Today I took a tour of Tesla’s factory in California. It was eye opening, especially on a day like today.
At the factory, which is four times the size of Disneyland, I saw thousands of people working on building the cars of the future. People who not only got a salary and benefits from this job, but stock in the company they’re helping build. Ordinary people who in many cases saw their lives change because of Elon.
You often hear people say that those people created the company, and Elon just stole it from them. And of course, the Tesla team deserves endless credit for making the business successful. But most companies don’t give their factory workers any equity. Tesla does. Tesla is the one company that does actually reward the front line workers with ownership in the company.
These people also miss just how valuable and important visionary leadership is. The Tesla Fremont factory originally opened in the 1960s, as a General Motors plant. Before it was making fast electric cars, it was making American muscle cars. But as General Motors stumbled, the factory was shut down.
The factory wasn’t shut down because the workers weren’t doing their job. It shut down because of bad management. And all of the workers paid the cost.
Then Toyota came in and partnered with GM to reopen the factory. With Toyota management training workers on the Toyota Production System, the factory had a new life. Many of the workers who lost their livelihood returned, thanks to good Japanese management. In 2008 the financial crisis hit and the factory was shut down again. Workers lost their jobs, again.
Then Elon came in with an insane vision for a car factory that would build the cars of the future. Fast electric self-driving cars. Because of his vision this factory is not only still operational, it makes more cars than any other car factory in North America.
This factory and its workers went from dying to thriving. The only difference? Good management. Visionary leadership. The best artisans and workers in the world are useless if they’re working on the wrong thing. But focus on the right problem and even ordinary people can change the world. That’s why good management is so important. It’s not about the manager, it’s about all the people whose talents are wasted if they’re not led in the right direction.
If we say that leadership is worthless, and leaders shouldn’t be compensated for the value they create, smart people will do other things. They will run hedge funds or build real estate or become lawyers. It makes absolute sense to compensate leaders, not because they’re so great, but because the lives of so many others depend on them doing a good job.
Letting Elon have a piece of the businesses he’s created has been an incredible deal for the American people. He got $1 trillion from his efforts, but the public saw $10 trillion of value creation and consumer surplus. If this is what we villainize, we are idiots.