Sam Bankman-Fried, Elon Musk and how one person’s actions can erode a brand
The actions of Sam Bankman-Fried and Elon Musk and the subsequent fallout illustrate how people’s words can both command and corrode attention.
Before he was convicted to serve 25 years in prison for fraud last week, Sam Bankman-Fried aligned himself with a movement known as Effective Altruism. They welcomed him with open arms, happy for the boost in awareness he generated and a corresponding increase in those taking up the cause. Then Fried’s crypto-fund FTX imploded. Fried was indicted. And suddenly, that association wasn’t seen as such a good idea.
In another part of tech-land, barely a week goes by that Elon Musk doesn’t say or do something to roll some eyes and furrow some brows.
A recent article on Business Insider noted that ”Tesla’s “consideration score” has fallen significantly over the past few years. In February, the EV-maker’s score on Caliber’s metric of whether consumers trust and like a brand and would consider buying its products plummeted to 31% — less than half its high of 70% in November 2021”.
Underneath both examples is the outsize impact an individual can have on a brand’s value.
A recent podcast featuring Will MacAskill, founder of the Effective Altruist movement, underscored the damage to their brand. The toxic reverberations generated by Fried’s actions caused MacAskill to consider abandoning his work entirely.
Musk treating X (formerly known as Twitter) like another party toy for the ultra-rich and grandstanding on any newsworthy issue rightfully makes investors and customers nervous, casting shadows over his serious endeavours.
Goodwill, word-of-mouth and reputation are crucial contributors to the store of value held by a brand. They’re inherently vulnerable to individual actions, and distance doesn’t always limit the damage. Even tenuous proximity to someone’s bad behaviour can cause confidence to erode in what an organisation is doing. Going from solid to shaky in a news cycle and quickly compounding.
The potential boost posed by compelling personalities comes with a downside. Yes, ideas and stories from a person more readily connect than from an entity. However, Fried and Musk illustrate how those people’s words can both command and corrode attention.
When it’s the latter, the value held in the brand erodes because, among other pitfalls, addressing the resulting fallout requires effort and resources that could otherwise help further whatever is most important to the organisation.
Every time Musk says something stupid, it gets a bit harder for Tesla to hold its ground. The noise and distraction delay work on new products, allowing competitors to gain a foothold. Impatient and disillusioned customers turn elsewhere, and what was previously the first choice future of cars becomes another model on a shelf full of options. Falling sales hit the share price, making investors less likely to support other work.
Still, it’s much easier for an organisation to break ties with someone from the outside than a rogue founder.
Effective Altruists are likely relieved MacAskill didn’t abandon them. Choosing instead to ride out the storm Fried created and shifting the focus to the two billion dollars the movement has distributed to well-run charitable endeavours.
This highlights a way out of the downward spiral, allowing organisations to find their footing, refocus on their achievements and what matters, and get value flowing back into the brand.
People are easily distracted by what’s next, and there’s always another story, scandal, or Musk tweet to shift the spotlight.
The lesson for any business, big or small, is to consider the trade you make by allowing anyone to overwhelm what’s most important about what you’re doing.
Michel Hogan is an independent brand counsel.
