His vainglorious $44bn takeover backfired on investors, employees, users – and the world’s richest man himself.
“He has no clothes on!” shouted the little boy, pointing to the emperor, and what everyone in the crowd had thought, they began to say among themselves. Then again, he was just a little boy, and they were grown-ups, and the emperor was a really important guy, so they whooped and cheered, because just like the emperor they were vacuous and greedy and not half as intelligent as they made out.
That’s the part of the story most people forget. Contemporary retellings end with the monarch humiliated, scrambling to cover his nudity before the laughing public, but that’s not what Hans Christian Andersen wrote. In fact the procession continues, and the lords-in-waiting try harder than ever to pretend they are bearing their emperor’s magnificent train.
This is very much what seems to be happening with Elon Musk, who remains the world’s richest man despite the wealth of evidence of his wayward decision-making, short-sightedness and erratic public behaviour. There remain those who think Musk is playing an online persona when he appears to endorse the ravings of a Nazi apologist, or to offer to inseminate Taylor Swift, or to ponder that “no one is even trying to assassinate Biden/Kamala” – and that this is part of a four-dimensional chess game in which only he, the mage of the markets, understands the rules. But the Musk presented in Kate Conger and Ryan Mac’s account of the Twitter takeover, Character Limit, is as thick as a carpenter’s thumb and nothing like as useful.
To be fair, no one emerges from this account of the Twitter/X debacle looking serious. Jack Dorsey, one of Twitter’s founders, established himself as its visionary CEO but seems to have become distracted; in meetings, to which he would dial in from Hawaii or French Polynesia, he would reportedly lecture his colleagues on the need to invest in Bitcoin or drink salted water.
In November 2021 Dorsey decided to step down, but installed his own choice of successor – a reliably terrible idea, as organisations from General Electric to Manchester United have discovered. Parag Agrawal, a gifted engineer who had until that time managed a grand total of 40 fellow engineers, became responsible for an organisation with more than 7,000 employees and a backlog of problems that Dorsey had never managed to solve.
Most pressing among these was content moderation. In October 2020 Twitter had made a serious misstep in blocking links to a New York Post story on the contents of a laptop found to belong to Hunter Biden. Executives had decided that the story should be restricted because it came from hacked personal data, but there was clearly an element of bias – a month before the presidential election – against the right-wing Post. This gave Republicans a credible basis for much more speculative claims that they were being “shadow banned” by left-wing social media platforms.
Musk had been building his own thoughts on who should have, as the Twitter execs called it, “freedom of reach”. He despised journalists; his long history of lawsuits includes libel actions against the BBC’s Top Gear and the New York Times for negative reviews of Tesla cars. As one of Twitter’s most high-profile accounts, he detested the system of giving reporters a blue tick – an accolade he thought should only apply to the truly important, or at least to paying customers.
Having quietly built up a large shareholding in Twitter, Musk launched a takeover bid funded by private investors such as the Saudi prince Alwaleed bin Talal, the cryptocurrency exchange Binance (which would later be convicted in the US of breaching money laundering regulations and sanctions) and Larry Ellison, a close associate of Benjamin Netanyahu. These people doubtless saw political or regulatory potential in investing in world’s most influential social media platform. The banks who supported Musk have no such excuse.
If you think the people running a publicly traded company are clowns and that you could run it better, all you need to do is offer them enough money and the company’s board, which has a fiduciary duty to its shareholders, has to sell it to you, even if they hate you. You will, however, need to raise the money (even the world’s richest man doesn’t have a liquid $44bn), and for that you need a bank. Banks routinely finance takeover deals in the expectation that the new owner will increase revenues, and they will be able to sell the company’s debt on at a profit. In return, they typically ask for a detailed and credible account of how you will turn the target company around.
At the time of the Twitter deal, Musk had little experience in advertising (in 2019 he tweeted: “I hate advertising”), nor had he – or anyone else – shown that the general public would pay to use social media. All the same, some of the world’s biggest banks accepted that he would more than quintuple Twitter’s revenue from ads and subscriptions, from $5bn to $26.4bn by 2028. They believed him, it seems, because he was Elon Musk.
According to Conger and Mac, on the night Musk completed his acquisition of Twitter he demanded his first big idea for the platform – that users should be able to scroll the feed without logging in – be implemented. Twitter had already tested this idea and found that it allowed spammers and bots access to the platform. It didn’t work. Nevertheless, it was to be live by the following morning.
Musk then brought in two of his cousins, James and Andrew Musk, to oversee engineering teams. Software engineers were told their code would be reviewed, unusually, on paper. Privacy officers panicked as thousands of sheets, filled with the company’s intellectual property and its users’ personal data, were printed out and carried around the building. Shredders were hastily bought and the engineers had to line up, watched by security guards, to destroy the pages.
The cousins were not the only family members involved. Meetings with some of the company’s biggest advertisers were attended by Musk’s mother and a music producer who uses the name BloodPop. Advertisers rarely challenged Musk in person, but ad spending – which had fallen in 2022 as clients worried their products could be shown next to scenes from the invasion of Ukraine – dropped off still further.
Source : https://www.newstatesman.com/culture/books/2024/09/how-elon-musk-killed-twitter