The Billionaire Brain: Elon Musk, Jack Dorsey & the Battle for Twitter with Kurt Wagner

0:04Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk with some of the brightest minds out there about everything surrounding the written word, from authors and historians to figures in entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe wherever you get your podcasts and leave us a review. We all love a review, even the bad ones. I want to hear the parts you're enjoying or how we can do better. You know, I can roll with the punches, so let me know.

0:38Anyways, let's get to it.

0:47Elon Musk and Jack Dorsey, two names we all know that make us think of one thing, Twitter, or should I say X. The completion of Musk's$44 billion acquisition of Twitter was one of the pinnacle business moments of 2022. From the rise and fall of at real Donald Trump to the messy takeover, Kurt Wagner gets into all of it with us on today's show.

1:21And joining us now on Open Book is Kurt Wagner, award-winning business and technology journalist for Bloomberg. But what a book. Okay. This book is called Battle for the Bird. Great title. Jack Dorsey, Elon Musk, and the$44 billion fight for Twitter's soul. Well, I don't really know where to start with this actually, because I read the book. I felt like it was a little bit of a thriller and a page turner. You're probably too young, Kurt, to remember Barbarians at the Gate. Do you remember Barbarians at the Gate? Fun story. I'm reading it as we speak. Okay, so for viewers and listeners that are younger than me demographically, that's a story from 1988-89 about the takeover of R.J.R.

2:05Reynolds, which was an old school tobacco and Nabisco biscuit company. And what a battle of egos. And here we are 35 years later, and we're reading about what I would call a web sort of barbarians that negate them. Do I have that right? I mean, that's how I felt. That's how I felt about your book. That's part of why I'm reading it, actually. Someone else made a similar comparison, and I had read bits and pieces of Barbarians at the Gate, but it's a long book. It's like 500 pages, and I never made it through, I have to admit. But I was like, well, if someone's going to be kind enough to sort of liken my book to that one, I really need to give this another chance.

2:39And so I picked it back up. I'm a little more than halfway through it right now. But I think you're right. Like, there's a lot of similarities in the sense that it's, you know, it's a leveraged buyout. This ultimately is what Elon did, a leveraged buyout of Twitter. and, you know, a ton of personalities involved, competing, you know, opinions about where this could or should go. And so I do see like, you know, why the comparison gets tossed out, which is flattering, I will say. It's a great book. Well, I'm glad someone else felt the same way. I love the book. That book went on to become an HBO series.

3:08I predict you're going to get picked up. I know you did this in the middle of the writer's strike, but my guess is the story is just too good, Kurt. And I also often tell my authors, I don't like giving away too much of these books because I want people to go out and buy your book. The purpose of my podcast is to introduce an author, get people excited about reading. And I feel you did so much homework and research on this book. We owe it to you to read it. Let's start with you for a second. What made you pick this? It's a crazy struggle when you get down to it. You had to put it all together.

3:41What made you decide to write the book first, and then we'll get into a little bit of it? Well, I wanted to write a book about Twitter before Elon came into the picture, to be honest with you. I'd been covering Twitter for almost a decade at this point and always sort of thought, well, if I was going to go the book route, Twitter would be a logical subject for me. I've just covered the company. And the story is actually quite interesting and captivating, even before Elon showed up. And so I had set my sights on writing this sort of Jack Dorsey Twitter book. And as I was out pitching it to publishers, like literally the same week, I was out pitching this book idea to publishers.

4:17Elon showed up as the largest shareholder of Twitter. And I continually kept sort of telling myself, well, I'll just like add a chapter to the end or, you know, okay, now I'll add two chapters to the end. And eventually I got around to the idea that it was like, okay, this is a totally different story than I had originally set out to sell. And you'll probably see in the book, there's really a two, it's two parts. Like the first half is really the pre-Elon years and a lot of things that happened that set up the opportunity for him to show up and buy this company. And then the second part of the book is really when Elon arrives on the scene.

