Elon Musk's Dealbook Meltdown
Let us all point-and-laugh together
Elon Musk went on stage yesterday at the New York Times Dealbook summit and had a complete meltdown. I’ve seen good pieces about the, uh, episode from Mike Masnick and Paris Marx, but it really seems like more people ought to be making fun of Elon today. (WTH?!? Did the worst person in the world die or something?)
It’s really worth watching the video clip below. Transcripts don’t do it justice.
I have four notes:
(1) Last year, Sam Bankman-Fried accepted the Dealbook interview invite and ruined himself. This year, it was Elon. If this trend continues, they should just hand the reigns over to Isaac Chotiner.
(2) Andrew Ross Sorkin did all he could to make this a friendly interview for Elon. I lost track of the missed opportunities to ask the obvious, tougher question.
-Advertisers aren’t suspending advertising because they “don’t feel comfortable” on the platform. They’re suspending (and now outright terminating) advertising because being on the platform is bad for their brands. These are companies, not delicate flowers.
-If the company declares bankruptcy, advertisers aren’t going to say, “Elon, YOU killed the company, because you said these things and they were inappropriate things, and they didn’t feel comfortable on the platform.” What they’re going to say is “LOL it isn’t our responsibility to keep your business solvent. That’s you job, you ketamine-addled chump.”
(3) It’s just incredibly clear that Elon Musk has no recollection of how to interact with a room full of people who aren’t primed to say “masterful gambit, sir” to whatever half-formed thought tumbles forth from his jaw.
(4) The bankruptcy line — “if the company fails, because of an advertising boycott, it will fail because of an advertising boycott, and that’s what will have bankrupted the company, and that’s what everyone on earth will know.” — signals that Musk is searching for a way to save face while shutting down the company and walking away.
…Like, I’m sure he would be thrilled if XTwitter became a superapp and replaced everyone’s bank or whatever. But the reality is that (a) Musk offered to buy Twitter on a (drug-addled) lark, (b) he tried very hard to get out of buying it, (c) then the Delaware Chancery Court made him buy it, (d) nothing has gone as-planned since he took over, and (e) he isn’t having any fun. Even Walter Isaacson wasn’t able to make the situation look good.
That being said, my hunch is that this won’t be nearly a good enough scapegoat to spell the end of the company. The story just doesn’t hang together at all — “The company failed because free-speech hating advertisers stopped spending money on it” sounds way too much like “the company failed because it stopped being a compelling product to advertisers.”
I staked out a prediction back in March (“How long does Twitter have left?”) that the platform would declare bankruptcy within six months (September). Obviously that date has passed and X is still clunking along. But I still suspect that I had the mechanics right, even if the dates were wrong. The specific prediction is that, once the FTC levies the (inevitable, gigantic) fines for repeat, glaring violations of the existing consent decree, Elon would declare bankruptcy. From the piece:
Twitter operates under a consent decree with the FTC. Just last May, the company was fined $150 million for user privacy violations. That was back when Twitter had thousands of employees and was notoriously slow and careful in rolling out new features. Twitter is required under the consent decree to dutifully report any changes in how it “maintains and protects the security, privacy, confidentiality, or integrity of any nonpublic consumer information.”
(This is one of the many reasons why Elon-Twitter can’t afford to act like a startup, even if Elon would desperately like to reclaim that startup vibe from his youth. Startups don’t have major FTC reporting requirements. Huge companies with a checkered regulatory history do.)
Elon-Twitter has been flagrantly ignoring the FTC consent decree. The FTC has already opened an investigation. Current and former employees have talked openly about the regulatory exposure he has created. One of his former lawyers basically shouted warnings on the company Slack, encouraging people to seek whistleblower protection.
My hunch is that the fines will be the final straw. When the fines come, Elon is going to seize on them as a reputational life raft.
He’ll declare bankruptcy and blame the regulators. “I was THIS CLOSE to turning around this important, innovative company that is a threat to the mainstream media and all those crooked politicians,” he’ll say. “But then the liberal bureaucrats stepped in and fined the company out of existence! There’s nothing I can do about it. Twitter is dead now. It all would’ve worked out if not for that meddling government.”
(This is what I’ve called the Reverse Scooby Doo theory of tech innovation. “It all would’ve worked if not for those meddling regulators!”)
I noted in that post that I had no clear sense of how long the FTC investigation would take, but figured 6 months seemed about right. It has now been nine months, and the FTC investigation is still ongoing.
I’m not going to start dealing in Friedman units here. Regulatory studies aren’t my field. But the Dealbook interview leaves me further convinced of the relevant narrative beats.
Zombie Twitter will stumble along at a financial loss until Elon can find a villain to hang its failure on. Last night, he talked himself into casting Disney and IBM in that role. But that’s never going to work. Regulators are the traditional villain in the Silicon Valley techno-optimist story. That’s the standard formula, and he’ll return to it when he has the opportunity.
In the meantime, we have a collective obligation to make fun of the guy.
I mean, come on… “tell it to Earth?!?”
Elon Musk’s fortune, power, and influence are based on the mythology that he co-created with the tech press over the course of two decades.
He has set $44 billion on fire by buying and wrecking Twitter.
We ought to make sure it’s the death knell for the mythology as well.
So, in closing…