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He's going pretty hard on the 5% fake accounts that Twitter reported. I would probably do the same if I were in his position.

by ru552 4y ago

sabertoothed 4y ago
I admire Elon Musk as a visionary and engineer. But here, I think, he is just trying to get out of the deal. The high percentage of bots was exactly the reason why he wanted to buy Twitter in the first place. Because removing the bots would have been a relatively straight-forward way of increasing Twitter's valuation. IIRC he even tweeted about it. [See my clarification below in a comment]
- sabertoothed 4y ago
  On another note, isn't it amazing how well Twitter hides its advanced search functionality? I still don't understand if it is incompetence or deliberate.
- A4ET8a8uTh0 4y ago
  Yes, but sufficiently high amount could potentially mean lower price. So it serves as a way to keep his options open and an indication to counter-party that he could just walk away. As much as Elon annoys me, it hard for me to say he does not know what he is doing. Even the WFH tweet was timed seemingly to lower the cost of severance payments from announced 10% workforce reduction.
  - sabertoothed 4y ago
    I am not saying what he is doing right now isn't rational. I think it's totally rational. He now has the chance of lowering the price or even abandoning the deal. (I just don't believe him regarding the bots. He always knew bots are a problem and likely under-reported.)
  - enragedcacti 4y ago
    How does him reversing the 10% reduction days later play into the master plan? https://www.carscoops.com/2022/06/elon-musk-backtracks-on-tesla-job-cuts-says-total-workforce-will-grow/ https://www.carscoops.com/2022/06/elon-musk-backtracks-on-te...
    - A4ET8a8uTh0 4y ago
      I will genuinely rather wait for more leaks of emails from the factory than try to divine the meaning behind tweets. That said, if the message is confusing then either messenger does not know what he is doing or wants the confusion. In his case, I think the latter is more likely.
- specialp 4y ago
  He might actually have to make this deal. I thought for a while that he had no intention of actually buying them. He just wanted to stir the pot with Twitter. He would then back out, and say something like "Taking these funds and now putting them towards a moon base to mine helium 3 operational by 2023" and people would eat it up. But I think now that it didn't work the way he planned, and now his credibility and ability to make sound judgements is being questioned by many.
- HL33tibCe7 4y ago
  Visionary? Maybe. Engineer? Meh. I think he's first and foremost an entrepreneur, and people overstate his engineering ability. In many cases, he shows total ignorance for the realities of engineering (see e.g: hyperloop). I suspect in those cases he is just surrounded by yes-men who don't want to tell him he's wrong. In general, I get the impression that his success over the years has been contingent on the people he has surrounded himself with. That, in itself, is a skill, though, granted.
- Someone1234 4y ago
  > I admire Elon Musk as a [.] engineer. Engineer? What exactly has Musk ever engineered? You could maybe argue "designer" but even that may be generous.
  - scoopertrooper 4y ago
    > What exactly has Musk ever engineered? A public persona that he's now diligently working to destroy?
  - _jal 4y ago
    Finance.
- mrandish 4y ago
  He might just be trying to reprice the deal at a lower price he now thinks is commensurate to the value. Things were necessarily rushed in the initial agreement due to leaks etc. He and his team have now had time to develop an operating plan. Keep in mind that there are several savvy hedge funds also investing in this deal and this may be driven by their concerns. There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
- mrandish 4y ago
  He might just be trying to reprice the deal at a lower valuation he thinks is commensurate to the potential. Things were necessarily rushed in the initial agreement due to leaks etc. He and his team have now had time to develop an operating plan. Keep in mind that there are several hedge funds also co-investing in this deal and this may be driven by their concerns. There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
- sixQuarks 4y ago
  Wow, look at the emotional anti-Elon bias in here. Just because you said you admire him as a visionary and engineer. You actually disagree with him, but just the fact that you admire him triggers people.
  - sabertoothed 4y ago
    It’s sad that there is little space for nuanced, intellectual discourse. Tribalism and polarisation rule.
    - sixQuarks 4y ago
      What's sadder is that it's happening on HN, one of the last vestiges of good online intellectual discussions.
    - dubswithus 4y ago
      Sometimes dishonesty and general sleaziness overrides personal accomplishments.
acallan 4y ago
Why wasn't this part of his due diligence before contractually obligating himself to purchase Twitter?
- xeromal 4y ago
  I don't know much about this specific situation, but isn't it pretty normal to lock in a price for purchase contingent on everything checking out. It's not like you can go digging around in their databases looking for bot accounts until you have official access. EDIT: Clearly people feel strongly about this so feel free to look at the comments below for some great answers. I'd ask for you to read before commenting though. I keep getting emails rehashing similar things.
  - canucklady 4y ago
    He explicitly waived any kind of due diligence, which is when you would normally agree to a price and make a conditional offer. His offer was unconditional.
    - xeromal 4y ago
      lol, that not a bright move. Hopefully someone hold's his feet to the fire.
  - nightpool 4y ago
    No, the whole point of the pre-merger negotiations is to grill the company on that kind of stuff before locking in the price. you don't get "official access" to anything until you've actually finished the transaction and paid for the company (partially for "don't string us along" reasons and partially for antitrust/collusion reasons). Musk decided to rush into this deal with very little negotiations and while waiving the standard due diligence, and now he's bored with it and creating a pretext to get himself out of it. It's insane to believe he really cares about the bot problem—fixing the problem of "too many bots in his mentions" was one of the reasons he bought the company to begin with!
  - parmenidean 4y ago
mikeyouse 4y ago
