Twitter’s Elon Musk Problem (Published 2022) (2024)

From The New York Times, I’m Michael Barbaro. This is The Daily.

Last week, when the billionaire entrepreneur Elon Musk made a major investment in Twitter.

It was seen as a chance by the company to turn the business world’s most unpredictable man into an ally. Instead, it has plunged Twitter into a very public drama over its future.

I spoke with my colleague, technology reporter Mike Isaac.

It’s Thursday, April 14.

Mike, what is it about Silicon Valley and corporate drama?

That tends to go together like—

A horse and carriage?

A horse and carriage, yeah.

Speaking of drama, where does this drama begin?

So about two weeks ago, Elon Musk, as you know, the C.E.O. of Tesla, the founder of SpaceX, early PayPal creator, guy who does a million things at once—

And is fantastically wealthy.

Oh, yeah. He also happens to be the richest man in the world. He decides to start buying up a bunch of shares of Twitter, Twitter, the company.

He’s a power user of the service. He’s someone who tweets a lot, if you follow him. He has 80 million plus followers. And so, sort of quietly, without anyone really noticing at least initially, he starts buying up shares of Twitter.

How many shares?

Yeah, not just a few. He buys up millions of shares, basically amassing a sort of private pile that ultimately ends up to about 9.2 percent of outstanding shares in the entire company.

Which is not a typical investment, it’s just not beefing up your stock portfolio. That is a huge investment.

You do not call your e-trade broker to buy up 10 percent of a company. No, he ultimately becomes the company’s largest shareholder through doing this, sort of quietly, basically.

Mhm.

No one really knows about it. Except Twitter, Inc. catches wind and basically is, like, uh oh, this is happening. We need to do something about it.

And why is that an uh oh moment for Twitter. Because the sense is that when he touches a company, it pretty much turns to gold for investors. So why would he not be welcomed by Twitter? Why is Twitter thinking to itself uh oh?

Well, no. I mean, I think that’s fair. I think, you know, look at Elon’s past, right?

The guy revolutionized the electric car industry.

He turned Tesla, the company, into this sort of juggernaut on Wall Street. And—

With SpaceX, he’s literally working with the government to put people into space, to carry payloads into space, commercial space travel, in a way.

Thank you.

The guy is a big thinker. And you could argue that bringing a big thinker might be something that Twitter needs. Maybe after years of criticism that Twitter, the product, has been stagnant or needs an overhaul, maybe Elon Musk is the guy to do it.

And as it happens, Elon does have a bunch of ideas about how to change it. Often he kind of decides to go on Twitter and tweet out those ideas, basically riff on what the product should be or might look like at some point. There’s this bandied about idea of a Twitter edit button, something that doesn’t exist right now. But if they did create it, it could look like maybe going back and changing your tweet if you misspelled something in it.

He also has poked at this idea of making Twitter open source and creating what he calls decentralized version of Twitter. The idea is essentially to let users kind of moderate themselves and decide what kind of Twitter they want to see, what version of the network they want to participate in.

And that’s generally kind of the way Elon views the world. It’s about giving power back to the users, kind of this free speech should flourish everywhere online whatever that might mean to you or me, and letting us choose our version of Twitter rather than Twitter, Inc., you know, someone at the top.

So basically, they see a successful businessman who has a lot of ideas on how to change and innovate the product. And he has a track record of turning big ideas into potentially world-changing businesses. And perhaps that’s not necessarily a bad thing if he’s suddenly more interested in getting involved.

Mhm.

On the other hand, Elon is Elon.

Hm.

With Elon Musk comes a lot of baggage, I guess is what I would say.

So the guy is famously mercurial. He decides to do what he wants when he wants to do it, no matter what the consequences, often.

What are some examples?

So one of the most famous cases, probably, a few years back—

He tweeted that he was considering taking his company private at a stock price of $420.

Initially, it seemed like a joke. $420 is what? It’s the pot number, right? So, like, everyone is—

Oh, oh, like, you don’t know that.

I’m sorry. That’s what I’ve been told. So everyone’s, like, ha, ha, ha. But—

—you know, it actually got him in a lot of trouble with the S.E.C. and ended up being a full investigation.

It turns out he had to get a slap on the wrist and deal with a whole lot of regulatory issues.

