When Tesla shareholders approved Elon Musk’s colossal compensation package, worth up to $1 trillion if all performance targets are met, the business world reacted with a mix of disbelief, admiration, and unease. The vote wasn’t remotely close: over 75% of shareholders supported the package, an extraordinary show of confidence in one person’s importance to a company of Tesla’s scale. According to detailed reporting by Reuters, the pay plan includes multiple tranches tied to extremely ambitious long-term milestones in market cap, vehicle production, earnings, robotics, and autonomous-driving deployment, making it the largest compensation package ever proposed for a corporate leader.

Still, the vote revealed something deeper about Tesla’s internal reality: shareholders view the company’s fortunes as inseparable from Musk. AP News noted that many investors consider him “irreplaceable,” quoting one shareholder who said plainly: “Without his relentless drive … there would be no Tesla.” That sentiment explains why an unprecedented package, one that almost stretches the concept of compensation itself, found such overwhelming support.

This phenomenon, where a single individual becomes so central to a company that their absence is unimaginable, lies at the heart of the Superstar Dilemma. While Tesla is an extreme case, the underlying dynamic is common in startups, where resource constraints, founder charisma, and early wins often create a gravitational pull around one “superstar” figure.

Why the superstar becomes a trap

Startups, more than mature companies, are fuelled by the energy and clarity of their leaders. Investors look for ambitious founders who can articulate a direction others can’t yet see. Employees join not because of high salaries, but because the founder seems uniquely equipped to make magic happen. Customers often buy early products because they believe in the story being told.

All of this makes the emergence of a “superstar” figure almost inevitable. A high-performing CTO, a charismatic CEO, a commercially savvy cofounder, someone who becomes the beating heart of the organisation, the person who “makes things happen.” In the short term, this can be extremely productive. It gives the company momentum, aligns the team, and helps define a culture of high standards and clear vision.

But superstar dependency carries within it several structural weaknesses that worsen over time.

The single-point-of-failure problem

When a company relies heavily on one person for technical expertise, fundraising ability, product vision or execution discipline, that dependence becomes a bottleneck. Once the superstar is overworked or unavailable, the company’s velocity slows dramatically. Startup teams frequently discover, too late, that the superstar held a disproportionate amount of institutional knowledge in their head, from supplier relationships to architectural decisions. Once that person steps back or burns out, entire workflows grind to a halt.

The formation of “hero culture.”

Hero culture glorifies extraordinary individual output at the expense of building repeatable systems. It rewards firefighters instead of system designers. In such cultures, the superstar is the default problem-solver for every challenge, while the rest of the organisation orbits around them. This leads to underdeveloped teams, shallow managerial structures, and a general dependence on luck rather than process.

Companies deep in hero culture often take pride in the brilliance of their star, not realising that this pride blinds them to systemic fragility. In those environments, other employees may unconsciously defer to the superstar and stop developing leadership capacity of their own. Over time, talent attrition quietly increases: ambitious people don’t want to work beneath someone they can never surpass or even match.

Governance distortion

When a business becomes so reliant on one figure that investors cannot imagine its survival without them, governance becomes skewed. Boards lose leverage. Oversight becomes softer. Succession planning is ignored. Compensation structures inflate. What happened at Tesla, a pay scheme so large that it is almost philosophical rather than financial, illustrates how far boards may go when they fear losing their superstar. In smaller startups, this dynamic plays out as founders taking on outsized roles, over-promising equity, or resisting shared decision-making, simply because investors and teams are too afraid to upset the balance.

Continuity risk

This is one factor highlighted repeatedly in coverage of Musk’s various responsibilities across Tesla, SpaceX, X, and other ventures. Even a superstar’s attention is finite. If the lynchpin of your business is spread too thin or diverted by competing priorities, execution suffers. Startups often miss this subtle form of risk: the superstar is technically still with the company, but mentally elsewhere.

Superstar dependency shapes market perception

Investors, partners and even customers begin to see the company as an extension of one personality. This can inflate valuations in good times, but it also magnifies volatility. News cycles about the superstar, whether positive or negative, begin to affect the startup’s credibility. A company that cannot separate its identity from an individual loses control of its narrative.

The Tesla example: a mirror for the startup world

Tesla may be enormous, but the psychology behind the shareholder vote mirrors what happens regularly in early-stage businesses.

