Today, Explained - @elonmusk

Episode Date: April 20, 2022

Elon Musk says he wants to buy Twitter, but is also making 420 jokes. Kara Swisher (who knows him) and Liz Lopatto (who doesn’t) explain whether the world should take him seriously (or care). This episode was produced by Miles Bryan, edited by Matt Collette, engineered by Paul Mounsey and Efim Shapiro, fact-checked by Matthew Collette and Amina Al-Sadi, and hosted by Sean Rameswaram. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

You know, I know a lot of people like weed, and that's fine. But I don't find that it is very good for productivity. To troll or not to troll? That is the question Elon Musk seldom asks himself. Instead, he trolls. And that's why it's kind of hard to know whether to take his Twitter takeover efforts seriously. I mean, I could technically afford it.

But ahead on Today Explained, we're going to figure it all out by talking to someone who knows him personally. Who cares if he's a juvenile? He's had a very successful business run. Let's focus on that. And to someone who doesn't. Big picture, this is a story about internet culture, which is really just culture. But in reverse order. Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit

superstore.ca to get started. Today, Today Explained. Today Explained, I'm Sean Ramos-Furham, joined by Liz Lopato. I am a deputy editor at The Verge. Lately, that's meant she's been writing a lot about Elon Musk. Yeah, so Elon Musk, if you're not familiar, is the CEO of a car company, Tesla, and a rocket company, SpaceX. And he's also a renowned internet poster. Spends a lot of time on Twitter. You tweet a lot. I use my tweets to express myself.

Loves riling people up on Twitter. Loves to talk smack about like Bernie Sanders and Elizabeth Warren. Tweeting at Bernie Sanders over the weekend. I keep forgetting that you're still alive. I just don't even know what to say about that. The other thing that's maybe worth noting here is that his Twitter use was important for Tesla. His account is disclosed in some of their filings as being a legitimate source for Tesla information.

And also in 2018, which I understand feels like the ancient mists of time by now, he made an announcement that he was going to take Tesla private funding secured price of $420 per share, which was a substantial premium over its share price at that time. Twitter is a place where he does a lot of his, I think, entertainment. So it seems to be massively important to him personally as a forum for talking to his fans. Twitter is a war zone. If somebody is going to jump in the war zone, it's like, okay, you're in the arena. Let's go. And before this story begins, how does Twitter feel about Elon Musk? Well, there's a little bit of prehistory here, some of which is corporate. So Twitter's last CEO is a guy named

Jack Dorsey. Beautiful beard. Iconic beard. And he has said that he views Musk as the ideal Twitter user. Like that's how he thinks Twitter should be used. And so the two of them are buddies. And so last year. Okay, fact check. This actually happened in 2020. But as Liz said earlier, the ancient mists of time. Some activist shareholders, Elliott Management, which are legitimately scary people. If they get into your stock, you're maybe in trouble. They got it to Twitter. We got some pretty big social media news.

We learned that Elliott Management, that's that relentless activist hedge fund, had taken a sizable position in Twitter and demanded CEO Jack Dorsey's head on a silver platter. Twitter ended up like settling with them for some board seats and Jack Dorsey left last year, which means that Elliott Capital Management's ideal successor, Parag Agrawal, is now the CEO of Twitter. So that's sort of the prehistory here. How does this particular story start? So a couple weeks ago, we discovered that Elon Musk had been buying up shares of Twitter. Twitter shares, they are surging right now. This because Tesla CEO Elon Musk has now taken a passive stake in Twitter. We discovered this because he had filed the wrong form with the SEC about it. Not good, the financial stuff.

I just think he doesn't like the SEC very much and doesn't respect them. And I think that because he said so several times. I want to be clear. I do not respect the SEC. I do not respect them. He files this and there's like a sort of interest. The stock pops. I want to say it's about 30%. And like people are excited that Elon Musk has gotten into the stock. What does Twitter do in that moment?

I think panics. I think that that's like, it's a shock to everybody, right? This is like, surprise, Elon Musk is at the party. And that's what I think when they probably started negotiating with him about the board seat. So Twitter finds out that Elon Musk is buying up a bunch of its stock and they call him up and they say, shall we put you on the board? Yeah. Why would they do that if he's sort of like a mercurial figure on Twitter? Well, a couple of reasons. First of all, I think it's not a bad idea to have

poster representation on the board of your company if your company's Twitter. Plus, Elon Musk getting into it makes the shares go up. And investors generally like it when numbers go up. That seems seems to be like a thing. The possibility of Elon Musk on your board is that Elon can say a bunch of wild things and have them be thought of as like Elon being Elon that you as CEO or an otherwise responsible member of the financial community cannot say. And maybe that's useful. So they think of it as a potentially positive business development, but also maybe like a way to keep an eye on him? Yeah, there's also a standstill agreement on that board seat, which is that he's not going to buy more than 15% of the company's shares.

