14 > “Bring the cattle”
As soon as Musk tweeted on April 14 that he had made an offer for Twitter, everyone on the platform began taking sides. A contingent of Trumpers, right-wingers, and libertarians, who believed the company had inappropriately censored accounts that shared their political beliefs, cheered the move. Musk was their savior, the man who nobly sacrificed his own money to rescue society.
“Elon Musk is willing to do what only he can do,” wrote Dinesh D’Souza, a right-wing political commentator known for denying the results of the 2020 U.S. presidential election. “He is putting a substantial chunk of his vast fortune on the line to save free speech in America.”
Others were less comfortable with the idea of one human controlling one of the most important pieces of digital real estate. Fred Wilson, an early Twitter investor and former board member, called the platform “too important to be owned and controlled by a single person.”
“The opposite should be happening,” he wrote. “Twitter should be decentralized as a protocol that powers an ecosystem of communication products and services.”
But unlike email, Twitter wasn’t a protocol. It was a business and a public one, making it possible for a motivated individual with the highest net worth on earth to put in an offer.
>>> After news of his offer broke, it didn’t take long for Musk’s phone to light up with messages. Gayle King, the prominent television host, called the proposed takeover a “gangsta move” and told the billionaire he was “not like the other kids in the class.” Marc Merrill, the cofounder of video game developer Riot Games, called Musk “the hero Gotham needs” while Adeo Ressi sent a prayer hands emoji with hopes that his former college buddy could fix the platform. The level of hero worship that Musk—who often cast himself as the savior for the world’s problems—received gave him confidence. This was the right move.
Congratulations also came from members of his inner circle. These were some of his closest friends and company lieutenants—men he knew he could rely on. And like courtiers, they lined up to kiss the ring.
“Thank you for what you’re doing,” wrote Omead Afshar, the de facto leader of Tesla’s Austin operations whose official title was Project Director for the Office of the CEO. A former ski instructor and medical device company engineer, he worked his way through the ranks of Tesla and had ingratiated himself with Musk by never saying no. At the automaker, he became known among employees for his ability to manage Musk’s expectations or translate bad news to the boss, and was given the responsibility of overseeing big projects like the build-out of the Gigafactory.
“We all love you and are always behind you!” Afshar texted. “Not having a global platform that is truly free speech is dangerous for all.”
Steve Davis, head of the Boring Company, also chimed in. Like Afshar, he idolized the entrepreneur, though people who knew him said he took it even a tad further. Davis saw Musk as his North Star, and his life’s mission was to help Musk achieve his idol’s dreams. As Birchall would tell others: “If Elon asked Steve to jump out of a window, he would do it.”
Musk had texted his tweet announcing his offer to the Boring Company’s head early on Thursday morning along with ideas for a “Plan B” to build a “blockchain-based version of Twitter.”
“Amazing!” Davis wrote back after waking up and seeing the messages from his boss. “Not sure which plan to root for. If Plan B wins, let me know if blockchain engineers would be helpful.”
Neither Afshar nor Davis, however, were quite as jazzed as Jason Calacanis, a tech entrepreneur who pivoted to investing and hosting podcasts. One of his early companies had funding from Musk, and over the years, Calacanis, a beady-eyed man with a penchant for name-dropping his famous friends, became one of the staunchest defenders of Tesla and its leader. He often made it known that he owned the first Model S ever created.
Over a thirty-one-hour period starting on the day of Musk’s announcement, the investor sent eight texts in a row before his friend deigned to respond. Calacanis said that removing bots and spam from Twitter would be far easier than the engineering problems faced by Tesla’s self-driving team. He argued that Twitter’s verification system of blue check marks should be extended beyond members of the media and celebrities. And after getting his first reply from Musk, he suggested that Musk immediately fire employees to cut costs.
“Sharpen your blades boys 
“,” he wrote. He then sent Musk some of his own tweets outlining product ideas.
In return, Musk gossiped. He believed Agrawal, who had already returned to San Francisco by Thursday morning, was still on vacation. He impugned the Twitter chief’s work ethic to Calacanis, while failing to mention that he, too, had been in Hawaii earlier that week. Twitter’s chief executive and its hopeful buyer had, by coincidence, left the islands on the same day.
EM
Btw, Parag is still on a ten day vacation in Hawaii
JC
No reason to cut it short…in your first tour as ceo
JC
(!!!)
JC
Shouldn’t he be in a war room right now?!?
