We Tried to Calculate How Much an Hour of Elon Musk's Time Is Worth. Here's What We Came Up With.
Elon Musk may have reached his tipping point. As investors, board members, business contemporaries and the public watch from the sidelines, all they can feasibly do is hope his stress, exhaustion and determination will serve as fuel for the Tesla CEO to climb still higher rather than spontaneously combust.
After a nine-word tweet on Aug. 7 -- issued on the fly and during trading hours -- shares of Musk’s electric car company soared alongside his own net worth. Tesla shares ended the day up 11 percent, and some estimates pegged Musk’s EOD earnings at $1.43 billion. But, as with most erratic tweets by a high-profile individual, the statement came with its share of backlash: The Securities and Exchange Commission (SEC) launched a probe into Tesla, angry investors filed multiple lawsuits and shares entered a period of significant ups and downs.
Days later, after Musk broke down about his demanding work schedule in a candid interview with The New York Times, people everywhere -- from everyday consumers to media mogul Arianna Huffington -- urged him to take a break and get some rest. Musk claimed he has been working 120 hours per week and hasn’t taken a full week off since 2001, when he had malaria. “There were times when I didn’t leave the factory for three or four days -- days when I didn’t go outside,” Musk told The Times. “This has really come at the expense of seeing my kids. And seeing friends.”
Entrepreneur wrote about Musk’s likely unsustainable working hours in May -- we even tried living a day in his shoes -- but since then, his behavior has far surpassed a then-Twitter spat with Warren Buffett and an ill-timed jab at investors on Tesla’s Q2 earnings call. It appears that Musk -- who allowed himself mere hours to attend his brother’s wedding before high-tailing it back to the Tesla factory for meetings -- has given new meaning to the term “workaholic.”
It’s true that Musk’s success is tied to that of Tesla and that his vision made the company what it is today. But his hectic schedule and seeming inability to delegate begs the question: How much is an hour of Elon Musk’s time worth? And how much could he -- and the company -- stand to lose if he simply took a break?
Entrepreneur decided to investigate (read: do a series of increasingly complicated calculations). The typical formula for determining value of time involves salary and annual earnings, but for someone like Musk, that’s almost impossible. For one, even though his Tesla salary is public (minimum wage in the state of California), he almost never takes it. Second, his salary at SpaceX -- a private company -- is unknown. Finally, undisclosed capital gains and potential dividends mean that although we have an idea of Musk’s net worth -- about $23 billion -- we’ll likely never know his take-home earnings per year.
There is, however, one concrete clue when it comes to the value of Musk’s time. Announced in January was Tesla’s compensation plan for Musk over the next 10 years. Tesla claims its CEO will receive “no guaranteed compensation of any kind” -- we’re talking salaries, cash bonuses, equity over time. Instead, his payout will depend entirely on performance, namely a series of revenue-based milestones. To receive his maximum possible compensation, Musk will need to lead the charge in Tesla’s reaching its ultimate goal: a market cap of $650 billion.
Currently, Musk says he’s working 120 hours a week. That translates to just over 17 hours a day, more than 6,240 hours per year and, over the next 10 years, over 62,400 hours of work. If Musk’s total 10-year payout is a theoretical $55.8 billion, that means if he sticks to the same work schedule in delivering Tesla to its goal, every hour of his time could be worth close to $900,000.
But that’s just it: Even if each hour of Elon Musk’s time in office should theoretically earn him $900,000, there’s no guarantee. That’s because Musk’s payout is entirely performance-based. Tesla makes it clear that the CEO’s compensation is completely at risk: If Musk doesn’t deliver on any of the contractual milestones, he will earn a grand total of $0.
There’s an oft-repeated saying -- “work smarter, not harder” -- and it may very well apply here. Scientific trial after scientific trial shows that cognitive processing slows and function declines after prolonged lack of sleep. According to a 2016 sleep study, seven nights of sleep restriction (in this case, five hours of time in bed) led to deterioration in sustained attention, working memory and executive function, as well as a decrease in positive mood. The subjects’ sustained attention and speed of processing did not return to normal even after two “recovery nights.” Imagine the effect of zero recovery nights -- maybe even for months on end -- on sustained attention and speed of processing.
Musk, for his part, said he has enduring issues with insomnia -- that his nightly choice usually comes down to “no sleep or Ambien.” But there’s a good chance that rolling back on work and stress -- if even ever so slightly -- would translate to some positive effect. In the best case scenario, a restructured work schedule could position Musk -- and Tesla as a whole -- as more likely to hit the milestones they set out to in January 2018. There are no long-term studies to be found on the effect of 120-hour work weeks on cognitive function, but Musk shouldn’t wait 10 years to find out.