Categories: Business

Elon Musk is aware of what he’s doing. Right here’s the actual worth he sees in Twitter

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The query seemingly on everybody’s thoughts is what Elon Musk will do with Twitter. Will he put it aside? Destroy it? Will he remorse the day he hit ship on that tweet saying his intention to purchase the corporate? Or in 5 or 10 years, will all of us look again, see the way in which Musk has reworked Twitter, and shake our heads in admiration? 

The reason most beneficiant to Musk is that he’s a visionary. He sees issues we are able to’t. He does issues we are able to’t. And whereas Twitter as at the moment constructed looks as if a really unhealthy use of his capital, that is the man who created Area X. He created Tesla. Neuralink. Odds are, nobody studying this column has ever launched anybody into house or moved the complete auto trade into electrical automobiles. Possibly we must always simply give him the good thing about the doubt and withhold judgment for just a few years.

The least beneficiant rationalization is that Musk is actually no completely different from Donald Trump or Kayne West. He wants consideration forward of something and every little thing else. Dangerous consideration is a lot better than no consideration in any respect, it doesn’t matter what it requires him to say or do.

A traditional particular person can tweet concerning the Mets recreation, get just a few likes, and be pleased with it. Musk must dominate the information cycle. You don’t get a lot consideration for having a pointy tackle which left-handed reliever ought to come out of the bullpen. You get it for saying and doing both main issues, loopy issues, or each. This seems like Musk awakened at some point and stated one thing barely loopy to get consideration. It labored–we’re nonetheless speaking about it. But when he actually wished to purchase Twitter, he wouldn’t have spent months making an attempt to get out of the deal.

Or perhaps it’s extra apparent than we understand. Nobody on this planet–maybe nobody in historical past–has benefited extra from hype and pixie mud than Elon Musk. Tesla’s market cap is round $700 billion. Basic Motors’ market cap is roughly $55 billion. Toyota has a market cap of round $220 billion. Toyota’s annual income exceeds Tesla’s by a margin of virtually 4 to 1 ($275 billion to $75 billion). Even if you happen to determine someway that Tesla is as beneficial as Toyota, there’s nonetheless a half-a-trillion-dollar hole. That comes from retail investor enthusiasm. It comes from the fixed hype machine of Twitter, Reddit, StockTwits, and each different platform.

By utilizing Twitter to talk on to traders, Musk doesn’t need to depend on market analysts like most CEOs. Concepts or bulletins that may be thought-about trivial by consultants as a substitute excite day merchants and groupies, driving valuation by tens of billions of {dollars}. Controlling meaning of data could possibly be fairly beneficial, particularly if he needs to repeat the method as soon as he takes SpaceX public. If Musk can use the hype machine to supply a differential of a whole bunch of billions of {dollars} between what his firms are literally price and their market cap, then the cash he paid for Twitter is a minor price of doing enterprise. And whereas manipulating Twitter’s algorithms to impression a public firm’s share worth would almost definitely violate SEC guidelines, it wouldn’t be Musk’s first battle with the SEC.

Or it might merely be that individuals who personal technique of communication are highly effective and Musk needs extra safety. Jeff Bezos benefitted from shopping for the Washington Publish as a result of his critics on the left grew to become hamstrung by the truth that Donald Trump hates the Washington Publish, making the enemy of their enemy their good friend. Maybe in Musk’s thoughts, Twitter is the modern-day model of the Washington Publish–besides that as a substitute of the $250 million that Bezos paid for the Publish, Musk spent $44 billion.

Nobody spends $44 billion to profess their love without cost speech. Whereas betting in opposition to Musk ought to most likely include a warning label, it’s laborious to see how going from the picture of a radically sensible inventor to somebody caught within the endless morass of moderating content material and refereeing between left- and right-wing nuts is an effective transfer.

Possibly proudly owning Twitter in the end makes his different firms price a whole bunch of billions extra. Possibly proudly owning Twitter scares off potential critics. Possibly he simply sees one thing we don’t. However almost definitely, Musk fell prey to the identical temptation as many wealthy and highly effective folks all through historical past: he wished consideration, he figured he knew higher about every little thing than everybody else, and he couldn’t maintain his mouth shut. Now he’s getting precisely what he requested for.

Bradley Tusk is the founder and CEO of Tusk Ventures.

The opinions expressed in Fortune.com commentary items are solely the views of their authors and don’t essentially replicate the opinions and beliefs of Fortune.

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