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The October 13 launch of SpaceX’s Starship and capture of its superheavy booster stage ranks among history’s greatest engineering triumphs. If you’re one of the few sentient beings on the planet who missed the video, you’re in for a treat. Starship is just one of the accomplishments of its inventor, Elon Musk, perhaps the most productive engineer of all time.
Among his other accomplishments: Tesla Inc., which revolutionized the electric vehicle industry; the Falcon 9 launch vehicle, which uses the same booster recapture technology as the Starship and now lofts into orbit several times more satellites than all of its competitors combined; and Starlink, which provides affordable direct worldwide satellite internet and is coming soon to your cell phone.
This record of success piled on success renders Musk’s inept 2022 purchase of Twitter and its subsequent mismanagement all the more puzzling, a story unraveled by Kate Conger and Ryan Mac’s Character Limit: How Elon Musk Destroyed Twitter.
Twitter in peril
A media company is in big trouble when its advertisers are the ones pointing out its moral rot. Briefly summarized, Musk, an enthusiastic poster on the site, decided to purchase it on a whim in 2022.
By that point, Twitter’s reputation and finances were a mess, a classic example of a tech firm founded by a visionary who, when it came to the dull day-to-day of management, could not run a church bake sale. The visionary in this case was Jack Dorsey, who by this point had already been ousted and rehired and whose aloofness and chest-length beard did not distract from the fact that he was zooming to board meetings from tropical resorts around the planet.
Twitter’s ad revenue, which peaked at $5 billion in 2021, subsequently fell as skittish advertisers bailed. Musk, who even before the purchase had a history of tweeting dangerous nonsense, accelerated the process; early in the pandemic he posted that “the coronavirus is dumb” and that “there were close to zero new cases.” In fact, thousands were falling ill each day, scores of whom would suffer agonizing, lonely deaths.
Given Twitter’s rapidly corroding ad revenue, the takeover’s $44 billion bid made little sense. The major reason for the ludicrously inflated offer was that Musk, out of either paranoia or grandiosity, had refused to sign the de rigueur NDA. The document would have given him visibility into the company’s parlous finances. Instead, he effectively blinded himself to the fact that he was about to acquire a crippled, dysfunctional company in a deal saddled with a volcano of new debt.
Following the purchase, he did nothing to stop the rampant misinformation, overt racism, and conspiracy theories that had spooked advertisers, a cesspool increasingly stirred by Musk himself, most notoriously when he retweeted an overtly anti-Semitic post with “You have said the actual truth.”
Opening missteps
Musk completed the purchase in November 2022. Instead of carefully crafting personnel cutbacks, he took a chainsaw to entire departments. Perhaps the most inept and poorly thought out change was his decision to attempt to relaunch the previously unsuccessful paid subscription to the platform’s coveted “blue checkmark.”
The tiny but crucial indicator confirmed that the owner was indeed the government official or celebrity signified by their username. Going forward, all one needed was a phone number, photograph, and payment of a modest Twitter Blue fee.
Users reacted to Twitter Blue with outrage: Posted actor William Shatner, “I’ve been here for 15 years giving my [timely emoji] & witty thoughts all for bupkis; now you’re telling me that I have to pay for something you gave me for free?” For years, Shatner’s account drove significant traffic to the site, and his blue checkmark told users that @WilliamShatner was indeed the real thing. Asking him to pay for the privilege added insult to injury and left his account followers to wonder if @WilliamShatner might not be an anonymous fake with $8 per month to spare.
The company’s dysfunction under Musk manifested in a meeting where employees warned that Twitter Blue risked rogue actors impersonating police departments or other key government officials. Musk responded that such infractions would be halted swiftly and with vigor, completely unaware of the practical impossibility of monitoring millions of accounts in real time, a task not made any easier by laying off most of the platform’s content moderators.
When warned that state actors like China and Russia were sure to jump through the gaping Twitter Blue window, Musk replied that governments were, in general, incompetent – “the DMV” in his words – and that, furthermore, the Chinese and Russians could not possibly obtain phone numbers or credit card accounts. The meeting’s attendees wondered what he was talking about.
When another employee speculated, for example, about the possibility of a Twitter Blue account holder posting fake pictures of flooding that might prompt a mass evacuation, Musk had an equally remarkable answer: “Safe to say we’d suspend that account, and we’ll keep their eight bucks.” Things rapidly went downhill from there; Musk ended the meeting with a rant about how to deal with a World War Z zombie wave attack.
The employee warnings proved prophetic: “O.J. Simpson” soon confessed to Nicole’s murder; “Ted Cruz” copped to eating babies; and “Tesla” announced nonexistent products. To the horror of the company’s few remaining content moderators, Musk, oblivious to the potential for harm, initially found these fake postings hilarious. But when “Eli Lilly” announced a free insulin giveaway, advertisers revolted, and when “Kari Lake” graciously conceded the governor’s race, Musk’s smile disappeared. “Turn it off,” he finally ordered.
Musk’s reckless abandon
In the not-too-distant future, Twitter’s post-2022 personnel procedures will likely yield a Harvard business school case study on the demolition of company morale, starting with a loyalty oath that swiftly made almost a third of employees quit, followed by more layoffs. Offices reeked of garbage, sweat, and overflowing toilets, the result of Musk’s elimination of janitorial service. As a result, employees not infrequently walked to neighboring cafes for pit stops. Musk trimmed his workforce in the most ham-handed manner possible, firing high-level executives the day before their shares vested and cutting off those at the lower rungs from their health insurance in the middle of cancer treatments and IVF.
