Sunday, December 18, 2022

Conjuring drama – inside Elon Musk’s Twitter takeover


Conjuring drama – inside Elon Musk’s Twitter takeover

Kurt Wagner, Sarah Frier and Brad Stone

It was Day 5 of Elon Musk’s riveting, rambunctious takeover of Twitter. The owner and self-proclaimed Chief Twit had spent much of the last weekend in October at his new company’s San Francisco headquarters among people desperate to please him: employees angling to keep their jobs amid steep layoffs and personal advisers helping him with the turnaround. He arrived in New York at 2 am that Monday with plans to visit Twitter’s offices in Chelsea and spend the day courting advertisers, the group most important to the company’s survival.

Elon Musk Getty

In the early afternoon, a team from Horizon Media stopped by. Horizon is one of the largest ad agencies in the world, chaperone to brands such as Capital One and Burger King. Also in attendance were two ad execs from Twitter, as well as two major fans of Musk’s: investor and podcaster Jason Calacanis and, inexplicably, his mother, Maye Musk. Horizon chief executive Bill Koenigsberg sat at the head of the table with a colleague. “Some of my clients knew that I was going to meet you,” Koenigsberg said, “and they all asked, ‘Is he going to get Donald Trump back on the platform?’ ”

Musk had already proclaimed publicly that he didn’t believe in permanent Twitter bans. So here was a moment for a careful response – perhaps an explanation of how the company planned to guard against the former president’s predilection for misinformation and incitements of violence upon his return. Instead, Musk replied that it was the question he was getting from everyone, too, and, sitting there, composed a tweet on his iPhone: “If I had a dollar for every time someone asked me if Trump is coming back on this platform, Twitter would be minting money!” He paused, surveyed the room and asked everyone whether he should post it. One of the Twitter ad execs strenuously objected. Musk laughed and posted the tweet anyway – and fired the dissenter later that week.

Twitter, two months into the New Elon Era, continues to operate entirely at his whim. His antics extend the chaos – in the courts, in the media and on Twitter itself – of the seven-month legal battle that resulted in his purchasing the platform for $US44 billion ($66 billion), much more than it was reasonably worth. He capstoned the deal on the day it officially closed by ousting almost all of its top executives and limiting the enforcement of its content moderation policies. That was Day 1, back when we were all young and our foreheads less furrowed from squinting in disbelief.

Since then, Musk has sacked more than half of Twitter’s workforce; floated, rescinded and refloated an idea to verify user accounts for $US8 a pop; publicly linked to a bogus news story about the violent attack on the husband of the speaker of the US House of Representatives; alienated more than half of Twitter’s advertisers, forcing them to pause spending; and promised to reinstate not only the former president but a rogue’s gallery of right-wing troublemakers who were previously banned for spreading misinformation and fomenting violence. And he’s wrapped it all in overheated indignation about free expression – even leaking internal documents through a pair of friendly journalists, in a release he dubbed “the Twitter Files” and hyped to his 120 million followers with a popcorn emoji. “This is a battle for the future of civilization,” Musk tweeted. “If free speech is lost even in America, tyranny is all that lies ahead.”

Has there ever been such a Shakespearean Silicon Valley tale – an iconoclast, consumed by occasional bouts of mad, Lear-like outbursts, whose only impediment to expanding his empire is his own conspicuous character? The visionary behind Tesla and SpaceX should be basking in the adulation of a society grateful for his contributions to low-emission transportation and space exploration. Yet he can’t resist the attention that comes from shock-tweeting, no matter the ramifications for his companies, legal bills and personal reputation. Longtime colleagues say he struggles with self-reflection and has an inability to take constructive feedback or tolerate criticism.

At the perpetually fragile franchise that is Twitter, the result has been something close to disaster. He’s engulfed the company in haphazard cost-cutting and picked a fight with Apple. Advertisers have fled. High-profile users such as musician Elton John, screenwriter Shonda Rhimes and model Gigi Hadid have all noisily departed the platform, citing an increase in misinformation, racism and other hateful content. Tesla’s stock has fallen by half since the saga began.

