On March 20 this year, Seth Dillon, CEO of American right-wing satirical media Babylon bee, was briefly banned from twitter for publicly ridiculing transgender people, and the satirical tweet was deleted as "hate speech". After learning about this, musk personally called Dijon to learn about the situation and revealed that he was considering acquiring twitter. At that time, he had not publicly disclosed his stake in twitter.
Finish hunting in three months
A full 10 days have passed since Twitter's board of directors reached a $44 billion sale agreement with Musk on April 25. During this time, the outside world is gradually getting the inside details of this shocking transaction. And many pushers standing behind musk are gradually emerging.
From the end of January this year to the submission of information disclosure documents in early April, musk quietly purchased 73.65 million ordinary shares of twitter in the open market in more than two months, and the shareholding ratio quickly reached 9.2%. When he suddenly surfaced as Twitter's largest shareholder, the twitter board was caught off guard.
Twitter's board of directors invited musk as a director the next day in exchange for his commitment not to increase his stake and not to seek control. When musk refused to join the board of directors, his intention to buy twitter had been revealed. The world's richest man wants to turn the most influential social media into his personal assets and transform it according to his own intentions.
Although the twitter board of directors quickly launched the poison pill plan, musk did not raise the offer to impress the board of directors, but adopted a strategy of buying people's hearts. He knows very well that Twitter has no super voting rights, and the shareholding ratio of the board of directors is even less than 2.5% (2.25% of which comes from his friend Dorsey). As long as he gets the consent of enough institutional investors, he can force the board of directors to accept the offer. After all, the responsibility of the board of directors is to maximize the interests of shareholders.
Twitter shareholders are obviously very dissatisfied with the company's management and board of directors. As the most influential social media in the world, Twitter has not brought relatively equal business value to shareholders. Over the past few years, the growth of Twitter users has stagnated, there have been huge losses in a row, and the stock price performance is lower than that of other social media platforms. When musk made the offer, Twitter's market value was less than $40 billion, or even two-thirds of snap, the main youth market.
Musk is taking advantage of this dissatisfaction of investors. After he offered a $45 billion financing guarantee, musk met with several large twitter institutional investors and won their approval with his cash offer. Under the pressure of investors, the twitter board of directors completely changed its attitude within ten days, took the initiative to meet musk for negotiation, and finally accepted the cash offer of $54.2 per share. Buy it now price does not give the other party room to bargain, which is Buffett's common acquisition strategy.
Why on earth did musk do this? He has repeatedly said that he did not buy twitter to make money, but to protect the so-called cornerstone of democracy - freedom of speech, because Twitter is a citizen's Square in the Internet era. Musk claimed that he realized that Twitter could not prosper or serve this cornerstone under the current mechanism, so he had to buy twitter for privatization.
PayPal gangs surfaced
Looking back, the first acquisition in the field of social media is not entirely Musk's desire to control the most influential social media. There are also a group of billionaires who control half of Silicon Valley. These Silicon Valley bosses behind the scenes have similar three views with him, and are also dissatisfied with Twitter's "too left" position. They not only prompted musk to launch a malicious bid for twitter, but also directly provided him with financial support.
Many figures of the legendary "PayPal Gang" in Silicon Valley emerged behind the deal, including Peter Thiel, Reid Hoffman (also co-founder of LinkedIn), Ken howery, Max Levchin and so on. These partners who built PayPal together more than 20 years ago still maintain close contact. They generally agree with Musk's view of excessive content control on Twitter and provide direct support for Musk's acquisition of twitter.
Briefly review the history of PayPal gangs. Thier et al founded online payment company comfort in 1998. Before the bursting of the Internet foam in March, 2000, infinity merged with x.com, a competitive company founded by musk and others. The new company was later renamed PayPal, successfully listed and financed under the leadership of Thiel, and then sold to eBay for $1.5 billion. Thiel, musk and others left the market with huge cash out and began their new journey in Silicon Valley.
Many of them have achieved great success and control many resources in Silicon Valley, so they are also known as the "PayPal Gang". Til started his legendary venture capital life, invested in Facebook and many other start-ups, and co founded Palantir. Hoffman founded LinkedIn and is now a partner of Greylock, a venture capital firm. Musk founded SpaceX, and then invested in Tesla, an electric vehicle enterprise. Finally, as CEO, he led Tesla through the brink of bankruptcy several times, becoming the world's largest automobile enterprise by market value and the world's richest man.