So like, he isn't gonna like buy half the company, you know, he going to stop at 15% in order to retain that board seat. How does Elon respond to this effort to maybe celebrate him, but also contain him? Well, there were a bunch of weird tweets for a while. You know, he's tweeting stuff about... Twitter is dying, that they should empty out the headquarters in San Francisco and turn it into a homeless shelter, that Twitter Blue is a bad product, basically trashing the company that he's now the largest shareholder in. And like, there are some other things he's tweeting over the course of that weekend about like an edit button, which by the way, Twitter was already working on.

And then after all of this, like this weekend of like really intense, like product suggestion tweeting, the CEO of Twitter drops a letter that he has just sent to his entire company All of this, like this weekend of like really intense like product suggestion tweeting. The CEO of Twitter drops a letter that he has just sent to his entire company that's like, oh, yes. By the way, Elon has decided he doesn't want to join the board anymore. Really what it seems like is they wanted him on the board to be, you know, a fiduciary to the shareholders and employees of the company. And he decided that what he wanted was more drastic change. And then Elon's like, cool. Musk is threatening a hostile takeover of Twitter for $43 billion. In his filing with the SEC, Musk says free speech is imperative for a functioning democracy. I now realize the company will neither thrive nor serve this societal imperative in its

current form. Elon's like, I'm willing to pay $54.20 a share. Long time Elon watchers will note that 420 is the weed number. Happy 420 to all those who celebrate. Also, the Tesla go private thing, he was going to take Tesla private at $420 per share. So like 420 is clearly a very special number to Elon. Happy 420. I mean, it's legal, right? What about this is hostile? What does like a hostile bid mean versus, you know, I'm buying 15% of your share kind of bid? Usually when you go to acquire all of a company,

you have like a cool conversation with management. Everyone's real friendly. You work out like a bid that makes sense to management, makes sense to you, the acquirer. Like maybe you have some like contracts for like key personnel you want to keep on. Like typically these things are friendly. Like there's like a bunch of meetings, you know, your lawyers kiss their lawyers or whatever it is. Fine. But in the 1980s, there was this practice from corporate raiders like Carl Icahn. Icahn is the man who's been changing the face of American

business, which he threatened, or actual takeovers of dozens of companies. They call themselves activist shareholders, but frankly, corporate raiders is a cooler term, where they would go into a company and they would buy it out. They would trim the costs. They would make it look attractive. And then they would sell it to somebody else and make a pretty big profit. And that's sort of what the hostile process is. So Elon arrived at a number without consulting the board or like doing any of like the making

nice playing footsie stuff and was like, hey, this is my offer to buy your entire company. It's, you know, $54.20 a share. This is my best and final offer. I'm cutting to the chase. I'm cutting to the very end. And if this doesn't work out, I may sell all of my shares. So it feels a little like a threat also, in addition to being like a hostile bid.

How does the world react to that? I don't think people think it's real. And I'll tell you why. Again, there's the prehistory with Tesla taking Tesla private where like the funding wasn't secured. Ordinarily, one secures funding before doing this stuff. And here, if you look at the SEC filing, he's like, this is contingent on me getting funding. And he's like retained Morgan Stanley, which good for Morgan Stanley. That's nice for them. I'm sure they're making a cute little fee to help him with this. But he hasn't got the funding ahead of time, which is sort of standard when one does this

kind of thing to indicate that one is serious. You're like, hey, check out all the cool money I have for this bid. What do you mean secure the funding, though? Isn't he like the richest man in the world? He is, but he did this TED Talk the same day that this all came out. And he's like... And I should also say the intent is to retain as many shareholders as is allowed by the law.

You don't necessarily want to pay out 40 or whatever it is, billion dollars in cash. You'd like them to come with you. Yeah, but it's, I mean, I could technically afford it. And like part of that is that he's not very liquid. Like all of his wealth is in shares of Tesla and SpaceX. And the stuff that he lives off of is mostly stuff that he's borrowing against those shares. So in order to get his hands on his own money, he would either have to sell a chunk of shares in Tesla or SpaceX,

which maybe those investors wouldn't be super happy about, or he would have to borrow more against those shares, which could potentially lead to a margin call. So he's saying, I'll put up some chunk of the money, but not all of it. I want to keep as many shareholders in this as possible, but I think we need to go private to make the kinds of changes that would make Twitter a better place. Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. But you've described yourself.

I don't care about the economics at all. And how does Twitter respond? Twitter's like, cool, so we need to think about this blah, blah, blah fiduciary duty. You can't just say, hey, you know what, we'll take it. You can't. That's not fair to the shareholders. Then they start doing stuff that looks like they're not going to be responding to it positively. So most recently, they've activated what they call a shareholder rights plan, which is more commonly known as a poison pill.