And that’s the thing with him. You kind of never know what you’re going to get. If this dude who decides to have fun or have a joke, it has repercussions. And that can have repercussions for your multibillion dollar company that is traded publicly, that has stock prices that are connected to people’s 401(k)s or portfolios.

Right.

I think the other thing to think about is how some people think that Elon Musk sometimes uses Twitter in actually a pretty dangerous way.

And what do you mean by that?

He’ll get into these sort of random scraps with people online. I mean, Twitter fights are not uncommon. But when you’re fighting against Elon Musk, it can end up with his sort of legions of fans kind of being sicced on different people.

For example, a few years back, there was a bunch of kids trapped in a cave in Thailand, I believe.

Right. I remember.

And there was a guy who was a cave diver. He was trying to go and sort of save these kids. The story becomes national news.

Elon Musk gets involved. He says he’s going to send a submarine. The cave diver guy essentially says—

Musk’s efforts weren’t that helpful.

And so—

Musk decides to lash back out at the guy by calling him, essentially, a pedophile, with no proof, on Twitter. Which is crazy. And once he says that, his millions of followers who adore Elon sort of can go after the cave diving guy, who is an innocent bystander throughout this whole thing, because Elon decided to get mad at him.

So essentially, he acts like a troll. And he happens to be one of the world’s most powerful executives?

I think troll is a perfect way to describe him. I think he probably would acknowledge that himself. And half the time you don’t know if he’s serious or not, which is potentially dangerous to have at the helm of a public company.

Mhm.

I think the other thing Twitter is thinking about at this point, too, is not just whether the guy is going to troll people online or troll the company, but the world’s richest man is buying up a significant amount of your stock all at once. And they’re thinking, is this the grounds for an eventual takeover? You have to remember that Elon, years ago, was not the original C.E.O. of Tesla. He came in later after he initiated a takeover of that company, not exactly a welcome one.

And folks can argue that it turned out well. But it was not a peaceful transition, necessarily. So if you’re the C.E.O. of Twitter, and you’re looking at Elon Musk, who has a history of sort of coming on very aggressively, and he’s buying up a ton of your stock, you’re worried, you know? What’s Elon going to do? So—

Right.

—I think that’s the other thing that really raised their eyebrows.

Right. So that’s the story behind the uh oh. For all those reasons you just described, Twitter has very real reservations about having Elon Musk become a major stakeholder in their company.

Yeah. 100 percent. I think they are genuinely torn. You know, Jack Dorsey, co-founder of Twitter, still on the board, actually loves Elon. Has said, in a sort of public bromance moment, that he loves Elon. And he’s a good heart and very smart.

And so they do appreciate the feedback from this guy. But at the same time, his very aggressive come on gives them all sort of a moment of pause. And they have to figure out what to do, essentially.

Right. So what does Twitter do?

Yeah. So Twitter starts seeing this happening. And the new C.E.O., Parag Agrawal, who’s only been there as the head of the company for a few months, he has to be, like, all right, well, what are we going to do to remedy this situation?

Basically, they hatched this sort of plan. They approach Elon. They say, hey, noticed you’re buying up a lot of our stock. Can we help you with anything? From what I’ve been able to report so far, it starts out pretty friendly, you know?

And the idea they have essentially is to, I guess I would say, co-opt the chaos agent of Elon, right? Bring him on to the board of directors. Say, we’d love to have your input, we’d love for you to be a part of this, we’d love to get you at the top of the company, or at least on the board, and take your advice. And everything will be great. And we don’t have to worry about a hostile takeover.

Right. They’re going to keep their friends close and their Elon Musks closer.

Exactly. But the sort of quid pro quo here is, as a condition of you coming onto the board, we would also love it if you would sign this agreement that you’re not going to buy more than x amount of stock to amass a controlling stake and be able to push us around in a big way. You’re not going to initiate a hostile takeover at some point.

And part of the agreement of joining a board in the first place comes with a lot of restrictions. Or, like, the assumption that you won’t, say, tweet material things that might harm the wellbeing of the company, or the stock price of the company, or just say things off the cuff that can actually have a very big impact about the company that you’re currently sitting on the board of.

Right.

And so these are the sort of peacemaking terms that we’d like, as a sign of good faith, for you to come onto our board.

Interesting. And the thinking here is we’ll put some guardrails around you. We’ll bring you inside the tent. You won’t take us over. We’ll take your advice. This will all work out just fine.

