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Musk wanted to pump the brakes.
On Sunday, May 8, he texted Michael Grimes about his worries. The following day, Russian president Vladimir Putin was due to give a speech on the status of the war with Ukraine on a holiday meant to commemorate the Soviet Union’s victory over Nazi Germany. Musk had been telling those close to him that he had been in communication with Putin and Ukrainian officials since the start of the fighting, and he would later push for a peaceful solution in which Russia would obtain the disputed territory of Crimea. It was a solution that was wholly unacceptable to most Ukrainians, but Musk urged the appeasement of the Russian aggressors to prevent a global war.
“Putin’s speech tomorrow is extremely important,” he wrote to Grimes late that afternoon. “It won’t make sense to buy Twitter if we’re headed into WW3.”
Quite the swerve. Musk had already signed on the dotted line to buy the company—and he was in the process of asking his friends for investment. Why was he suggesting he may not follow through? Let’s wait to see what Putin has to say and “take stock of where things look after that,” Grimes texted back.
Musk’s mind then pivoted to a completely different topic: the meeting with Segal and the lack of clear answers around bots and spam. The billionaire believed Twitter’s management was toying with him, so he wanted to investigate everything. The more he stewed, the angrier he became, and he started chatting with members of his inner circle about suing Twitter executives.
“An extremely fundamental due diligence item is understanding exactly how Twitter confirms that 95% of their daily active users are both real people and not double-counted,” Musk texted Grimes. “They couldn’t answer that on Friday, which is insane.”
The banker didn’t write back.
“If that number is more like 50% or lower, which is what I would guess based on my feed, then they have been fundamentally misrepresenting the value of Twitter to advertisers and investors,” Musk wrote thirteen minutes later.
No text response.
A little more than an hour after that, Musk had arrived at a eureka moment. If the bots were swarming Twitter in greater numbers than the company had ever admitted, he should be allowed to back out of the acquisition.
“To be super clear, this deal moves forward if it passes due diligence, but obviously not if there are massive gaping issues,” he told Grimes over text.
>>> Agrawal was fighting on multiple fronts, but the battle for his employees’ trust was going against him. When he was first named chief executive, some didn’t even know he worked at the company.
Twitter’s C-suite and board, who had regular contact with the CEO, came to like him. Similar to Dorsey, he could be quiet and cerebral, but they found him to be warm in small groups, and he took time to listen or explain complex engineering concepts. He towered over people like a friendly oak tree.
Twitter’s employees had remained remote after the pandemic, however, and most workers had only interacted with Agrawal via video calls where he was reduced to a small box. In those company-wide meetings, he could be robotic, frequently looking off screen as if he were reading from a script. It also didn’t help that he could say very little to them about the deal, as employees hungered for any scrap of information and wondered if they would have jobs once Musk took over.
He either didn’t have the answers or was hamstrung by the various nondisclosure agreements and legalese around nonpublic information that came with the complex, multibillion-dollar transaction. One misstep could jeopardize the deal, and with Musk seemingly looking for any excuse to pull the rip cord, the novice chief executive erred on the side of caution and relied on workshopped answers and empty platitudes.
What little internal support might have remained for Agrawal evaporated on May 12. That morning, he sent out an email to Twitter’s employees notifying them that most new hiring would be frozen while spending would be cut. More important, however, he was firing two key executives who he had planned to lay off a month earlier, before Musk’s offer disrupted everything: Kayvon Beykpour, the head of consumer product, and Bruce Falck, the head of revenue-generating products. Employees were blindsided.
Beykpour’s termination was particularly harsh. A personable thirty-three-year-old with a strong jaw and easy smile, he had started his career building apps from his Stanford dorm room and was one of the people employees speculated would take over for Dorsey once the time came. He bled Twitter and was married to another Twitter executive. But he had made several missteps with the company’s products, and some workers gossiped that Agrawal’s move was a power play as the company got ready to transfer ownership to Musk.
