Tag: Twitter

Elon Musk Biography Book Review and Comments on Twitter Takeover

It’s summertime and with markets quiet it’s time to look for some holiday reading. One book I can recommend is “Elon Musk” by Ashlee Vance. Published in 2015 it covers the early life of Elon and his early business ventures at Zip2, X.com/Paypal, SpaceX and Tesla.

It reveals a lot about his personality and will to revolutionise the space exploration and banking sectors. Like Bill Gates and other successful entrepreneurs he clearly has a forceful manner and does not suffer fools gladly.

The subtitle of the book is “How the billionaire CEO of SpaceX and Tesla is shaping our future”. If you want to know how to become a billionaire and the richest person in the world (roughly $250 billion at the time of writing) then this is a book well worth reading.

Elon’s career was not without its problems and failures. SpaceX rockets blew up repeatedly and technical problems with the first Tesla car delayed its public launch (over-heating batteries and breaking transmissions). But despite consuming most of his fortune from the sale of Paypal he persisted and eventually they were successful products.

The book also provides some interesting background on the VC world in Silicon Valley in the 1990s and 2000s, which I was familiar with from running a software company in the period and having an office in Los Altos.

Why was Elon so successful? He was willing to take risks and focussed on revolutionising sectors such as space exploration with low-cost launches, the banking world with internet banking and the automobile industry with electric vehicles when other people just said the goal was impossible. But he was not a one-man band and made sure he hired the best people as employees.

He could clearly be persuasive in raising capital when needed helped by the availability of funding for new ventures at the time.

In summary one of the best books on Elon Musk and a New York Times bestseller.

The latest gamble by Elon is paying $44 billion in cash for Twitter. As a user of Twitter it has always seemed to me to be an essentially simple software product that should have been low cost to develop and maintain. Since Elon Musk took the reins at Twitter as its CEO in October 2022, its workforce has dropped by 80% and reportedly hovers at around 1,300 employees, according to CNBC.

There was certainly an opportunity there to massively reduce costs. But other people have seen that also with the launch of “me-too” products that have imitated Twitter functionality. Will they be successful? I doubt it.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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JPMorgan Global Growth AGM and Twitter Fees

Yesterday I attended the Annual General Meeting of JPMorgan Global Growth and Income Plc (JGGI). This is a global investment trust as the name implies and the meeting was a “hybrid” AGM with a number of shareholders present in person but I attended on-line. Questions could be posed on-line but voting was only via proxy in advance for those attending on-line. I found this a perfectly satisfactory arrangement.

The meeting commenced with a presentation from the managers after brief words from the Chairman about the recent merger of the trust with the Scottish Investment Trust which almost doubled the size of the company. The result will be lower management fees.

The trust is a “high conviction, bottom-up stock selection” investor with 80% active share, i.e. it is definitely not a closet index tracker. As one investor pointed out, this results in a high stock turnover as they are sensitive to changes in the current valuations of companies.

The annualised return since 2008 has been 2.4% ahead of the MCSI All Country World Index per annum but they slightly underperformed last year. But it has a good long-term record and usually trades at a premium to NAV.

The manager emphasised that they aim to own the “best” companies but talked about the 185 different data points they measure on companies re ESG factors – a very tiresome subject that is now promoted by all fund managers. I just want them to make money!

There were some negative comments on Apple, Tesla and Lyft (they prefer Uber). They like Amazon, NXDP, LVMH etc where they are overweight.

There were a few questions from the audience. One was is the dividend covered by earnings? The answer was NO. The justification given was that it is best to invest in the best companies and not worry about the dividend cover. Would it not be best to reinvest the profits? Most investors prefer a reasonable dividend and the company has retained profits from capital that it can pay out.

All resolutions were passed based on the proxy counts before the meeting.

In summary this was a useful meeting which was well managed. For those who want good international coverage and like active management this is a share worth considering.

I shall be tweeting about this report of course. Also yesterday Elon Musk suggested that he would introduce a subscription service on Twitter at $8 per month which would give users some priority in search which he considered essential to defeat spam and reduce the number of adverts they see. There would also be verification of users who subscribed. In reality he is changing the business model from total reliance on advertising.

I am all in favour of those changes. More moderation is required on Twitter and if charging helps to reduce the number of garbage and abusive comments then so much the better.

Musk is also planning to halve the number of Twitter staff. It’s not many companies that have so many non-essential staff that half can be fired. It will be interesting to see the outcome of these changes for investors in Twitter.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Elon Musk Takes Over Twitter

The board of Twitter have accepted the bid from Elon Musk to acquire Twitter for $44 billion. How is he going to finance this? Apart from being the richest person in the world, probably by borrowing against his shareholdings in Tesla.

But users of Twitter will be concerned about his plans for the platform. This is what Elon said (in a tweet of course): “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated. I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential -I look forward to working with the company and the community of users to unlock it.”

As an active twitter user I find these commitments to be positive. Authenticating all users should be done by all social media platforms to deter the abusive comments that are all too common. Twitter also needs to cease the political bias which is all too evident in its selection of who and what to suppress.

There are some simple changes to Twitter that might help. For example, allowing you to “dislike” tweets as well as “like” them, and allowing edits of tweets to enable one to correct the typos that creep in when using a mobile phone. There is also too much repetitive advertising on Twitter of late, often irrelevant to you.

Now would it not be good if we could get Elon Musk to take over the BBC and remove the left wing, woke bias from that also!

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Elon Musk and Twitter

Elon Musk has offered $43 billion to buy Twitter but the Twitter board have responded by announcing a “shareholder rights plan”. This should rather be called a “management rights plan” because it’s what is called a “poison pill” defence which allows the board of the company to defend against any hostile bid by permitting them to issue so many new shares at a big discount that the bidder is diluted and unable to gain control.

This is in my view unethical and unprincipled. Irrespective of your views on Twitter or on Elon Musk, the adoption of a poison pill is effectively a frustration of shareholder democracy.

There is a hint that Mr Musk would limit the amount of censorship that Twitter applies to posts. For example Donald Trump has been permanently suspended from Twitter for comments that Twitter judged to be an incentive to violence. You can read their judgement here:  https://blog.twitter.com/en_us/topics/company/2020/suspension . It hardly appears to be a fair and unbiased view.

It’s not just Donald Trump that faces the wrath of the Twitter censors. For example news aggregator Politics For All (PFA) was banned for “distorting stories by focusing on specifics that would go viral”. Is that not what all news media do?

Free speech is an important constitutional right in the USA and when such a dominant medium such as Twitter chooses to interfere in politics or for commercial reasons then it needs to be censured. So Elon Musk might just be a better owner that the existing Twitter management.

The other issue is that the board of Twitter may simply be defending their well-paid jobs by trying to block a takeover. I hope they lose this battle.

Poison pill defences are of course not permitted in the UK under Takeover Panel rules. It is unfortunate that they are not outlawed in the USA.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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