HomeCoverINTERNATIONALElon Musk is a wild card who may make life troublesome for...

Elon Musk is a wild card who may make life troublesome for Twitter’s new CEO

These beautiful developments put Twitter, an organization that’s definitely no stranger to company chaos, in uncharted waters. All of the sudden, the world’s richest man, who is understood each for his bold and revolutionary spirit and for his erratic and trollish habits, has a robust seat on the desk. And he is approaching board simply as Twitter’s beforehand little-known (not less than externally) new chief government, Parag Agrawal, makes an attempt to come back out from the shadow of Jack Dorsey, the platform’s founder and longtime public face. Dorsey, who handed over the CEO function in November and plans to exit Twitter’s board in Could, stated this week Agrawal and Musk “will probably be an unbelievable staff.”
Nearly instantly, the corporate was the topic of great exterior hypothesis. This ranged from whether or not Musk — who’d beforehand recommended Twitter doesn’t enable free sufficient speech and requested if a brand new, rival platform was mandatory — would upend the social community’s content material moderation insurance policies, as to whether he’d assist restore former President Donald Trump’s account. Inside the corporate, the response gave the impression to be combined; some workers on Twitter appeared to query what his presence would imply for Twitter’s well being and security work and raised issues about insulting feedback Musk has beforehand made on the platform, together with in regards to the trans group.
Elon Musk to join Twitter's board

It isn’t clear precisely what Musk hopes to perform at Twitter. In contrast to some who’ve served on the corporate’s board over time, Musk has an enormous Twitter following and a deep understanding of the platform. Buyers have already cheered the transfer, with Twitter’s fill up practically 19% since his stake within the firm was revealed. However company governance consultants and tech business watchers say his unorthodox method to becoming a member of the corporate may create problems for the corporate and its new chief government.

“It virtually appears the CEO was type of demoted from dealing with strategic points and now must seek the advice of not the chairman of the board, however an everyday sitting director for recommendation on firm technique,” stated Jason Schloetzer, an affiliate professor at Georgetown College’s McDonough College of Enterprise.

Twitter declined to remark for this story.

A ‘staff’ member to a brand new CEO

When Dorsey made the shock choice to step down as CEO in late November, it left Agrawal, a decade-long veteran of the corporate, holding the reins at a pivotal second for Twitter. The corporate was seeking to enhance its digital promoting enterprise amid broader privateness modifications out there. It was searching for to hit a lofty aim for consumer development underneath strain from an activist shareholder, after durations of stagnant and even declining consumer numbers. Like different tech corporations, it was additionally confronting scrutiny from lawmakers and the general public about its content material moderation practices.
Twitter, whereas a fraction of the dimensions of rival platforms like Fb and Instagram, has lengthy had an outsized significance given its affect in media, politics and finance, amongst different areas. Agrawal himself appeared to allude to that impression when he was named CEO. In a memo to workers on the time, he wrote: “The world is watching us proper now.”

Musk could have been watching, too.

“It is sensible — the founder is stepping away and the CEO is fairly new, that is a superb time for anyone to step in and attempt to impact some change,” Schloetzer stated. However, he stated, “the best way that that’s evolving is totally different than the best way it will usually evolve if there was an activist [investor] who was getting concerned.”

Twitter's Parag Agrawal took over as CEO after Jack Dorsey's surprise exit from the role in November. Agrawal tweeted out this photo of him and Dorsey when the leadership change was announced.

Even when all goes effectively and Agrawal and Musk are usually aligned on priorities, the latter’s involvement and public statements may complicate Agrawal’s function as CEO. Within the public eye, and maybe even internally, Musk may have the notion of being a shadow CEO of types. He may additionally probably get credit score for initiatives that have been already underway underneath Agrawal’s management.

Musk has in latest weeks, for instance, hinted at his assist for open supply requirements for Twitter, one thing Agrawal has already been engaged on on the firm. Agrawal has been concerned within the improvement of Bluesky — an effort born at Twitter to create open supply, decentralized requirements for social media — since its early days. In December 2019, when the venture was introduced, Agrawal stated on Twitter that he can be liable for discovering the venture’s lead and laid out a collection of potential hurdles for the hassle, ending with: “Regardless of these hurdles, we imagine that there’s the potential for large optimistic impression for Twitter and for society.”
Musk additionally tweeted a ballot on Monday, after his stake within the firm was revealed, asking whether or not his followers needed an edit button, a long-requested, if controversial, characteristic for the platform. And on Thursday, he tweeted a meme suggesting that making certain Twitter will get an edit button can be a part of the domino impact of his profession. In truth, Twitter stated on Tuesday it has been creating for the previous yr a characteristic that can enable customers to edit their tweets and will probably be rolling it out to its paid subscription product Twitter Blue “within the coming months.”

