Jae C. Hong/AP
Elon Musk has been founding companies since the dawn of the internet age. He’s led Tesla, SpaceX and PayPal to be the blue chips that they are today.
But earlier this year, Musk set in motion a $44 billion acquisition that doesn’t fit the pattern of his previous successes. He initiated a takeover of Twitter, the social network where he often spouts off his opinions. Then he tried to back out, kicking off a vicious legal battle before saying that he would, in fact, buy the company. The deal is expected to close this week.
Musk starts and grows companies. But Twitter, which has struggled to turn consistent profits for years, needs something more to become a success story, said Andy Wu, who teaches business strategy at Harvard Business School.
“Musk has no experience in managing organizational change and there’s definitely an embedded culture at Twitter that he’ll have to change in order to achieve some of his goals,” Wu said.
The challenge has only grown since Musk first offered to buy Twitter in the spring for $54.20 a share. Tech stocks have struggled along with the broader market. Musk’s public criticism of Twitter–its management, policies and problem with fake accounts–has shone a light on the company’s weaknesses. At one point, Twitter’s stock lost a quarter of its value.
“Myself and other investors are obviously overpaying for Twitter right now,” Musk said on a call with Tesla investors last week.
He has floated big plans for Twitter: he wants to slim it down while getting rid of fake accounts, create a haven for free speech, and build it into an “everything app.”
Experts say reaching even one of these goals would be hard enough.
Entering Twitter HQ – let that sink in! pic.twitter.com/D68z4K2wq7
— Elon Musk (@elonmusk) October 26, 2022
Musk revolutionized the electric-car industry and privatized space
Throughout his career, Musk has chased bold, sci-fi-like visions. He fast-forwarded the electric car industry and sent rockets into space.
“People thought SpaceX was a crazy idea. He was going to launch satellites. Who does that? The government does that. And he proved all of his skeptics wrong. He launches satellites for much less money than the government,” said Erik Gordon, professor of strategy and entrepreneurship at the University of Michigan’s Ross School of Business. “He’s gone through this before and landed like a cat.”
Tesla was on the edge of insolvency more than once, due to manufacturing and logistics problems that piled delays on top of delays. Musk sunk millions of his own money into the company as it burned through cash and struggled to make deliveries.
In 2018, he famously slept on the floor of the Tesla factory to troubleshoot the assembly line and oversee the paint shop.
Musk is a genius at persuading the financial markets to back his risky investments, said Tim Higgins, who wrote Power Play: Tesla, Elon Musk, and the Bet of the Century.
“Probably the biggest contribution he had to Tesla was his ability to sell his vision of the future to customers, but more importantly to investors, to raise the billions and billions of dollars that were needed to keep Tesla afloat until it could become a viable company,” he said.
That power has gotten Musk into trouble. In the middle of Tesla’s struggles, Musk tweeted that he planned to take Tesla private at $420 a share. The stock price soared, leading the Securities and Exchange Commission to investigate whether Musk had misled investors.
In the end, Musk gave up his role as chair of Tesla’s board and paid a $20 million fine to settle. (Tesla paid another $20 million.) He also agreed to let a Tesla lawyer review his tweets. The company remains publicly traded.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk’s fundraising magic worked with SpaceX too, even when its rockets repeatedly blew up.
The Falcon, the Dragon, the Super Heavy rockets all exploded spectacularly on the launchpad or while attempting to land. SpaceX has since successfully flown astronauts to the International Space Station in the partially re-useable Falcon rocket.
In his tweets, Musk put a spin on the spectacular explosions as a new approach to the staid military-industrial spacecraft industry, applying the software industry’s iterative process to rocketry.
“All he had to do was tweet something like, ‘Oh, everything is actually wonderful. I couldn’t be happier about all of these disasters. It’s going to be great.’ And he raised lots of money,” Higgins said. “He’s a money-raising genius.”
Musk’s ability to raise money on command was also on display during his legal fight with Twitter. The lawsuit made public a cache of his personal text messages, in which Silicon Valley heavyweights jockeyed to invest in Twitter.
Some consider Musk a visionary; others see a troll
Tesla is fighting a racial discrimination and harassment lawsuit that a California agency filed on behalf of 4,000 Black Tesla employees.
Several women have filed lawsuits alleging Tesla fostered a culture of sexual harassment at its Fremont plant and other facilities.
Also, during the first months of the pandemic, the Fremont, Calif. Tesla factory continued operating despite orders from local public health officials to shut down to prevent the spread of Covid.
“There’s a sense in which Musk is like teletransported from another era of business and is just unconcerned about things, you know, like it’s 1952,” Gordon said. “He has huge zones of non-concern. Most companies 30 years ago didn’t care about sexual harassment or racial discrimination.”
On Twitter, Musk readily trolls those who disagree with him or appear to be rivals.
His ego has been on display to his 110 million followers throughout the Twitter saga. After Twitter CEO Parag Agrawal tweeted a detailed explanation of the company’s efforts to combat spam, Musk responded with a poop emoji.
— Elon Musk (@elonmusk) May 16, 2022
Musk renamed himself “Chief Twit” in his Twitter bio on Wednesday. He’s pledged to loosen Twitter’s rules on what people can post to the platform. He’s said Twitter was wrong to ban former President Donald Trump after the Jan. 6 attack on the U.S. Capitol. Many Twitter users have openly worried that the network will soon become more racist, sexist, and toxic.
Twitter is a different sort of challenge for Musk
While many people are nervous about what sort of social network Twitter will become under Musk, it has never been a healthy company.
During Tesla’s earnings call last week, Musk said Twitter “sort of languished for a long time but has incredible potential.”
While Twitter is often used by politicians and journalists, it has fewer U.S. users than Facebook, TikTok or YouTube. It has struggled to attract ad dollars, and to create services that users will pay for. Internal company documents obtained by Reuters say now even “heavy tweeters” are using the platform less.
Musk plans to address Twitter staff on Friday. He’s said he wants to trim their ranks dramatically. Time has reported that Twitter employees are circulating a petition, asking Musk to preserve the current headcount and staff benefits.
Threatened layoffs would “hurt Twitter’s ability to serve the public conversation,” the petition reads.
Yet Higgins, the biographer, expects many employees will choose not to work for Musk.
“He can be infuriating and inspiring in almost the same breath. It just depends on the Elon Musk you get that day,” Higgins said. “I have no doubt that if and when he gets into Twitter, he’s going to anger a lot of people there and a lot of people will probably leave.”
Musk may not be chasing profits with Twitter, however, instead regarding it as a vanity project in service of his free speech ideals.
“Unlike his manufacturing endeavors, this is much more of a pure tech company, sort of in the ether. It’s also much more political. And he has said that that’s part of why he’s interested in it,” said Molly Ball, who profiled Musk when he was chosen as Time’s Person of the Year last year.
Musk has said he wants people on Twitter to be “able to speak freely within the bounds of the law.”
That may be “a very dangerous experiment,” according to Harvard’s Wu.
Social networks like Parler, Gab and TruthSocial, which take a more hands-off approach to content moderation, have a tiny fraction of the users that mainstream platforms have. People have used them to spread hate speech, threaten violence and share harmful misinformation that is banned elsewhere.
“We actually don’t know yet if that’s a platform people would want to read and want to contribute content to,” he said. “Obviously there’d be a lot of hate speech and hostility. Would that by itself drive people away, or is there enough of a critical mass to sustain the platform?”
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