Hacker News Reader

Comment by SkyMarshal | Hacker News Reader

More like, how not to buy a business.

Elon basically started with the Private Equity leveraged buyout playbook - borrow money to buy a business, then assign that business the debt used to buy it.

But it’s unclear how he’s going to do part 2, which is to either suck enough value out of it to recoup the purchase price before it fails completely, or turn it around and make it more valuable than when he bought it.

Right now Twitter needs to drastically increase its revenue and decrease its expenses just to service the new debt load. Hence Elon firing everyone and trying to charge more for every little thing.

It’s amazing that Twitter was more or less self-sustaining prior to this, and now it’s not.

View on HN

I think it's a mistake to evaluate his success with it in purely financial terms like that.

He's proven himself thin skinned, egotistical, and capricious, and is easy to provoke into vindictive & retributive actions even if not in his best interests.

I think a big part of why he bought twitter was a sense of grievance, basically that the wrong people were getting positive attention, that people were being mean to and making fun of him and his friends & allies. He wanted to restructure the mechanics and incentives of the platform to better support the people and outcomes he values.

I'm not sure whether he succeeded by these terms either, it's still too early to tell I think. But I do think it's an important factor in evaluating whether he succeeded in what he set out to do when buying twitter.

And from that perspective "make it good or (let it) die trying" may be an acceptable compromise. He doesn't get the musk-adoration platform he wants, but at least there is no longer the musk-ridicule platform he perceived it to be.

Remember, he didn't want to buy Twitter. He pitched it in the first place purely in an attempt to get leverage over the board. He didn't really want to own it.

The board called his bluff and said "sold!", then Musk spent a great deal of time and effort trying to wiggle out of the deal. He failed, and now he's stuck with it.

Everything he's doing now is trying to minimize the amount of financial damage this debacle will cause him.

I think he did want to buy it, but then later thought that decision through a bit, or had it thought through for him, and realized his mistake. You're giving him too much credit.

It does seem like he was not in the right state of mind when he decided to buy for $54.20/share

I still think my analysis holds. Why did he want leverage over the board? For the grievance-based reason I pointed to. He didn't want to follow through with it, but once forced, why would he not continue to act based on that driver and similar petty impulsiveness we now know he experiences?

It's true though that if it loses a bucket of money and he never wanted it in the first place he might not consider it as successful as I'm guessing. We can't know his mind, but thinking of it in this way explains a lot of his behavior around twitter that is difficult or impossible to explain from a pure financial standpoint, so I'm going to stick with it for now.

Are you sure he didn't actually want to but it, before it turned out there are so many bots?

In any case, I suspect that the GP comment by giraffe_lady, explains why he was interested in Twitter at all -- why bothering trying to get leverage over the board.

Or, if he wants to eventually become the President of the US, then that's an alternative explanation (of why he cared)?

> Or, if he wants to eventually become the President of the US, then that's an alternative explanation (of why he cared)?

That would require a constitutional amendment in order for him to be eligible. He’s revealed himself to be pretty dumb, but even I give him enough credit to not be so stupid as to think he will one day he President.

He's not broadly stupid. He does seem to have the very specific failure to believe that rules or consequences apply to him. He's correct about this a lot of the time, and it's probably the source of a good deal of his success. I think he's capable of believing he could be president some day.

> Are you sure he didn't actually want to but it, before it turned out there are so many bots?

There's very little doubt in my mind. The bot thing was always just rhetorical. he didn't suddenly "discover" something he wasn't already well aware of.

Elon will never be president. Only in part because he is not a US born citizen.

Ok he's from South Africa

> Are you sure he didn't actually want to but it, before it turned out there are so many bots?

Yes. This has been covered widely and was a key reason he had to follow through with the purchase. The bot thing was an attempt to get out of buying Twitter, not something he actually believed. You need to realize that he's like Trump: lying is kind of beside the point. He'll say whatever he thinks will get him what he wants, which ultimately public adulation, however hollow that is.

> Remember, he didn't want to buy Twitter. He pitched it in the first place purely in an attempt to get leverage over the board. He didn't really want to own it.

He didn't just "pitch" it, he made a buyout offer with all the attendant SEC filings. Not the sort of thing you can accidentally do with a slip of the tongue!

Given everything he has said and done about Twitter, I think it's pretty clear he has no idea how contracts work and is very bitter about ever having to follow them.

>I think it's pretty clear he has no idea how contracts work

Is this really a good assumption for a guy who has started so many successful companies?

>started so many successful companies

The only companies he actually founded was SpaceX, and Boring if that even counts.

Given how hard he fought against buying it even after he signed the paperwork to buy it I think we're forced to say "Yes".

He's hardly the first person to get rich flouting the law.

Plus it's not at all clear how much credit he should get for the companies he invested in, aside from being a good fundraiser and hype man. There are plenty of stories about employees having to manage him to avoid him stepping on critical work.

What is your alternative explanation for how it turned out? "Didn't understand what he signed up for" is the only explanation that makes sense to me, given my second choice is "he's a fucking idiot that fell into money". Though I don't think Musk is nearly as smart as he (or a lot of his fans) thinks he is, he's no idiot, so...

And you don't have to understand contract law to start a company (or in the majority of Musk's cases, invest in an existing company), that's what lawyers are for.

> Not the sort of thing you can accidentally do with a slip of the tongue!

If your name is Elon Musk, you may convince yourself you can walk away unscathed, or with only a slap on the wrist (see the many SEC encounters).

Bit of a Pyrrhic victory isn't it?

I don't think he would be ok losing $40billion+ and with only some assuaged grievances to show for it. He's not that tempermental.

He's got a business idea for Twitter, which is to turn it into "X", the everything app he originally wanted Paypal to be 20yrs ago. Basically a US version of WeChat.

But it will be a steep climb from here, with a skeleton engineering crew that needs to both maintain current Twitter and build new X, and the debt service draining money and constraining hiring.

Reply on news.ycombinator.com