In explaining himself, the chief executive did not mince words. “It’s critical to have the right leaders at the right time,” Agrawal wrote. He said that Jay Sullivan, who joined Twitter six months earlier during the company’s growth phase, would replace Beykpour.
In Agrawal’s mind, the decision was simple. At the beginning of the pandemic, the company had decided to grow dramatically, spurred by the activism of Elliott Management. Beykpour and Falck were responsible for driving that growth, and their projections became the basis for the company’s announcement of its long-term goals to investors. But both executives had come up far short of their ambitions, and “as a company we did not hit intermediate milestones that enable confidence in these goals,” Agrawal continued. So he opened the trapdoor and sent both men tumbling down the chute.
The business reasoning may have been sound, but Agrawal’s lack of emotional intelligence would hurt him. Completely surprised, Beykpour was on paternity leave, celebrating the birth of his first child, when he learned of his termination. It was a brutal way to conclude his seven years at the company and he took it personally, particularly after seeing Agrawal deal with Musk’s antics during his own parental leave a few months earlier.
“The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision,” Beykpour tweeted that day. “Parag asked me to leave after letting me know that he wants to take the team in a different direction.”
Sullivan seemed to Agrawal like a natural replacement for Beykpour—he had already been filling in for the product leader during his paternity leave, and he had the efficient leadership style of a former Facebook executive. But Sullivan was horrified by the decision and argued over the phone with Agrawal about it the weekend before the axe fell, begging him to reconsider.
Sullivan, a mild-mannered man with a verbal tic, felt loyal to Beykpour. The product executive had recruited Sullivan to Twitter, and their lively conversations were one of Sullivan’s primary motivations for joining the company. Agrawal told him that Falck’s performance had faltered and Twitter desperately needed to get its revenue business in order, but he was vague about his motives for getting rid of Beykpour.
The firing would have a chilling effect on all the women who work at Twitter, Sullivan argued. If they saw a top executive removed during a family leave, they would be hesitant to use their own parental benefits. And Sullivan himself would become the living embodiment of a decision he believed was deeply wrong.
Agrawal agreed with it all. “I understand the trade-offs,” he said. “I know what I’m doing.”
Then the chief executive went further. He told Sullivan that he wouldn’t just oversee the consumer products that Beykpour had built, but would also take on the revenue products that were Falck’s purview. Sullivan had a bit of experience building features for advertisers, but it wasn’t his strength, and he said so. “You’re the right leader for the right time,” Agrawal said simply.
Sullivan hung up and called Beykpour. An apology tumbled out of him. “This is the worst,” he kept repeating.
To some employees, the firings made little sense. It was like starting a full bathroom remodel on a house someone else had already agreed to buy. With Musk looming, they wondered why Agrawal decided to create more waves and toss a lieutenant, particularly while he was spending time away with his family. Twitter was supposed to be a compassionate workplace—at least for now. Some tweeps felt that the company should abide by those standards until the keys were handed over.
Sensing the tide turning against him, Agrawal took to his Twitter account to lay out the reasoning for his recent decisions. Unlike Musk or Dorsey, the chief executive was not a prolific tweeter. He started his procession of tweets by acknowledging his role as a “lame duck” CEO. While he said he expected the deal to close, the company needed “to be prepared for all scenarios,” he wrote. He wasn’t just working to keep the lights on.
Parag Agrawal
@paraga
People have also asked: why manage costs now vs after close? Our industry is in a very challenging macro environment – right now. I won’t use the deal as an excuse to avoid making important decisions for the health of the company, nor will any leader at Twitter.
3:10 PM May 13, 2022
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Once again, his tweets made no direct mention of the billionaire who had upended his tenure and made his life hell. But there was a veiled reference. Agrawal said he wasn’t going to be the “loudest sound bite” and promised to focus on “the ongoing, continuous, and challenging work our teams are doing to improve the public conversation on Twitter.”
The thread didn’t resonate with the rank and file, and raised more questions than it answered. It felt like the same public relations drivel they had been force-fed since the Musk circus began. And while Agrawal said he believed the deal would close, the qualification about preparing for “all scenarios” led employees—and the public—to once again wonder if Musk was serious. If employees were listening in hope of a voice of comfort and trust, it would not come from their chief executive.