EM
Does doing occasional zoom calls while drinking fruity cocktails at the Four Seasons count?
JC
>>> One member of Musk’s inner circle who knew better than to leave a paper trail of texts was Birchall. Perhaps having learned from the “pedo guy” trial, which exposed his embarrassing communications, he limited important communications with Musk to phone calls or messages on Signal, an encrypted app that could be configured to delete text history.
Birchall didn’t necessarily worship Musk unconditionally. He did, however, see him as a generational leader who could usher humanity into a new era of progress with his cars and rockets. He had relocated his family from California to Texas in 2020, as his boss warred against the Golden State’s COVID policies, and settled in a mansion outside of Austin to be closer to Musk.
“Elon lives on the rails and he always comes close to the edge,” Birchall would sometimes tell people who came to work closely with Musk. “It is our job to keep him on the rails.”
It was Birchall who authorized Musk’s Twitter share purchases—flaunting SEC rules in the process—and handled the paper pushing during the board-seat rodeo. And it was Birchall who snapped into action to backfill a plan when Musk rashly decided he didn’t want the seat but rather the whole company. As his boss laid out his vision on the TED stage in Vancouver, the financier was already sussing out investors who might put money into a Musk-led Twitter. The world’s richest man would have control and would finance the deal mostly with his own cash and debt commitments, but Birchall sought to lessen that burden by attracting minority shareholders.
Among those potential investors was Michael Kives, a Hollywood agent who had represented the likes of Katy Perry, Bruce Willis, and Arnold Schwarzenegger and founded K5 Global, an investment advisory firm. Musk sometimes stayed at Kives’s Beverly Hills mansion when he was in Los Angeles and dined with the agent’s celebrity friends. Kives was a connector and had been texting with Musk two days before he announced his bid, suggesting he should meet with Sam Bankman-Fried, the FTX leader who hoped to make improvements to Twitter. (Kives served as one of Bankman-Fried’s biggest hype men in Hollywood and earned $125 million after the crypto mogul made a $700 million investment into K5.)
Kives would be one of a handful of people in Musk’s ear about Bankman-Fried, who pushed hard to invest in Twitter. Birchall vetted Bankman-Fried before connecting him with Musk. He also diligently worked the phones, hitting up every connection in Silicon Valley.
Finding people who said they wanted to back Musk wasn’t hard. Turning around a stagnant company like Twitter was unlike anything he had done before, but his reputation was such that investors were willing to take a risk just to curry favor or be close to him. In their eyes, Musk was the greatest technology mind of his generation and his TED interview was a clarion call that he was open for business. Musk’s supreme confidence in himself was what had driven him to success at Tesla and SpaceX, and it was that same confidence that Morgan Stanley bottled and sold in their pitch to potential investors in his Twitter.
Morgan Stanley prepared a pitch deck for Musk’s Twitter 2.0 and passed it around to potential investors. By 2028, the document claimed, Twitter’s revenue would be $26.4 billion, a staggering increase from the $5 billion it accumulated in 2021. The eye-popping figure was far more aggressive than the trajectory outlined by an optimistic Agrawal at the start of his tenure as CEO, and it seemed improbable that Musk could quintuple Twitter’s revenue.
To get there, the bankers told investors that Musk would decrease the company’s reliance on advertising, which generated 90 percent of its revenue. Within six years, the company would take in $12 billion from advertising; $1.3 billion from a new payments business; and some $10 billion in subscription fees from Twitter Blue, an existing product that offered improved features for the site’s fanatics. The deck also mentioned a mysterious product known as X. While the bankers didn’t know exactly what X would be, they still parroted Musk’s projections for 104 million subscribers to the unknown service by 2028. Overall, Twitter would have 931 million users by then, the pitch deck said, more than triple the 217 million users that it had at the end of 2021.
The picture painted of Musk’s Twitter was one of efficiency. The company would become a well-oiled machine, spinning off $3.2 billion in cash by 2025, and $9.4 billion by 2028, the deck said.
At Twitter, Segal puzzled over the numbers. It was his team’s job to make similar financial models, and short of Musk pulling a rabbit out of a hat, his figures did not make sense, particularly as the global economic picture worsened. Twitter’s sales executives felt the same way. Did he not realize that the company depends on advertising and that subscription products have provided little impact on revenue? they wondered. Some speculated the figures were completely made up.
Still, investors—some considered the savviest in Silicon Valley—wanted to place their faith in Musk. He dreamed of a different reality, one where humans were multiplanetary or put computer chips in their brains or built tunnels to avoid traffic. His appeal went beyond normal logic. He would find a way, investors believed.
