Is Elon Musk the right person to lead Twitter? Our City experts debate the matter on Strictly Business
My colleague Alex Brummer and I were recently at a City dinner when a very senior banker, who is acquainted with Elon Musk, was asked what he thought motivated the Tesla founder.
The banker opined that, preposterous though it might sound, Musk was not driven by money but by a desire to change the world.
Musk himself said as much about his takeover of Twitter, which has galvanised investors around the world. ‘I don’t care about the economics at all,’ he declared.
The controversial entrepreneur, a prolific user of Twitter himself, has framed his £35billion bid in terms of his belief in free speech.
In a letter to the social media platform’s chairman, Bret Taylor, he wrote that Twitter needed to be transformed into a private company and boasted that he would unlock its ‘extraordinary potential’.
This raises two very big questions.
Is Musk, the mercurial multi-billionaire, really the best steward and guardian of free speech through private ownership of Twitter, as he believes?
And can he make it a financial success, while also running his other ventures, including electric car company Tesla and his SpaceX rocket business?
As an index of investors’ concerns, almost £100billion was wiped off the value of Tesla after Musk struck a deal to buy Twitter.
Worries about him having too much on his plate sent shares in the electric car maker down by 12 per cent. There are qualms about him selling more of his own Tesla holdings to plough investment into Twitter.
Musk also founded and is heavily involved in a brain-chip start-up called Neuralink and a tunnelling venture, The Boring Company. Even a genius can be spread too thin.
If he succeeds in taking Twitter private, he has a battery of societal, regulatory and financial challenges.
Twitter is hugely popular, but since it was founded in 2006 it has only made an annual profit twice, in 2018 and 2019.
It has 217million daily users, which is a lot, but it is behind other social networks, including FaceBook.
Bold ambition: Elon Musk has pledged to defend free speech with his leveraged buyout of social media platform Twitter
Musk is buying at a point when tech and social media stocks are under intense pressure, with a plan for the company that looks fairly vague.
What he has said so far suggests it would probably involve a crackdown on top pay, and finding ways to make money out of tweets.
That might include working out how to cash in on tweets that go viral, or charging third parties when they want to quote or embed a tweet. It could also involve charging users to tweet, though such a move would obviously risk a dramatic fall in traffic.
The deal involves taking on high levels of debt. And the arrival of Musk might, some observers fear, drive away talented Twitter staff.
Love him or loathe him, Musk is a titan: one of the great personalities of the modern business world.
In swooping on Twitter, he has made a daring but very risky move. He has defied his critics in the past, but we will find out soon enough if he has flown too close to the sun this time.