According to reports, Musk's circle of close friends has played a crucial role in his acquisition of twitter. These people include Thiel, his brother kimbal musk (director of Tesla), Steve juvertson, co-founder of well-known venture capital Dfj in Silicon Valley, who is also an early investor of Tesla and SpaceX, and so on. They support and encourage musk to buy twitter dominated by the radical left and transform the so-called "real freedom of speech".
These people have similar political positions and world outlook to musk, also known as libertarians, who oppose restrictions on civil liberties, excessive government intervention in enterprises, content censorship by social media, and the economic policies of high tax income and high welfare of the left.
In the current spectrum of American politics, libertarians are closer to the conservative position of the Republican Party. Musk himself made a satirical cartoon, which means that as the American political spectrum continues to lean to the left, neutralists like himself appear more and more conservative and close to the right. In the past few years, he has repeatedly clashed with the Democratic Party and liberals on many topics, such as the COVID-19, vaccination, labor relations, rich people's taxes, etc.
Peter Thiel is deeply involved in politics
Perhaps in the field of science and technology, no one is more deeply involved in American politics than Thiel and has become a staunch supporter of the Republican Party. Because he publicly canvassed trump in 2016, he became the target of public criticism in Silicon Valley and had to move out of Silicon Valley. But until then, Thiel had been donating money to Republican candidates. Thiel himself is not willing to hold a government position. He refused the invitation of the trump administration and is more willing to support political candidates behind the scenes to realize his political intentions.
Last year, Thiel resigned as a Facebook director since 2004 and more actively funded many Republican candidates to run for congressional seats in U.S. states, planning to fight the political offensive of the Democratic Party. In the campaign for the Senate seat in Arizona and Ohio, the two candidates supported by Thiel, Blake masters, co-author of "zero to one" and JD Vance, author of "Elegy of the country man", are optimistic. They received not only the millions of dollars of financial support from Thiel, but also the endorsement of former president trump.
Thiel's mutual hatred with the Democratic left is well known, and he is more disgusted with the "cancel culture", so he himself left Silicon Valley. Conservatives believe that Twitter is a social platform full of "boycott culture", and have long accused twitter of "suppressing the different views of the right". The controversial til doesn't use Twitter at all. His only tweet was to promote his new book from zero to one in 2014.
Musk's acquisition of Twitter is of great significance to Til's political ambitions. There is every reason to believe that if til has such financial resources, he will also buy twitter. The investment tycoon has a personal wealth of about $9 billion. After all, only musk has the financial resources to buy a listed company with a market value of $40 billion.
Twitter is not only a social media, but also a battlefield of public opinion between the two political factions in the United States. After musk announced the acquisition of twitter, many US Republican congressmen and conservative opinion leaders expressed strong concern about the deal. Loyal trump supporters such as Missouri Senator Josh Hawley, Georgia congressman majorie Taylor Greene and fox host Tucker Carlson expressed strong expectations for Musk's acquisition of twitter.
Musk's personal attitude towards twitter can be seen from a small episode. On March 20 this year, Seth Dillon, CEO of the US right-wing satirical media Babylon bee, was briefly banned by twitter for publicly mocking Rachel Levine, a trans sexual person, as the US Deputy Secretary of health; This mockery tweet was also deleted because of "hate speech". According to Dijon, he then received a call from musk, who revealed that he was considering acquiring twitter. At that time, musk had not publicly disclosed his shareholding in twitter.
After musk announced his acquisition of twitter, he once again publicly criticized twitter for suppressing freedom of speech. During the 2020 U.S. election, twitter restricted the dissemination of an exposure scandal about the son of Democratic presidential candidate Biden at the suggestion of chief legal adviser vijava gadde. Gard also played an important role in blocking Trump's account.
Musk's public accusation made gard the focus of public opinion. According to reports, gard's account was soon besieged by musk supporters and conservative Internet users. She even lost control and cried because of too much pressure at twitter internal meetings. After musk joined twitter, gard will almost certainly leave, perhaps with many managers and employees who are politically left.
