How Elon Musk got everything he wanted out of Twitter

Platformer is an independent newsletter from Casey Newton that follows the intersection of Silicon Valley and democracy. Subscribe here.

Last week I spent a lot of time writing about Musk becoming the largest shareholder in the company, taking a seat on the board, and throwing the company's future into uncertainty. After a few years of relative calm, Musk's trickster-god persona seemed to augur a new period of chaos for the company.

Even though you are dealing with a top-tier chaos muppet, you still find yourself unprepared for the next turn of events. I found myself unprepared for the development that upended the timeline on Sunday night: Musk now won't be taking a board seat after all, and in fact had already decided not to.

The news came from Parag, who used to have a simpler life. In a reply to a follower, Agrawal wrote:

The Board and I had many discussions about Elon joining the board, and with Elon directly. We were excited to collaborate and clear about the risks. We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward. The board offered him a seat.

We announced on Tuesday that Elon would be appointed to the Board contingent on a background check and formal acceptance. Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same day that he will no longer be joining the board. I believe this is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input.

Musk's trip through the board room raises two obvious questions: what changed? What happens next?

Let them take them in turn.

The explanation for Musk's change of heart offered several hints. Musk has shown no interest in the fiduciary responsibility of a board member to shareholders. I think that most people understand that Musk bought 9.2 percent of Twitter for fun. As a board member, Musk would have had to represent the interests of the common shareholder, or at the very least not scare the markets with his statements.

This may have been particularly pressing for Musk since there seem to be so many legal issues dogging him already. He was able to scoop up 4 percent more of the company at a much lower price because he delayed filing a form indicating that he had surpassed a 5 percent stake with the Securities and Exchange Commission.

According to The Washington Post, Musk saved himself over $150 million. The SEC will definitely investigate and possibly fine Musk over the fact that he doesn't care about saving $156 million on a purchase. The SEC is investigating Musk over a number of things, so he didn't want to put himself in a position where he would be breaking their rules.

It is also equally likely that the SEC conflict would have no effect on Musk; he has barely been affected by his battles with the SEC so far. If you want to imagine that rational self-interest played any part in the events of this weekend, you would probably assume that it was the result of increased enforcements.

The funniest and least credible suggestion is that Musk did not take the board seat because he refused to submit to a background check. It is incredible because of all the Musk-related material that exists already in the foreground: smoking weed on Joe Rogan's show, mocking the use of alternative pronouns, and the fact thatTesla is now the subject of the largest racial discrimination. What was going to happen when a background check was done? That he knocked over a convenience store?

I believe Musk would have demanded a background check if he had been offered a seat on the board.

The mood inside the micro-blogging site is one of relief. Some of the reasons linked in my quick foreground check were related to the internal opposition to his board seat. Musk's stance toward the company has been almost entirely hostile, filled with criticism over its content moderation policies, lack of an editing button, and the decision not to use its company headquarters as a homeless shelter.

The steps that have been taken to reduce abuse and harassment on the platform are taken by many of the employees. Musk's hasty exit from the board feels like a dodged bullet for them.

I kept quiet since the announcement because I wanted to give the leadership of the company a chance to do right by their employees, said Rumman Chowdhury, who runs the company.

Let's ask the less-answerable question: what happens next at Twitter? He said in his note that there will be distraction ahead and that there are more shoes to drop. Let's consider the multiverse.

There is a world where Musk buys way more stock than the board agreed to cap his investment at. I don't know if he would gain much by increasing his share, unless he really wants to take the company over. Ben Thompson explains that it would be difficult because of the poison pill provisions. I think that may not stop Musk.

There is a world in which Musk sells off most or all of his stock because he decided he had had enough. Steve Ballmer, the former Microsoft CEO, stopped investing in individual stocks after he acquired 4% of the social networking site.

There is a world in which Musk keeps his position on the social network, but constantly posts edgelord content about how bad it is. This is the most likely near-term outcome, as it allows Musk to achieve his main objective with a Twitter stake while avoiding further SEC involvement. The added benefit of this approach is that it increases the market value of the company.

In the end, I'm left thinking about the activist investors who joined the board in 2020 and likely contributed to Jack Dorsey's sudden departure as CEO. Adding 100 million users is one of the goals they set for Agrawal.

Will Elliott Management Corp. come back to look for fresh blood when it fails to reach that mark? When they do, will they find an ally in Musk, or will his friendly relationship with Agrawal and Dorsey serve as a shield against a further attack?

I think the dynamics will change continuously until that moment arrives. Musk won't join the board, but a board seat was never going to be the source of his true influence. Musk believes that true power on the platform lies in being able to use it whenever you want.

Musk got what he wanted when he turned down the board seat.