I really do think all the Elon/Twitter stuff is best understood as a lark: "Wouldn't it be crazy if I bought a bunch of Twitter stock?" It's always helpful to understand Elon as fundamentally a Reddit guy, and for him buying 9.2% of Twitter and then tweeting a bunch of dumb shit about Twitter and then eventually buying the whole thing is the billionaire version of ordering a left-meat-only pizza. At the end of the day he's a guy messing around with an online system to see if he can get any funny posts out of it.
There was an old tweet I can't find that went something like "It's wild how I can just type something in this box that will absolutely ruin my life." This is obviously not the case for Elon, but I do think it points to the idea that Elon's experience of the Twitter product is unique from every other user's (with the exception of maybe Donald Trump.)
When Elon types things in the box, stuff happens in the real world. Sometimes that stuff is predictable (crypto prices go up or down), other times it is less expected (he gets to host SNL?) That seems like a fun game, and I think you can view a lot of his pre-stock purchase Twitter behavior over the past six months as being in line with how a speed-runner might operate, experimenting what he can type in the box to see if he can make the game do something interesting or unexpected. To carry this metaphor further, buying a bunch of stock, pretending to take a board seat and then purchasing the company is something like modding: growing bored of testing the boundaries of the vanilla game, he's now playing with how that game works if he starts messing around with the system files. So far a bunch of really interesting stuff (to him, anyway) has happened!
he fixes twitter? great! he kills twitter? great! nothing much changes but every other journalist i love and/or respect still finally talks themselves into writing that unreadable but nonetheless appreciated "why i'm finally leaving twitter" personal essay and following through? great! i support this transaction!!
1) I think it's a little weird everyone is treating this as a done deal. I'm not saying it's definitely a stunt, but he backs out of plans and partnerships constantly, even halfway through.
2) To the extent he's got a real motivation beyond receiving attention, I think you have to take personal vendettas seriously. He's clearly let his preoccupation with Tesla's short-sellers affect his decisions (though it's hard to argue he's done anything "wrong" given that 270 number, Jesus). It doesn't seem outrageous to me that being able to roll out his fantasy ban list is worth a few bil in the calculus.
3) In some sense he's a perfect person for the job because his management style closely matches the vein of power users' complaints: rabid focus on bullshit minutiae. It's hard to imagine a CEO who would be more receptive to taking ideas like "don't let eggs reply to me" seriously.
$12.5B of the $46.5B Twitter purchase is being financed by a loan against Elon's Tesla shares. His interest rate is SOFR + 3% on the loan (comes out to ~4% annually currently). So he has to pay $500 million per year in *cash* as interest just to keep his loan. There's also an additional $13B in bank loans (these will be on Twitter's balance sheet not Elon's) at a roughly 5.5% interest rate. Ballpark $700 - $800 mill.
Keep in mind Twitter is cash flow negative before debt (they have huge infrastructure expenses). This is an LBO (leveraged buyout) btw.. I'm guessing Elon will help run/fix Twitter up for 3-5 years then IPO . Remaining $21B in cash probably coming from Elon + friends.
If he backs out he has to pay over $1 billion as a breakup fee.
To be clear, you're saying my first point is wrong (it's not a stunt/he can't back out) because he's already put his money where his mouth is? If so, I'd believe you!
But it's still weird to me that the reporting isn't framed more around his history of lying or changing his mind about stuff (e.g. "Here's how we know that Elon Musk is ACTUALLY serious about buying Twitter"). He's already lied about securing funding to take a company private!
Taking Twitter private is the only way to solve the platform's bot problem. What do you think happens if Twitter deletes 2/3rds of their DAU overnight while being a public company? They'd have to report those numbers and the stock would enter freefall and possibly drag a chunk of the S&P 500 with it.
Remember the article you wrote for NY Mag "How Much of the Internet Is Fake? Turns Out, a Lot of It, Actually."? It's only gotten worse.
Great point about Twitter being TSLA's ad-platform. Don't know what's going to happen moderation-wise, but I deactivated based on his hostility to unions, including expressing it on Twitter. I'm always pro-worker, and I sense some ominous possibilities beyond just 'rich boy, new toy'. #litmustest
{finally gets around to this in the flood of Tuesday substacks}
"To be clear, I don’t think this is benevolent; I think Twitter is bad and transformation would be welcome, if only because it might open new horizons of possibility."
Yep; completely agree with you.
"Look, I’m not saying that he’s making a wise business decision, here."
I'm inclined to think he'll wind up bailing in such a way as to wind up not losing too much money. That's the game he's been playing with his bitcoin holdings and the like. He might blunder into disaster though, but it'll be by accident. He'll try to make things better and make it worse.
Basic point is that the main 'free speech' platform/protocol (in the various forms it has existed on the internet across time) has lots of opponents and few allies; well-off authoritarian-leaning people really hate the idea of those people [insert identity here] talking among themselves, and worse, many of the people who want to talk among themselves don't want those *other* people [insert identity here] talking among themselves. (Encrypted chatting platforms are proliferating for a reason.) Likewise, many people don't want to be insulted by anonymous people but they don't want to be out and proud themselves (frequently for good reason) and here we go around the mulberry bush.
Basic speech rights (liberalism) are unpopular with most people, but they'd hate to give it up. Elon's just getting attention (and getting paid for it).