It's just silly though -- he complained relentlessly about the bots before he made what was am unconditional offer to buy the company. Twitter hasn't changed their definition of bot in the past decade, they have repeatedly emphasized that they count them in a unique and specific way, and they detailed that methodology (it's not 5% of accounts - it's 5% of "monetizable daily active users"[1]). He has no legal leg to stand on, in a 'legally just' world, he'd be forced to buy Twitter for the price he initially offered. There's a good chance that the entire process would annoy everyone to death, so they may not try and force him to buy a company he no longer wants, but they'd be well within their contractual rights to do so. [1] From their 2022 10K: We define mDAU as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter products, including subscriptions. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three month sended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.
- omarhaneef 4y ago
  I think this is the right approach: zoom in on the language and discuss what is at stake. So let's talk about the legal leg to stand on part. From his 13d language (amendment #8, filed June 6th, which is public, but I read it on bloomberg and can't find the link to the gov site this second) it doesn't sound like he has an issue with the definition. He wants to rerun the numbers and see for himself. He is asking for the underlying data. Twitter pushed back to say that is not in the scope of what was asked for (apparently, based on his letter). Not taking sides because I was not in the negotiations and know nothing about what each side, indicated, what the legal contract says and so forth. Just saying, the issue is whether they should provide the data for him to run his own calculations.
rco8786 4y ago
Except he very deliberately put himself in this position. Twitter has reported 5% as the bot count for years, it’s not like it was some secret only uncovered during DD here. Additionally one of the main reasons Musk cited for wanting to buy Twitter was to fix the bots!
- ru552 4y ago
  Say I find a house for sale that I think is at a really low price (I want to flip it), but I can see it has some termite damage on a corner. I don't see damage anywhere else and the owner signs a legal document that the termites are in less than 5% of the house. I think I can fix the termite damage and then turn a profit so I enter into an agreement to buy the house. Before we complete the transaction, I start to notice signs that the termites might be worse that initially thought. I ask to have an inspector come in and determine how much of the house is infested with termites. The owner is denying my inspection request. I inform the owner I won't complete the transaction until I get a termite inspection of the property. The owner's friend owns the local newspaper so they run a story about how I can't afford the house and I'm trying to get out of the purchase. Hi, I'm Elon Musk, but I'm buying a house and not Twitter.
  - KVFinn 4y ago
    It's more like, I find a house for sale and I announce that the owner is missing out on the potential value of this house, because I can see termites everywhere. I am the termite master. The owner of the house has no idea what they are doing with termites, I announce to the public. I know much more about the termites in that house than they do. They can't even see all the termites I see. What fools! The value I will bring is my termite annihilation skills. I insist on buying the house. The owner is reluctant to agree. They delay. I continue to insist that I purchase the house immediately. The owner says, hey let's stop and think about this, let's do due diligence and inspections, let's take our time. I say screw you, there is no due diligence allowed, there is no house inspections allowed, you must accept my offer now. NOW. I insist that the house owner has a legal fiduciary responsibility to their family to sell the house, because my offer is above the assessed public value of the house. This house must be sold to me! They give in to pressure and accept the sale. I sign all the contracts, I waive all the inspections. "What, the house has termites? What a surprise! I want my money back."
matthewdgreen 4y ago
>He's going pretty hard on the 5% fake accounts that Twitter reported. I would probably do the same if I were in his position. Yes, but you wouldn't put yourself in his position. This is an entirely unforced error on his part.
moneywoes 4y ago
Shouldn’t he have done that prior to making the bid?
hash07e 4y ago
Ok. Lets suppose it is not only 5%. Maybe 20%. Would it be fair to buy a company that 20% of its "customers" are fake? He is forcing twitter to be honest or to at least audit it.
- remram 4y ago
  https://twitter.com/elonmusk/status/1517215066550116354 https://twitter.com/elonmusk/status/1517215066550116354 > If our twitter bid succeeds, we will defeat the spam bots or die trying! > And authenticate all real humans It's a bit weird to now have him go "I'm backing out on the bid because Twitter has many bots and does not authenticate real humans"
- Arkhaine_kupo 4y ago
  > Would it be fair to buy a company that 20% of its "customers" are fake? Yes. for a number of reasons. 1) You carry the investigation BEFORE filling to buy (he waived the investigation). 2) Twitter never said 5% are bots, they said 5% of monetasible daily users are bots. Thats a very important distinction, and one Musk is well aware off. Because he has used bots to affect tesla stock price before. 3) No one forced him to put a 40 billion offer on the table, but once its on, it affects the market so you cannot back away willie nilly. Thousands of people made choices based on him filling that offer, he has to deal with the responsability and the consequences. > He is forcing twitter to be honest or to at least audit it. No, he is trying to use public sentiment. Like your comment, to not have to pay the 1,000,000,000 fine if he doesn't buy it. And he will have to pay it because he company is now worth much less and he is trying to find a way to weasel away.
- bthrn 4y ago
  He waived due diligence. If I offer to buy a house and waive contingencies, I can’t subsequently use an inspection report to back out of the sale claiming the house was misrepresented to me.
csours 4y ago
I feel like a lot of people are talking past each other on this point. Elon Musk's PERSONAL EXPERIENCE of spambots and fake accounts is really terrible because they always glom onto his posts. So he sees way more than 5%. That is what he wants Twitter to fix. He's spent billions of dollars to say that, and may spend billion(s) more to get out of the deal. One would think he could just fund a personal Twitter engineer or two to clean up his feed for him and come out wayyyy ahead on the deal.