A poison pill? I've heard about this on Succession. My question would be, what's it worth in terms of the me of it all? Yeah, this is like very dumb succession. I can, I can chug it. The poison pill lets Twitter dilute their shares. And importantly, this also features the weed number. I mean, it's legal, right? What happens is for $210, you can buy this package, this offering. And then if it's triggered,

you get $420 worth of Twitter shares. Again with the $420? Blaze it. Everyone's 13 years old again. What I'm waiting for is the sex number, frankly. When Twitter comes back to Elon Musk and is like, we're not selling for below 69. I'm like right all right nice nice does it feel risky to have someone who's been perhaps one of the most you know conspicuous trolls on twitter in charge of the platform and its ideas around content moderation and free speech not to mention someone who has like two to three to four other hugely ambitious business ventures that he has to concern himself with? Well, of course it's risky. It's Elon Musk. I think it's this entire process is risky for

Twitter, not just because of Elon Musk, but because now the company is in play. And in the business world, when it comes to these kinds of corporate buyouts, there are certain dances that are done. I don't know, Elon knows that there's a dance or is willing to do it, but I bet Twitter's board does. And one way that you fend off Elon Musk is you go find yourself a white knight to make a better offer than Elon Musk. And then you're like, yeah, so we're going to go with a better offer. Thanks. Bye. I also think it's possible that people who hadn't been thinking about Twitter while it was like minding its own business are maybe now kicking the wheels and thinking, oh, do I want to make an acquisition? Maybe I should make a bid. So I think that there's

like a certain amount of chaos that has now been injected into an already chaotic system, courtesy of Elon Musk. And one of the things that I think is really interesting is that this could play out in a variety of ways, including, you know, some way that I haven't foreseen, which is maybe the most interesting part of all of this. this because both Twitter and Elon are sort of chaotic and putting those two chaotic things together very rarely results in order. Thank you. and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. With Ramp, you're able to issue cards to every employee with limits and restrictions and automate expense reporting so you can stop wasting time at the end of every month. And now you can get $250 when you join RAMP. You can go to ramp.com slash explained. ramp.com slash explained.

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. I mean, it's legal, right? Kara Swisher, journalist, podcaster, person who talks to Elon Musk every once in a while.

After talking to Liz Lopato from The Verge, I feel like I'm sort of stuck between this is like a grown-up man-child making 420 jokes, and this is an immensely important business and cultural decision at stake here. Where is your head at? I would say in the middle. You know, I think on one hand, who cares if he's a juvenile? He's had a very successful business run.

Let's focus on that. He's run companies pretty well. There's been some issues. You know, he certainly runs through employees, and, you know, he's a on that. He's run companies pretty well. There's been some issues. You know, he certainly runs through employees and, you know, he's a tough boss, but he's created two companies, particularly SpaceX and Tesla that are groundbreaking, you know, to call him an idiot, which I find kind of ridiculous on Twitter with the people who are sort of clutching their pearls. I mean, he landed a rocket on a platform in the Pacific or wherever.

It's like, what? Like, come on. Like, this guy knows what he's doing in terms of a lot of things and technology for sure. And having spent a lot of time with him, I don't like his juvenile jokes. Some of them, some of them are funny. You know, I like his memes sometimes. Some of them are tasteless. Some of them are stupid. And to him, he loves Twitter. He thinks it's run badly and he sees an opportunity. And I think that's what's interesting.

There is an opportunity here. Let's talk about Twitter for a second. I mean, Elon cares a lot about Twitter. I know you're rather active on Twitter. For all the people out there in our listening audience who are like more into TikTok or the gram, why should people care about Twitter? Well, I'm not sure they should because it's a business, right? You know, it's been a business since the beginning. And I use that as a technical term. It really is a business. It's very small. People don't realize how small it is as much as it feels outsized in the lives of media

and politicians who are both narcissists in a way. I think one of the things that's hard to put in people's minds is it's not a utility. It's not. It's just a product. And so this product has been underleveraged, even though it has global influence. There's very few internet properties that have global reach of this many people and has a business that hasn't kept up with the promise of it. And I think that's what Elon's talking about. It's been badly managed since the beginning by various and sundry people.