It didn’t have to be this way. Bloomberg Businessweek interviewed dozens of former employees and partners – some of whom were privately impressed with Musk and his sincere interest in grasping the issues facing Twitter before being repelled by his public behaviour. They describe a leader, fully capable of charm, who deeply understands the service he’s trying to fix but is so addicted to its regular injections of ego gratification that he often sets the whole thing aflame.

Musk himself, of course, disagrees with that characterisation. “The proof will be in the pudding,” he wrote in an email to Bloomberg Businessweek. “These are early days. Obviously, Twitter is working fine with far fewer people. We have reduced hate speech and bot/troll activity by roughly one-third, while significantly increasing daily users, so Twitter is actually doing better.”

It’s fitting that Musk’s official arrival at Twitter’s headquarters right before his deal closed started with a joke. He walked into the lobby at 10th and Market streets in San Francisco carrying a bathroom sink, a stunt orchestrated so he could tweet to his followers: “Entering Twitter HQ – let that sink in!” It was a reference to a meme where people punctuate their truth bombs with images of sinks in doorways.

Employees found no reason to laugh. Not only had they spent months watching their new boss disparage the company he was planning to buy, but the company had also already frozen hiring, cut down on corporate spending and travel, and shuttered offices. Staff knew layoffs were coming; now the richest man in the world had shown up, punching down with a jokey meme.

The dismantling of Twitter’s leadership started on Day 1, once the deal closed. The new boss fired CEO Parag Agrawal and chief financial officer Ned Segal; both had slipped out of the building earlier that day in anticipation. Vijaya Gadde, the widely respected head of policy and the architect of Twitter’s content policies, was also fired. Sean Edgett, the general counsel, was ignominiously escorted out of the office as employees prepared for the company Halloween party.

Almost everyone else on Twitter’s executive team resigned shortly thereafter and was replaced by a cadre of Musk loyalists whom some employees started referring to as “the goons.” They included investors such as Calacanis, former PayPal exec David Sacks and Andreessen Horowitz partner Sriram Krishnan; Musk’s personal lawyer, Alex Spiro, and business manager, Jared Birchall; and SpaceX board member Antonio Gracias.

That group never took formal roles at Twitter, but some were added to the corporate directory and started advising Musk on everything from product ideas to layoffs. As Sacks met with Twitter’s product leads, he floated the idea of putting the entire service behind a paywall. In a separate meeting with sales leaders, Gracias hyped his pal Musk: “He’s here to win,” he said, according to a former employee. “He’s a winner. He wins everywhere.”

Twitter’s San Francisco headquarters. Bloomberg

Musk set up shop on the second floor of Twitter’s San Francisco office, though to most Twitter employees he may as well have been on Mars. It would be almost two weeks before the rank and file heard from him. There were no emails, no all-hands meetings, no formal announcements from on high that Musk had even taken over. It was a strange way to conduct a courtship, though it also spoke to his intended plans: He wasn’t there to make friends.

On Day 2, Musk asked engineers to print out their most recent code so he and his team could review their work and evaluate whether they were making a meaningful contribution. The directive led to employees milling around the printers with stacks of paper before somebody realised that printing Twitter’s entire codebase might pose a security issue. Employees started milling around the shredders instead.

At the same time, Musk brought in dozens of engineers from Tesla to start collecting information on ongoing projects and lay the groundwork for a massive downsizing. Twitter managers were instructed to stack-rank their employees, with rankings due hours after they were assigned. No one knew for certain how many people would be laid off, though at first the numbers seemed reasonable – 25 per cent to 30 per cent for many teams. Some employees who had no desire to work for Musk petitioned their bosses to be included on the list of layoffs, and just because you were making a list of your own didn’t mean you weren’t going to be on somebody else’s.

Still, those few Twitter executives who earned one-on-one time with Musk early on walked away impressed. The CEO seemed thoughtful and curious. He asked a lot of questions and, in many cases, said the things people wanted to hear. He promised to consult a special advisory council before making decisions on whether to bring back banned accounts such as Trump’s. In those first few days of the New Elon Era, he managed to restore a little hope.