He's going pretty hard on the 5% fake accounts that Twitter reported. I would probably do the same if I were in his position.

by ru552 4y ago

He's going pretty hard on the 5% fake accounts that Twitter reported. I would probably do the same if I were in his position.

sabertoothed 4y ago

I admire Elon Musk as a visionary and engineer. But here, I think, he is just trying to get out of the deal. The high percentage of bots was exactly the reason why he wanted to buy Twitter in the first place. Because removing the bots would have been a relatively straight-forward way of increasing Twitter's valuation. IIRC he even tweeted about it. [See my clarification below in a comment]

sabertoothed 4y ago
On another note, isn't it amazing how well Twitter hides its advanced search functionality? I still don't understand if it is incompetence or deliberate.
A4ET8a8uTh0 4y ago
Yes, but sufficiently high amount could potentially mean lower price. So it serves as a way to keep his options open and an indication to counter-party that he could just walk away. As much as Elon annoys me, it hard for me to say he does not know what he is doing. Even the WFH tweet was timed seemingly to lower the cost of severance payments from announced 10% workforce reduction.
- sabertoothed 4y ago
  I am not saying what he is doing right now isn't rational. I think it's totally rational. He now has the chance of lowering the price or even abandoning the deal. (I just don't believe him regarding the bots. He always knew bots are a problem and likely under-reported.)
- enragedcacti 4y ago
  How does him reversing the 10% reduction days later play into the master plan? https://www.carscoops.com/2022/06/elon-musk-backtracks-on-tesla-job-cuts-says-total-workforce-will-grow/ https://www.carscoops.com/2022/06/elon-musk-backtracks-on-te...
  - A4ET8a8uTh0 4y ago
    I will genuinely rather wait for more leaks of emails from the factory than try to divine the meaning behind tweets. That said, if the message is confusing then either messenger does not know what he is doing or wants the confusion. In his case, I think the latter is more likely.
specialp 4y ago
He might actually have to make this deal. I thought for a while that he had no intention of actually buying them. He just wanted to stir the pot with Twitter. He would then back out, and say something like "Taking these funds and now putting them towards a moon base to mine helium 3 operational by 2023" and people would eat it up. But I think now that it didn't work the way he planned, and now his credibility and ability to make sound judgements is being questioned by many.
HL33tibCe7 4y ago
Visionary? Maybe. Engineer? Meh. I think he's first and foremost an entrepreneur, and people overstate his engineering ability. In many cases, he shows total ignorance for the realities of engineering (see e.g: hyperloop). I suspect in those cases he is just surrounded by yes-men who don't want to tell him he's wrong. In general, I get the impression that his success over the years has been contingent on the people he has surrounded himself with. That, in itself, is a skill, though, granted.
Someone1234 4y ago
> I admire Elon Musk as a [.] engineer. Engineer? What exactly has Musk ever engineered? You could maybe argue "designer" but even that may be generous.
- scoopertrooper 4y ago
  > What exactly has Musk ever engineered? A public persona that he's now diligently working to destroy?
- _jal 4y ago
  Finance.
mrandish 4y ago
He might just be trying to reprice the deal at a lower price he now thinks is commensurate to the value. Things were necessarily rushed in the initial agreement due to leaks etc. He and his team have now had time to develop an operating plan. Keep in mind that there are several savvy hedge funds also investing in this deal and this may be driven by their concerns. There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
mrandish 4y ago
He might just be trying to reprice the deal at a lower valuation he thinks is commensurate to the potential. Things were necessarily rushed in the initial agreement due to leaks etc. He and his team have now had time to develop an operating plan. Keep in mind that there are several hedge funds also co-investing in this deal and this may be driven by their concerns. There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
