Elon Musk is surrounded by yes-men, and it's a recipe for disaster: 'The emperor has no clothes, but everybody's too afraid to tell him'

• Experts told Insider Elon Musk's close business relationships is a "recipe for disaster."
• In November, an early Twitter investor warned that the billionaire is surrounded by "yes men."
• Five experts highlighted some of the difficulties that people face when attempting to  "speak truth to power."

Elon Musk has some of the most powerful relationships in the business world, but experts say his circle of "yes-men" could be his undoing.

"It's the classic scenario where the emperor has no clothes, but everybody's too afraid to tell him," William Klepper, a management professor who teaches an executive leadership course at Columbia Business School, told Insider, referencing an old parable. "It's a very vulnerable position to be in because no one in the CEO ranks is immaculate."

Earlier this month, Musk was booed by the audience at Dave Chappelle's comedy show. At the time, the billionaire said it was "a first for me in real life." Experts told Insider it's not surprising that the second-richest man in the world would be taken aback by public criticism. In his personal life, Musk appears to be surrounded by praise.

In October, a trove of text messages between Musk and some of the biggest names in tech and media showed that the billionaire received a slew of praise for his plans to take Twitter private. The texts included offers to run the company, requests for accounts to be reinstated and relatives to be considered for roles. Angel investor Jason Calacanis offered to "jump on a grande [sic]" for Musk and told the billionaire "you have my sword."

Musk, Calacanis, and Kimbal Musk did not respond to a request for comment from Insider ahead of publication.

'People want to be close to people with that much power'

Rosabeth Moss Kanter, a professor at Harvard Business School and the author of "Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time," said Musk is likely surrounded by a type of "cult."

"People want to be close to people with that much power, which often means your so-called friends are more like followers," Kanter said, pointing to the power dynamics of a relationship with one of the richest men in the world. "The naysayers are out there, but people in power get surrounded by yes-people who never let the naysayers close to them."

Across his companies, Musk also appears to have built up a slew of allies. In November, during a trial over Musk's Tesla compensation package, a shareholder argued that the billionaire has stacked the carmaker's board with some of his closest friends, including his brother Kimbal Musk. Similarly, at Twitter, Musk has also brought in some of his personal associates to assist in the transition.

'A recipe for disaster'

Arthur Boni, a professor of entrepreneurship at Carnegie Mellon University, told Insider that Tesla's board is "a recipe for disaster," but Sabina Nawaz, a CEO coach who has worked with executives at tech companies including Microsoft, said it could also be a positive sign.

"A hallmark of great managers are managers who build loyalty," Nawaz said, declining to comment specifically on Musk. "People will follow them across organizations. Some CEOs use that as a selling point, proof that people want to work with them."

There has to be a balance between maintaining a circle of people you trust versus promoting diverse perspectives, said Ayelet Fishbach, a professor of management at the University of Chicago.

"We often talk about diversity for the sake of equality, but it also just makes business sense," Fishbach said, declining to comment on Musk specifically. "Usually the best people in the room are the people that have different perspectives."

Kanter said a lack of dissenters in his inner circle could put Musk and his companies in a "very perilous situation" and pave the way for a "long losing streak."

What's more, it's not clear Musk has left room for people close to him to provide criticism, Kanter said. In the past, Musk hasn't responded positively to critical feedback. Most recently, the billionaire fired several Twitter employees that corrected him on social media.

'Speak truth to power'

It can be very difficult to "speak truth to power," Nawaz told Insider, saying it's important for CEOs to create "psychologically safe" environments. She said she often coaches executives on how to promote and respond to feedback.

Without room for negative feedback, Nawaz said that workers will either leave a company or "sabotage" it by taking extra days off or working at a lower quality.

Ultimately, as Tesla's stock plummets and Twitter struggles to maintain advertisers, Klepper said if Musk does not find a way to turn the companies around his business associates might be forced to "step up to the plate."

"My general feeling is they [Musk's friends] have put their treasure into his companies because they know they can get money out of it," he said. "The relationship is can you or can't you make me money and as soon as the money is at risk that relationship changes."