Business
Column: Elon Musk has replaced Twitter with X — and an actual business with science fiction
R.I.P. Twitter. Welcome to the world, uh, X.
We all know that the world’s richest man is impetuous and more than happy to court controversy. Even so, Elon Musk’s sudden move over the weekend to transform Twitter, the social media company he purchased for $44 billion last year, into an entity obliquely named after the 24th letter of the alphabet, struck even his admirers as bizarre and ill-conceived.
The Twitter name and bird logo are gone; a slapped-together X now stands in their place.
Bloomberg reported that the move may wipe out as much as $20 billion in brand value — almost half of what Musk paid for it. Observers noted that the X logo made it look more like a porn company than a social platform. A reporter for TechCrunch, a website famous for reflecting Silicon Valley optimism, wrote, simply, “It’s trash.”
The tech world spent the following days trying to read the tea leaves, to game out Musk’s plans and motives for overhauling — some would say desecrating — one of the most recognizable names in tech. Why would Musk do this now, with so little planning or warning? Why would he do it at all?
But any efforts at rational analysis are futile.
This is, quite simply, the richest entrepreneur in world history doing what he wants, what his lizard brain tells him to do, when there is no one left in a position to advise him against doing it. And what Musk has wanted, for decades, is to call a company “X.”
In the late 1990s, Musk was chief executive of PayPal, a successful payment processing company, and he wanted to turn that into X too. The board, led by Peter Thiel, revolted, and ousted Musk. An idea that most everyone else at the company was embarrassed to be associated with was nipped in the bud. This time, there is no board of directors at Twitter, because Musk dissolved it, and Musk feels he no longer needs to answer to anyone.
The difference between these two epochs is pretty simple: money. So much money. And power, sure, but mostly money. The so-called PayPal mafia that would go on to dominate the tech world were then constrained by serving customers and the bottom line. Elon Musk and the Silicon Valley of today exist in another universe; a vague notion issued from a tech billionaire’s lips can transform a network used by hundreds of millions of people, overnight.
As a result, like so many of his fellow tech sector heavies, Musk — buffeted by unprecedented stores of capital, surrounded by yes men and a rapidly waning stock of good ideas — is becoming further untethered from the constraints of reality.
This was apparent immediately in the announcement of the new X enterprise.
Former Twitter and current X CEO Linda Yaccarino heralded the venture in a series of what were formerly known as tweets — now, apparently they’re supposed to be called “xeets.”
(“Sheets”? “Zeets”? “Exeets”? Your guess is as good as mine. Anyway.)
“X is the future state of unlimited interactivity,” she wrote, “centered in audio, video, messaging, payments/banking — creating a global marketplace for ideas, goods, services, and opportunities. Powered by AI, X will connect us all in ways we’re just beginning to imagine.”
This can be interpreted as an insistence the company will be able to do almost everything, but ultimately means next to nothing. It’s not the language that’s novel — such impenetrable buzzspeak has been the currency of Silicon Valley for decades — but that it was instantly put into action, in service of a product that remains equally abstract. Twitter is now not merely a company, but a “future state”!
Despite the highfalutin framing, the only part of X described above that is not already in some way a part of Twitter, is a means of making payments. Fortunately, in a recent interview, Musk himself elaborated on his vision for X’s foray into finance. Namely, it would be large. “Essentially if done right, X would serve people’s financial needs to such a degree that over time it would become half of the global financial system,” Musk said. “It would be by far the biggest financial institution.”
This is a fundamentally unserious thing to say, but Musk was serious. Half the global financial system, in this projection, would be conducted on an app that has 350 million users, and is constantly glitching out and running up against rate limits.
Musk has a reputation for making bold statements that rarely resolve into reality — remember the brain-computer interface he promised, or the artificially intelligent humanoid robot? Or that he’d be sending people to Mars soon? But even so, this new one feels like a new frontier. It’s a tell, in part because it’s so lazy. It’s hard to know if Musk even believes the line himself, or if it just fell out of his mouth, a half-formed notion. But Twitter, a hallmark of 21st century communication, is being hastily remade in its shape anyway.
