The playground The rivalry between Mark Zuckerberg and Elon Musk goes back several years – and in terms of who's cooler than who, Mr. Musk usually wins easily. As an innovator, Mr. Zuckerberg, co-founder of Facebook and boss of Meta, a social media giant, has often been called a geek dilettante in a hoodie. He never received the Promethean kudos that Mr. Musk has for turning Tesla into an electric vehicle benchmark (VEs) and SpaceX in a rocket sensation. Mr. Zuckerberg is known for his motto “Move fast and break things,” which may have helped Facebook take over the world, but has given critics the right to paint it as a social threat. Mr. Musk is revered as a rule-breaker, he plays up his bad-boy image and generally gets away with it.
That was the tenor of their relationship when Mr. Musk proposed a cage match with Mr. Zuckerberg in June last year, just before Meta launched a short messaging app, Threads, to compete with Mr. Twitter. Musk (now X). Forget the physical fight that never happened. In business terms, Mr. Musk already had the upper hand. He was the richest man on the planet. Tesla's market value, although declining, was higher than Meta's. His income was growing faster. Yet since then he couldn't have kicked himself more in the teeth. Over the past few weeks, Tesla has shocked investors with a horrific earnings presentation. Mr. Musk's $56 billion 2018 salary was overturned by a judge, reducing his net worth. From America to China, its VEs have undergone recalls.
Meanwhile, Mr. Zuckerberg is punching the air. On February 1, Meta released results showing a dizzying rise in sales and margins. Its market value has reached $1.2 trillion, exactly the level Tesla reached at its peak in 2021, and more than double what the market value reached. VE-maker is now valid. Of course, short-term measures of financial performance are not everything. But when you look at longer-term factors, such as how both men run their businesses, treat their shareholders and customers, and respond to their own failures, it's clear that the fight is all but over. Zuck won.
To understand why, let's start with the interplay between how the two billionaires control and manage their businesses. Each of them dominates his company in a way that makes proponents of corporate governance pale: Mr. Zuckerberg through a dual-stock structure that gives him majority control of Meta; Mr. Musk, having everyone at Tesla under his thumb. But as Mr. Zuckerberg has become more sensitive to his fellow shareholders, Mr. Musk has become less so. This had a significant impact on performance.
That of Mr. Zuckerberg about-face began in 2022 when shareholders balked at the way he was spending their money (and his) on lunar projects like the Metaverse, just as Meta's core business was slowing down. Instead of ignoring them, he listened to them. He has since changed his mind to focus on cutting costs, increasing profits and using cash to invest in artificial intelligence (AI) and the metaverse in a way that improves existing products and funds futuristic bets. Additionally, to convince shareholders that it is not wasting their money, Meta will return more cash to them via share buybacks and pay the company's first-ever dividend.
Mr. Musk had no such revelation. In the two years since Tesla's stock price peaked, he appears to have doubled down by disappointing his co-owners of the company's stock. The most sensible aspire to a cheap mass market VE. Instead, Tesla sells expensive models at a reduced margin. They want him to spend more time at Tesla, but he shares it with SpaceX and wastes it at (and on) X. They aspire to fully autonomous cars as the catalyst for a robo-taxi revolution. Instead, even the most die-hard fans were stunned recently when Mr. Musk threatened to move his AI and robotics efforts away from Tesla unless it gets 25% voting control.
This leads to a second big difference: motivation, which was at the heart of the Delaware judge's decision on January 30 to strip Mr. Musk of his gargantuan paycheck. Mr. Zuckerberg, as the judgment points out, receives neither salary nor stock options. His 13% economic stake in Meta is the main motivation for coming to work every day. Mr. Musk, however, is different. Even though his stake in Tesla at the time meant he would become $10 billion richer for every $50 billion in Tesla's value, it wasn't enough. Tesla's board of directors (many of whom, the judge said, were too friendly with Mr. Musk to be independent) convinced shareholders that additional incentive was needed to keep their noses to the grindstone: namely, the most big payment in the history of public procurement. Now that it's been canceled, his motivation is likely even more in doubt.
Then there are the two men's attitudes toward customers, which also moved in opposite directions. Mr. Zuckerberg has been vilified for Facebook's fast and loose approach to user data, content moderation and privacy. Concerns remain strong, particularly when it comes to young people on social networks. But Facebook now has an independent oversight board to rule on content decisions, and Meta says it has invested $20 billion since 2016 in online safety. There is no doubt that Mr. Musk still has loyal customers. But given the number of Americans VE The owners are Democrats, the more he rants about X, the clearer it is that he despises their political views. The latest recalls are another cause for concern (although the problem can be fixed with a software update). In China, a huge market, it faces fierce competition. Meta, on the other hand, credits Chinese advertisers with contributing to the surge in advertising revenue last year.
Tyrant in cage
In a word, as Mr. Zuckerberg gets older, he seems to have learned from his mistakes. As Mr. Musk ages, he becomes more and more childish and absent-minded. His angry reaction to the Delaware court's ruling, threatening to up sticks and move Tesla's incorporation to Texas, is a good example. This indicates that he wants the company's shareholders to be even less protected than usual from his whims. If anyone should step into the ring and knock some sense into it, it’s him. ■