Elon Musk is a man everyone loves to hate. He is successful beyond anyone’s wildest dreams and his ambitions for humanity gives everyone a jolt from their pitiful lives of watching cat videos and posting inane comments on equally inane social media posts.
It is implausible that Mr. Musk believes he can take humanity to Mars within his lifetime. He cannot. What he has been trying to do through SpaceX is rekindle the spirit of invention which was in full bloom at the turn of the last century, when the Wright brothers invented airplanes and cars started becoming a modern fixture because of Henry Ford. Even afterwards, till the 1960s at least, scientists from the USA and USSR competed vigorously to make better rockets and missiles. The Moon landing was a result of this quest for technological supremacy. The fact that we as a species have not been able to repeat that quest either gives credence to conspiracy theories surrounding the moon landing or we have retrogressed technologically.
Let’s not talk about fancy conspiracy theories but rather about retrogression. The Concorde, which flew faster than a rifle bullet, faster than sound itself, took its well-heeled passengers from New York to London in 3.5 hours. It was discontinued in 2003, which means that we now fly slower than we used to 20 years ago. The spirit of invention has been slowly dying down. In the last couple of decades, all the new inventions and improvement in technology has been about moving everything online and connecting people faster, but there has not been a seismic shift in the way we operate as a species, the way electricity transformed our homes, or the way railways and airplanes transformed modern transportation. Talking to your cousin sitting in Tokyo for free does not imply technological progress. It is just ease of communication.
Detractors might cast Elon as a villainous billionaire out to manipulate free speech after the conclusion of his successful bid to buy Twitter. Little do they know that he is a cash-poor billionaire, risking his equity in Tesla in the hopes of not only making Twitter private, but cutting its dependence on ad revenues and restyling it to be an open-source platform where the company is not run by its board but its users – at least, that is the plan.
When he announced his bid for twitter on Twitter, people thought this a repeat of his performance in August 2018 when he tweeted that he would take Tesla private, but never acted on it and had to cough up $40 million because the SEC charged him with securities fraud. This time though he was able to convince a reluctant board to agree to his price of $44 billion even after they enacted a poison pill, essentially hemorrhaging him from buying more twitter stock. Mr. Musk has agreed to buy twitter at $54.20 per share which was at a 50% premium compared to its average price in March 2022. In short, the founder of Zip2, PayPal, Spacex, Tesla, Neuralink, Solar City and The Boring company grossly overpaid for Twitter.
What could Elon Musk possibly want from Twitter that he put his whole net-worth at risk for it? There have been stories that a large coterie of tech founders including Jack Dorsey were wary of what was happening at Twitter a la blocking controversial accounts for supposed hate speech, incitement to violence or fake news. In Musk they began to foresee a rejuvenation for Twitter and the idea of free speech itself. Mr. Musk’s takeover of Twitter would set the company in the right direction for these elite proponents of “absolute free speech”. Trump’s account would be restored to its former glory, along with other right-wing commentators such as Katie Hopkins. Liberals from all hues and cries have been crying foul over Twitter again becoming a playground for uncalled for obscenities, lies and provocations. A consortium of civil rights groups has penned a letter to the top advertisers on Twitter, including Coca-Cola, HBO and Disney amongst others – suggesting that that they pressurise Twitter: threaten the target company that they would withdraw their ad dollars if Twitter does not curtail hate speech under Mr. Musk.
As of now, 90% of Twitter’s revenue comes from advertisement, just like it does for any TV channel or social media platform. Since a significant chunk of Elon Musk’s financing for Twitter comes from margin loans against Tesla shares, despite him securing $7 billion in cash from other investors, any downturn in Twitter’s revenue in the future would mean the company is not able to service its debts to Wall Street firms. And if word of this gets out on the Street, Tesla shares would plummet in value, which would result in margin calls from Morgan Stanley and other banks. In this situation, Elon Musk would be forced to put up more devalued shares as collateral against the loan. Advertisers have Elon Musk in a choke-hold after he takes the helm at Twitter – which may take a couple of months. But is this so?
Elon’s biggest bane is that he has a gargantuan vision. It forces him into unpleasant situations. It made him risk all his spoils from selling Zip2 to into PayPal, then ever penny after he got bought out from PayPal into SpaceX and Tesla. When he founded X.com, later PayPal, the only way of paying for goods online was by mailing checks. Before Elon founded SpaceX, no one could have dreamed about a private company making and manning rockets. It is unquestionable that Musk has revolutionised electric cars through Tesla and that is why the market pays a hefty premium for its stock. General Motors sells twice as many cars as Tesla, but its market capitalization is twenty times less than hers. So, it is hard to believe that a couple of executives at Coca Cola or Disney would be able to distract Elon Musk from his vision of enlarging Twitter’s role as a virtual townhall, like a modern day Acropolis where everyone is heard no matter how nasty their views are.
People pay Elon for his vision. It is why right after announcing his bid for Twitter on Twitter, he was able to secure funding for his acquisition in less than a month, which is unheard of even for the most prestigious private equity groups. It is why Wall Street banks decided to loan him money against his equity positions, which is an extremely risky undertaking. It is why Prince Al Waleed bin Talal decided to keep his Twitter shares rather than be bought out. It is why Qatar’s sovereign wealth fund, Oracle’s founder and long-serving CEO Larry Ellison, the cryptocurrency platform Binance and venture capital firm Sequoia Capital decided to become equity partners with Elon Musk, providing him with an additional $7.2 billion to buy Twitter. It is because they believe in Musk’s vision for Twitter – even though like you and I, they do not know what it is.