Ours is a culture of personality. The men and women who stand on stage, representing their companies – often built from the ground up – are both heroes and villains, living icons of what those brands represent.
It’s not a new phenomenon. Newspaper barons, steel magnates, and railroad tycoons have been larger than life figures in society for the better part of two centuries, and often become synonymous with the brands they represent. So, it’s no surprise that the executive brands of people like Richard Branson and Steve Jobs can have a profound impact on the stock market and the overall performance of a brand in the long term.
How Executives Raise Stock Prices
There are several ways in which an individual can directly impact the rise and fall of stock for a billion-dollar corporation. One of the highest profile stocks in recent years is that of Tesla, the electric automotive and energy storage company founded by Elon Musk in 2003. Recently reaching a market value of $48.63 billion, surpassing Ford’s market value despite ongoing annual losses, Tesla’s stock has long been closely tied to the enigmatic genius of its forward-thinking CEO.
Always thinking bigger and better, Elon has become synonymous with the socially-conscious mad-genius persona that has driven all three of his companies to new heights. It’s so pronounced that when Elon Musk posted this tweet in August 2016, Tesla’s stock increased by 2%, adding $670m to the company’s value at the time. The mere mention of a new product, feature, or technology is enough to expect a surge in value for the stock.
Elon Musk is the not the only person whose exuberance, creativity, and new ideas can drive stock higher. Jeff Bezos is close to becoming the richest man in the world, and it was a long road getting there. Amazon just had its 8th consecutive profitable quarter, posting a profit in Q1 2017 of over $700m. Before 2015, however, Amazon spent the better part of 20 years losing money.
A big part of that is the steadfast, consistent leadership of Bezos, who has gone as far as to reinvest his own fortune not only into Amazon, but into other ventures like Blue Origin (competing space exploration company).
Richard Branson is synonymous with Virgin Brands, which consists of more than 400 operations across a range of investments around the globe. His personal brand, however, is one of adventure, jet setting, high flying fun, and when he attaches the Virgin name to something (with which he is synonymous), it skyrockets in value. In 2012, the branded revenue from companies bearing the Virgin name surpassed 13 billion pounds, and the Virgin Media group is largely run independent of his input, but he leases the Virgin name, which alone is a multi-billion-pound resource.
How Executive Brands Can Hurt Stock Prices
While most stories of brand impact from executives is positive, it can easily swing the other direction just as easily. For every Steve Jobs, whose perfectionism and careful control of corporate presentation generate billions in profit, there’s another who can’t handle the pressure and who makes poor personal decisions that directly impact stock value.
The current media villain is Travis Kalanick, the CEO and founder of Uber. Once considered the future of transportation, Uber has gone through some rough times of late. Not all of it is due to the brash attitude of their CEO, but several big dips can be directly linked to his personal brand.
The bad news for Uber started with the Taxi Strike in New York in January, during which Uber was accused of breaking the strike. Kalanick’s handling of the situation was deemed tepid at first and too late later. Then there was the now infamous video of Kalanick arguing with one of his drivers at the end of a trip. After debating falling share prices, Kalanick said “Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else.” This wasn’t the first instance of Kalanick’s attitude having a negative impact on the brand, but it was the most pointed. The company culture has been equally toxic according to almost all reports from both investors and current and former employees.
The impact of all this bad news and the negative culture? It’s hard to know for sure since Uber hasn’t yet held their IPO, but private stock prices have dropped by about 15% with company valuation sitting at about $50 billion, down from $60 billion in January, and one valuation as high as $70 billion in February.
The case of Donald Sterling, former owner of the Clippers, follows a similar line. The embattled former owner was mired in scandal in 2014 due to racist comments caught on tape, ultimately leading to a major fine and nearly being removed from ownership, all but forcing the eventual sale to Steve Ballmer, former CEO of Microsoft. While none of this impacted the eventual sale price of the team ($2 billion – a record at the time), the teams’ ticket sales and team morale were severely damaged.
At the end of the day, a company will succeed on the merits of its products, employees, and ability to innovate and try new things. The leaders of these companies have a hand in all of this, and the culture they bring to the company is a major part of their personal brand. For those that excel at building something bigger than themselves, that means the sky is the limit. For those who cannot get out of their own way, it can have a significant, negative impact.