs of all time.
Gwynne Shotwell is another accomplished executive who appears to avoid the limelight. Don’t recognize her name? She’s COO of Elon Musk’s SpaceX, and given the company’s success, one could reasonably expect that Shotwell would be deserving of a magazine cover or two. Either the media isn’t aware of her success or Shotwell prefers not to spend her time courting reporters and posing for magazine photo shoots. I imagine launching rockets and striving to land on Mars is pretty time consuming.
Then there’s Rebecca Tinucci, the Tesla executive responsible for building out the company’s charging network, who has yet to be profiled in a major publication. How good is Tinucci at her job? My Cousin Rob recently called me to say that for the first time in all the years he’s driven a Tesla, one of the company’s chargers was out of service. Five minutes later, he called back to say a repair person was already on site to fix it. Here’s a profile I put together on Tinucci based on publicly available information.
Admittedly, Elon Musk appears to be a notable exception about the correlation between humility and success. But most of Musk’s wealth comes from his Tesla stock, and with Barra and Farley running GM and Ford, he hasn’t yet had formidable EV competition. Toyota is considerably bigger and more profitable than Tesla and I wouldn’t count that company out in the long run. China’s BYD already is given Musk a good run for his money.
Rivian has legions of skeptics, but the company recently beat Wall Street’s expectations and some analysts have become bullish on the company’s prospects. While Musk for years has promised a pickup truck, Scaringe already has one available for sale.
Here in Los Angeles, one of the biggest EV markets, I’m seeing Rivian pickups and SUVs with increasingly regularity. I rarely see Ford’s electric Lightning F-150 pickup, and Barra has delayed the launch of her electric pickups until 2025.