Why Celebrity CEOs Like Elon Musk Don’t Guarantee Profits

Why Celebrity CEOs Like Elon Musk Don’t Guarantee Profits


you’ve ever heard the name Jamie Dimon
the CEO of JPMorgan all right so you already like ahead of where I thought
you’d be let’s talk about Rockstar CEOs I think one of the biggest
misconceptions amongst investors is that popular CEOs or CEOs with name brand
recognition are going to deliver the most upside the shareholders and in fact
often it works in the opposite way this guy’s gonna attack the SEC how
about removing it for a CEO to have reached a certain level of acclaim
that’s probably because they’ve already grown a business to the point where
everyone’s heard of them usually the bigger gains are going to come from a
CEO that no one’s ever heard of before someone who’s working far away from the
limelight and slowly building up the type of company that’s going to
contribute to huge shareholder wealth when people think about CEOs they think
about people like Steve Jobs or Bill Gates or Jeff Bezos people that are
changing the world and while that can lead to a lot of shareholder return it’s
not always the case that those are going to be the best performing companies
Microsoft is a great example sure they changed the world and then for ten years
the share price did nothing in the meantime tons of nameless faceless
people came along started companies and drove up massive share price gains
here’s the thing with Steve Jobs there’s no question he was a visionary but
there’s also no question that his first time running Apple didn’t end with
fireworks and roses and actually he had to be excommunicated from the company
before he would then make a comeback and change the world all over again
I’m pretty committed to this and seeing Apple turn around the company I mean I
started the company with Steve Wozniak in my parent’s garage you know 20 years
ago and over 22 years ago and so there’s a definite place in my
heart for this when Steve Jobs died in the fall of 2011 Apple had a market
capitalization of about 300 billion since Tim Cook took over for Steve Jobs
Apple’s market value more than tripled from 300 billion up to about a trillion
dollars at its peak nobody would say that Tim Cook is more important to
apples growth and apples innovation than Steve Jobs so it’s very tough to judge
how much of a visionary the CEO is and then say that that’s going to have some
major impact on a chair price as Apple has grown its iPhone sales around the
world its services business its watch all of the things that Apple does it’s
obvious that Tim Cook as the CEO is still benefitting from the legacy that
Steve Jobs built while he was alive while he was running the company but
despite this the growth and market cap in both percentage terms and dollar
terms under Tim Cook has been absolutely extraordinary so where does Steve Jobs
end and Tim Cook begin I don’t know that there’s a quantitative answer to that
question sometimes you can have the same company but all it needs is a change at
the top Microsoft is a great example under Steve Ballmer earnings grew but
the share price didn’t for a very long time Satya Nadella comes in as CEO and
yes there was some change in the fundamentals of the company but
valuation exploded Wall Street loved the new story the new CEO and the areas of
expertise that he was bringing to the top job so I walked around New York
where Jamie Dimon is a celebrity see how many people would recognize his name or
Warren Buffett’s name and how few people would have any idea who’s running
MasterCard who’s running visa who’s running square or PayPal or some
of the fastest growing best performing financial stocks have you ever heard the
name Warren Buffett never have you ever heard the name
Warren Buffett do you know what that is okay who is that Berkshire Berkshire Hathaway alright I
know you knew that do you know who the CEO of square is okay no idea the CEO do
you know who the CEO is of MasterCard PayPal square not a not a lot of people
know these either in recent years one of the most famous CEOs has also become one
of the most notorious names in the news and not always for a great reason
Elon Musk is the founder and CEO of Tesla Motors Tesla had made shareholders
a lot of money and then over the last few years there’s been a stole in the
share price a lot of controversy tweets that the regulators have taken issue
with a lot of statements that had had to have been walked back do you think you
can work this out with the FCC over the next two weeks so while a lot of people
are aware of Elon Musk that hasn’t necessarily been great for stockholders
oftentimes when a CEO becomes synonymous with their company if the CEO has a
scandal the company won’t escape and vice versa
we’ve seen examples of this phenomenon over the years and it rarely ends well
for investors the CEO of WorldCom had a scandal involving borrowing money from
the company and that company no longer exists in the modern era many technology
companies have figured out a way to have their cake and eat it too they get to be
public companies with all of the market capitalization benefits that exist they
can use their shares as currency to make acquisitions to pay highly valued
employees but they don’t give up any votes Facebook is in a situation where
Mark Zuckerberg controls approximately 60% of all the voting rights of Facebook
so you have a choice you can invest in the company but you’re investing in what
Mark Zuckerberg wants to do that can work in your favor or against your favor
and if there is a major scandal it’s hard to disassociate one from the other
the types of CEOs who end up on the news or in
mainstream media or on the cover of magazines are usually the people who
have grown revenues the fastest or who have innovated the most or who have
changed the world with their inventions or have made huge mergers and
acquisitions happen but in reality the CEOs who deserve the most credit are the
ones who grow share price and build the most shareholder value so I turned to a
book called The Outsiders by William Thorndike that looks at eight of the
most unconventional CEOs and the biggest money makers for shareholders of all
time mr. Thorndike wanted to take a look at these companies and these CEOs and
find the common characteristics what they did that was correct and what they
avoided doing that a lot of more popular CEOs perhaps spend too much time with in
the Outsiders he looks at the CEO of Berkshire Hathaway which we all know is
Warren Buffett but then also her his protege he looks at Catherine Graham
from the Washington Post and one of the major things that stands out about the
CEOs who are mentioned in The Outsiders is how little attention they pay to Wall
Street analysts the mainstream media or the business press these are people who
do not do quarterly conference calls these are people who do not seek out
interviews or attention or publicity of any kind when Catherine Graham’s husband
passed away there were very few observers of the Washington Post who
would have thought that she would be the one to lead the company going forward
especially given the fact that the Washington Post company was in the midst
of working on an IPO to bring the shares public Katherine Graham was more of a
socialite and much less of a businessperson at the time this transfer
happened but in the end she managed to find the right mentor to help her make
the big decisions to make Washington Post not only a well-regarded newspaper
but a fabulously profitable and successful business as an investor
you’re not necessarily looking for famous name-brand CEOs what you’re
looking for are people who have a very strong sense of capital allocation what
to do with the free cash flow the company
generates and if they become famous in the process that’s not so terrible invest in you ready set grow CNBC and
acorns

