Analyst Rob Enderle discusses why Elon Musk likely got the offer of a board seat from Twitter, why he probably turned it down, and the result of a hostile takeover attempt.
Elon Musk presents himself as a free speech absolutist. In other words, he believes everyone should have a voice. He has certainly had issues with critics, brutally going after a whistleblower and a first responder among others. So, like a lot of people in power, he feels strongly no one should take away his voice or someone that he agrees with but, if you aren’t in that group, maybe being quiet would be a far safer path. Musk seems to have little control over what he says publicly, which would be problematic for any board he might serve on, so it was kind of surprising that Twitter offered him a board seat and, given this was what he appeared to want, even more surprising that he eventually turned that offer down. More recently, it was announced that the deal killer was the background check and Musk may have some nasty skeletons in his closet. Finally, just to add insult to injury, Musk announced he is going to do something else that is rarely successful and that he has never done before, a hostile takeover. Let’s talk about why Elon Musk likely got the offer, why he probably turned it down, and what will happen to his “hostile takeover” attempt. We’ll close with my product of the week: a GPS tracking collar that is a godsend if you have a dog that likes to wander — or, like our Alaskan Klee Kai, simply decides it wants to visit the other side of the country. Having critics goes with any corporate structure, but the more visible and powerful the critic, the bigger the problem for the board. Musk is one of the most visible and powerful critics Twitter has and, while it is clear the Twitter board appreciates Musk’s capabilities and accomplishments, his public comments were creating problems for them they’d just as soon not have. So, once Musk bought nearly 10% of the company, they couldn’t really ignore him anymore and could either fight his growing power or attempt to contain it. They chose the latter because board members typically must sign iron-clad NDAs to keep them from discussing company, and particularly board business outside of the boardroom. These NDAs are not only enforceable but are often written with large enough penalties to keep board members in line. By getting Musk on board, they’d get the primary benefit of shutting down Musk’s active criticism of Twitter because that condemnation would violate his NDA and they assumed that would keep Musk quiet. This wasn’t a good bet given the SEC had ruled that Musk couldn’t do social media without oversight and Musk not only hasn’t conformed to that ruling, but he is also now attempting to have that order overturned. Fighting the SEC like this is unusual for a CEO, but it does showcase that, despite Twitter’s NDA, Musk was likely going to speak out again and that would have put Twitter and Musk in court with what would undoubtedly be a very painful, expensive, and damaging litigation process. Musk clearly doesn’t like how Twitter moderates its forum. In particular, he seems to want Twitter to reinstate Donald Trump, which would be problematic for the platform and likely problematic for Tesla.
