Q3 – Betting with your skeptics

You may have seen over the last few weeks the events surrounding Elon Musk going after short-sellers of Tesla stock. As a quick 101 of short selling, it is the act of borrowing shares and immediately selling them, then repurchasing them at a lower price and returning the shares; consequently, the seller makes a profit from the difference. Musk loathes short-sellers since they are shareholders betting that Tesla’s share price will drop. Musk has claimed that over the ‘at least a few months he has had extreme torture from short-sellers as they are desperately pushing a narrative that will possibly result in Tesla’s destruction.’ This whole charade has made me reflect on our company.

In the case of Tesla, it has demonstrated the importance of balancing short-term successes with long-term objectives. To counter-act short-seller’s one weapon in a business’s arsenal is to seek strong quarter results, potentially to the detriment of long-term growth.

You may assume that I don’t like the practice of short-selling since it can skew the direction of the board; however, organisations should embrace the skepticism that comes with short-selling.

To be more sustainable business leaders need to have the capacity to bring both their employees and shareholders on the journey of where the business is travelling. To be transparent and realistic about all the challenges you think may occur along the way, and why you can overcome them.

All proper planning involves incorporates evaluating your weaknesses and external threats, and the best leaders should have people around them that are willing to share their thoughts whether that be positive or negative, to avoid any instances of groupthink occurring. Groupthink is where a group wants to avoid having conflict, thus, always reaching consensus due to individuals feeling reluctant about sharing their own beliefs or opinions. Researchers point to groupthink as being a systemic cause of the 2008 U.S banking crises, as many financial institutions created a culture where discussing market failure was taboo.

Since we aren’t a floated company we are not held to account by shareholders. Instead, our accountability must derive from within, our employees. We’ve been conscious of creating a culture where our decisions must be questioned, where our employees shouldn’t self-censor or conform.

As we continue to expand our business, I want to embrace any skepticism to our plans to make sure we are ready to counter-attack any challenges that may rear its head.