>>> On the morning of April 15, Good Friday, Twitter’s board regrouped to decide how to handle its new enemy. The day before, onstage at TED, Musk had revealed more about his plans for Twitter than in his conversations with Agrawal. During their chats, Musk had at times played coy, framing himself as a willing adviser who could easily miss the mark.
But at TED, Musk said he wanted to open-source the company’s recommendation algorithm, allowing anyone to pore through the code that drove certain tweets to the top of the timeline and fight back against the “scam armies” of bots on Twitter. He also insisted that most of the site’s content moderation rules had to be scrapped.
His tweet about going directly to shareholders with his offer also worried Twitter’s directors. They would need to act quickly to block him. Taylor called a vote on implementing the poison pill in order to buy them time. The directors unanimously agreed.
If Musk continued buying shares and accumulated more than 15 percent of Twitter, the pill would trigger, making it financially onerous for him to continue. The stall tactic gave the company a bit more time to reach out to other financiers and find out whether any of them could beat Musk’s “best and final” offer. But the problem was finding any one person or organization with the kind of money to outbid the world’s richest man.
The firm on everyone’s lips was Silver Lake. Egon Durban, the firm’s managing partner, already sat on Twitter’s board and had been willing to splurge on a rapid bailout two years earlier in order to rescue Dorsey. Perhaps Durban would once again tap into the firm’s resources to protect Twitter. Because Silver Lake already owned a significant stake in the company, it would need to spend less than other potential acquirers.
But Durban’s position on the board made such an arrangement awkward. When he joined in 2020, Silver Lake signed an agreement to not acquire more than 5 percent of Twitter—part of its truce with Elliott Management. The board would have to lift the cap, a move that Musk would certainly attack as preferential treatment.
The other name in the mix was Thoma Bravo. The Chicago-based firm was one of the largest private equity firms in the world and had a track record of taking major software companies private—perhaps Twitter could pique its interest. But even though Thoma Bravo had about $100 billion under management, challenging Musk was a big ask—and Twitter didn’t fit the firm’s portfolio, which focused mostly on business software.
The big tech companies like Google and Salesforce, and media giants like Disney, of course, were options. But all of them had taken whiffs of Twitter before and did not like the smell. President Trump had seemed to have little interest in antitrust enforcement, but the Biden administration had made it a top priority to investigate mergers and crack down on corporate giants that snapped up smaller competitors. Any tech company that submitted an offer for Twitter was daring the Justice Department and the Federal Trade Commission to come calling.
>>> In the pantheon of American business deals, a $44 billion acquisition does not even crack the top ten. America Online made an ill-fated $182 billion acquisition of Time Warner at the turn of the century, the equivalent of $309 billion in 2023’s inflation-adjusted dollars. In 2015, Dow Chemical acquired DuPont in a $130 billion merger of chemical giants. Meanwhile, Disney paid $71.3 billion for 21st Century Fox in 2018, and United Technologies paid $121 billion for Raytheon, the defense contractor, in 2019.
Still, $44 billion was objectively a shit ton of money. It was more than had ever been paid for another social media company—more than double the $19 billion paid by Facebook to acquire WhatsApp in 2014. It was also about equal to the annual gross domestic product of Paraguay, and larger than the GDP of Iceland, Jamaica, and Senegal. In April of 2022, it represented about 20 percent of Musk’s net worth. (Bill Gates was the first person on Forbes’s annual billionaires rankings to amass a net worth greater than $44 billion. The magazine calculated he was worth $51 billion in 1998.)
That one man could accumulate such a fortune, much less be willing to spend it on a company for ideological or personal reasons, was a testament to the world’s widening wealth inequality. This simply wasn’t what the elite did with their money. To buy and operate a global corporation for one’s own pleasure was unheard of. Musk was breaking the rules of what it meant to be rich.
But even for one of history’s wealthiest people, it was still an expensive and complicated purchase. The vast majority of his wealth was tied up in his Tesla shares, and offloading $44 billion worth of Tesla stock was inconceivable. If the market perceived his sell-off as a lack of confidence in the automaker, it could tank Tesla’s stock and hurt his loyal investors. He also would be decreasing his control over the company. Some tech founders, like Mark Zuckerberg, had guaranteed they would maintain control of their companies by setting up dual-class shares and granting themselves outsize voting power to control their boards, but not Musk. Like Dorsey before him, he could stand to lose control over his company if Tesla’s board turned against him—however unlikely that would be—and he needed to hold on to as many shares as possible. He would have to find another way to come up with money.