‘There is no choice’

Yoel Roth, Twitter’s head of trust and safety, was among the optimists. Because Musk believed that Twitter had overstepped on banning accounts and fighting misinformation, and that it was too heavy-handed in policing user content, Roth assumed he would be fired immediately – he largely oversaw those policies. Instead, Musk started leaning on him privately and publicly, retweeting his posts and encouraging people to follow him for updates on Twitter’s election plans. It was an alliance that surprised everybody, Roth included.

By Day 6, the severity of Musk’s planned cuts started to crystallise. Chief marketing officer Leslie Berland, the last remaining member of Twitter’s executive team and the person most closely linked to its employee-friendly corporate culture, was fired. Word soon leaked that layoffs were going to be much bigger than managers had initially expected: Musk was planning to cut 50 per cent of Twitter’s more than 7000 employees later that week. Late in the evening on Day 8, and into the early-morning hours of Day 9, hundreds of employees converged on Spaces, the social network’s tool for broadcasting live audio, taking turns sharing stories about their time at the company and grieving for what might come next.

To Musk, cutting half of Twitter’s workforce was an unavoidable business decision. “Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4M/day,” he tweeted. To many employees, the layoffs signified the end of Twitter as they knew it – the death of a company culture that had, for better or worse, become a part of the product’s identity. Some employees whose jobs were saved woke up the next morning wishing they’d been fired instead.

The chaos machine chugged along. Twitter’s engineering teams quickly realised they had fired too many people by mistake, and some employees were approached about returning. In one meeting after the layoffs, Gracias, the SpaceX director, was left once again to defend Musk, who’d become a punching bag for now-former employees watching the company in turmoil. Gracias asked employees to show the CEO some empathy. “This is hard for him,” he said.

Musk woke up on Day 12 and tweeted multiple masturbation jokes. On Day 14 he killed Twitter’s famous work-from-anywhere-forever policy in the middle of the night. On Day 18, despite his crowing about free speech and tweeting that “comedy is now legal on Twitter,” he began firing workers who criticised him on Twitter or in its internal Slack.

Roth resigned on Day 15. “There were decisions and requests that were quite top-down and at odds sometimes with this notion of ‘We’re not going to make big decisions until we have this council, until we consult with people,’ ” he said at a Knight Foundation event.

Other newly former employees were more succinct. “I said it before and i’ll say it again,” tweeted a fired engineer named Sasha Solomon. “kiss my ass elon.”

Advertisers retreat

Paul Pelosi, husband of House Speaker Nancy Pelosi, was attacked in their home. AP

As the courtship with employees soured, Musk also missed an opportunity to woo, or maybe just reassure, Twitter’s advertisers – the source of 90 per cent of its $US5 billion in revenue last year. Leading industry figures, including Koenigsberg at Horizon Media and Mark Read at WPP, clearly want to forge a productive relationship with Musk; for starters, Tesla doesn’t pay for traditional advertising (Musk says he’d rather invest in innovation), but they hope that will one day change and Tesla will become a major client. They also seek a stable online alternative to Facebook, Instagram and TikTok.

So it was with the possibility of winning over advertisers still hanging in the air that Musk woke up on Day 4, two days after a deranged man hopped up on right-wing propaganda had broken into the San Francisco home of Nancy Pelosi, the speaker of the House, and assaulted her 82-year-old husband, Paul, with a hammer. Replying at 8.15 am Sunday morning to a tweet from former Secretary of State Hillary Clinton blaming Republicans for inciting violence with conspiracy theories, Musk linked to an article from an uncredible website that proposed an anti-LGBTQ theory behind the attack. “There is a tiny possibility there might be more to this story than meets the eye,” he tweeted.

Advertisers were already alarmed by the surge in hate speech on Twitter in the wake of layoffs that decimated the site’s content and safety teams. After the Pelosi tweet, they retreated en masse. Ad giant IPG Mediabrands sent a letter to clients including American Express, Coca-Cola and Levi Strauss & Co. advising them to stop spending on the site. Chevrolet, Ford and Jeep all announced they were pulling back – quietly thrilled, perhaps, to have an opportunity to stick it to an auto industry adversary. AMC Networks, AT&T and Kellogg didn’t make public statements but appeared to withdraw spending as well, according to a report by Media Matters for America, which said Musk had driven away half of Twitter’s top 100 advertisers.

