Elon Musk’s Tesla master plan won’t fit Twitter
His goals for the powerful platform are less tangible and measurable than selling more and more electric vehicles
What's the secret Twitter Master Plan?
Elon Musk famously published a not-so-secret manifesto for Tesla Inc. in 2006. Back then, he described his role at the electric-vehicle maker as a side-gig; his day job was running rocket developer Space Exploration Technologies Corp. or SpaceX. At that time, he wasn't on Twitter, which had launched publicly only a few weeks earlier. It would be another three years before he set up @elonmusk.
Things have moved on a bit since then. Tesla has a $1 trillion market cap and roughly 10 times the workforce of SpaceX, so Musk's priorities have shifted. And now, with 85 million followers and an agreed $44 billion takeover offer for Twitter Inc., Musk is all but master of Twitter's fate. The "all but" does a lot of work here since the deal needs to be voted through, and it's still not clear where he will get roughly half the funding. Assuming it goes through, though, what is Musk's plan for his latest addition? Does the history of Tesla offer clues?
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For one thing, at Twitter as at Tesla, Musk would be the dominant force — only more so. While it seems unlikely he would take on the CEO role, he would run the show regardless. If a privately held Twitter were to have a board, it would, like Tesla's, be a nest of cyphers.
To an important degree, all Musk companies are extensions of himself. This carries risks but, crucially, also an aura that has translated into regular outside funding. Just as faith in Musk enabled Tesla to raise multiple rounds of equity despite the company's burning billions in cash, so does Musk's involvement make this highly unusual buyout of Twitter somewhat doable at all.
Similarly, although Twitter's buyout price is less than 1/20th of Tesla's market cap, it represents an outsized risk to Musk's own finances because of the potentially big equity check and the $12.5 billion loan secured against some of his Tesla stock. This continues another prominent theme in the Muskplex: the financial intertwining of the companies he controls with one another and himself.
In 2016, Tesla (in)famously bought SolarCity Corp., bailing out a failing company of which Musk was a major shareholder and chairman, and which had sold bonds to himself, his cousins and SpaceX.
Given the role that Twitter, like Tesla, has played in building Musk's reputation as genius, planet-saver and troublemaker, both companies are also bound up inextricably with his ego. So if the deal goes through, Musk has ample reason to make it work. While he wouldn't have a daily scorecard as he has with Tesla's stock price, the bond market would offer some commentary on a debt-laden Twitter, if more muted.
Guessing what "making it work" means exactly has become the world's newest, biggest online parlour game. There are no straightforward benchmarks such as selling more and more electric vehicles. Profitability, according to Musk, is just a nice thing to have. To describe his greater aspirations for the company, he resorts, as is often the case, to the messianic, claiming in a recent TED interview that "civilizational risk is decreased ... the more we can increase the trust of Twitter as a public platform." Righto.
Leaving aside the grandiosity, that statement gets to the heart of the issue. Musk equates trust in Twitter with purer free speech, a concept that is considerably squishier than, say, selling half a million Model 3s.
Other goals that Musk has revealed are more tangible, including making Twitter's algorithms open-source, verifying more accounts and combating spam. These would probably enhance the user experience and, therefore, the business. But Musk's "free speech" imperative also means taking Twitter back to less content moderation. While that may help cut costs in the short term, the reasons that social media giants have tried to police misinformation, spam and worse haven't gone away.
Musk himself once used Twitter to pretend he had a buyout deal secured for Tesla. That doesn't fit even his relatively loose maxim that tweets should "match the laws" of a country.
Moreover, Musk makes for a dubious arbiter of freedom. He bristles, for example, when people short Tesla's stock, publicly accusing them of risking the planet rather than, you know, just making a financial bet in a free market (Bill Gates is the latest example). In 2020, Musk characterised temporary Covid-19 lockdowns in California as "fascist" — a label that seems a tad overwrought, especially when the man unfurling his Gadsden Flag also runs a car company whose fortunes are tied increasingly to that utopia of personal expression, China.
This combination of centralised power, symbiotic relationships and an ill-defined mission suggests that a Musk-owned Twitter, like Tesla, will be prone to sudden shifts in strategy. We can probably expect an edit button, then modifications to the edit button, maybe a poll or two about the edit button, and then, who knows, the edit button getting edited out.
This isn't necessarily a bad thing from an operational standpoint. Tesla, after all, pulled itself back from the brink with such manoeuvres after the botched rollout of the Model 3. But it will probably lead to more staff turnover, especially at senior levels. Because Twitter is to become a privately held company, we may learn of such shifts only via Musk's personal account. Actually, that's not so different from Tesla these days.
Again, though, with Twitter, we are talking about voices, not vehicles. A constant theme with Tesla, indeed a selling point for its fans, has been Musk's willingness to push against regulations and the regulators tasked with enforcing them, especially when it comes to the elusive prize of self-driving vehicles. Tesla may be the world's biggest car company by market cap, but its tiny market share and new technology allow it to maintain the image of the scrappy underdog. Mavericks are often forgiven for their transgressions.
Twitter, on the other hand, is already a powerful platform. Getting bought by the richest person in the world only compounds that. This is not like muscling into the auto industry; it's about protecting an existing entity. There is no underdog story here, and the aspects of society that Twitter touches — privacy, wealth, health, politics, free speech (however defined), to name a few — have far greater salience and emotional weight than a car or a solar panel has.
While Musk seems to relish confrontation, especially on Twitter, owning the platform will mean having to accommodate the divergent wishes and comfort levels of its users (or risk their leaving), as well as maintaining a social licence to operate.
With Tesla, Musk has proved adept at inviting in public money while keeping the company — its strategy, image and even regulatory oversight — essentially as his private domain. He put the "master" in Master Plan. Perhaps counterintuitively, by taking Twitter into his own hands, he is opening his door to a clamouring public.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
Disclaimer: This article first appeared on bloomberg.com, and is published by special syndication arrangement
