"Hannibal is at the gates!" shouted the panicked people of Rome in 216 BC as the Carthaginian general appeared on the precipice of destroying their Republic. An implacable and ingenious enemy, Hannibal had repeatedly defeated the best armies Rome could muster. Running out of options, Rome reluctantly turned to a bold, unorthodox young man for help - a man known to history as Scipio Africanus. With a fondness for long hair and Greek philosophy, Scipio flouted the conventions of Roman society. He was a hippie and an iconoclast before hippies and iconoclasts ever existed. He assumed political offices for which he was not eligible. He had little patience for petty procedures and stuffy statutes in his drive to accomplish great things - and he would accomplish great things. Through a combination of charisma and cunning, he beat the Carthaginians back to North Africa and eventually defeated the once invincible Hannibal at the Battle of Zama in 202 BC. After the victories, Scipio was idolized by the public and placed above the law. Later on, when the Roman Senate would bring charges of embezzlement against him, Scipio would dismiss the accusations as not worthy of his time.
Over the next two centuries, Romans would find out that there were far more men that think they are great than there are great men. The Republic was bedeviled by civil wars as ambitious Romans escalated the rule-breaking in ever more aggressive and brazen attempts to grasp power. If Scipio didn't have to abide by the complicated social conventions and political procedures that had held the Republic together for centuries, then why should they? If you were bold enough, no rules applied. The ensuing chaos and bloodshed would culminate in the end of the Republic and the birth of the Roman Empire in 27 BC.
It is a bit of a stretch to say that the CEOs of technology companies are the Roman generals of our day, but when it comes to the cult of personality developed around them there are some similarities. Great, seemingly impossible, undertakings are expected of them. Corporate culture and financial regulations look like irrational impediments when visionary CEOs are driven to accomplish these great things. The abrasive personality of Steve Jobs is overlooked when compared with his ability to bring the personal computer and the smartphone to the public marketplace. However, CEOs like Travis Kalanick at Uber, Adam Neumann at WeWork, or Elizabeth Holmes at Theranos left their companies in disarray and their investors in turmoil as they tried to break the rules to achieve their visions.
Currently there is no more prominent tech CEO than Tesla's Elon Musk. With routine promises to turn science fiction into science fact, he has developed an immense following. His confrontations with the SEC have only seemed to increase his reputation as a great man beset by trifling bureaucrats. At one point this year (8/31/2020), Tesla's share price was up almost 500% year-to-date. Such price movement is completely untethered from any traditional financial metric of the company. It seems that Elon's elan and the public's belief that he can will great things into existence are driving much of the momentum. As technology enthusiasts, we do hope he is successful, but as investment analysts, we believe that completely disregarding the rules and conventions of finance can more often than not lead to trouble, not quite the trouble of the late Roman Republic, but at the very least the kind of trouble that can burn investors.
A Triumvirate? On the left, Scipio Africanus, apparently older and balder than during his fighting years. Center, former Apple CEO Steve Jobs. On the right, Tesla's CEO Elon Musk.