Years of close friends or new CEO
Surprisingly, and to be expected, twitter co-founder and former CEO Jack Dorsey is also one of Musk's supporters of the acquisition of twitter. Dorsey publicly said that although he didn't think anyone should have twitter, musk was the only solution to the twitter problem. As Musk's best friend in the circle, Dorsey is fully aware of Musk's intention and may also provide positive opinions behind his back.
Dorsey is also dissatisfied with the current situation of twitter. He believes that after Twitter's listing, it has focused too much on short-term performance under the pressure of Wall Street's performance. Due to pressure from many institutional investors, Dorsey resigned as CEO of twitter at the end of 2021 and focused on square, another listed company (now renamed block). Since twitter does not have super voting rights, Dorsey, who owns 2.25%, does not have control over the social media. After leaving twitter, Dorsey even publicly lamented that Twitter was a heart disease and a regret.
Obviously, Dorsey hopes musk can get rid of the short-sighted pressure of capital and drive twitter to complete the in-depth transformation after acquiring the company. Although it has been reported that musk may invite Dorsey back after acquiring twitter, it seems that musk is more likely to serve as an interim CEO for a period of time to personally supervise the great changes to twitter. At present, there is little suspense about the replacement of twitter CEO Parag agrwal. Musk has publicly expressed his disappointment with Twitter management on several occasions.
But Musk's appointment as CEO of Twitter is not a long-term plan. After all, it is difficult for him to have enough energy to serve as CEO of Tesla, SpaceX and twitter at the same time, and continue to travel in San Francisco, Los Angeles and Texas. According to the reports of American media, musk prefers to select the CEO of twitter from the industry people he is familiar with; Ken howery, one of the co founders of PayPal, is the most likely candidate.
Holly is Thiel's Stanford classmate. With Thiel, he founded confiniity and took up the position of CFO; After cashing out and leaving PayPal, Holly later founded the founders fund with Thiel and served as the U.S. ambassador to Sweden during the trump administration. Moreover, Holly is also Musk's best friend. According to the Wall Street Journal, after moving to Texas, musk borrowed many times to live in Holly's Texas mansion, when Holly was still working in Sweden.
At the same time, the morale of twitter management and employees is facing a heavy blow. Musk has told investors that after he joined twitter, in order to reverse the current huge loss performance, he will almost certainly carry out layoffs and restructuring and re list in a few years. At the twitter internal meeting, Agrawal can only answer vaguely the layoff questions of employees, and the company will continue to pay attention to and attach importance to the value of employees.
A twitter employee who didn't want to be named told Sina technology that Musk's acquisition of the company has had a significant impact on the internal morale of the company, and Agrawal obviously can't calm everyone's mood. "Everyone is talking about it. No one knows what the future will be. Even the CEO and chief legal counsel are leaving. Maybe the management will be completely shuffled."
Technology bosses have invested one after another
After reaching an acquisition agreement with Twitter's board of directors, musk has pushed forward the world's largest leveraged buyout step by step at his own pace in the past ten days. On the one hand, he sold Tesla shares to cash in $8.5 billion to raise funds for the acquisition of twitter. On the other hand, musk also used his influence to introduce more investors and reduce his financing risk.
This week musk submitted regulatory documents this week, disclosing that he has obtained more than $7.1 billion in new financing guarantees from 19 investors for the acquisition of twitter. These investors include the most powerful venture capital institution in Silicon Valley, his friends for many years, and new investors optimistic about Musk's acquisition of twitter.
There is no doubt that the figure of several of the most famous old venture capital funds in Silicon Valley is eye-catching. Sequoia Capital also provided us $800 million, vy capital provided us $700 million, Andreessen Horowitz (also known as a16z) invested US $400 million and Dfj invested US $100 million. Sequoia and musk have a cooperative relationship for more than 20 years and are also early investors of PayPal. Ben Horowitz, the founding partner of a16z, is a good friend of musk. They interact frequently on twitter.
Horowitz said that Twitter faces many problems, from robots to abuse to content censorship. As a listed company, it is completely based on advertising business model, which exacerbates these problems. As a Facebook investor, Horowitz is also a member of meta's board of directors. His political position is similar to that of musk. He has repeatedly publicly criticized that Silicon Valley has been occupied by extreme leftists and took the initiative to ridicule democratic radical politicians such as Elizabeth Warren.
Oracle co-founder Larry Ellison has provided $1 billion through his trust and is currently the second-largest individual investor. The Silicon Valley maniac is arrogant, and the only business leaders he can praise are jobs and musk. Ellison is a good friend of musk and a member of Tesla's board of directors.