4:47So, you know, I mean, I'm going to I'm going to say something to you and I want you to react to it. OK, so I was at Goldman Sachs for seven years and, you know, I believed that I was going to start my own business. I remember telling my dad, who was a blue collar worker, I said, you know, dad, I'm going to start a business. It's going to be great. There's going to be no politics, too much politics at Goldman Sachs. And then, Kurt, the minute I had like six employees, I had politics. And then I said, oh, you know, and we're going to be doing things differently at our firm. And then the minute things got hectic, I went right to the Goldman Sachs playbook and compliance book and replicated it.

5:21And I find fascinating about your book is whatever you think of Dorsey and his team, they put in some protocols and they put in some ways of doing business and some guardrails. Elon is a genius. There's no question about that. He thinks differently than all of us. He's already one of the richest people in the world. but do we sometimes get our ego in play to the extent where we think we know better than people who actually may be more experienced than we are in a field that we're looking at? Let's say you. I would agree. And I think in Elon's case, you know, the issue was actually that he tried to take a playbook that had worked for him at Tesla and SpaceX and sort of force it on Twitter, even though the problems at Twitter are just so different.

6:03They require a totally different type of thinking and skill set, right? They're more of a like soft skill problems, communication, human interaction, speech, free speech, those kinds of things. And Elon approached it like an engineer. And he was like, you know, we're going to sleep at the office and we're going to run as fast as humanly possible and get these things shipped as fast as possible. And I just don't think that, you know, the playbook that worked to get the Tesla Model 3 out the door, for example, is the same playbook you can use at a company like Twitter. And, And, you know, we saw that, in my opinion, be a major problem for him in those first couple months after the takeover.

6:40Okay. So we have an engineer in Elon Musk. We have this sort of maverick Bitcoiner in Jack Dorsey. They seem similar to me. Is that a problem for them in terms of the way they clash with each other? Or what am I missing? What is different and similar about Elon Musk and Jack Dorsey and describe their relationship to our viewers and listeners? How's that? Sure. I'll start actually with the differences because I think they're more stark, which is just the management style of these two guys, right? So Jack Dorsey, as we learn in the book, he's introverted. He doesn't like making decisions. His management style is essentially to be hands off and let the people who work for him run the show while he sort of serves as this advisor, you know, at the top, more of like a big thinker type guy.

7:27And he never, I never got the sense that he really wanted to be the CEO of publicly traded companies. It's sort of like something he almost fell into, which is bizarre because he had two of those jobs at the same time. And then you look at Elon, right? And he's someone who moves incredibly quickly. He's very decisive, you know, not always the right decision, but he makes a decision and he goes for it. And, you know, he is the ultimate decision maker. Like the people who work for him are implementing his vision and not the other way around. So in terms of differences, that's where I feel like management style is very different.

7:57Now, where they're similar, they're both founders. They're both technologists. They're both incredibly rich, right? So they have this freedom to think about things in a way much longer term, much bigger picture than most of us do because we just don't have the financial freedom to sit around and pontificate. Where's Bitcoin going to be in 20 years because you're trying to pay rent or whatever it may be. So I think where they sort of aligned was that they had this big sort of grand idea of what Twitter could be. And I think there were some similarities in their visions for Twitter, even if the way that they chose to execute it were very different.

8:28And so this was a relationship. I spent a lot of time in the book, as you know, like focused on this relationship because I feel like without Jack Dorsey sort of encouraging Elon to buy Twitter and sort of welcoming him to come in and buy Twitter, I don't know if a deal actually gets done. And so that's why I spent so much time talking about those two guys. Yeah. I mean, listen, there are two brilliant guys. My next follow-up question there, I'm going to go in another direction. You know, I just turned 60 this year. Somebody asked me, what's my observation? I sort of feel like people that have earned this amount of money, something happens to their brain.

9:02It's almost like the old drug commercial. When I was a kid, they used to crack an egg and say, this is your brain. And then they would put the egg in a frying pan and say, this is your brain on drugs. I feel like money does that to people. I feel like it smokes their brain a little bit where they think that they're superior or they think that they're smart. I'm watching it with some billionaires in sports. They believe that they know more than the baseball or football or hockey operators. Am I missing something or do sometimes rich people get in the way of themselves as a result of the ego of being rich?

