An Interview Before Musk Bought Twitter 44 Billion USD
Elon Musk bought Twitter for forty-four billion dollars. Elon Musk, the C.E.O. of Tesla and the top richest man on earth, plans to take the social media company private, and has said that he wants Twitter to adhere more closely to the principles of free speech, which, in a statement, Elon Musk called "bedrock of functioning democracy." (In the same statement, he described Twitter as the "digital town square where matters vital to the future of humanity are debated.") Elon Musk himself is a frequent tweeter, and it is assumed that he will continue to use the Twitter platform, and potentially reinstate the account of former US President Donald Trump. He is also thought to be less likely to ban people for violations of the platform policies, which themselves may change in the future.
To talk about Elon Musk and what the future holds for his newest acquisition, I spoke by phone with Matt Levine, a Bloomberg Opinion columnist who has been comprehensively reporting on and analyzing this story over the past months in his newsletter. During our conversation, which has been edited for length and clarity, we discussed how Elon Musk has used Twitter to further his business interests, how he views freedom of speech, and why Twitter’s influence has long surpassed its financial value.
Q: Why do you think Musk is buying Twitter?
A: I assume it’s because he has some genuine set of political and social beliefs about how Twitter should be run, and he feels like it isn’t being run that way. I also think that he gets a lot of pleasure and utility out of tweeting and wants it to be optimized for his use. The value of his company is enhanced by his being a very strange public figure on Twitter, so he clearly sees a lot of value in tweeting, and probably wants to own that for himself.
Q: It’s not immediately obvious why Tesla is valued as highly as it is. So how much do you connect Tesla’s worth to Elon Musk as a person and the way he orients himself toward the world, especially on Twitter?
A: Tesla is a company, a relatively small car company, that makes good high-end electric cars, right? And the stock-market value of Tesla, which makes Elon Musk the richest person in the world, comes from a lot of extreme optimism about Tesla’s future ability to make more cars and become the dominant player in car-making as cars become more electric. Also, he’s just, like, a sort of futurist visionary—he’s building tunnels that he seems to think will be the future of transportation. He’s sending rockets into space. And so the value of these companies in the market is largely derived from expectations around how much money they’ll make in the future, as opposed to how much money they’ve made in the past. And those expectations are probably helped by having a charismatic, noisy founder who makes a lot of jokes online and is sort of a science-fiction character himself and portrays himself as a science-fiction character, and who appeals to people who like that by making jokes.
Tesla’s an expensive company to run. It’s not like a social-media company, where you rent some space from some servers and type some code. You have to build big factories to build cars. And, historically, Tesla has needed a lot of money to run itself, and Tesla has been able to sell millions of dollars of stock to new shareholders, to some extent bypassing the way Wall Street usually works, and not finding big institutions to sell stock through banks but, rather, going out to the market and selling stock to individual shareholders who are big fans of Elon Musk. So his public persona has helped him raise money to build a big company that does real things, and has also kept the valuation of that company really high because people like it and like him, and trust in his vision for the future because he is an accessible character to them in a way that a lot of other C.E.O.s are not.
None of that translates in any direct way to the idea that owning Twitter will make that more valuable. At least it doesn’t to me. It’s not obvious to me how, if he bought Twitter, he would then be better able to get his message out, or better able to tell a story in a way that is good for Tesla and good for his economic interests. But it’s not obvious that it wouldn’t be. And he’s a really smart guy. One possible way to tell this story is that Twitter doesn’t make that much money compared to Facebook and other social-media companies. It’s not that big a company in terms of market cap. He might say, "Look, I get so much value out of this direct access to the public." Owning that direct access to the public—owning that thing that creates so much value for Elon Musk and Tesla—has to be valuable somehow, whether it’s by increasing the value that it creates for Tesla, or whether it’s by finding a way to monetize the value that it creates for sports stars and celebrities and Donald Trump and lots of other people. You know, Donald Trump’s tweets back when he was on Twitter could create billions or trillions of dollars worth of market moves, right? And Twitter never made a lot of money off of that. It’s not obvious how the company would, but if you’re sitting on top of a thing that can create that much value, surely, if you’re really smart then you can extract some value out of it.
Q: In terms of the way that you described him using Twitter for his business image and business interests, is the sui generis, or do you see this more widely now?
A: I think it’s hard to imitate him, but I think people are, and I think that the classic example in the last five years or so has been the rise of meme stocks: companies like AMC and GameStop got very high market valuations and raised a lot of money through social media, popularity, and game memes. Adam Aron is the C.E.O. of AMC, and he’s this Harvard Business School graduate, a guy who’s worked at traditional corporate jobs. And he’s really embraced the meme-stock stuff, and does a lot of weird stuff on social media because his fans on Reddit and Twitter really like that and it seems to be good for the stock. And he’s pretty self-conscious about saying he works for retail meme investors now, and he’s going to do things that appeal to them.
I think there was this longtime perception that, if you were a high-powered corporate person, you could only get in trouble on Twitter and you should write bland things that are vetted by lawyers. And I think people are recognizing that Elon Musk has created a lot of value for his companies by being unhinged on Twitter. And I think there are imitators, and I think we’re kind of early in the game. There will be more imitators. And that applies to politics. It’s the obvious counterpart, where people have realized that you can make a lot of hay politically by being a poster.
Q: Deep analysis: He likes money.
A: You could say I’m wrong. I mean, he doesn’t spend money on the type of luxuries that a lot of others do. I don’t know what motivates him. I don’t think it’s obvious that Tesla is either a pure moneymaking enterprise or a pure humanitarian enterprise. And I think that’s probably true of most of his enterprises, where he enjoys the personal challenges, like solving puzzles, and he enjoys being a rich, successful businessman, and he enjoys thinking that he’s doing something good for humanity. And I think that Twitter fits all of those things, too.
Q: Is there anything we can tell from his S.E.C. filings or other statements about what his plans are for Twitter?
A: I can tell nothing. He talked at the ted conference about it. He said things like he wants more free speech, he wants to not permanently ban people, and he wants less dependence on advertising because he thinks that is bad for free speech—which it is, by the way. I think that, if you unmoderated Twitter, you’re going to turn off advertisers. If you don’t care about advertisers, then you can have a more unmoderated Twitter. Things like that. Musk just tweeted that he wants his worst critics to remain on Twitter, because that’s what free speech means. I think a lot of people are worried that he’s going to ban his critics.
From a corporate finance perspective, the idea is that you buy Twitter and then it’ll be a private company and he’ll just control it. So he doesn’t need to present a business plan to, for instance, the board of directors of Twitter or the shareholders of Twitter. He can just say the business line: you take the cash and go away, and then it’s my company to control. So he said some things. They’re not binding on him. If he owns the company, he owns the company, and he can kind of do what he wants.
On the other hand, he is getting money from outsiders: he’s getting money from banks, and potentially from equity partners. And so, presumably, he has some business plan for that, where he’s saying, "This is how I’m going to make money with Twitter." He’s made noises about subscriptions.
Q: It seems like, if it worked monetarily, it would have some downsides in terms of this influence that we’re talking about.
A: Oh, yeah. I would agree. I don’t know how serious he is. I don’t think his plan for Twitter is to turn it into a subscription-only service, but what do I know? He’s not the first person to notice that this is a hugely influential product with a somewhat lackluster business. I think it’s a genuinely hard problem—but, you know, he built rockets and stuff. He might be looking for another hard problem to tackle.