Shareholders approved the deal largely because they believed Musk was uniquely capable of steering Tesla through its next chapter, especially in scaling production, advancing autonomous driving, and building out robotics infrastructure. The vote was not just about rewarding past performance; it was about securing future allegiance. Investors did the math: losing Musk would be catastrophic, so paying him an unprecedented amount to stick around seemed, to them, pragmatic.

Early-stage investors make similar assessments every day. Many fund the founder, not necessarily the product. They assess whether the person at the top possesses such irreplaceable vision or charisma that the company’s fate is inseparable from theirs. This is not irrational; great founders do drive disproportionate value.

But what Tesla shows, at scale, is the potential extremity of the imbalance. When a figure becomes so central that the company’s survival appears to hinge on them, governance fades into symbolism, compensation inflates to astronomical levels, and the organisation becomes structurally dependent. If a trillion-dollar company can fall into this pattern, how much more easily can a five-person startup?

How to avoid falling into the Superstar Dilemma

Avoiding superstar dependency doesn’t require dismantling the founder’s influence or minimising their strengths. What it requires is building a company where the founder is celebrated but not indispensable, where the vision is strong but not concentrated in a single person, and where the team can operate at full strength even when the star is offline.

The first step is to build and empower a complementary leadership team early. Many founders hire “helpers” instead of genuine leaders. They build a team of executors rather than strategic partners. This creates a fragile structure in which the founder must interface with every decision. Instead, founders should hire leaders who bring their own philosophies, people confident enough to disagree, propose, design and own significant areas of the business.

Next, founders must institutionalise knowledge, not hoard it, something that feels counterintuitive to many early-stage teams. The goal is not to dilute the founder’s brilliance but to make the company robust. Documenting processes, decisions, negotiation histories, long-term strategy assumptions and technical architecture ensures the team can function even when the superstar is not present.

Another essential method is redistributing authority. If all roads lead to the founder, the company’s growth will permanently plateau at the founder’s bandwidth. Delegation is not simply handing off tasks; it’s handing off domains. When leaders are given ownership over product, growth, engineering, operations or talent, they can build sub-systems that scale independently of the founder.

Then there is incentive design. Teams mimic what is rewarded. If incentives privilege one individual over the health of the organisation, superstar culture becomes inevitable. But if incentives reward collective achievement, leadership maturity and cross-functional excellence, the company gradually becomes a network of stars rather than a single point of light. Many startups design equity and bonus structures that unintentionally reinforce dependence on a single figure; thoughtful redesign can mitigate this risk.

One of the most underrated but vital practices is succession planning, something often dismissed as “for big companies.” In reality, succession planning is a resilience strategy. A founder does not need to be planning their exit to plan for continuity. Succession planning means identifying who can step in, who is developing leadership capacity, and how the company would operate during transitions. The very act of asking these questions strengthens the organisation.

Founders should also track their own centrality as a measurable risk factor. If the founder is making a vast majority of decisions, even in areas where others have expertise, that is a sign the company is overly dependent. As the organisation grows, the founder’s involvement should evolve: from operator to strategist, then to architect, then to steward. If a founder is still doing everything at scale, the business is not scaling.

Finally, startups must manage external perception. Communicating depth, not just personality, reassures investors and partners that the company is more than its figurehead. Introducing leaders publicly, sharing decision-making processes, and demonstrating organisational intelligence helps build credibility beyond the superstar.

A final reflection: brilliance and fragility

The lesson from Tesla is not that relying on talented individuals is wrong. On the contrary, exceptional leaders are often the differentiating factor between a startup that thrives and one that fails. But the Tesla vote illuminates the consequences of extreme reliance. A company that cannot imagine itself without its superstar is a company perpetually one decision, one distraction, or one crisis away from instability.

Startups should embrace their visionaries, while also designing their organisations so that the vision survives even when the visionary cannot carry it alone. A resilient company is one where the superstar elevates the team, not replaces it; where systems are strong enough to endure absence; and where success continues not because of one extraordinary individual, but because of the collective strength beneath them.

If Musk’s trillion-dollar package tells us anything, it’s this: brilliance can build empires, but resilience keeps them standing. For founders everywhere, avoiding the Superstar Dilemma may be one of the most important strategic decisions they ever make.

‍

Read - Precedents Thinking: How Founders Can Make Better Decisions by Looking Backward to Move Forward