9:36It's funny you say that because a colleague of mine just talked to me about the book last week in New York. And literally, she called it billionaire brain. She was like, what is this billionaire brain thing that happens to people? And I think you're totally right. And I think it's two things. Well, it might be more than that, but I've identified, I think, like two main things. The first is you're reluctant to surround yourself with anybody because you kind of lose trust with most people, right? They're either trying to get something from you or they're trying to manipulate you or whatever. So I feel like people isolate themselves a little bit more when they get to that point because they just they don't trust many people.

10:09And then there's no question. You're fearful that people are clonting on to you for money or digging gold on you. Exactly. I understand that. So then you have a smaller circle and people want to be in that small circle. So then the other thing that happens is they don't actually give you any real feedback, right? They just agree with everything you say. Or if they do give you feedback, they do it in a very gentle way that might not even change your opinion, right? So we saw this with Elon in particular when he was taking over Twitter. he had this sort of small group of advisors he brought with him, personal friends, you know, relationships from other companies.

10:43And everything that I heard was essentially he'd sort of have a bad idea and they'd be like, yes, that's the best idea ever. Go forward. Go do that. You should totally do it. Instead of someone being like, well, wait a minute, let's like think this thing through. Like this might not actually be a good idea. But when, you know, you have a small group of people and those people just continue to encourage every idea that pops into your head, I think it's, you know, creates that billionaire brain thing because you're no longer getting the feedback you probably need. I mean, it's just fascinating, right?

11:07Billionaire brain. You know, it's interesting because, and by the way, all of us, billionaires are not billionaires. We can get our egos into our decision-making. I certainly did that when I joined the White House. I had this vision of me working for the president and blah, blah. And of course it didn't work out for me, but I do feel that I put too much of my ego into the decision-making and it was very costly to me. So that's a cautionary tale for people that I get out of your book. Let's go to the following equation. Jack Dorsey's indecisiveness plus Elon Musk's impulsiveness equals what? Yeah.

11:46Well, the indecisiveness was a major problem for years because Twitter simply didn't innovate fast enough. As a result, it didn't grow fast enough and its business lagged behind. So this indecisiveness is one of the key reasons that Twitter was in a position to be acquired, It had not achieved its potential because, in my opinion, Jack Dorsey as the leader was not making these affirmative, decisive decisions. Flip that on its head with Elon and the impulsiveness, and you see the destruction of some of the stuff that was actually, in my opinion, working at Twitter. So even though Twitter was a small business, they had a pretty stable, solid brand advertising business.

12:27right? A lot of big brands wanted to be on Twitter because it's where people talked about the Super Bowl and the World Cup and the Oscars and all of these like things that are happening in real time. It was a great compliment to watching on television. But Elon Musk's, I guess, ability or inability to filter himself ultimately has scared off a lot of those advertisers because he goes on Twitter and just tweets whatever pops into his head. And there's a lot of people, marketers who don't want to be associated with that, right? So where Jack's slowness kind of set Twitter up, you know, struggled business wise, I think Elon sort of not reading the room and understanding that his own impulsive behavior has a negative effect on the company is destroying the business that they have right now.

13:05And so obviously two different approaches, but two very similar outcomes, which is Twitter is underachieving as a business in both cases. Okay. So this is essential thought of mine. Free speech. You're for free speech. I'm assuming you are. You're a journalist. Of course. Yeah. I'm for free speech. But help me, OK, because I had to take con law in school and there's a lot of different types of speech. Some of it's protected. Some of it isn't. Obviously, hate speech wouldn't be. I can't put you in harm's way. The proverbial young liar in the theater. What does Elon Musk get right and what does he get wrong about free speech on his new business?

13:43Yeah. Formerly known as Twitter. I think what he gets right is probably that Twitter, old Twitter, Twitter 1.0, had probably over-indexed on its rules, right? Quite frankly, I think we have the benefit of hindsight now, but you look at what happened in 2020 with COVID and the election and the reaction to the election from then-President Trump. And we saw Twitter like really, really get a lot more strict on its rules. And I think like in the moment, given the severity and the extreme things that were happening, I think it, you know, to some people, it was justified. Right. And I think you could look back now and say, well, you know, maybe they were a little too forceful with some of that stuff.

