Elon Musk's Reality Distortion Field Has Failed

Musk's ability to bend reality has seen him through countless lies and lawsuits. Amazingly, it may be Twitter that shatters it for good.

Elon Musk's career has been built less on delivery and more on promise, the valuations of his companies (and therefore his own) propped up by sci-fi promises of dreadnaught factories and high-speed tunnels, concepts often borrowed from the covers of 1950s-era issues of Popular Science. By and large, these promises have gone unfulfilled. For decades he's leveraged his ability to bend reality to his own will, but it's become increasingly clear over the past weeks that reality is catching up with him.

The term "reality distortion field" originates from the pilot episode of the original Star Trek series, “The Cage,” where aliens with pulsing, posterior-like heads try to lure Captain Pike into staying for observation. Pike is tricked into thinking he's accompanied by a beautiful young woman who (spoiler alert) turns out to be heavily scarred and disfigured, back broken both literally and figuratively. It's an iconic piece of science fiction and a reasonably good yarn -- if you ignore the resolution of the character of Vina who, given the option of escaping, prefers to stay in captivity with an illusion of happiness so that she can maintain her good looks. 

Outside of misogynistic science fiction, the term "reality distortion field" was most famously and frequently applied to Steve Jobs. The Apple co-founder and savior was widely regailed for his ability to elevate excitement externally, imbuing the annual launch of iterative tech products with a magical significance, but also internally, inspiring thousands of employees to ignore his bullying tactics, to work long hours and create a company that, as I write this, is worth just a tick under $2.4 trillion dollars. 

Back in the late 2000s, when SpaceX rockets were blowing up like fireworks and Tesla Motors was skidding towards insolvency, Musk somehow pulled both companies through. Much of this can be put down to Musk's own fledgling reality distortion field. Not only did he manage to convince NASA that SpaceX was still worth funding, he convinced employees at both companies that putting up with his tantrums was tantamount to building the future.

As both companies soared (SpaceX literally, Tesla financially, crossing a $1 trillion market cap in late 2021), Musk's reputation took a similar trajectory. In the court of public opinion, he could do no wrong. Even baselessly calling a hero a pedophile couldn't damage his brand. His personal net worth crossed into the hundreds of billions of dollars. 

Through it all, his constant stream of often spiteful tweets provided a microscope straight into the heart of his hubris. And now, amazingly, it’s that very platform which has destroyed his reality distortion field. What was once an echo-chamber for his most ardent fans, bolstering his reputation and his ego, has now become a sort of Thunderdome for Musk dunks. It’s a global sport, and the twitizens of the world are getting pretty damned good at it. 

As his reputation comes crashing down around him, I'm left wondering whether any of his other ventures will survive with him attached. After all, when you leverage an entire company's success on the reputation of its CEO, the destruction of that reputation must damage those companies.

Tesla's current fortunes proof that the investment world is opening its eyes. The EV maker's stock was near an all-time high in April of this year when all the Twitter acquisition talk began. The stock was $382 a share back then, especially remarkable given the market headwinds at the time. Last week, as it became abundantly clear that Musk had no solid plans for Twitter, Tesla stock hit $178. 

On the SpaceX side, that company's valuation seems to be strong as of October's most recent equity raise, but there are cracks showing. In late 2021, Musk warned that SpaceX had a "genuine risk of bankruptcy" if it didn't launch one of the company's fledgling Starships at a rate of "once every two weeks next year." 

SpaceX has had exactly zero Starship launches since then. So, is the company now in a dark place? Or, was Musk spinning his own yarn to try and get his employees to work even harder? If so, and it didn't work, that's yet another sign his influence is waning. 

And what about Twitter? One investment advisor did the math based on the current value of the company’s debt and its revenue and came up with a figure of $4 billion. Musk, of course, paid $44 billion just a few weeks ago. 

Gary Black @garyblack00

It’s hard to put a value on $TWTR today. Elon paid $44B for TWTR, and the $13B debt trades for $.60 on the dollar, so ~$8B. The $31B equity is down more: EBITDA about 1/2 the prior $1.2B/year = $600M. At 20x = $12B less $8B debt = $4B equity. So equity -88%.

Over the years, Musk has made various promises about Tesla, my favorite being a prediction in 2016 that Tesla's cars would be able to drive themselves coast-to-coast by 2017. We're five years since he blew that one, but nobody batted an eye at the time. His reality distortion field was strong. 

Now, Musk is letting loose an ever more desperate-sounding stream of tweets about how great Twitter is, culminating in this doozy over the weekend: 

He’s since deleted it, but it was up for a long time and it is pointedly false. I'm unfortunately not at liberty to share specific numbers, but in my experience, inbound traffic from Twitter at major publications is rarely more than a few percentage points of overall daily numbers. Even when a tweet goes viral it's rare to see it even reach half the incoming traffic generated on an average day by Facebook, which itself pales in comparison to search traffic these days.

Either Musk didn’t know enough about his own company to know this is false or he was flat-out lying. Either way, you need only look at the ratio and replies to know that his distortion field failed to protect him. The enveloping blanket that's kept him warm and confident for the past decade is in tatters, and the cold wind of reality is only intensifying.

Ed Markey @SenMarkey

One of your companies is under an FTC consent decree. Auto safety watchdog NHTSA is investigating another for killing people. And you’re spending your time picking fights online. Fix your companies. Or Congress will.

Elon Musk @elonmusk

@SenMarkey @washingtonpost Perhaps it is because your real account sounds like a parody?

The end of Elon Musk, then? Don’t bet on it. Without that distortion field in effect, Musk is going to have to prove that he can run a business less on hopes and promises and more on fundamentals. You know, novel things, like revenue and profit. Tesla has been doing well in those metrics of late, though not well enough to maintain even its current valuation. Can he possibly do this for Twitter? Only time will tell.

As a long-time Musk skeptic, I must admit it’s been refreshing to see the nature of his behavior revealed to the world these weeks in much the same way that Vina was exposed to Captain Pike back in 1966. However, unlike Vina, Musk can't just choose to step back into the veil.