100 comments on “Why Celebrity CEOs Like Elon Musk Don’t Guarantee Profits

  1. I knew you would get around to the negative remarks about Elon Musk. What you said about isn't true. But CNBC hates Musk, and wants to crush him, which won't happen.

  2. If you had bought tesla in 2010 at 17 dollars a share ipo price, you would have made 15 x your money by todays share price. I would say that is "outperforming the market".

  3. This site has a lot of beef against Elon Musk. Do you have a secret crush on him? Wants a part of his bank account? 🤦🏻‍♀️

  4. Can u guys help me out by subbing to my channel because my mom said that if I don’t show her that I have improved on my YouTube channel she will delete it

  5. Why should I trust a CEO of a small RIA wealth management firm I've never even heard of lol. No offense to him, I'm just saying to CNBC

  6. Level 5 Leaders are key: personal humility and professional will embodied in one Person enables a company to become truly great. Look at a work Form Collins in 2001

  7. Funny how he's talking about Elon like he knows what he's talking about while he said Elon founded tesla motors which was done Martin Eberhard en Marc Tarpening

  8. CNBC is officially out of arguments about why Tesla will fail and Elon is Evil

    All these subtle messages of why you may want a change in the top, Stupid explanations of why the shares don’t rise and etc. It is so easy to see.

    Here are some facts:
    Apple is successful now ONLY because of how strong of a brand Steve Jobs built. Tim converted Apple’s thechnogical advantage to cash. The price of that is lost marketshare and less brand recognition.

    Microsofts success is due to work of art decision making and a change of a CEO how made a fool of himself on several presentations.

    Now dear CNBC,
    Tesla is what it is because Elon. You know exactly what he did.
    Tesla is successful despite everything the media, the Oil Industry and the SEC tried to do.
    Tesla will grow big time in the following 3 years.

    Keep on trying to miss-lead people. And take money from companies that trade your health and future for money.

  9. How do you not put Elon Musk in the category of CEO's that are changing the world? Wow. Media bias against Musk is serious.

  10. Tim Cook only rode the wave that steve job started. In fact, since he took office, apple's innovation plummeted really hard.

  11. Can I just say Elon Musk is for Intents and Purposes not a founder of Tesla. From Tesla's wikipedia page: "Tesla was founded in July 2003, by engineers Martin Eberhard and Marc Tarpenning, under the name Tesla Motors. […] In early Series A funding, Tesla Motors was joined by Elon Musk, J. B. Straubel and Ian Wright, all of whom are retroactively allowed to call themselves co-founders of the company."

  12. Stop comparing Elon Musk to every other CEO hes better than all of them combined because he's not doing anything to make money for himself; he's simply helping the world so that he can be able to smoke a blunt on Mars with his feet kicked up relaxing in his own solitude.

  13. The stock was making people money for years so I dont see what your point is ? Its your fault if you did not take profits or cut your losses.

  14. I dislike that the stated value in this episode was that a CEO made the most profit for Shareholders. I think it is equally important what the invention or company is doing in the world.

  15. CNBC's message is always about creating value for shareholders and investors. What about the workers? Would there even be a company without the workers?

  16. Tesla gained a lot of value because Elon Musk is popular. It lost value because Tesla keeps falling behind schedule, not because Elon is popular. So this video is about 99% opinion and may be 1% fact. Which is fine. But I expressed my opinion in the form of dislike.