It is also unclear what sort of working relationship Musk, who as soon as tweeted a meme that equated Agrawal to former Soviet chief Joseph Stalin, can have with the CEO. Along with his tweet about forming an “unbelievable staff,” Dorsey on Tuesday raised questions on whether or not Musk can be instantly concerned in strategic operational selections — an uncommon function for a board member. Board members additionally sometimes act as a collective, fairly than unilaterally, as advisers to executives, in line with William Klepper, a administration professor at Columbia Enterprise College.

Twitter in an announcement this week tried to make clear that its board members don’t make selections in regards to the platform’s guidelines or insurance policies. “As at all times, our Board performs an essential advisory and suggestions function throughout everything of our service,” Twitter spokesperson Adrian Zamora stated. “Our daily operations and selections are made by Twitter administration and workers.”

An activist investor?

If Musk is making an attempt to play the function of an activist investor, he is going about it in an uncommon method.

The Monday disclosure of his greater than 9% possession stake in Twitter got here within the type of a Schedule 13G submitting with the Securities and Trade Fee, a kind used for passive traders who do not plan to push for modifications at an organization. That appeared to contradict his earlier requires modifications at Twitter.

Then on Tuesday, Twitter introduced that Musk can be becoming a member of the board, Agrawal stated the corporate had been in talks with Musk for “weeks,” and Musk stated he regarded ahead to creating “important enhancements” to the platform. Later that day, Musk filed the extra detailed 13D kind required of lively traders.

Musk’s method has additionally differed from that of a typical activist investor, who would usually announce their intention to make modifications at an organization publicly, and lay out a transparent argument for why an organization is undervalued and a method for enhance its monetary trajectory.

Elon Musk made another $1 billion from his Twitter stake. As if he needs it

If Musk’s want was, for instance, to decentralize the platform (basically, make it potential for different builders to construct on high of it), as he has recommended, he may need laid out an estimate of what that change can be price to the corporate. “, perhaps all that has already occurred, but it surely hasn’t been laid out that method within the dialogue to date,” Schlotzer stated.

Nonetheless, analysts have pointed to the potential for Musk’s affect on the firm to be precious. Musk is “clearly gifted relating to with the ability to give you options for very massive challenges,” D.A. Davidson analyst Tom Forte stated.

Transitioning onto the board

Musk has principally served on the boards of his personal corporations, though he’s additionally a director on the board of media conglomerate Endeavor and served on the board of photo voltaic set up firm SolarCity Company earlier than it was acquired by Tesla.

As soon as Musk has formally joined the Twitter board, the conventional expectation would be that he carry his recommendation and ideas for the platform to the administration staff privately, fairly than sharing them on Twitter as he has accomplished up to now, particularly as he learns proprietary details about the corporate, Klepper stated.

“He can suggest that administration, the CEO and management staff, take a special strategic view of the corporate than they presently are, and in lots of ways in which could possibly be a optimistic factor,” Klepper stated. But when “he begins saying issues exterior the boardroom that ought to keep contained in the boardroom … and as an example the inventory for one purpose or one other tanks because of that, the entire board is topic to his error.”

Musk has a historical past of ending up in sizzling water with regulators over his actions on Twitter. In 2018, his tweets about probably taking Tesla non-public resulted in a lawsuit from the SEC and a settlement requiring him to have sure tweets in regards to the firm pre-reviewed. (He is now preventing that requirement.)

In naming him to the board for 2 years, Twitter received Musk to agree to not purchase up greater than 14.9% of its shares — which might give him an much more highly effective maintain over the corporate — whereas serving as a board member, however there is not any assure that will not change as soon as his time period is over. Then again, it could possibly be an issue for Twitter’s inventory if Musk, who has a historical past of with the ability to immediate wild swings within the costs of property he tweets about, decides to dump his stake within the firm for any purpose.

If issues go sideways, it may mirror badly on Agrawal, Klepper stated, probably placing a stain on his management early in his tenure. “Whereas Elon brings many good issues to Twitter, he additionally brings some baggage,” Forte stated.

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