At his first meeting with Beykpour’s former product team, Sullivan seemed dejected. “I don’t defend that. I don’t know how to defend that,” he told them about the sudden firing. Sullivan’s candid approach made him seem like the more humane executive.
>>> The shifting economic landscape spared no company, not even Tesla. While the company’s shares—and subsequently Musk’s net worth—had entered 2022 nearing all-time highs, they began to plummet by early April, affected by the macroeconomic environment and its chief’s own actions. The day after Musk first announced his deal for Twitter, Tesla’s shares fell more than 12 percent as investors worried he’d be selling off stock in the automobile company to fund his purchase. On May 4, the company’s shares were down nearly 17 percent from a month earlier, closing the trading day at $317.54.
Tesla’s value was of crucial importance to Musk. Not only was much of his personal fortune tied up in his roughly 20 percent ownership stake in Tesla, but he had also pledged some of those shares as collateral, including for a $12.5 billion personal loan to fund the Twitter purchase. (That personal loan was later reduced to $6.25 billion in early May after Musk was able to raise outside funding.)
Tesla’s shareholders also worried that Twitter would divert Musk’s focus. Adding Twitter to the billionaire’s constellation of companies would only further divide his limited time, they thought, and the electric automaker needed to continue to deliver new cars and products. Moreover, analysts, shareholders, and Tesla’s own management worried about the potential financial knock-on effects of paying for the social network. In a 2022 financial filing, the company had previously outlined the risks of the personal loans made to its chief executive, “which are partially secured by pledges of a portion of the Tesla common stock currently owned by Mr. Musk.
“If the price of our common stock were to decline substantially, Mr. Musk may be forced by one or more of the banking institutions to sell shares of Tesla common stock to satisfy his loan obligations if he could not do so through other means,” the company wrote. “Any such sales could cause the price of our common stock to decline further.”
In essence, investors and the company itself were fearful of a domino effect. If Musk failed to pay back his loans, he would have to sell his Tesla shares. And if he sold off his Tesla shares, the company’s investors could be spooked and sell off their own shares. That would drive down the share price further, leading Musk to have to sell off more shares at an even greater discount to create the necessary cash to pay off the loans. And so on and so forth.
In the week after May 4, Tesla’s stock dropped another 23 percent, reducing the company’s valuation by $226 billion. One of Musk’s greatest powers was his ability to instill confidence. But the Twitter deal sowed doubts, and, in turn, Musk began to doubt himself. He would tell those close to him he was unsure if he should push through with his acquisition. (By the end of May, Musk completely did away with the remaining $6.25 billion of the personal margin loan by raising more outside funding, though the damage to Tesla’s stock had already been done.)
As Tesla’s shares plummeted, Musk pushed harder on the bot issue, his doubts about spam and fake accounts evolving into a full-blooded conspiracy theory. Twitter’s executives must be hiding something from him, and Musk pushed his lawyers and bankers to do better due diligence.
On May 9, lawyers from Skadden had started messaging Twitter’s teams for access to the firehose. The reams and reams of data, they believed, would allow them to do their own research and potentially prove out their boss’s bot hypothesis.
On Twitter’s side, the requests seemed preposterous. The executives had given Musk’s advisers the chance to sit down with their engineers for a live demo so they could walk through their calculations. Moreover, providing firehose access wouldn’t allow Musk’s team to determine the difference between a real or fake user, which required private account information that didn’t come from the enormous dataset that included only public tweets. Twitter combed through personal information including user locations, emails, IP addresses, and other data that simply couldn’t be shared because of global data privacy laws.
It also defied logic. Twitter had given Musk the chance to do due diligence on its financials and user numbers before he had agreed to sign the deal, and the billionaire had balked at the idea. Twitter had nearly ripped his hand off shaking on the deal.