On Day 32 Musk attacked former National Security Council member Alexander Vindman. AP

Musk deleted the Pelosi tweet but has yet to quell the chaos or alter his behaviour. On Day 16 he scrapped an ill-considered plan to sell blue verification badges, after numerous impostor accounts exploited the service to impersonate a range of brands and popular figures, including Musk himself. (An internal report from Twitter’s trust and safety team that Bloomberg Businessweek reviewed had warned Musk this would happen, but it was apparently ignored.)

Over the next few weeks, he conducted a poll of his followers on whether to reinstate Donald Trump’s Twitter account (Day 23), then did it (Day 24). On Day 32 he attacked former National Security Council member Alexander Vindman as “both puppet and puppeteer”; Vindman had testified publicly against Trumpin the first impeachment hearing. On Day 33 he linked to a fake CNN headline and mingled with a number of accounts linked to far-right nationalism, racism and antisemitism. He also continually embraced right-wing bugaboos: “Cancel culture needs to be canceled!!” he tweeted (Day 35).

It was shocking coming from a major tech company CEO – a studiously apolitical group – but not particularly surprising coming from Musk. His journey from hero of the save-the-planet wing of the Democratic Party to right-wing flag-bearer has been years in the making. It was seemingly provoked by a series of real or perceived attacks from his left flank – from unions such as the United Auto Workers, which hopes to organise Tesla workers; COVID 19-wary lawmakers in California who shut down Tesla’s factories during the early days of the pandemic; and labour-friendly leaders like President Joe Biden, who declines to mention Tesla in speeches about electric cars and talked about extending EV credits for only unionised automakers. When Musk feels ambushed, he lashes out.

For advertisers, that’s bad for business. “When things are hot, and in the news and unpopular, you don’t want to have your content associated with that,” says Katie Harbath, the former director of public policy at Facebook. Musk, she says, is acting like a politician – saying the right things in meetings, then playing to his base’s lowest impulses in public. “I am a bit shocked that he thought that there wouldn’t be ramifications from his actions.”

By any measure, Musk is great at using Twitter. Tesla doesn’t have to pay for advertising in part because of his unmatched ability to cultivate hype and intrigue and make it impossible for the media to resist his story. He has 120 million followers, which, setting aside his own claims about how many Twitter users are real people and not bots, makes his account one of the site’s most popular. He posts every few hours (often while on the toilet, he claims) and is growing adept at using his ownership of the service to drive his own fame and exert a Trump-like grip on the news cycle.

Conjuring drama

Earlier this month (Day 37) he gave a journalist “unfettered access” to emails and documents from the prior management pertaining to Twitter’s controversial content moderation decisions, including temporarily blocking a story about Hunter Biden’s laptop. He discussed the revelations of the “Twitter Files,” as he called them, from aboard his private jet on Twitter Spaces, with about 100,000 people listening. Over the course of two and a half hours, Musk declared his commitment to free speech, his disdain for the “mainstream media” and the personal risks he said he was undertaking by sharing supposedly sensitive information. “I’m definitely not going to be doing any open-air car parades. Let me put it that way,” he said on the chat. “It’s not that hard to kill me if somebody wanted to, so hopefully they don’t.” Meanwhile, the former executives who were mentioned in the documents began to face online harassment.

Thus far, Musk has conjured so much drama around the future of Twitter that the site’s faithful are glued to their feeds to see what happens next. Every few hours there’s another bombshell from Musk’s account, usually accompanied by an unsavory meme. (On Day 25 he posted one that depicted Twitter as a young woman inviting anal intercourse from Trump.) The reward: record new sign-ups and time spent on the site, at least according to Musk.

Musk antagonised and then made up with Apple CEO Tim Cook.  AP

Some might call this “trying something new.” A main dig at Twitter from tech people has always been that the site never changed. It took years for staff to decide to extend the tweet character limit from 140 to 280, for instance. Tiny tweaks, such as changing the icon for favourites from a star to a heart, sparked furious protests from users accustomed to bland consistency. Innovative ideas, including Vine, the Twitter-acquired antecedent to TikTok, shrivelled in management’s indecisive hands.

