Elon Musk has never been conventional about the way he’s run his businesses, how he’s dealt with fame, or how how he’s acts on social media, and now he’s being just as unconventional in his opinions about the upcoming recession.
While the rest of the world is hyperventilating about the impending slowdown, Elon Musk — who’s the richest man in the world — has all but welcomed it. “Yes, this is actually a good thing,” Musk replied to a Twitter user who asked him if the world was approaching a recession. “It has been raining money on fools for too long. Some bankruptcies need to happen,” Musk added.
“Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!” he added.
Musk also opined on how long the recession was going to last. “Based on past experience, about 12 to 18 months,” he said. Musk even went on to say that companies which weren’t adding any value to society needed to “die”. “Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources,” he added.
Musk’s comments are a far cry from how most of the world has reacted to the impending slowdown — big-name investors have written grim memos to their portfolio companies asking them prepare, and even once-profligate startups have begun talking about profitability and unit economics. But while Musk’s take might seem a bit a tad unsympathetic — a recession would mean layoffs, bankruptcies, and a significant erosion of wealth for many — his comments are likely accurate. A recession would bring some temporary pain, but also clear the economy of the froth that’s been generated over the last couple of years. The monetary stimulus provided by the US to deal with the coronavirus has caused the economy to be flush with funds, and several unviable businesses — which Musk bluntly calls “fools” — have been funded.
A recession, though, would clear the economy of the excesses of the past, and once again divert resources towards companies that actually add value. This is something that many believe, but not many would openly say. But Musk has gone ahead and declared it in as many terms to his nearly 100 million Twitter followers. Money can buy a lot of things — it can buy creature comforts, it can buy amazing lifestyles, and it can help change the world, but most importantly, as Musk’s blunt assessment of the economy shows, it can get people to openly speak their minds.