What Elon Musk may imply for Twitter

Today, let’s speak about what Elon Musk means for the way forward for Twitter.

To say the connection between the Tesla CEO and the social community is altering quickly is an understatement. On Sunday, so far as the world was involved, Musk was merely one among Twitter’s most well-known customers. On Monday, it was revealed that over the previous month he has turn into its largest particular person shareholder. On Tuesday, Twitter CEO Parag Agrawal announced that Musk now has a seat on the board.

Here are Kate Conger and Mike Isaac at the New York Times:

Mr. Musk had concepts for reshaping social networks that dovetailed with these of Mr. Agrawal and Jack Dorsey, Twitter’s co-founder, in accordance with their public exchanges. All three have floated the notion of radically shifting the power in social networking to customers and away from behemoth firms, by utilizing an strategy to expertise that will give folks management over what they see of their social media feeds.

In the following weeks, Mr. Agrawal mentioned having Mr. Musk turn into a extra lively participant in Twitter’s future, in accordance with two folks with data of the conversations who weren’t approved to talk publicly. Mr. Agrawal additionally welcomed having Mr. Musk — who has greater than 80 million Twitter followers and generally tweets a dozen or extra occasions a day — be part of the corporate’s board, one of many folks stated.

Musk’s shock stake in Twitter has been the most important story in tech this week. In half, that’s an artifact of the general public’s near-total fascination with all issues Musk. It additionally illustrates how Twitter’s standing because the heartbeat of the worldwide information cycle signifies that any Twitter-related tales can dominate the information: it doesn’t matter what occurs on Twitter, you will be assured that each Twitter consumer has an opinion about it.

Because Musk represents himself on-line as a sort of mischievous trickster god, his Twitter inventory buy has been coated thus far primarily by way of the lens of shenanigans: the world’s richest man amusing himself with what Ranjan Roxy known as “the shitpost to end all shitposts.” (For my half, I likened it yesterday to Loki shopping for an ant farm.) And actually Musk’s conduct on-line over the previous couple days has accomplished little to counsel that his stake represents something apart from the antics of a prankster; his first official touch upon the $2.64 billion buy was “oh hi lol.”

But the hubbub has served to obscure what has been a tumultuous time at Twitter basically. It has barely been 4 months since Dorsey unexpectedly stepped down from Twitter after a marketing campaign from the activist investor group Elliott Management Corp. Elliott had taken a 4 % stake within the firm in 2020 and got down to substitute Dorsey because of the firm’s stagnant inventory worth and weak consumer progress.

Elliott left the board simply over a yr later, apparently happy with Twitter’s progress. But as a situation of leaving, it had set aggressive objectives for the corporate that Dorsey was not near assembly: rising its consumer base by 100 million folks, accelerating income progress, and gaining market share as a digital advertiser. When Dorsey left Twitter, it appeared clear that the stress to hit these marks had been a part of the rationale.

Those objectives at the moment are Agrawal’s accountability, and within the first few months of his tenure there have been few indicators of how he intends to realize them. Yes, the corporate is working to diversify its income past promoting by including subscription initiatives and instruments for creators. But it lost money in the most recent quarter, and added barely six million new customers.

All of which is to say that Twitter stays susceptible to a problem from Elliott or different activist traders down the street, who would possibly work to drive out Agrawal or as soon as once more stress the corporate to promote itself.

This, to me, is possibly essentially the most fascinating dimension on which to think about Musk becoming a member of the board. As the Times story particulars, Musk has been pleasant each with Dorsey and Agrawal. (Although Musk did once post a meme comparing Agrawal to Stalin?) They all are enthusiastic in regards to the thought of turning Twitter into a decentralized protocol. They all like cryptocurrencies.

And, publicly at the very least, they’re all very enthusiastic about the truth that Musk has joined the board. (Here are Agrawal, Dorsey, and Musk on that topic.)

If you are taking all that at face worth, it’s potential Musk’s presence on the board will function a sort of bulwark towards Elliott and different traders. While he could have just one vote out of 12, his standing as each the platform’s largest shareholder and most influential board member will seemingly give him tender energy that exceeds his technical authority.

Moreover, Musk becoming a member of Twitter has successfully turned it right into a meme inventory, with traders sending the worth up 27 % on the day his stake was introduced. Assuming that holds true — it was up one other 2 % at present — activist traders may have a good more durable time mounting a problem to Agrawal’s management. (It’s additionally good for attracting and retaining expertise, whose compensation is usually tied partially to the inventory worth.)

The remaining query, then, is whether or not Musk himself intends to be an activist investor. Or slightly, given his tweets to date, what type of activist investor he needs to be.

We know that Musk has mused about starting an alternative social network that has fewer restrictions on what folks can publish. This has led to hypothesis that he would possibly search to loosen Twitter’s content material moderation insurance policies, and even champion Donald Trump’s return to Twitter.

We additionally know that Musk’s first official act as Twitter board member was to ask his 80 million followers whether Twitter should have an edit button. (In equity, I had asked Musk to weigh in on this subject myself.)

If there was any thought that Twitter Inc. would ignore this kind of rogue product improvement on the a part of its board members, the way in which you nod politely at an uncle who’s “just asking questions” at Thanksgiving dinner, Agrawal put that concept to relaxation slightly rapidly:

Perhaps Agrawal is winking at us right here. There’s nothing unsuitable with having slightly enjoyable on-line, nor ought to we fault him for wanting to construct slightly goodwill along with his most influential board member. (Also, Twitter confirmed at present that it is constructing an edit button, and had begun constructing it final yr.)

But it’s additionally true that this kind of factor generally is a actual distraction for a CEO who completely has greater fish to fry. As Dorsey’s hand-picked successor, Agrawal was already going to face criticism that he was merely extra of the identical from an organization that has struggled to dwell as much as its potential. The proven fact that Dorsey left the board, although, had given Agrawal a possibility to start crafting Twitter in accordance with his personal plans.

Now that Musk is round, although, along with his viral polls and stream-of-consciousness product recommendations, Agrawal might discover himself struggling to steadiness his personal imaginative and prescient towards that of an unpredictable board member with a a lot louder megaphone.

One of essentially the most well-known tweets about Twitter got here from Dick Costolo, who upon becoming a member of the corporate as chief working officer in 2009 posted an notorious joke:

The joke is notorious as a result of in the long run it got here true: simply over a yr after he tweeted it, Costolo was chosen by Twitter’s board to switch then-CEO Ev Williams.

Musk is so chaotic that it appears like a idiot’s errand to foretell what kind of duties he’ll tackle as Twitter board member. But I can’t be the one one who wonders whether or not, deliberately or not, he’ll undermine the CEO.

If I had been Parag Agrawal, I’d watch my again.