14:23And I don't think it's crazy for Elon to come in and say, I feel like there are too many rules and I want to sort of, you know, rescind some of these. I don't have a problem with that. But what I do think he's missed is the fact that the rules exist, not just, you know, for the company to feel good about itself. There's a business reason to have these things, right? Like more users want to show up at a place where they feel safe, where they're not going to be attacked, where they are not going to be exposed to, you know, ridiculous conspiracy theories or whatever. And so there's a business reason to have some of these rules.

14:55I don't think, you know, he has really thought that through. Or if he has, he just says, well, we're just going to suffer the business consequences of, you know, letting people sort of say whatever they want. And, you know, people are free to leave, of course, if they don't feel that the place reflects their own values. And that's what some of them are doing. And so it's just incredibly, I think what I've learned from doing this book is how difficult the balancing act is, right? You know, you want to uphold free speech, you want to let people say what's on their mind. But at the same time, you got to build a business and a business requires some level of pruning, right?

15:26And some level of kind of cleaning these things up. And no one has really succeeded in navigating that perfectly. I don't think anyone would, to be clear. But it's just a really tough thing that I don't think outsiders fully appreciate. They feel like the service should reflect whatever they personally believe and anything else is wrong. But those beliefs are a huge, you know, huge spectrum. Well, we're in that society now. We're in that tribal society now. We want to play to the band or sing to the chorus, that sort of thing. And I learned so many different things from your book. I'm going to start with a couple and I just want you to get your reaction.

15:57Sure. What did I learn from your book? I learned that these things are way more complicated, aren't they? Setting up free speech. You just set that as an example. I learned that this deal could have been very successful for Elon Musk because he is a great innovator, but he went in the wrong direction as explained in your book. How did he go in the wrong direction? if you believe that's the case. I do. I feel like what Twitter was best at, and maybe this is unique to your one-time position in the White House, what I do for a living. But Twitter was great at news. If you cared about news, Twitter was the place you went.

16:37You had to be there. You had to have an account. And I feel like Elon has sort of said, he's got beef, obviously, with the media right now, certainly like sort of the mainstream media. And I kind of feel like he's saying, I want to make this less useful for news because I'm going to stick it to some of these journalists who have been either critical of me or who he disagrees with. But the problem is that was what made Twitter super sticky and unique to people. And so I get the sense he's sort of gone away from the thing that it was best at. And you add that on top of the business struggles we talked about with the advertising and sort of how Elon has run off some advertisers.

17:13I think the idea of subscriptions actually isn't a bad idea. But I think the way he rolled them out as quickly as he did without thinking through the potential ramifications of taking away check marks, for example, or selling check marks without any kind of identity verification. These are the kinds of things when I said he moves fast, but almost in a reckless way, these are ideas that could have worked, in my opinion, had they been handled very differently. I just feel like the execution was poor. Okay. Okay. Last thing on this topic of what I learned, you can really damage a brand. And you could put a brand in a non-recoverable position.

17:51I'm not saying he's not going to be successful with X. But when I look at X today, it is very different than what Twitter once was. And so I want you, for our viewers and listeners, to describe, again, your opinion, what Twitter once was with Jack Dorsey and what X is today under Elon Musk. It feels like a totally different experience to me. And I've been on the platform for 15 years. So tell us what you think the differences are. Yeah, I think if you just look at the actual product, I don't think it looks that different. I don't think it, you know, the way you interact with the app is all that different.

18:27But the feeling you get on the app is totally night and day different, in my opinion. And again, I think Twitter used to lean very heavily into the it's what's happening slogan or tagline, right? You would expect to go there and see the discussion at the top of your feed be about today or this week would be State of the Union. We're about to hear the State of the Union from President Biden. And you would think, OK, there's sort of what's happening in the U.S. today. Therefore, that's what's going to be at the top of my feed. What I think Elon has tried to do and what he's actually said publicly is that he wants Twitter to be the most entertaining app that people use.