Musk, perhaps riled up by his own conspiracy or angered by the tricky predicament where he now found himself, began to uncork in the only way he knew how, unleashing a steady stream of criticism about Twitter on Twitter. He railed against Twitter’s algorithmic recommendations and, on May 12, tweeted that he believed “Trump should be restored to Twitter.” Then, after an evening of posting about spam, the culture war over paper straws, and supposed media hoaxes, he fired off something that caught everyone by surprise.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted at 4:44 a.m. Austin time on May 13.
This was the public’s first real hint he was having doubts. Reporters scrambled to see if it was even possible for Musk to halt the deal after signing the contract.
To Musk’s inner circle, the move was seen as self-sabotage. Even if Musk believed he had a way out of the deal, what was the use in announcing it to the world and tipping his hand? His Twitter habit had once again put him in a corner, and Spiro and Birchall frantically texted and called their boss to fix the situation.
It took two hours and six minutes for them to convince Musk to act. “Still committed to acquisition,” he tweeted at 6:50 a.m., just as much of the American financial press was beginning to stir. It was an incredible, confusing set of back-to-back tweets. Few knew what to think. Twitter’s stock dropped nearly 10 percent. Tesla’s shares rose 5 percent. Musk stopped tweeting for thirteen hours.
>>> By the evening of Sunday, May 15, Agrawal had become fed up with Musk’s posturing about the so-called bot problem. To Agrawal and Twitter’s board, Musk’s logic was particularly shoddy. Correcting bots and spam were one of the particular reasons the billionaire gave for buying the company, after all.
“If our twitter bid succeeds, we will defeat the spam bots or die trying,” Musk had tweeted on April 21. He then repeated the line four days later in a press release announcing his Twitter bid. Three weeks later, what had changed?
Agrawal had had enough. The Twitter peanut gallery had pilloried him for appearing weak as Musk led a harassment campaign against Gadde, even though he had resisted Musk’s private demand to fire her. He had remained silent as Musk’s twitchy fingers used the platform he oversaw to start the board member merry-go-round and push a de facto hostile takeover. After spreading his wings on Twitter a few days earlier to explain the firings of Beykpour and Falck, he felt encouraged. The Tesla chief was just taking his crazy to another level, this time to undermine the work of his employees.
That night he drafted a fifteen-tweet thread, vetting it with the transaction committee and lawyers. Many of those who saw it told Agrawal not to send it. The tweets would only antagonize Musk, they said, and there was no point in trying to reason with someone so erratic by using facts and logic. Agrawal could also risk jeopardizing the deal, giving Musk more fodder to wiggle out of his contract.
But Agrawal believed in the solidity of the merger agreement and he wouldn’t be mentioning Twitter’s potential buyer by name or handle in any of his tweets. In Twitter parlance, it was a “subtweet,” a post that clearly bashes another user without directly naming them. In this case, it was abundantly clear who Agrawal was talking about, and he hit the tweet button at 9:26 on Monday morning in San Francisco: “Let’s talk about spam. And let’s do so with the benefit of data, facts, and context…”
The spam problem, he said, was complex and dynamic, an ever-evolving problem that led the company to suspend half a million accounts a day. Using sophisticated techniques and data science, Twitter estimated that spam accounts were less than 5 percent of daily active users. And because of that, it was impossible for any outside party to accurately assess the bot problem, because they couldn’t access the full wealth of Twitter’s data.
Musk didn’t care. He responded initially with a single emoji:
Elon Musk
@elonmusk
@paraga
1:03 PM May 16, 2022
a troll move that garnered 51,000 likes, three times more than Agrawal’s lead tweet in the thread. It was childish, but effective—a grade-schooler winning an argument against a PhD student by calling them a playground insult.
Fourteen minutes later, he used actual words.
“So how do advertisers know what they’re getting for their money?” Musk wrote. “This is fundamental to the financial health of Twitter.”
Never mind that Twitter disclosed these figures in public financial reports. And never mind that Musk had already agreed to buy the company. He once again won the battle in the court of Twitter opinion. Agrawal’s account went silent for a week.