sixQuarks 4y ago
Wow, look at the emotional anti-Elon bias in here. Just because you said you admire him as a visionary and engineer. You actually disagree with him, but just the fact that you admire him triggers people.
- sabertoothed 4y ago
  It’s sad that there is little space for nuanced, intellectual discourse. Tribalism and polarisation rule.
  - sixQuarks 4y ago
    What's sadder is that it's happening on HN, one of the last vestiges of good online intellectual discussions.
  - dubswithus 4y ago
    Sometimes dishonesty and general sleaziness overrides personal accomplishments.

acallan 4y ago

Why wasn't this part of his due diligence before contractually obligating himself to purchase Twitter?

xeromal 4y ago
I don't know much about this specific situation, but isn't it pretty normal to lock in a price for purchase contingent on everything checking out. It's not like you can go digging around in their databases looking for bot accounts until you have official access. EDIT: Clearly people feel strongly about this so feel free to look at the comments below for some great answers. I'd ask for you to read before commenting though. I keep getting emails rehashing similar things.
- canucklady 4y ago
  He explicitly waived any kind of due diligence, which is when you would normally agree to a price and make a conditional offer. His offer was unconditional.
  - xeromal 4y ago
    lol, that not a bright move. Hopefully someone hold's his feet to the fire.
- nightpool 4y ago
  No, the whole point of the pre-merger negotiations is to grill the company on that kind of stuff before locking in the price. you don't get "official access" to anything until you've actually finished the transaction and paid for the company (partially for "don't string us along" reasons and partially for antitrust/collusion reasons). Musk decided to rush into this deal with very little negotiations and while waiving the standard due diligence, and now he's bored with it and creating a pretext to get himself out of it. It's insane to believe he really cares about the bot problem—fixing the problem of "too many bots in his mentions" was one of the reasons he bought the company to begin with!
- parmenidean 4y ago

mikeyouse 4y ago

It's just silly though -- he complained relentlessly about the bots before he made what was am unconditional offer to buy the company. Twitter hasn't changed their definition of bot in the past decade, they have repeatedly emphasized that they count them in a unique and specific way, and they detailed that methodology (it's not 5% of accounts - it's 5% of "monetizable daily active users"[1]). He has no legal leg to stand on, in a 'legally just' world, he'd be forced to buy Twitter for the price he initially offered. There's a good chance that the entire process would annoy everyone to death, so they may not try and force him to buy a company he no longer wants, but they'd be well within their contractual rights to do so. [1] From their 2022 10K: We define mDAU as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter products, including subscriptions. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three month sended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.

omarhaneef 4y ago
I think this is the right approach: zoom in on the language and discuss what is at stake. So let's talk about the legal leg to stand on part. From his 13d language (amendment #8, filed June 6th, which is public, but I read it on bloomberg and can't find the link to the gov site this second) it doesn't sound like he has an issue with the definition. He wants to rerun the numbers and see for himself. He is asking for the underlying data. Twitter pushed back to say that is not in the scope of what was asked for (apparently, based on his letter). Not taking sides because I was not in the negotiations and know nothing about what each side, indicated, what the legal contract says and so forth. Just saying, the issue is whether they should provide the data for him to run his own calculations.