And it is nothing if not hasty. The move was so sudden that when the announcement was made, the link to X.com on Musk’s profile directed many users, myself included, to a Godaddy error page. Engineers and web developers scratched their heads — a modicum of planning could have avoided a kind of amateurish outcome. Meanwhile, it’s not even clear that Musk owns the trademark for X. It may even be owned by Meta, his chief competitor.
The physical rebrand didn’t fare much better: When construction workers brought a crane to Twitter HQ to tear down the old logo, city officials had to interrupt the work. Musk hadn’t filed for a permit, and the crane was blocking traffic — including, apparently, some autonomous cars. (You could do worse for a snapshot of our technological moment than the most famous entrepreneur of our age ordering a spur-of-the-moment name change on his social media company, and mucking up the works so much that a line of robotaxis were forced to wait to get by.)
In the past, launches of new companies announced by founders and the tech giants were highly produced, carefully stage-managed affairs. Now they’re rush jobs. Facebook’s misbegotten transformation into Meta wasn’t much better, though at least Zuckerberg didn’t torch his own social platform in the process — Facebook is called Facebook. When Google announced Bard, its new AI service, it made embarrassing, billion-dollar errors right out the gate.
There’s an increasing sense that Silicon Valley is scrambling to chase fads, dodge scrutiny, and frantically grasping at a future it can no longer be bothered to properly articulate. In my last column, I argued the 2010s would be remembered as the era of the valley’s magical thinking, due largely to its insistence that endless scale would solve any problem.
The 2020s are shaping up to be Silicon Valley’s era of reactionary indulgence. Power has concentrated into a handful of players, who have more money to throw around than ever before, yet less of a coherent vision to throw it at. They wind up chasing short-term trends like the metaverse, crypto, or whatever ‘X’ is, pouring capital and resources into grand but impossibly half-baked schemes.
Just last week, it was revealed that Sam Bankman-Fried, who ran a major crypto exchange and is now facing fraud charges, aimed to purchase the entire island nation of Nauru to build a network of survival bunkers. If the exchange hadn’t collapsed, he very well may have.
David Karpf, an associate professor of media and public affairs at George Washington University, has a research project in which he’s reading through every back issue of Wired magazine through the ‘90s. One thing he keeps noticing, he tells me, “is just how small the numbers were back then. It’s the same set of people, with the same mind-set and the same mistakes. But they’re covering million-dollar companies. Bill Gates is a titan as a single digit billionaire. It all got magnified a hundredfold.”
“Musk with $2 billion can’t put himself into this situation,” Karpf says. “Musk with $200 billion can. And that creates a feedback loop where he and his hangers-on believe he is 100x more insightful and talented than a person with $2 billion. And that belief, in their own meritocratic status, is central enough that everything just keeps getting weirder, supported by so much money that they can get way out of hand.”
Before Musk entered the picture, Twitter had a real, and mostly sustainable business model. It sold advertising to brands around the world to a global audience of users. It was never as immensely profitable as Google or Facebook, but it was a reasonable business. Musk’s policies, such as reinstating accounts banned for racism and harassment, as well as his own increasingly reactionary politics, have tanked that business. Rather than try to rebuild it, he’s tried and failed to build a subscription model in Twitter Blue. Now he’s running out of options.
He faces mounting bank fees and server payments, not to mention potentially enormous fines from the Federal Trade Commission and the European Union. Musk’s rebrand may allow him a venue through which to ask investors for more money. One thing Musk can still reliably do — or could this time last year, anyway — is raise very large sums of cash to support his projects. If all of a sudden Twitter isn’t just Twitter, but X, the future state of interconnectivity or whatever, maybe he can scare up enough cash to keep the lights on.
But really, my hunch is that he’s just flying by the seat of his pants. And, sitting atop world-historic wealth and his own storied mythology, he’s not acting the visionary, he’s reacting to unfavorable conditions with a hefty dose of science fiction.