>>> Onstage at TED, Musk had been candid about the fact that Twitter’s board could rebuff him. Although he didn’t share the specifics of how he might force the deal through, taking his bid directly to shareholders in a tender offer would be the only route left for him if his offer was not accepted.
Of course, Musk couldn’t keep the secret for long. On Saturday, April 16, as Twitter’s employees and board members tried to set their phones aside for the weekend’s Passover and Easter celebrations with their families, Musk kept up the pressure. “Love Me Tender,” he tweeted that afternoon, surrounding the title of the 1956 Elvis Presley hit with emojis of music notes.
The not-so-veiled reference made his intentions clear to Twitter’s directors and executives. Instead of waiting for the board to agree to his terms, Musk could take his $54.20-a-share bid directly to the shareholders, giving them a window of opportunity to sell their stock to him at that price instead of the public market price of about $45. The tender offer would not allow Musk to circumnavigate the poison pill—Twitter’s board could still flood the market with cheap shares.
But if shareholders were eager to take Musk’s offer, they might clamor for the board to remove the poison pill and let them sell at his higher price. Musk had often relied on his fans to generate public pressure in support of his positions in the past. With winking tweets, he had raised the price of a meme cryptocurrency called Dogecoin. The Twitter deal would be no different. It was a $44 billion game of chicken.
That weekend in Austin, some of Musk’s friends asked him if he was worried about overextending himself. He was already trying to electrify the world’s cars and get people to Mars; why would he waste his time on Twitter? Musk said he would need five years to turn Twitter around. And, he told them, running a social media company was nothing like launching rockets or manufacturing cars. To him, it was just a website where people posted whatever they wanted. How hard could it be?
>>> With the threat of a tender offer on the horizon, Agrawal needed to figure out how many of his institutional investors might take Musk’s bait. Other directors were anxious to know, too. If they voted against Musk without the support of investors, they would quickly find themselves in an even more painful bind.
Lane Fox, who already had some relationships with major investors, volunteered to coordinate the outreach. She began the process of arranging meetings for Taylor and Pichette with firms, including the Vanguard Group, the American investment adviser that held a 9.2 percent stake in the company, and asset manager BlackRock, which held a 6.8 percent stake, to gauge their sentiment. Would they sell if Musk came to them with his offer?
Each video call seemed to expand with new faces. The bankers from Goldman Sachs and JPMorgan were there, along with a phalanx of lawyers from two different white-shoe law firms: Gadde’s former shop, Wilson Sonsini, and the litigation specialists from Simpson Thacher & Bartlett LLP. Twitter hired both firms to represent it.
The discussions were dizzying. But one thing was clear to Agrawal: little more than four months into the job, his leadership was on trial. If he intended to reject Musk, he would need to show a compelling case that he could raise Twitter’s share price higher than Musk’s offer—and do it immediately.
While most of the board was focused on rescuing Twitter, one member seemed to be gleefully cheering Musk on. That weekend, Dorsey tweeted, “As a public company, twitter has always been ‘for sale,’ ” and went on to say the board had “consistently been the dysfunction of the company.” The public dig at his colleagues landed during their round-the-clock work and pissed everyone off. Taylor called Dorsey and asked him to lay off his public criticism of the company. Dorsey sullenly agreed. After their discussion, a Twitter user pressed him about his criticism of the board, noting he had been a member for years without trying to turn things around. Dorsey replied, “So much to say…but nothing that can be said.”
Agrawal tried to tune out his former mentor’s subtweets. He knew that Twitter was in a bleak position. The hope of hitting its 2023 goals for expanding revenue and users had faded from a long shot to nearly impossible. To win investors over, he would have to make the case that he could run a leaner Twitter—and that meant accelerating the layoffs he had been considering.
The cuts would have to be much more significant than he had originally planned. News of layoffs usually sent a company’s shares rising, since jettisoning employees meant more money on the company’s balance sheet. And the bigger the cuts, the bigger the boost. Agrawal set his sights on as much as 25 percent, a drastic reduction that would shatter Twitter’s friendly culture and turn him into an enemy of his employees, but possibly—just possibly—save the company from Musk.