Engineering resources had long been devoted to solving the toxicity problem. The very mechanics of the site tended to amplify and reward humanity’s worst impulses. Twitter spent years prioritising tools and rules to restrain the worst of it, angering users like Musk who love their off-colour comedy.

Inside and outside Twitter, there’s speculation – or at least hope – that Musk knows exactly what he’s doing and is putting on a performance. And that advertisers, too, are doing a calculated dance: they’re following the pack to stop spending on Twitter, gaining the benefit of looking responsible while under pressure to cut budgets anyway, and in a few months, when the drama has settled, they’ll creep back on. The majority of the brands that boycotted Facebook ads during protests against racism in July 2020, for example, have returned there. Musk spent the majority of Day 33 antagonising Apple, Twitter’s biggest advertiser; on Day 35 he was taking a conciliatory walk with CEO Tim Cook at the company’s campus in Cupertino, California. And on Day 37 he revealed the comforting fact that he, too, has limits, booting the rapper formerly known as Kanye West off the site for tweeting a swastika.

In the meantime, there are bills to pay, and risks to moving as haphazardly as Musk has. In his rush to cut staff before understanding how Twitter worked, he fired reps who oversaw valuable relationships with advertisers, as well as employees in charge of complying with regulations and an entire team devoted to enterprise products that brought in hundreds of millions per year. Laid-off workers who managed advertiser contracts and invoices didn’t have the option to transfer those important documents to the people who remained, according to people familiar with the matter. (Twitter uses a document permission system that requires an override from the human resources department to open access to unauthorised employees; layoffs in HR temporarily derailed that process.)

Musk’s solution is to suggest that all contracts are malleable. He’s asked staff to hit the phones to renegotiate lower prices for everything, threatening to throw around the weight of his other companies if things don’t go his way.

That might not be enough. Musk’s borrowing to overpay for the acquisition is now Twitter’s problem, to the tune of an estimated $US1.2 billion per year in interest payments, at a variable rate. The first check is due to the banks on Day 91, at the end of January. Reducing spending is key, because as Musk pointed out, Twitter – which was profitable as recently as the first quarter of this year – is now losing $US4 million a day.

Musk never signed his name to the memos announcing job cuts or answered questions about them, so his first in-person address to employees as their owner happened on Day 15, in a meeting that was sparsely attended because workers had less than an hour’s notice. Musk said he’d done something financially risky that year – selling billions in Tesla stock – “for Twitter. To keep Twitter alive.” Everybody needed to commit to a version of Twitter that was “hardcore,” he said, and do everything they could to promote the $US8 Twitter Blue offering to ensure the company’s continued existence. “We just definitely need to bring in more cash than we spend,” Musk said, his back to a wall of greenery and a giant wooden bird logo on the 10th floor of the headquarters. “If we don’t do that and there’s a massive negative cash flow, then bankruptcy is not out of the question.”

The staff, thinned out by layoffs and resignations, had never previously been asked so directly to confront the paradox that has dogged Twitter since its inception: its addictive appeal to many internet users and its fundamental failure to ever sustain rapid growth.

Musk continued. Fees from subscriptions would be crucial for offsetting a decline in advertising revenue during a recession, he predicted. Twitter would need to build a short-form video tool like it used to have with Vine, and compensate creators better than YouTube does. Adding a payments capability – including giving users high-yield money-market accounts and debit cards – was also a “high priority.”

It didn’t sound like a coherent plan, multiple employees say, and to them, Musk appeared to be winging it. “You get the sense he hasn’t thought through stuff – he’s just talking in front of people,” one attendee says.

Still, Musk’s tone was sincere. In the room with him that day, and until he lobbed his next 280-character hand grenade, it felt possible to accept him as Twitter’s new leader and get excited to try something different. “Part of me keeps thinking, ‘Maybe he’s not as bad as I think,’ ” says one former executive. “And then he tweets something, and I think, ‘Yeah, maybe he’s worse than I thought.’ “

More about Elon Musk

— Bloomberg Businessweek