Perhaps the most bizarre of the book’s themes concerns Musk’s obsession with the fall-off in followers of his personal Twitter account, where he posted up to hundreds of times per day. When a hapless engineer, summoned to uncover the reasons behind the decrease, told Musk that the apparent cause was a general diminution of public interest in him, as reflected in Google searches for his name, Musk yelled at him “You’re fired! You’re fired!”
Not long thereafter, he spent most of the Eagles/Chiefs Superbowl game, which he attended in Glendale, Arizona, hunched over his phone, obsessed with the fact that President Biden’s pro-Eagles tweet had received more eyeballs than his. Enraged, he left the game early, flew back to Twitter headquarters in San Francisco, and convened an emergency meeting with the firm’s engineers to determine the source of the outrage.
Musk’s take-no-prisoners modus operandi extended beyond his workers and Twitter posters to his landlords, whom he simply stopped paying. In some cases, this enabled Musk to negotiate lower rents, but in other locations, employees found themselves summarily evicted.
The rivalry with Mark Zuckerberg provides perhaps the most amusing glimpse into Musk’s personality disorder. While he initially got along with Facebook’s owner, Musk viewed him as nothing more than a talented code monkey who manufactured nothing.
When the blowup inevitably occurred, Musk challenged Zuckerberg to a cage match; alas, Musk was flabby, hobbled by a neck injury, and nearly 13 years older than Zuckerberg, who routinely sparred with martial arts professionals. Zuckerberg, demonstrating an emotional maturity that Musk lacked, deftly gave him a face-saving offramp from demolition. Shortly thereafter Musk changed the name of the firm, one of the legendary few to morph into a verb, to X.
The few remaining content moderators increasingly began to worry about jail time. For more than a decade, the company had operated under an FTC consent decree. That settlement mandated safeguards for user privacy and periodic security audits, which subjected executives and employees to criminal sanctions for errors and omissions.
The content moderators – already demoralized by the layoffs and Musk’s disregard for the consequences of the company’s lax policing of conspiracy theories and overtly violent content – began resigning in droves. At the top of the resignee list was Yoel Roth, who had been in charge of content moderation. (Two years previously, after Roth labeled Donald Trump’s 2020–2021 tweets about election fraud as inaccurate, he had received death threats credible enough to make him and his family to flee their home.)
A cocktail of paranoia and immaturity
Conger and Mac offer some intriguing hints about the disjunction between his prowess in engineering and in media. For starters, Musk’s sense of humor and need for attention seem not to have evolved much beyond middle school.
When retelling a story he heard from a Google executive about how the company avoided antitrust scrutiny by keeping its search market share below 70 percent, he looked at his audience and exclaimed, “Get it? Sixty-nine percent?” His audience, either unamused or horrified, apparently needed prompting, so Musk repeated: “Sixty-nine percent!”
Musk also exhibited an industrial-scale susceptibility to conspiracy theories. When Paul Pelosi, husband of the Speaker of the House, suffered near fatal injuries from a deranged hammer-wielding attacker, Musk retweeted a story from the Santa Monica Observer that Pelosi had in fact suffered from a violent encounter with a male sex worker. That particular august online venue was known for amplifying patent nonsense, such as the theory that Hillary Clinton was deceased and replaced by a body double.
Finally, Musk’s paranoia astounds, as when he imagined that not only were a large percent of Twitter’s posters bots – a not unreasonable hypothesis – but that so too were many of the company’s employees. Soon after the purchase, he commissioned a task force that successfully confirmed the corporeal existence of all on the payroll. It would seem that while complex engineering tasks are not much affected by glaring deficits in judgment, emotional intelligence, and maturity, such shortcomings do degrade performance at the helm of a media company.
The history of modern capitalism is replete with the stories of visionary entrepreneurs who, inundated with societal worship and surrounded by well-paid yes men, go off the rails: the early eighteenth century South Sea Company’s John Blunt, the nineteenth century English railroad magnate George Hudson, early twentieth century utility king Samuel Insull, and a bumper crop of twenty-first century miscreants – Adam Neumann, Elizabeth Holmes, and Sam Bankman-Fried – to name but a few. Financial journalists would do well to emulate Conger and Mac’s eagle eye for the classic triad of financial disaster: charisma, megalomania, and fawning press coverage.
Character Limit’s second half, which narrates Twitter/X’s implosion under Musk, carries the reader along with rollicking, page-turning prose. The same, though, cannot be said for the book’s first half, which covers the legal and financial minutiae leading up to the company’s purchase in frequently painful detail; given the book’s near-door stop length, it should have been aggressively edited down.
Despite the book’s initial slow going, Conger and Mac have supplied a timely reminder of the two sides of the raw entrepreneurial capitalist coin: on one side, the visionaries who power the modern world’s great explosions of wealth; and on the other, egos inflated by a steady drumbeat of public adulation and poisoned by the absence of feedback from petrified employees. This affliction, seen all too frequently at capitalism’s commanding heights, has been called by financial historian Edward Chancellor “a malignancy of the soul.” More often than not, it comes to a bad end.
William J. Bernstein is a neurologist, the co-founder of Efficient Frontier Advisors, an investment management firm, and a writer with several titles on finance and economic history. He has contributed to the peer-reviewed finance literature and has written for several national publications, including Money Magazine and The Wall Street Journal. He has produced several finance titles, and four volumes of history, The Birth of Plenty, A Splendid Exchange, Masters of the Word, and The Delusions of Crowds about, respectively, the economic growth inflection of the early 19th century, the history of world trade, the effects of access to technology on human relations and politics, and financial and religious mass manias. He was also the 2017 winner of the James R. Vertin Award from the CFA Institute.
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The views presented here do not necessarily represent those of Advisor Perspectives.