Yeah. And to Twitter’s sort of surprise and delight, Elon agrees.

And so they announce it to the world, that they’ve come to an agreement. Elon is going to join the board.

Everything is going to end up happily ever after or whatever.

And it actually does seem like it might be going OK. You know, Parag Agrawal, the C.E.O. tweets out—

Happy to have Elon on board. And—

Elon does a little tweet saying—

You know, can’t wait to work with the C.E.O. of Twitter and just sort of, like, everyone’s playing very nicely. Wall Street kind of goes wild.

The stock price surges some 27 percent in one day.

Elon starts dripping out little sort of ideas for product stuff on Twitter.

Initially, at least, everyone’s kind of, like, whoa, this might actually work out for us. At least everyone inside of Twitter HQ, at the top, is saying this might actually be a good thing.

Right. The great co-opting seems to have succeeded.

Yeah. I mean, initially it seemed like everything was going great. But then it all started to fall apart.

We’ll be right back.

So Mike how did things start to fall apart here?

So a few days later, after everything has sort of quieted down, people are starting to accept, hey, Elon is coming on the board, this might work out, Saturday morning comes around. And Elon starts the morning off with a tweet.

He basically posts is Twitter dying?

Hm.

And then he goes on to list these examples of some of the most popular people on the service.

Which is something people might not have noticed until he brought it up in the first place, you know?

Right. I don’t think I thought about it.

Right. I mean, I don’t obsessively follow Bieber’s account anymore.

He then does not stop. He has been posting a whole lot trying to poll users about Twitter. One question he put was delete the W in Twitter?

And then he goes even further. He continues by saying, should we convert Twitter’s San Francisco headquarters to a homeless shelter, since no one shows up anyway?

Which is pretty extreme, but also, people are in the middle of a pandemic. So that’s a weird thing to tweet.

Right. And none of these communications are at all in line with the legal and financial responsibilities of a member of a board of directors of a company. I mean, at all.

Yeah. I mean, it doesn’t make sense. But also it doesn’t happen. Right? That’s just something you don’t expect.

Right. And what is the response inside Twitter?

So it’s an immediate five alarm fire inside of Twitter. Executives start to realize clearly their plan to co-opt Elon and put him on the board and sort of calm him down is not working, as you saw by all his tweets that day. And they have to figure out what they’re going to do next.

I mean, I think this is basically what Twitter feared at the outset and why they wanted him to come inside the corporate tent and be governed by all these rules of serving on a board.

Yeah. 100 percent. I think those initial worries that they had were essentially justified by Elon going back to being Elon. And so on Sunday, Twitter C.E.O. has another announcement. And that is that Elon Musk has decided not to join the company’s board of directors.

And it’s not that Twitter doesn’t want him on the board. It’s the other way around? Elon Musk is rejecting Twitter? He is deciding he doesn’t want to be on their board?

I mean, it certainly appears that way, at least in the way that they phrased it.

But why do we think that would be? I mean, why would he suddenly not want to be on the board?

I think at some point over the weekend, Elon essentially realized that agreeing to be on the board of a company comes with a lot more strings than he wants to be attached, right? One of the agreements is acting in the best interest of the company’s shareholders. It’s called fiduciary responsibility, you know?

Right.

You can’t lob criticisms, like grenades, at the company when you feel like it on a Saturday because you’re bored. You know? And I think Elon doesn’t like being put in a box that way. He almost preferred his initial positioning, which was I’m already a guy with tens of millions of followers. I’m already amassing a good amount of stock. You have to listen to me, anyway. Why would I sort of feel handcuffed or silenced on the board of directors when I can do it from the outside? And I think he—

Right.

—he figured that out and decided nope, I’m out. I don’t want to do it.

Mhm. So what should we take from all this? Because on the one hand, this may seem like the simple story of a renegade businessman who doesn’t want to be penned in by the rules. But I’m now remembering that you told us that part of the deal he signed onto was that he wouldn’t buy more and more of Twitter’s stock and therefore couldn’t take it over. So if he backs out of this deal, should we also assume that he’s now free and perhaps desires to keep taking over more and more of Twitter?

That is a correct assumption. All bets are off essentially at this point. That agreement that he made, which is called a standstill agreement to not buy more stock, no longer is applicable.