  17. I wish I could copyright the words visionary and genius so that people today stop using these words to describe people like Steve Jobs. What was Steve Jobs vision ? Create a phone ? What a low bar! Visionary people were those who sent humans to the moon…And if you call Elon Musk a genius then you have to come up with a new word to describe people like Newton and Einstein…

  18. Steve jobs is a innovater but Tim cook is concentrate mostly in marketing in iphones after Tim became the CEO of apple the apple fans are increased

  19. Is the stock price tripling under Tim Cook supposed to mean anything? It increased by over 7,000% under Steve Jobs. And he didn't need to be forced out the first time, the board was just full of idiots.

  20. As usual, 3rd rated targeted content by the worst propaganda channel – CNBC. Focus is only to instil insecurity and fear among general public about a path breaking, revolutionary, high-tech automaker. All Fabricated BS. We no longer buy your dumpings. DOOM TO YOU!! YES, WE HATE YOU CRAZY PAID STOCK MANIPULATERS😠😠😠😠

  21. Steve Jobs drove Innovation, but Tim Cooke was a better CEO. After the death of Steve Jobs, Apple started stagnating in terms of innovation, and now it seems like they are always playing catch up. They are adding things to their products others have innovated, and they are constantly losing all their best engineers to the competition. They need to do something, and they need to stop playing catch up with the other companies in their field, cause right now they are just treading water. It’s sad, cause I want them to be like how they were before, but when Jobs died he took all the innovations with him.

  22. Steve jobs, gaves new ideas and innovations at fair prices, while crook gives us over-priced for a micro-development smartphone

  23. Did that guy really say stock prices are more important than the ideas that changed the world 🌎 ?? if you are only trying to make the shareholders happy, watch Silicon Valley on HBO and you will know what will happen ok?!

  24. Another hit piece on Elon Musk from Crap News Broadcasting Corporation.
    Elon Musk has founded or co-founded four multi-billion dollar companies, soon to be five with Neuralink.

  25. This is the major reason I hate stocks as an investment. The value of my shares is not directly tied to how well the company is doing. Revenues could increase 30%, does my shares go up 30%? There is no direct link between the companies performance and the stock price. I as an investor have very little influence on my investment and little warning if things are about to go bad. So to me its just like gambling. I much prefer real estate and small businesses I do have a say in!

  26. i think there is no problem with the Ceo who try to satisfy its shareholder and earn money, but they don't get so much respect because they are just "businessman". Elon Musk, in my opinion, is rather a visioner then a businessman he is not seeking for short term profit he wants to do something gamechanger and gives hope to the people.

  27. Steve jobs and Elon are not CEOs.. they are company founders, entrepreneurs and real risk takers. CEOs like Jamie Dimon and Tim Cook are mainly talking heads glorified wage workers.

  28. This doesn't make sense. The most famous CEOs among consumers do not make profit. To say that Tim Cook is not a good person to have as CEO is silly. Anyone who will become a CEO of a popular company will become popular.

  29. Warren Buffet is great, Elon Musk Is bad, Steve Jobs is bad.
    Sorry, I will still support companies that are more world changing and less profitable than the ones looking for higher margins over human lives.

  30. The only thing consistent with CNBC is the ABSOLUTE negative comments in every single video!!!
    I tried to find one… no success

  31. God bless these guys working for the future of humanity, and the Lord needs humanity to starts to build a spaceship named Life and put all seeds we can inside of it and bring somewhere out of the planet, starting the work now is for our future generation also,

  32. NOT TRUE! Share price DOES NOT REFLECT a companies success, PROFIT DOES. Why do i stress this? buffet made his name from destroying companies by buying them if the assets were worth more than the share majority, he would then buy majority voter rights sack everyone and sell the assets and the shareholders would get one lump sum payout. he used to call it one final puff of the cigar butt. Or there's Apple, they OWN 47% OF THEIR OWN SCK WITH SHARE BUY BACKS! Thus pumping the share price to not reflect profit at all! This has become the new trend since near zero % interest rates. UBER and LYFT have never made a cent but both are valued at ridiculous amounts because of share buy backs…

  33. Share market is all about sentiments. Hence if ur CEO who can show off n be visionary by changing rules of the game then ur good.

  34. The premise is kinda flawed. I don't think most of us care at all if they have a huge upside for shareholders. They're rockstars for different reasons. Misanthropes and miserly, avarice folks don't tend to be folks we want to care about.

  35. CNBC is so wrong about this. Apple tripled in value from $300 billion to $1 Trillion only by riding on the vision & products of Steve Jobs. They did nothing great after him, only continued to do minor improvements and maintain the brand name. That's all. Even if they had an empty chair for the CEO instead of Tim cook, Apple would still have increased in valuation.

  36. Tesla's stooges are raging in the comments, yet I haven't seen one (1) person to actually disprove the information presented in the video.

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