Twitter’s Frankenstein Moment

Twitter finally proved its cultural influence was more valuable than the market thought. But perhaps not as planned.

Twitter is in disarray. The company’s top executives are leaving. Its share price is unstable. Its reputation is hurting. And its employees are frustrated. “It should not be possible,’ said one employee recently, “for individuals to toy with the world in quite this way, and yet…”

Elon Musk, that individual, has thrown Twitter into chaos, but ironically he’s done so after becoming hooked to the product. Through using it, he’s grown to believe in its bull case, and agreed to buy it at an above-market premium. It’s a rare scenario: A large public company on the business end of its own productive design choices. But for Twitter, it’s reality.

For years, Twitter insiders argued Wall Street underappreciated its cultural value. Twitter might’ve been smaller than Snapchat and earned less in a year than Facebook did in two weeks. But no other service brought politicians, journalists, celebrities, and athletes together as Twitter did. For those who used it, the service often felt like the center of the world. The share price didn’t reflect it. But that had to be worth something.

With investors skeptical, Twitter worked diligently to please them on their terms. It pushed to grow its daily active users and advertising revenue, the core business metrics that mattered to Wall Street. To do it, the company optimized for engagement, trying to keep people active and on its site and coming back. After mulling whether to hide Like and Retweet counts, for instance, Twitter kept them visible — with counts ticking up in real-time. After experimenting with minimizing the native retweet, which can play to our worst impulses, Twitter brought it back with a shrug. The service grew its metrics, but in the process became an “anger video game” where retweets and likes were points. You scored by stocking outrage and trolling your haters.

Musk became the game’s best player. He built a following in the tens of millions and grew keenly aware of his tweets’ performance, using the product somewhat obsessively. Within the first five minutes on his All-In Podcast appearance his week, for instance, Musk cited the number of likes on one of his recent tweets. Musk’s intense focus on the game revealed how influential he understood it to be. Despite Twitter’s 217 million daily users — a fraction of the globe’s population — Musk called it “the de facto public town square,” embracing its bulls’ central argument. And soon, he had to have it.

Musk started loading up on Twitter shares this January, and by April made an offer to buy the company at a premium, for $43 billion. Musk made his play believing the market underpriced Twitter, missing its cultural worth. "I don't care about the economics at all,” he said at TED. Beyond ad dollars, Twitter’s value lay in its ability to shape culture, and Musk seized on issues like content moderation and speech as his top priorities. He also proposed meaningful reforms — such as authenticating all humans and minimizing bots — that seemed easier to push forward as a private company.

After Twitter’s board accepted Musk’s offer on April 25th, chaos has ruled. Musk’s taken shots at the company’s employees, its policies, and its integrity. Employees have shot back. Executives have left, sometimes on their own accord. Advertisers have called in worried. Investors have panicked. And, after the market tanked, Musk’s reconsidered the deal. Now, Twitter’s board, after initial wariness, is pressing for it to go ahead, promising to ‘enforce’ the terms.

Twitter may soon operate under Musk’s ownership, or the deal may still dissolve in legal chaos. Either way, the company finally found someone who believed in its potential as much as it did, or possibly even more. Though perhaps not in the way it hoped. In a way, amid Twitter’s long, winding and chaotic, history, this moment is only a natural next step.

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What Else I’m Reading

Microsoft raised salaries. Employees think it wasn’t enough. Meta backed a shadow group to help advance its policy agenda. Grubhub’s free lunch special was a disaster. The market is falling off a cliff. Netflix laid off 150. Celebs pulled back from pitching crypto. But Web3 apps are booming. Road deaths in U.S. reached a 16-year high. Most long covid patients never went to the hospital. A reporter investigated his high school journalism teacher.

Number Of The Week

100X

The approximate return hedge fund Pantera Capital made on Luna before the coin effectively went to zero last week.

Quote Of The Week

“Many of us while away hours on social media — also not a path to happiness. The Mappiness project found that, of 27 leisure activities, social media ranks dead last in how much happiness it brings.”

– Author Seth Stephens-Davidowitz in a New York Times op-ed on wealth and happiness.

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This Week on Big Technology Podcast: Optimism In A Tech Downturn — With Packy McCormick and Austin Rief

Austin Rief is the CEO of Morning Brew. Packy McCormick is the author of Not Boring on Substack and founder of Not Boring Capital. The two join Big Technology Podcast for a discussion of why the economic downturn has hit tech disproportionately hard and how bad it's going to get. They also look for places of optimism, and areas of opportunity. Stay tuned for the second half where we discuss whether their own investing has changed, how their media businesses will get through this moment, and the latest on Elon Musk's plan to buy Twitter.

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