<Elon Musk's Twitter Acquisition: The Chaos That Follows>
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Elon Musk’s much-debated $44 billion acquisition of Twitter has finally concluded after a protracted six-month negotiation. His erratic journey with the company saw him oscillate from contemplating starting a rival platform, to acquiring a significant share, joining the board, and then abruptly stepping away from the board to propose a friendly takeover. This eventually morphed into a hostile acquisition attempt, from which he later sought to withdraw, only to ultimately acknowledge the necessity of closing the deal to avoid legal repercussions for himself and his investors.
As the circumstances surrounding the acquisition shifted, it transitioned from a seemingly fail-proof investment in a popular yet struggling social media platform to a scenario more favorable to Twitter. Musk has openly confessed to the media that he and his backers are significantly overvaluing the platform while adopting a "long game" strategy.
Last summer, Musk attempted to back out of the agreement as the situation turned unfavorable, citing Twitter’s alleged failure to reveal the true extent of fake accounts on its platform. This seems ironic given that addressing this issue was one of the key motivations Musk cited for his interest in purchasing the company, alongside his desire to promote “free speech” by reinstating banned accounts and curbing hate speech. Twitter's legal action against him ultimately forced him to proceed with the purchase.
There is a theory that Donald Trump’s presidential campaign served as a long-term publicity stunt for a media venture he wished to launch, and he was caught off guard when he actually won and had to govern for four years. Musk may be experiencing a similar predicament. His initial financial proposal for Twitter seemed advantageous, but with his Tesla stock — the primary collateral for the deal — having decreased by 25% since April, Musk now faces the challenge of making Twitter profitable without relying on government support.
The Billionaire Boy Band
With around 3,300 billionaires globally, most remain unknown to the public. However, a select few have cultivated recognizable personas tied to their wealth, forming what I call the Billionaire Boy Band. Its five members include:
- Bill Gates: the philanthropic one
- Warren Buffet: the pragmatic one
- Yvon Chouinard: the eco-conscious one
- Donald Trump: the astute one
- Elon Musk: the innovative one
These personas are crafted to serve as a buffer against questionable or unethical behavior.
- Gates has a controversial history with Jeffrey Epstein and was involved in a workplace affair.
- Buffett’s company profited from significant staff reductions, creating a tense environment until intervention from President Biden.
- Chouinard turned a significant tax strategy into a public relations narrative about donating Patagonia to combat climate change.
- Trump faced financial challenges before leveraging his television fame to portray himself as a wealthy billionaire while attempting to undermine democracy in the U.S.
Musk’s supporters often liken him to a real-life Tony Stark due to his ventures like Tesla, SpaceX, Hyperloop, and his brain chip initiative. Yet, there are significant differences: Stark was born into wealth and became a self-sacrificing genius; Musk, while also wealthy, achieved his status primarily through acquiring existing companies and claiming credit for others’ achievements, alongside benefiting from government subsidies.
Notably, Musk once lightheartedly proposed donating $6 billion to alleviate world hunger, contingent on a detailed plan from the World Food Programme's chief, David Beasley. When Beasley provided the plan, Musk accused the United Nations of misconduct instead of following through with his promise.
Key points about Musk include:
- He leveraged his wealth to secure a 7% stake in his first successful venture, Zip2, an internet city guide.
- He turned the Zip2 sale into X.com, which struggled until his removal by the board; however, he profited when eBay acquired it as PayPal.
- Musk acquired a position in Tesla by pushing out one of the founders and claiming a founding title, relying heavily on government electric vehicle credits and Bitcoin for financial stability.
- SpaceX was established thanks to the expertise of Gwynne Shotwell and Tom Mueller, with Musk often taking credit for engineering decisions that he merely endorsed.
Musk’s approach has been to skillfully navigate perceptions of his contributions, leaving many to believe he is a self-taught engineer.
However, with the Twitter acquisition, Musk is venturing into uncharted territory.
Symptoms of Chaos
This Twitter acquisition is far from the guaranteed success it once appeared to be before market fluctuations. Musk must now ensure Twitter becomes consistently profitable, and unlike his ventures with SpaceX or Tesla, he lacks access to appealing technology or governmental support.
In recent years, Musk has positioned himself as a figurehead for a disillusioned conservative faction, claiming their voices are suppressed by mainstream media. Yet, if Musk anticipated finding refuge among the alt-right, the financial struggles of Trump's Truth Social may serve as a warning sign. Reports indicate that the platform is facing severe financial difficulties, potentially running out of funds by April.
Consequently, Musk has begun to temper his “free speech absolutism,” even while right-wing media personalities celebrated the completion of the Twitter deal. His initial plan to cut three-quarters of Twitter’s workforce has also faced reconsideration. Nonetheless, his early actions included:
- Dismissing key executives such as CEO Parag Agrawal and CFO Ned Segal.
- Enlisting Tesla engineers to evaluate Twitter’s codebase.
In essence, Musk’s initial moves involved removing experienced management and inviting external engineers to assess Twitter’s product, a decision that raises questions given his lack of engineering expertise.
Musk’s request for Tesla engineers to analyze Twitter's algorithms mirrors a common scenario where individuals seek help from experts despite lacking a clear understanding of the issue at hand.
The future of Twitter remains uncertain. With Musk unexpectedly at risk due to this acquisition, he may need to dial back his overtures to the far right, whose support, as demonstrated by Truth Social, is vocal but financially limited. His options are limited; drastic cuts to the workforce could exacerbate issues with hate speech and violence, further diminishing user engagement and ad revenue. Alternatively, he may need to increase hiring to fulfill his original commitment to address the platform's challenges.
Personally, I harbor little faith in Musk or his wealthy associates to invest in the public good for the long term — or even for their own benefit.
Chris Newman is the founder of Sylvanaqua Farms, Skywoman, Pilikeku Media, and the upcoming Blackbird Poultry Cooperative. Support this work by sharing this article, subscribing to Chris’ Patreon, or contributing to our farm’s mutual aid fund.