Its stock has sat in the doldrums since it was started. It's had brief moments of glory, which is what the Twitter board is trying to hang on to in their efforts to get a higher price. But I think what people really should just, it's a business deal. This is a business deal. This is not the end of civilization. You know, going on in Ukraine is something that we might want to pay more attention to than who owns Twitter. So Elon cares about this public square. He thinks it could be a much better run business. You wrote a column for the Times saying Elon Musk knows exactly what he is doing. What exactly is he doing? People have a hard time in this

reductive world of having complex things. I think he likes it. You know, he's like, like, remember, you don't remember, you're too young, but there was a guy named Victor Kayyem. I used to be a dedicated wet shaver till my wife bought me this Remington M3 electric shaver. I was delighted and impressed. So impressed, I bought the company. He likes the razor so much he wants to buy the company. He thinks it's under leveraged. He has an issue around free speech, which I think is a lot more hand-waving than anything else, like a lot of Silicon Valley people, because they don't get to say what they want.

They want desperately to say awful things, I guess. I don't know. It's such an important need for them when they have everything else and they can't say every word they want. They get very, very pissy. And this is Elon's big idea for Twitter, is to just make speech freer? You know, I don't really know. It's kind of, he's got some good ideas. The edit button's a great idea. The idea of an edit button's a great idea. But that's not his idea, right? No, but it's anybody. At this point, I'm like, anybody who could do it.

I don't care. You know, I think some of his product stuff is pretty good. Getting rid of bots, obviously, is a low-hanging fruit. That's been a real problem. I think he's going to find it, as many people have written, a big friggin' mess when he gets inside of it. These decisions are not so easy to make. And so I think trashing the Twitter people as much as he does is a little reductive to like, okay, but it's not that easy what they're doing. At the same time,

they're not doing a very good job, right? So even if they make a small mistake, it has big repercussions. So I don't quite know what he's going to do because if he lets it be a free for all, it turns into a place for advertisers. So then does he make it subscription? Would you pay a subscription where you get yelled at by anti-vax bots all day long? No, thank you. I'll be showing myself out, essentially. So it's tough.

If he wants to just own it, just to own it, and he doesn't have economic reasons, that's a lot of money to pay for amusing yourself. Where do you put the odds of this actually happening? If he can prove he has the money and he holds his interest, absolutely. Although I think it's a big risk to his other holdings that are much more important, like Tesla. If he has to leverage up Tesla, that's a problem. Apple's coming for him in that space. Lots of people are coming for him in that space. And so he's not going to enjoy hegemony there for too long, too much longer. The space, I think he's far and away. I don't

feel like Jeff Bezos is going to catch up to him anytime soon, although he'll try. He's got some things where he's really far ahead, and that's where I would focus, but this amuses him. It's a big risk to him financially if he does it in the incorrect way, but if he uses OPM, other people's money, he's not. But that comes with the hooks. He's got to agree to, agree to, and again, he doesn't like that. So even though he says, you know, he's the richest man in the world, this is expensive. This ain't a small lift for the richest person in the world. It's a heavy lift. And then it comes with the whole controversy, which he likes. So that's fine. I will point out one other thing is for the people that are losing their minds over Elon Musk owning it.

Guess who's a big owner? The Saudis. I pick him over the Saudis any day of the week and twice on Sunday. The amusing himself part of this, it makes it feel like a giant troll. And he is a bit of a troll on Twitter. Would it be easier for Elon Musk himself, if this were something he was taking seriously and seriously wanted, to just approach it in a more straight ahead kind of way. Certainly, he has the contacts of people in charge of Twitter. Yeah, sure. I guess if he was a different person altogether. No, he's not. He's Elon Musk. This is what he does about whatever. He makes weed jokes. This is the guy. This is who he is. I don't think he even needs to own it. I think he could get up to the level of 14%. He'll have enormous influence over this company just by

owning that much of the company. I don't know why he needs to own it. It's just harder, I guess. He's used to running everything and people, he says jump and everyone says how high. And this is not a situation. He's got a big board. So he wants full control because that's the kind of guy he is, I guess. He could have a lot of influence owning a big chunk of it. I don't see why he needs to own it. And it's a lot of money. I think the issue is he's got to prove that he has an ability to raise the money to do this and that it is economic. These hedge fund guys, they'd run over their mother to make a buck. So they want to see, even if they go free speech, they really are thinking about more money for me. And so I think the hedge fund guys

will not, he's got to have help, partners. And this week, a lot of these people who I know a little bit, I try to avoid them, have called me. And I think their big question is, is he crazy? Is he serious? They say, is he serious? And what they mean is, is he crazy? Or will he lose interest? And I'm like, I think he's quite serious, but he's also a little, you know, he jumps from thing to thing. He did it with Etsy or Dogecoin. My son, I think, said he gets bored.

You know, he's like Tony Stark, he really is. Or he's playing, he's trying to play that character, I guess. He gets bored, but as you write, he's never boring. No, never. her work at TheVerge.com. Our show today was produced by Miles Bryan, edited by Matthew Collette, fact-checked by Matthew, and Amina Alsadi, and engineered by Afim Shapiro. I'm Sean Ramos for him. It is Today Explained.