Elon Musk is the prime mover in Silicon Valley’s new age of reactionary indulgence; and if that finally brings the wrecking ball down on the app millions of people use every day — so be it.
Bezos, Zuckerberg and Coke at the inauguration
Corporate America had already raced to donate big sums to Donald Trump’s record-breaking inaugural fund. Now some of its leaders appear eager to jockey for prominent positions at the inauguration next week.
It’s a new reminder that for some of the nation’s biggest businesses, forging close ties to a president-elect who is promising hard-hitting policies like tariffs is a priority this time around.
Jeff Bezos and Mark Zuckerberg are expected to be on the inauguration dais, according to NBC News, alongside Elon Musk and several cabinet picks.
The presence of Musk isn’t a surprise, given the Tesla chief’s significant support of and huge influence over Trump. But the other tech moguls have only more recently been seen as supporters of the administration. (Indeed, Bezos frequently sparred with Trump during his first presidential term.)
It’s the latest effort by Bezos and Zuckerberg to burnish their Trump credentials. At the DealBook Summit in December, Bezos — whose Amazon has faced scrutiny under the Biden administration and whose Blue Origin is hoping to win government rocket contracts — said that he was “very hopeful” about Trump’s efforts to reduce regulation.
And Zuckerberg recently announced significant changes to Meta’s content moderation policy, including relaxing restrictions on speech seen as protecting groups including L.G.B.T.Q. people that won praise from Trump and other conservatives. On the inauguration front, Zuckerberg is also co-hosting a reception alongside the longtime Trump backers Miriam Adelson, Tilman Fertitta and Todd Ricketts.
Both tech moguls have visited Mar-a-Lago since the election, with Zuckerberg having done so more than once.
Coca-Cola took a different tack. The drinks giant’s C.E.O., James Quincey, gave Trump what an aide called the “first ever Presidential Commemorative Inaugural Diet Coke bottle.”
More broadly, business leaders want a piece of the inauguration action. The Times previously reported that the Trump inaugural fund had surpassed $170 million, a record, and that even major donors have been wait-listed for events.
Others are throwing unofficial events around Washington, including an “Inaugural Crypto Ball” that will feature Snoop Dogg, with tickets starting at $5,000, The Wall Street Journal reports.
It’s a reminder that C.E.O.s are reading the room, and preparing their companies for a president who has proposed creating an “External Revenue Service” to oversee what he has promised will be wide-ranging tariffs.
David Urban, a longtime Trump adviser who’s hosting a pre-inauguration event, told The Journal, “This is the world order, and if we’re going to succeed, we need to get with the world order.”
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In other Trump news: The president-elect is expected to appear via videoconference at the World Economic Forum in Davos, Switzerland, which starts on Inauguration Day, according to Semafor.
HERE’S WHAT’S HAPPENING
Investors brace for the latest inflation data. The Consumer Price Index report, due out at 8:30 a.m. Eastern, is expected to show that inflation ticked up last month, most likely because of climbing food and fuel costs. Global bond markets have been rattled as slow progress on slowing inflation has prompted the Fed to slash its forecast for interest rate cuts.
More Trump cabinet picks will appear before the Senate on Wednesday. Senator Marco Rubio of Florida, the choice for secretary of state, is expected to field questions about his views on the Middle East, Ukraine and China, but is expected to be confirmed. Russell Vought, the pick to run the Office of Management and Budget, will most likely be asked about his advocacy for drastically shrinking the federal government, a key Trump objective. And Sean Duffy, the Fox Business host chosen to lead the Transportation Department, will probably face questions on how he would oversee matters including aviation safety and autonomous vehicles, the latter of which is a priority for Elon Musk.
Meta plans to lay off another 5 percent of its employees. Mark Zuckerberg, the tech giant’s C.E.O., told staff members to prepare for “extensive performance-based cuts” as the company braces for “an intense year.” The social media giant faces intense competition in the race to commercialize artificial intelligence.
