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Elon Musk likes to vary his sense of humor. Tesla boss’s new U.S. government slimming commission, authorized by President-elect Donald Trump, shares a novel Shiba Inu-themed cryptocurrency acronym. But the Department of Government Efficiency (Doge) may finally have some serious questions to answer. Is it possible to harvest and grow at the same time?
Companies usually prioritize one over the other. Leaders tend to focus on increasing revenue in good times and increasing profit margins in times of poor growth. Supporters of software companies talk about the “Rule of 40” to describe the search for businesses where revenue growth and EBITDA margins add up to 40. This means that the larger one is, the less the other tends to be.
Across the U.S. industrial landscape, companies are shifting from growth mode to cost-cutting mode in response to the outlook. Nike and Walt Disney are among the companies that have trimmed the fat. Semiconductor maker Intel and aerospace giant Boeing are seeing sharp declines in sales growth, and both companies are cutting staff by double-digit percentages to protect profits.
Some Silicon Valley executives are taking a different approach. Facebook owner Meta Platforms has labeled 2023 the “year of efficiency” as President Mark Zuckerberg cuts jobs and loses headroom even as revenue continues to rise. Google’s parent company Alphabet is also undergoing a “perpetual redesign” of its cost base, and new finance chief Anat Ashkenazi wants to take this a little further.
Mr. Musk’s own empire suggests that growth and frugality can go hand in hand. Last month, Tesla achieved its lowest cost per vehicle ever after undergoing a restructuring. These reductions could lead to increased income. If President Trump moves forward with his proposal to end subsidies for electric car buyers, it would unfairly destroy Tesla’s unprofitable competitors. Musk has already called for an end to subsidies in “all industries.”
Lawsuits can be filed at any time to cut off dead branches in business and bureaucracy. Mr. Musk has in the past encouraged Tesla employees to directly report waste and inefficiencies. Google launched Simplicity Sprints a few years ago in a similar vein. Freeing up resources in one place means they can be spent elsewhere, whether it’s developing humanoid robots or colonizing Mars.
There’s a big difference between cutting inefficient layers and slicing muscle. And the economy is not the country. Doge remains a high-stakes experiment with opaque authority, and it’s unclear whether Musk will be an efficiencyist or an iconoclast. Still, if President Trump wants new thinking about America’s growth and spending tradeoffs, the world of tech billionaires is a good place to look.
john.foley@ft.com