Execution would matter, too. Agrawal couldn’t just get rid of employees. He planned to cull the executive suite as well, and to drive those who remained to build and launch new products as quickly as possible. He had already pushed to reform the company’s annual review and bonus process, which under Dorsey had effectively prevented managers from ranking and incentivizing workers. Twitter’s mellow pace, governance by consensus, and days of rest, monthly recharge days introduced under Dorsey, would all have to disappear.
The staff reduction, Project Prism, was the ace up Agrawal’s sleeve. If he and the board could woo investors with his plan and show they had a way of creating more shareholder value than what was presented by Musk, they could reject the $44 billion offer.
“No one thinks Elon credible…. yet,” Durban texted Segal on Easter Sunday, trying to comfort him as he and Agrawal drew up the cuts. While he didn’t know it, the investor’s language hewed closely to the private texts between Musk and Calacanis. Both sides focused on deep cuts and saw the workers as cannon fodder.
“You and Parag will bring the cattle,” Durban added, a crude rancher’s reference that compared the layoff plan to livestock being sent to slaughter.
Segal responded by proposing a whopping $1 billion in cuts over the coming year, with $700 million of that savings coming from the workforce reduction. “Winner winner chicken dinner,” Durban cheered.
The Silver Lake partner was pleased. “We just drew three of a kind and have a chance for a full house,” he said. “Elon has a pair right now.” If all the numbers kept lining up right, Twitter would hold the winning hand.
Selling the rest of the board—and Twitter’s biggest shareholders—would be another matter, Durban cautioned. The layoffs and strategy for earning more revenue would need to be airtight.
“You’re going to be an old school great company,” Durban texted.
“I’m learning,” Segal replied. “Parag been great. I’ve done this before but not at this pace under duress.”
“Both of you will be assassins,” Durban reassured him. “Turnarounds make the career.”
Companies under pressure molded great leaders, he continued. The pain would be good for Segal in the end. Iron sharpened iron. Musk’s attack would make Segal a stronger executive.
“You guys are scared to get tossed out,” Durban noted.
“Scared is good!” Segal replied, with a caveat. “Scared of losing not getting thrown out.”
“They’re the same thing,” Durban wrote.
That afternoon, Durban was late to a call with Twitter’s bankers and legal advisers because he was tied up on another phone call with Morgan Stanley’s chief executive, James Gorman. Morgan Stanley was working with Musk, and Durban wanted them to know exactly what it was like to orchestrate a deal with the mercurial Tesla executive.
>>> Musk spent most of his Easter weekend continuing his trolling campaign. He flew back to Austin on his Gulfstream jet on Saturday and readied for a family Easter egg hunt the next day with his dog, a Shiba Inu named Floki. The dog was a recent addition to Musk’s entourage, and the billionaire used it as a prop to gain online support from investors in Dogecoin. On Sunday, he dressed Floki up as an Easter bunny next to a basket of golden eggs bearing the Dogecoin logo. The cryptobros ate it up.
Between all the Dogecoin shilling and his winking tweet about a tender offer, Musk used his account to attack Twitter’s board members. Besides Dorsey, they collectively owned little stock in Twitter, he announced, a flaw that he believed meant their financial interests were not aligned with those of shareholders. He also criticized them for earning salaries that ranged from $250,000 to $300,000 for what were essentially part-time jobs. Twitter would save a significant sum under his management, Musk said, simply by no longer needing to pay a board of directors.
The board decided it should reach back out to Musk. They worried that total silence would give Musk too much time to stew, and that he might rush ahead with his tender offer if he didn’t believe the board was taking him seriously.
Taylor sent him a polite yet stern text. “Elon, I am just checking in to reiterate that the board is seriously reviewing the proposal in your letter. We are working on a formal response as quickly as we can consistent with our fiduciary duties. Feel free to reach out anytime.”
Musk brushed off the message, but he was eager to speak with another member of Twitter’s board.
He’d heard that Durban, his one-time partner, had been gossiping with Gorman at Morgan Stanley about how he was a nuisance. The Tesla take-private deal that Durban had worked on with Musk in 2018 had collapsed spectacularly, and the litigation that followed ensnared many of Musk’s high-profile backers and bankers in years of depositions and legal discovery. It was an endless mess, and didn’t suggest that Musk would be an easy man to work with on the biggest take-private deal in the history of Silicon Valley.
The backchanneling infuriated Musk. He hated it when anyone criticized him, especially someone who had once drifted through his inner orbit. He lashed out at Durban in a text message. “You’re calling Morgan Stanley to speak poorly of me…” Musk wrote.
Durban didn’t text him back.