rco8786 4y ago

Except he very deliberately put himself in this position. Twitter has reported 5% as the bot count for years, it’s not like it was some secret only uncovered during DD here. Additionally one of the main reasons Musk cited for wanting to buy Twitter was to fix the bots!

ru552 4y ago
Say I find a house for sale that I think is at a really low price (I want to flip it), but I can see it has some termite damage on a corner. I don't see damage anywhere else and the owner signs a legal document that the termites are in less than 5% of the house. I think I can fix the termite damage and then turn a profit so I enter into an agreement to buy the house. Before we complete the transaction, I start to notice signs that the termites might be worse that initially thought. I ask to have an inspector come in and determine how much of the house is infested with termites. The owner is denying my inspection request. I inform the owner I won't complete the transaction until I get a termite inspection of the property. The owner's friend owns the local newspaper so they run a story about how I can't afford the house and I'm trying to get out of the purchase. Hi, I'm Elon Musk, but I'm buying a house and not Twitter.
- KVFinn 4y ago
  It's more like, I find a house for sale and I announce that the owner is missing out on the potential value of this house, because I can see termites everywhere. I am the termite master. The owner of the house has no idea what they are doing with termites, I announce to the public. I know much more about the termites in that house than they do. They can't even see all the termites I see. What fools! The value I will bring is my termite annihilation skills. I insist on buying the house. The owner is reluctant to agree. They delay. I continue to insist that I purchase the house immediately. The owner says, hey let's stop and think about this, let's do due diligence and inspections, let's take our time. I say screw you, there is no due diligence allowed, there is no house inspections allowed, you must accept my offer now. NOW. I insist that the house owner has a legal fiduciary responsibility to their family to sell the house, because my offer is above the assessed public value of the house. This house must be sold to me! They give in to pressure and accept the sale. I sign all the contracts, I waive all the inspections. "What, the house has termites? What a surprise! I want my money back."

matthewdgreen 4y ago

>He's going pretty hard on the 5% fake accounts that Twitter reported. I would probably do the same if I were in his position. Yes, but you wouldn't put yourself in his position. This is an entirely unforced error on his part.

moneywoes 4y ago

Shouldn’t he have done that prior to making the bid?

hash07e 4y ago

Ok. Lets suppose it is not only 5%. Maybe 20%. Would it be fair to buy a company that 20% of its "customers" are fake? He is forcing twitter to be honest or to at least audit it.

remram 4y ago
https://twitter.com/elonmusk/status/1517215066550116354 https://twitter.com/elonmusk/status/1517215066550116354 > If our twitter bid succeeds, we will defeat the spam bots or die trying! > And authenticate all real humans It's a bit weird to now have him go "I'm backing out on the bid because Twitter has many bots and does not authenticate real humans"
Arkhaine_kupo 4y ago
> Would it be fair to buy a company that 20% of its "customers" are fake? Yes. for a number of reasons. 1) You carry the investigation BEFORE filling to buy (he waived the investigation). 2) Twitter never said 5% are bots, they said 5% of monetasible daily users are bots. Thats a very important distinction, and one Musk is well aware off. Because he has used bots to affect tesla stock price before. 3) No one forced him to put a 40 billion offer on the table, but once its on, it affects the market so you cannot back away willie nilly. Thousands of people made choices based on him filling that offer, he has to deal with the responsability and the consequences. > He is forcing twitter to be honest or to at least audit it. No, he is trying to use public sentiment. Like your comment, to not have to pay the 1,000,000,000 fine if he doesn't buy it. And he will have to pay it because he company is now worth much less and he is trying to find a way to weasel away.
bthrn 4y ago
He waived due diligence. If I offer to buy a house and waive contingencies, I can’t subsequently use an inspection report to back out of the sale claiming the house was misrepresented to me.

csours 4y ago

I feel like a lot of people are talking past each other on this point. Elon Musk's PERSONAL EXPERIENCE of spambots and fake accounts is really terrible because they always glom onto his posts. So he sees way more than 5%. That is what he wants Twitter to fix. He's spent billions of dollars to say that, and may spend billion(s) more to get out of the deal. One would think he could just fund a personal Twitter engineer or two to clean up his feed for him and come out wayyyy ahead on the deal.