19:02So it's no longer, in my opinion, about usefulness. It's not really about opening up and getting exactly what I feel that I need that day. It's more about feeling entertained. Right. So I see, you know, tons of memes on there. I see tons of videos that have nothing to do with like news or what's happening. They're just sort of recycled videos that are either, you know, head scratchers or they're funny or whatever it may be. It just it kind of feels like he wants to be like a tick tock light or something like that, where you you're more scrolling to be entertained than you are to be informed. That's my personal opinion.

19:35Now, I'm actually curious, since you're a user yourself and you said you've seen a difference, like what's the difference in your mind between the two? Because, again, the product itself feels sort of similar in the way that you use it. Well, I feel certain things are boosted. Maybe I'm wrong. You know, I think the good news for me is I was shadow banned on Twitter. I was a Trump supporter. And so I got shadow banned. And so I got unclipped from that. And so I was modulated and throttled down to a low ability to gain followers. he very fairly unclipped that and so now i get followers and my stuff that i tweet out reaches a lot of people and so i was in love with that about twitter but i feel like there's a lot of boosting going on of uh conspiracy theory maybe um i feel a lot of uh sludges on there a lot of uh nonsense uh made up stuff you know um you know i feel bad about this because i really don't believe Elon Musk is an anti-Semite, but I do feel there's a lot of anti-Semitic activity going on on Twitter now, way more than there was prior.

20:37Okay. And this is the problem though. Someone like Elon Musk, people don't want to say that to because they don't want to offend him and he's a powerful guy and blah, blah, blah. You know what I mean? But if I was sitting in a boardroom with him, I'd be like, look, you've done a really good job of trying to flatten the playing field between conservatives and liberals. And I respect that. But we probably need to clean up on aisle seven of all the conspiracy theories. I mean, you know, I mean, you think the Rothschilds run the world? You know, I don't think they do. But if you follow X, you know, you've got a good 10 percent of the tweets that come into my field of vision.

21:15The Rothschilds are running the world. That's a anti-Semitic trope that's lasted 300 years. You know, I'm not in love with that. Well, and that's the tradeoff between the free speech and the cleanup. Right. That's true. So you, you know, example of one, right? But like X is less interesting to you. I'm sort of speaking for you now, but, you know, and as in partly because they are not policing in the way that old Twitter did. Right. And so, but old Twitter over policed. And so now you're sort of like, okay, how do we, you know, draw that line? How do you find that balance? And again, everyone's going to be different.

21:50But that's the fear is that the more you let people say whatever they want and say, you know, I might not agree with it, but it should be allowed to be on there. Well, people just don't want to be surrounded by that stuff, right? And so they use the product less or they leave altogether. And this is the dilemma that Elon will continue to face. Okay. So before I brought you on and before we had the recording start, we know that Fidelity, I believe, who made an investment alongside of Elon Musk at a$44 billion valuation, marked the investment down to$12 billion. Okay. You think it's worth$12 billion?

22:25There's a lot of debt on those books still. You have to remember that Twitter took on about, I want to say is like$12 billion in debt to get this deal done. So, and which they're paying back, you know, for many more years. So,$12 billion honestly feels a little high for me. We don't know exactly what the revenue is because it's a private company. So, they don't share that. I had a story in December that said that they were targeting around$2.5 billion in advertising revenue last year, which was down almost 50%. So, you know, you see a company that's bringing in, if we're generous, maybe two and a half, three billion in revenue, but has tons of debt on the books.

23:05And, you know, as you point out, a lot of other kind of cultural problems right now, I don't know if you could sell it for 12 billion. Maybe I'm being too harsh, but it seems a little high to me. Okay. So, but he's not interested in selling it. So let's fast forward a second. Okay. Here's a guy that took, I mean, this is one of the big misses of my life, you know, One of my best friends, Antonio Gracias, was on the board of SpaceX and Twitter. Now I think he's just on one of them. He gave me the opportunity to invest 20 years ago. And of course, I was too stupid. He went on to become a billionaire.