A new bill would give TikTok a reprieve from a ban in the United States. Senator Ed Markey, Democrat of Massachusetts, said he planned to introduce the Extend the TikTok Deadline Act, which would give the video platform 270 additional days to be divested from its Chinese parent, ByteDance before being blacklisted. It’s the latest effort to buy TikTok time, as the app faces a Jan. 19 deadline set by a law; President-elect Donald Trump has opposed the potential ban as well.
A question of succession
JPMorgan Chase and BlackRock, the giant money manager, just reported earnings. (In short: Both handily beat analyst expectations.)
But the Wall Street giants are likely to face questioning on a particular issue on Wednesday: Which top lieutenants are in line to replace their larger-than-life C.E.O.s, Jamie Dimon and Larry Fink.
Who’s out:
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Daniel Pinto, who had long been Dimon’s right-hand man, said he would officially drop his responsibilities as JPMorgan’s C.O.O. in June and retire at the end of 2026. Jenn Piepszak, the co-C.E.O. of the company’s core commercial and investment bank, has become C.O.O.
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And Mark Wiedman, the head of BlackRock’s global client business and a top contender to succeed Fink, is planning to leave, according to news reports.
What Wall Street is gossiping about JPMorgan: Even in taking the C.O.O. role, JPMorgan said that Piepszak wasn’t interested in succeeding Dimon “at this time.” DealBook hears that while she genuinely appears not to want to pursue the top job, the phrasing covers her in case she changes her mind.
For now, that means the most likely candidates for the top spot are Marianne Lake, the company’s head of consumer and community banking; Troy Rohrbaugh, the other co-head of the commercial and investment bank; and Doug Petno, a co-head of global banking.
The buzz around BlackRock: Wiedman reportedly didn’t want to keep waiting to succeed Fink and is expected to seek a C.E.O. position elsewhere. (So sudden was his departure that he’s forfeiting about $8 million worth of stock options and, according to The Wall Street Journal, he doesn’t have another job lined up yet.)
Fink said on CNBC on Wednesday that Wiedman’s departure had been in the works for some time, with the executive having expressed a desire to leave about six months ago.
Other candidates to take over for Fink include Martin Small, BlackRock’s C.F.O.; Rob Goldstein, the firm’s C.O.O.; and Rachel Lord, the head of international.
But Dimon and Fink aren’t going anywhere just yet. Dimon, 68, said only last year that he might not be in the role in five years. And Fink, 72, said in July that he was working on succession planning: “When I do believe the next generation is ready, I’m out.”
The S.E.C. gets in a final shot at Musk
Another battle between Elon Musk and the S.E.C. erupted on Tuesday, with the agency suing the tech mogul over his 2022 purchase of Twitter.
It’s unclear what happens to the lawsuit once President-elect Donald Trump, who counts Musk as a close ally, takes office. But the agency’s reputation as an independent watchdog may be at stake.
A recap: The S.E.C. accused Musk of violating securities laws in his $44 billion acquisition of the social media company.
The agency said that Musk had failed to disclose his Twitter ownership stake for a pivotal 11-day stretch before revealing his intentions to purchase the company. That breach allowed him to buy up at least $150 million worth of Twitter shares at a lower price — to the detriment of existing shareholders, the agency argues.
The S.E.C. isn’t just seeking to fine Musk. It wants him to pay back the windfall. “That’s unusual,” Ann Lipton, a professor at Tulane Law School, told DealBook.
Alex Spiro, Musk’s lawyer, called the latest action a “sham” and accused the agency of waging a “multiyear campaign of harassment” against him.
The showdown sets up a tough question for the S.E.C. Will Paul Atkins, the president-elect’s widely respected pick to lead the agency, drop the case? Such a move could call the bedrock principle of S.E.C. independence into question.
Jay Clayton, who led the agency during Trump’s first term, earned the respect of the business community for running it in a largely drama-free manner. It was under Clayton that the S.E.C. sued Musk over his statements about taking Tesla private.