I really do think all the Elon/Twitter stuff is best understood as a lark: "Wouldn't it be crazy if I bought a bunch of Twitter stock?" It's always helpful to understand Elon as fundamentally a Reddit guy, and for him buying 9.2% of Twitter and then tweeting a bunch of dumb shit about Twitter and then eventually buying the whole thing is the billionaire version of ordering a left-meat-only pizza. At the end of the day he's a guy messing around with an online system to see if he can get any funny posts out of it.
There was an old tweet I can't find that went something like "It's wild how I can just type something in this box that will absolutely ruin my life." This is obviously not the case for Elon, but I do think it points to the idea that Elon's experience of the Twitter product is unique from every other user's (with the exception of maybe Donald Trump.)
When Elon types things in the box, stuff happens in the real world. Sometimes that stuff is predictable (crypto prices go up or down), other times it is less expected (he gets to host SNL?) That seems like a fun game, and I think you can view a lot of his pre-stock purchase Twitter behavior over the past six months as being in line with how a speed-runner might operate, experimenting what he can type in the box to see if he can make the game do something interesting or unexpected. To carry this metaphor further, buying a bunch of stock, pretending to take a board seat and then purchasing the company is something like modding: growing bored of testing the boundaries of the vanilla game, he's now playing with how that game works if he starts messing around with the system files. So far a bunch of really interesting stuff (to him, anyway) has happened!
Great comment, great post Max.
he fixes twitter? great! he kills twitter? great! nothing much changes but every other journalist i love and/or respect still finally talks themselves into writing that unreadable but nonetheless appreciated "why i'm finally leaving twitter" personal essay and following through? great! i support this transaction!!
A couple thoughts:
1) I think it's a little weird everyone is treating this as a done deal. I'm not saying it's definitely a stunt, but he backs out of plans and partnerships constantly, even halfway through.
2) To the extent he's got a real motivation beyond receiving attention, I think you have to take personal vendettas seriously. He's clearly let his preoccupation with Tesla's short-sellers affect his decisions (though it's hard to argue he's done anything "wrong" given that 270 number, Jesus). It doesn't seem outrageous to me that being able to roll out his fantasy ban list is worth a few bil in the calculus.
3) In some sense he's a perfect person for the job because his management style closely matches the vein of power users' complaints: rabid focus on bullshit minutiae. It's hard to imagine a CEO who would be more receptive to taking ideas like "don't let eggs reply to me" seriously.
M&A banker here, a lot of what you wrote is completely incorrect.
Just circling back here to point out that I was right lol
like what?
$12.5B of the $46.5B Twitter purchase is being financed by a loan against Elon's Tesla shares. His interest rate is SOFR + 3% on the loan (comes out to ~4% annually currently). So he has to pay $500 million per year in *cash* as interest just to keep his loan. There's also an additional $13B in bank loans (these will be on Twitter's balance sheet not Elon's) at a roughly 5.5% interest rate. Ballpark $700 - $800 mill.
Keep in mind Twitter is cash flow negative before debt (they have huge infrastructure expenses). This is an LBO (leveraged buyout) btw.. I'm guessing Elon will help run/fix Twitter up for 3-5 years then IPO . Remaining $21B in cash probably coming from Elon + friends.
If he backs out he has to pay over $1 billion as a breakup fee.
To be clear, you're saying my first point is wrong (it's not a stunt/he can't back out) because he's already put his money where his mouth is? If so, I'd believe you!
But it's still weird to me that the reporting isn't framed more around his history of lying or changing his mind about stuff (e.g. "Here's how we know that Elon Musk is ACTUALLY serious about buying Twitter"). He's already lied about securing funding to take a company private!
I think Elon Musk just wishes to be Peter Thiel when he grows up.
Taking Twitter private is the only way to solve the platform's bot problem. What do you think happens if Twitter deletes 2/3rds of their DAU overnight while being a public company? They'd have to report those numbers and the stock would enter freefall and possibly drag a chunk of the S&P 500 with it.
Remember the article you wrote for NY Mag "How Much of the Internet Is Fake? Turns Out, a Lot of It, Actually."? It's only gotten worse.
Great point about Twitter being TSLA's ad-platform. Don't know what's going to happen moderation-wise, but I deactivated based on his hostility to unions, including expressing it on Twitter. I'm always pro-worker, and I sense some ominous possibilities beyond just 'rich boy, new toy'. #litmustest
{finally gets around to this in the flood of Tuesday substacks}
"To be clear, I don’t think this is benevolent; I think Twitter is bad and transformation would be welcome, if only because it might open new horizons of possibility."
Yep; completely agree with you.
"Look, I’m not saying that he’s making a wise business decision, here."
I'm inclined to think he'll wind up bailing in such a way as to wind up not losing too much money. That's the game he's been playing with his bitcoin holdings and the like. He might blunder into disaster though, but it'll be by accident. He'll try to make things better and make it worse.
Basic point is that the main 'free speech' platform/protocol (in the various forms it has existed on the internet across time) has lots of opponents and few allies; well-off authoritarian-leaning people really hate the idea of those people [insert identity here] talking among themselves, and worse, many of the people who want to talk among themselves don't want those *other* people [insert identity here] talking among themselves. (Encrypted chatting platforms are proliferating for a reason.) Likewise, many people don't want to be insulted by anonymous people but they don't want to be out and proud themselves (frequently for good reason) and here we go around the mulberry bush.
Basic speech rights (liberalism) are unpopular with most people, but they'd hate to give it up. Elon's just getting attention (and getting paid for it).
elm
great post