In the most difficult period of Tesla in 2018, Ellison personally purchased 15 million shares of Tesla (the number after stock split), becoming the second largest individual investor after musk, to show his support and confidence in musk. With the soaring of Tesla's share price in the past few years, Ellison's Tesla shares are also worth more than $15 billion, becoming his most successful personal investment.
It is worth mentioning that in the same year musk moved from California to Texas, Ellison also moved to Hawaii. He bought 98% of Lana'i island in Hawaii and almost turned it into his own private island. Ellison is an invisible supporter of the Republican Party. He was once denounced by Silicon Valley for holding fund-raising activities for trump with his mansion. In the century patent lawsuit between Oracle and Google, the Justice Department of the trump administration clearly and publicly supported oracle.
New direction of cryptocurrency
In addition to these technology giants with obvious political tendencies, musk has also been recognized by the Middle East sovereign wealth fund. When musk just made an offer, Al Waleed, Prince of Saudi Arabia and chairman of Kingdom of Saudi Arabia Holdings (KHC), once publicly said that Musk's offer was too low to consider. Musk therefore directly forwarded his tweet and asked the Saudis to explain what freedom of speech is.
However, after musk reached an agreement with the twitter board of directors, alvalid also gave musk a lot of praise, "I believe you will be an outstanding leader of Twitter and can maximize the potential of twitter". He announced that Kingdom holdings plans to work with musk to retain its stake in twitter (currently worth $1.9 billion). On the other hand, Qatar's sovereign wealth fund also invested US $375 million.
Also of concern is that biannce, the world's largest cryptocurrency exchange, also plans to invest $500 million in musk. Zhao CHANGPENG, founder of Qian'an, later confirmed the news on twitter. "We are very excited to help musk realize his new vision of twitter. We also hope to play a role in combining social media with Web3 and expanding the use of cryptocurrency and blockchain technology."
Zhao CHANGPENG is a billionaire in the field of cryptocurrency. According to the Bloomberg billionaire index, his wealth is currently $77.3 billion, ranking 13th in the world. But Zhao CHANGPENG said last year that his current assets are almost all cryptocurrencies, and the valuation without liquidity is of little significance.
Previously, there were online rumors that Zhao CHANGPENG was Musk's roommate when he was in college in Canada, based on a group photo of Musk with an Asian classmate in college in 1990. But a little knowledge of their resumes shows that neither of them went to the same university. Musk studied at Queen's University of Canada for two years, while Zhao CHANGPENG went to McGill University. Moreover, Zhao CHANGPENG is 6 years younger than musk. When musk entered Queen's University in 1990, Zhao CHANGPENG was only 13 years old and had just immigrated to Canada with his family. In fact, the Asian man in that picture is another student at Queen's University. It was said that the man's name was navaid Farooq, but it wouldn't be Zhao CHANGPENG anyway.
Both Dorsey, Horowitz and Zhao CHANGPENG are leading investors in the field of cryptocurrency and blockchain. One of the big fantasies of the outside world after Musk's acquisition of Twitter is that Twitter will have deep access to cryptocurrency payment and integrate blockchain technology in the future. Obviously, these leaders in the cryptocurrency field are very interested in this prospect. Moreover, it is rumored that holly, the popular candidate for the new CEO of twitter, is also engaged in the field of cryptocurrency.
After receiving these financial guarantees, Musk's total amount of mortgage loans held by Tesla was also reduced to $6.25 billion. However, in the view of wedbush analyst Dan ives, Musk's financing work is not over. He is still likely to introduce more investors and further reduce his leverage ratio. Elvis believes that the probability of Musk's successful acquisition of Twitter has been as high as 80%.
Perhaps the only suspense is how the Biden administration will respond to the deal. The Federal Trade Commission (FTC) is evaluating Musk's $44 billion acquisition of Twitter and will decide next month whether to conduct an in-depth investigation. At present, the Democratic Party and the FTC have only four seats each. Alvaro Bedoya, the fifth member of Biden's nomination and a professor at Georgetown University, was firmly resisted by Republicans. Since his nomination in September last year, the Senate confirmation process of the radical left professor has been postponed for eight months, and he has been unable to officially take office at the FTC.