What do solar panels, electric cars, spaceships, and a social media platform have in common? From a logical business perspective, absolutely nothing.
But in the mind of an eccentric, impulsive billionaire, logic doesn't really apply — only amusement does.
And no one is more amused these days than Elon Musk. The founder and CEO of SpaceX and electric car maker Tesla Motors said he wants to buy Twitter for $43 billion and take it private. (Or does he?)
Musk's purchase of Twitter makes as much sense as Tesla's shady $13 billion acquisition of SolarCity in 2016, a deal rife with so many conflicts of interests, starting with the fact that Musk controlled both companies.
At least you can say electric vehicles and solar panels are both clean energy technologies. And flying into space seems to be the fantasy-du-jour for tech billionaires at the moment.
But what could Musk possibly want with Twitter, aside from calling critics pedophiles, taunting the SEC, and trolling cryptocurrencies?
I might have just answered my own question. More likely than not, Musk is just bored and likes to stir things up via his favorite communications platform. A kind of Andy Kaufman-esque, is he serious or playing us, expensive piece of performance art.
But for the moment, let's assume that Musk the businessman, not the provocateur, is genuinely interested in Twitter.
Unimpressive results
There's no doubt that Twitter has underperformed since it went public in 2013. Despite its ubiquitous reach and name recognition, the company has failed to convert its sizable audience into revenue growth.
Facebook, Google, and Amazon collectively control 64% of the $200 billion digital ad market, according to eMarketer. Twitter's market share? Less than 3%.
Last year, Twitter lost $221.2 million, which is pretty bad but represented a significant improvement from 2020 when the company lost an eye popping $1.1. billion.
CEO Parag Agrawal has told investors that Twitter's problem is one of execution and has reorganized the company's management structure. He also said Twitter is using artificial intelligence to better organize information and connect advertisers with users with more relevant content.
Musk, for his part, is unimpressed.
"Given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder," he told Twitter's board, according to a SEC filing.
In a letter to Twitter Chairman Bret Taylor, Musk said he recognized the overall importance of the platform to society, which motivated his bid.
"I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy," Musk wrote.
"However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company."
Twitter is a business, not a charity
Interestingly enough, Musk hasn't said how he plans to do that. Yes, he's mentioned a few things like adding an edit button and loosening Twitter's effort to block misinformation, the latter which would no doubt please former President Donald Trump.
Improving the user experience helps. But that's like saying newspapers can sell more advertising if they only produced better journalism. That argument looks good on paper but doesn't really hold up to real life.
And lest we forget, Twitter is a business. The company's main problem is how to sell more advertising, not whether it allows sufficient amounts of free speech on the platform.
Musk can yap all he wants about free speech and democracy. In the end though, spending $43 billion just so you can troll your enemies with irony is probably not the wisest investment you could make.
The goal is to make money. And increasing the company's less than 3% market share is going to require a lot more effort than adding an edit button.
And it's not clear that Musk is the man who can do it. Whether cars or spacecraft, he is an entrepreneur best suited to disrupting existing industries. He has yet to demonstrate any ability as a turnaround executive. And at Twitter, he will inherit an entrenched culture and an already skeptical, hostile workforce.
Leaving his mark
In the end, perhaps Musk wants what all billionaires acutely aware of their mortality seek: a legacy.
Over the past decade or so, billionaires have been buying newspapers. Hedge fund manager John Henry acquired the Boston Globe, businessman Glen Taylor purchased the Star Tribune in Minneapolis, and Amazon founder Jeff Bezos now owns the Washington Post.
These billionaires bought newspapers not because they thought they were great businesses with lots of growth potential. (They're not.) Instead, they realized that newspapers, financially troubled as they are, continue to serve an important role to civic society and a healthy democracy.
So perhaps Twitter is to Musk what newspapers are to Bezos and company. Twitter as a business is secondary to Twitter as a platform for free speech.
If he took Twitter private, he wouldn’t need to answer to shareholders. He doesn't even need to make lots of money, just enough to keep Twitter running and generate a modest return, which is exactly what the billionaire newspaper owners have been doing.
You can't take anything with you when you die. But Musk seems intent on trying his hardest to do so.