Musk, who is set to become Trump’s cost-cutting czar and is expected to have office space in the White House complex, has called for the “comprehensive overhaul” of agencies like the S.E.C. The billionaire said he would also like to see “punitive action against those individuals who have abused their regulatory power for personal and political gain.”
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In related news: The Consumer Financial Protection Bureau sued Capital One, accusing it of cheating its depositors out of $2 billion in interest payments.
THE SPEED READ
Deals
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DAZN, the streaming network backed by the billionaire businessman Len Blavatnik, is closing in on funding from Saudi Arabia’s sovereign wealth fund as the kingdom continues to expand its sports footprint. (NYT)
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The Justice Department sued KKR, accusing the investment giant of withholding information during government reviews for several of its deals. KKR filed a countersuit. (Bloomberg)
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OpenAI added Adebayo Ogunlesi, the billionaire co-founder of the infrastructure investment firm Global Infrastructure Partners, to its board. (FT)
Politics and policy
Best of the rest
We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
As wildfires continue to burn around Southern California, thousands of business owners, homeowners and renters are confronting the daunting challenge of rebuilding from the ashes. For some number of them, the road ahead will be all the more difficult because they didn’t have any or enough insurance to cover their losses. For them, the U.S. Small Business Administration is a possible lifeline.
The SBA, which offers emergency loans to businesses, homeowners, renters and nonprofits, is among the few relief options for those who don’t have insurance or are underinsured. Uninsured Angelenos can also apply for disaster assistance through the Federal Emergency Management Agency, or FEMA.
The current wildfires are ravaging a state that was already in the midst of a home insurance crisis. Thousands of homeowners have lost their insurance in recent years as providers pull out of fire-prone areas and jack up their prices in the face of rising risk.
“For those who are not going to get that insurance payout, this is available,” Small Business Administration head Isabella Casillas Guzman said in an interview during a recent trip to the fire areas. “The loans are intended to fill gaps, and that is very broad.”
About one-third of businesses don’t have insurance and three-quarters are underinsured, Guzman said.
“There will be residual effects around the whole community,” she said. “Insurance will not cover this disaster.”
Businesses, nonprofits and small agricultural cooperatives can apply for an economic injury loan or a physical damage loan through SBA. Homeowners are eligible for physical damage loans. Economic injury loans are intended to help businesses meet ordinary financial demands, while physical damage loans provide funds for repairs and restoration. People can apply online and loans must be repaid within 30 years.
Renters can receive up to $100,000 in assistance, homeowners up to $500,000 and businesses up to $2 million, according to Guzman. Homeowners and renters who cannot get access to credit elsewhere can qualify for loans with a interest rate of 2.5%. The SBA determines an applicant has no credit available elsewhere if they do not have other funds to pay for disaster recovery and cannot borrow from nongovernment sources.
Interest rates for homeowners and renters who do have access to credit elsewhere are just over 5%. Loans for businesses could come with interest rates of 4% or 8% depending on whether the business has other credit options.
An applicant must show they are able to repay their loan and have a credit history acceptable to the SBA in order to be approved. The loans became available following President Biden’s declaration of a major disaster in California.
“We’ve already received hundreds of applications from individuals and businesses interested in exploring additional support,” Guzman said. “We know the economic disruption may not be contained to the footprint of any evacuation zones or power outages.”
People who don’t have insurance or whose insurance doesn’t cover the entirety of their losses are eligible for loans, Guzman said. While many will use the funds to start from scratch after losing their property to the fires, businesses that are still standing can also apply for support to cover lost revenue.
Guzman was not able to estimate the total value of loans they expect to offer in California but said the organization is on solid financial footing after temporarily running out of funds in October.
“Funding has been replenished by Congress, and we expect to be able to coordinate closely with Congress,” Guzman said. “We’re fully funded and in a good position to provide support.”
In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.
The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.
The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.
Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.
Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”
Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.
Ms. Flynn said context mattered.
“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”
Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.
The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.
He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.
When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.
After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.
He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.
Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.
Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.
Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.
“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”
Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.
“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”
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