Bye-bye corporate conglomerates. Hello personal conglomerates.

Aerospace, energy, healthcare, mobility, and media. Thirty years ago, we’d be talking about General Electric. Today, we’re talking about Elon Musk. He’s the CEO of Tesla, xAI, and SpaceX, which also owns the telecoms company Starlink. He owns the social media platform X. He’s developing neural implants and underground tunnels. He’s put at least $10 million behind fertility research. 

Musk also appears to be merging several of these ventures into one conglomerate.

Musk has frequently been likened to Henry Ford. A more apt comparison might be to John D. Rockefeller or Jack Welch, who took GE from an ailing industrial company into a sprawling conglomerate.

The Welch comparison could turn out to be particularly valid if Musk follows through on rumors that he’s trying to merge some combination of SpaceX, xAI and Tesla.

The similarities aren’t all encompassing, of course. GE was a company, and Musk is a person. But the distinction can get a bit blurry in an era when his net worth eclipses the market cap of 97% of the S&P 500. In fact, Musk’s net worth is approaching $800 billion, almost as much as GE at its peak when adjusted for inflation. 

At its height, GE was often inseparable from its chairman, Jack Welch.

Musk, the individual, captivates many of his peers, just like Welch did. Executives today talk of being “hardcore” and espouse “first-principles thinking,” just like CEOs of the 1980s sought to emulate Welch through “accretive” mergers and mass layoffs.

Today, Musk’s empire spans Tesla, SpaceX, xAI (including with X), Neuralink, and The Boring Company, all companies with very different goals. Sure, Teslas drive through The Boring Company’s holes, xAI’s Grok is available in the automaker’s vehicles, and Tesla has supplied its Megapack batteries to xAI’s data centers. But apart from sharing Musk’s ownership or leadership, they’ve had limited interaction with each other until recently, when Tesla and SpaceX separately invested in xAI.

The everything company

At one time, not so long ago, GE was the world’s most valuable company, with divisions that made light bulbs, jet engines, home appliances, X-ray and ultrasound machines, steam turbines, locomotives, and television shows, among dozens of others. 

When Welch took the helm of GE in 1981, he inherited a company adrift, having lost a fifth of its market cap in the preceding decade. His first move was to trim headcount. In fact, he laid off so many employees — more than 100,000 in his first few years — that he became known as “Neutron Jack,” an allusion to the neutron bomb, which eliminates people while leaving buildings intact.

With the savings, Welch went out and acquired company after company. Many of them manufactured stuff, similar to GE’s existing businesses. But some, like NBC, which Welch bought in 1986, did not. That one was added to the portfolio to expand the company’s influence. (Sound familiar?)

During his tenure as chairman of GE, Welch was revered for his management abilities, with rival CEOs emulating his management style. The company’s management training program was put on the same pedestal as top business schools, and several of his proteges went on to run Fortune 500 companies themselves. Through a relentless series of layoffs and acquisitions, Welch had turned GE into a money printing machine. The company grew from $14 billion when he took over to over $400 billion when he left in 2001. Shareholder dividends only went up.

But Welch’s approach wasn’t ironclad. In 2001, his last year at GE, the company’s share price declined. By the time the 2008 financial crisis hit, it was clear that the company’s conglomerate structure was hiding some grievous flaws. 

Profits from GE Capital were used to paper over poor performance in other divisions. When it became clear that GE Capital was deep into questionable financial instruments, fractures in the business model widened. GE Capital was ultimately bailed out by the federal government to the tune of $139 billion, but the shine was off. Five years ago, GE announced that it would split itself into three separate companies. The conglomerate was no more.

Aside from Welch, Musk might have another comparison a bit farther back in history, before GE became the prototypical conglomerate. “I think it’s much more of a robber baron story than a GE conglomerate story,” David Yoffie, professor at Harvard Business School, told TechCrunch. 

Gilded Age CEO

In the Gilded Age, he said, people like J.P. Morgan and John D. Rockefeller controlled large, powerful companies that built new industries like railroads and oil companies. They controlled those firms either directly or through board seats they influenced, and they could mix and match companies as they pleased.

“I think that’s much more the type of approach that Elon is taking,” Yoffie said. “It’s much more about ego, market power, and trying to be the kingmaker.”

Much of the robber barons’ power came from two sources: their tremendous wealth and the lack of regulation at the time.

Wealth disparities have grown similarly large in recent years. John D. Rockefeller’s wealth was equal to a percentage point or two of the United States’ total GDP, about the same as Musk’s today. 

“What’s different, of course, is that there was no regulatory framework whatsoever during the period of the Gilded Age,” Yoffie said. “Today, we obviously live in a much more heavily regulated world, but we’re also at the moment living in a world in which regulation is getting pulled back and therefore is less and less of a constraint.”

What ultimately happens to Musk and his empire will depend both on the direction he decides to take things — to merge his companies or keep them separate — and how society responds to his growing power. Musk, like his Gilded Age predecessors, has been attempting to put his thumb on the scales, spending more than $300 million trying to influence elections in the U.S. and abroad.

If Musk ends up merging one or more of his companies, he’ll end up with a true conglomerate, something that’s not in vogue today. Conglomerates in the U.S. emerged as a way for investors to hedge risk by buying shares in one company that has businesses that are counter-cyclical, Yoffie said. If one division hits a rough patch, others can pick up the slack to keep revenue and profit smooth.

“Most of that strategy and approach was debunked in subsequent decades,” he said. Investors tend to do better when they buy shares in more specialized companies, which are able to operate more efficiently. Conglomerates also make it difficult to disentangle the different businesses to accurately determine their value. “It’s well known in finance that there’s a conglomerate discount,” Yoffie said.

Merger talk aside, the biggest constraint on Musk’s companies might be regulation, which is ultimately driven by public opinion. The tycoons of the late 19^th and early 20^th centuries found their power ultimately checked by a wave of new regulations introduced in the Progressive Era. Musk has a knack for embracing visions of the future that captivate people’s imaginations and translating them into business plans. The question is, how long will he be able to keep it up?