On Monday, the very next day after the announcement, there was another filing. Basically says Mr. Musk no longer has to abide by the previous agreement. He can buy more stock if he wishes to. He can initiate a hostile takeover of the company if he wishes to.

Wow.

My favorite line was “he can change his plans at any time if he so wishes,” which is probably the most Elon thing ever.

Which was true before.

Yeah, exactly.

Which was true before that statement came out.

That’s exactly right.

So now we’re back to this big cosmic question, which is what would it look like if Elon Musk were to try to take over Twitter? Because Twitter is a big deal.

It’s easy to dismiss Twitter. It’s an addiction. It’s a place people go to talk trash about each other.

But it’s also one of the world’s great town squares. It’s where revolutions, the Arab Spring, have been amplified and spread. It’s where conspiracy theories and extremism have festered. It’s an important part of the global conversation.

Yeah, that’s exactly right. And I think the big question mark for a lot of folks is what does he want to do with it, you know? He has, for a long time, said he thinks there needs to be big changes.

He thinks that, for example, Twitter might restrict certain types of speech that he feels is really important to have out there. It’s a similar sort of refrain to a lot of conservatives feel like big tech is oppressing conservative speech on the platform, or tamping down what should be louder voices. And I think Elon Musk has a lot in common with that point of view.

On the other hand, folks believe that Twitter needs even more reining in. And it’s a really toxic place a lot of the time for a lot of people who use the service.

In fact, that’s why there’s so much talk about regulating Twitter, as well as its fellow social media platforms.

Facebook, TikTok, all of them, of course. And that version is sort of in line with the way Twitter has been going over the past few years. They’ve been building more tools to handle harassment. They’ve been amping up, along with Facebook, their moderation abilities and trying to cut down on all of that misinformation and vitriol that you’ve been referencing. And so it’s almost, like, two different paths that people are looking at and wondering which one are we going to go down.

And I think the thing that folks are left with now is the question of, what is he going to do next. And that’s sort of always been the question around Elon. But I think we have to revert to what we know about Elon. The guy goes into every industry he wants to all the way. He’s not a 50 percent type of guy.

Right.

Whether that’s pushing into the space industry, whether it’s electrifying cars, whether it’s changing how people pay for stuff online with PayPal, he’s really just gone all the way and transformed a lot of these industries. And so he has a history of doing this.

But I think Twitter is kind of different. It’s not a hardware company. It’s a communications service.

Right.

And even if your mom or your neighbor down the street isn’t on Twitter, they’re somehow being touched by what goes on the service. All of the stuff that happens on Twitter tends to leak out across other media, whether it’s TV, Facebook, or the front page of The New York Times.

Indeed.

So I think it really does matter with his intentions for this service. And whatever you think about Elon Musk, you can’t deny that the guy has been transformative. And now he’s looking at a platform used by hundreds of millions of people, and he wants to transform it. And when Elon Musk wants to transform something, history shows that he transforms it.

Or he could just be trolling all of us.

Or he could be just trolling all of us. Yes.

All right, Mike. Thank you very much.

Thank you for having me.

On Thursday morning, Elon Musk offered to buy Twitter outright in a $43 billion hostile takeover. If the offer is not accepted, Musk said in a government filing, he would need to reconsider his investment in the company. In the filing Musk said, “Twitter has extraordinary potential. I will unlock it.”

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We’ll be right back.

Here’s what else you need to know today.

On Wednesday, New York City police arrested the suspect in the city’s worst subway shooting in decades, 62-year-old Frank James, who was captured in the East Village of Manhattan. James is accused of putting on a gas mask, detonating two smoke grenades, and shooting 10 people inside a Manhattan-bound N train on Tuesday morning. Police have yet to identify a possible motive. But said that James had left crucial evidence at the scene, including a credit card with his name on it and the key to a van that he had rented.

And The Times reports that in response to Russia’s invasion of Ukraine, two more European countries, Finland and Sweden, are seriously considering applying for membership to the NATO military alliance and are widely expected to join it. If they do, it would highlight how much Russia’s military operation in Ukraine, which was designed to weaken NATO, has instead strengthened it.

Today’s episode was produced by Rob Szypko and Rachelle Bonja, with help from Michael Simon Johnson. It was edited by Paige Cowett and Marc Georges. And it was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for The Daily. I’m Michael Barbaro. See you tomorrow.