We're all learning to navigate uncharted territory.
Wednesday, December 28, 2022
The Wall Stret Journal Wonders If Musk Has Lost The Bubble
Just to establish some context, I'm posting a YouTube copy of the famous TikTok video in which a new Twitter employee led us through her typical day. As it happened, this was only weeks before Musk's late October takeover, following which in a very short time he reduced the workforce from about 10,000 to about 2,500. In the process, he transformed that same headquarters environment from what was shown in the video to what a visitor said "looks like a five-star hotel that's been abandoned".
If I were teaching in business school, I would use this as an example of Stein's Law, that which cannot continue must stop. If people are giving Elon Musk credit for it, that's a mistake. All Musk did was relieve Jack Dorsey and the former board of blame for what someone was going to have to do very soon no matter who was in charge.
In fact, as some commentators have pointed out, it's almost as though Twitter's advertisers and investors felt some sort of obligation to maintain Twitter in the style it had become accustomed, when there was less and less justification for doing this. Musk allowed himself to become the scapegoat for the inevitable, something he didn't need to do.
The Wall Street Journal reports that Elon Musk is facing financial pressure as Tesla stocks continue a downward trajectory and his $44 billion investment in Twitter has yet to pay off. The WSJ states that Musk’s ability to use his Tesla shares to raise money by selling or borrowing against them is being complicated by their rapid loss in value in recent months.
The WSJ notes that Musk has largely been a cash-poor billionaire for most of his career, depending upon margin loans — borrowing backed by his Tesla shares — for personal expenses and business investments while retaining his shares. But as Tesla’s market value has fallen by approximately $700 billion this year, Musk’s personal wealth has declined.
Tesla shares have fallen by around 65 percent in 2022 and Tesla investors have grown concerned by Musk’s focus on Twitter following his takeover of the company in October.
I can't disagree, although Warren Buffett said long ago, around the time he said he wouldn't invest in bitcoin, that he also wouldn't buy shares in Tesla. I doubut if he'd even waste his time commenting on Twitter. And Musk, rather than, say, recruiting someone who can actually salvage Twitter, is instead basking in his role as cultural hero:
Well and good, but Musk is neither a Buckley nor a Limbaugh. He's been thought to be a corporate innovator, and if that's in fact his calling, he should go back and focus on it. But even if he doesn't, we'll get along just fine. Our current problem is that Tucker Carlson is another one who's neither a Buckley nor a Limbaugh, and that's a much bigger loss.
In the 1990s, I did a lot of work-related flying, much of it on Southwest. This wasn't because I preferred it, but because the corporate travel departments put me on discount carriers. At the time, though, its corporate attitude was fun, a lot like the famous Volkswagen ad campaigns of the 1960s. For instance,
While peanuts are now a snack, they once stood for how frugal the airline was: other airlines served meals while Southwest served just peanuts. Some Southwest executives felt they would need to increase their investment in inflight food. Then-CEO Herb Kelleher shot that down, “Do you know what the difference in cost is between peanuts and Snickers?”
For several years, I commuted to various job assignments in Silicon Valley, San Francisco, and Sacramento via Southwest and even became familiar with a few of the crews. One flight attendant, who simply followed then-corporate policy of encouraging individual expression, would sing on the PA a ditty whose first line was, "I wish I was a Southwest Airlines Peanut". Those days are gone. As of 2018, even the peanuts were gone. According to the link,
Southwest Airlines will stop serving peanuts August 1 citing passenger allergies. That’s really notable because of the history of ‘peanuts’ intertwined with the airline since its founding.
In March 2017, Charlene Carter was fired by all Boeing 737 carrier Southwest Airlines. Carter claims that the airline and Transport Workers Union Local 556 violated her rights by firing her. Carter was fired for sending confrontational anti-abortion messages to the former president of the union, Audrey Stone. According to documents from the lawsuit, Carter called Stone “despicable” for attending a march in Washington DC earlier that year.
. . . Carter added that the union should not support events that included groups like Planned Parenthood. Stone never replied to Carter’s messages, but Carter was summoned by Southwest management for a mandatory meeting about her messages. Eventually, the issue led to a lawsuit, and a judge has just ruled that Carter should be reinstated by the airline.
I liked Southwest so much in the 1990s that I bought shares, but they never did as well as I expected, and the airline gradually became corporate-conventional and boring. By now, it seems to have lost control over both its operations and its once-;refreshing public image:
The U.S. Transportation Department slammed Southwest and pledged to review the airline after thousands of flights were canceled due following days of severe winter weather.
"USDOT is concerned by Southwest’s unacceptable rate of cancellations and delays & reports of lack of prompt customer service. The Department will examine whether cancellations were controllable and if Southwest is complying with its customer service plan," the Transportation Department tweeted late Monday evening.
Southwest canceled 71% of its flights on Monday and at least 62% of its flights so far on Tuesday, equaling more than 5,400 flights over the past two days, according to FlightAware.
What began as a crisis for Southwest Airlines amid a crippling winter storm turned to paralysis Monday evening when the budget carrier apparently canceled all departing flights from Los Angeles area airports until Dec. 31.
Thousands of flights have been canceled nationwide.
The airline’s website lists all departures out of LAX, Hollywood Burbank Airport, Ontario International Airport and the John Wayne Airport as “unavailable” until New Year’s Eve.
A few posters on Reddit and elsewhere tried to clarify that the flights were "unavailable" on the reservation system, not "canceled", and that probably reflected people who'd already rescheduled from canceled flights, but even if that's the case, the distinction is entirely academic for people who still can't fly out, and worse, it reflects that the public relations problem is entirely out of control, since Southwest has clearly been unable even to get Los Angeles media to clarify the situation, for whatever slight advantage that might give them.
Southwest admitted anticipating "additional challenges with an already reduced level of flights as we approach the coming New Year's holiday travel period, and we are working to reach out to customers whose travel plans will change with specific information and their available options."
Southwest added its employees and crews "are showing up in every single way. We are beyond grateful for that. Our shared goal is to take care of every single customer with the hospitality and heart for which we are known. On the other side of this, we will work to make things right for those we have let down, including our employees."
So they've suddently decided to rely on " the hospitality and heart for which we are known". Those days are 30 years in the past, and Southwest has been squandering passenger good will ever since. I hate to say I'm looking forward to a certain amount of Schadenfreude.
I think the US right has lost the ability to think about UFOs, and that'a a problem. The History Channel has made a lot of money off them with Ancient Aliens, Project Blue Book, UFO Hunters, The Secret of Skinwalker Ranch, and more, but they're entertainment. I like Fringe and zombie apocalypses, too. The problem starts when people take them seriously.
The fact is that there's just too much in the way of seriously believing in space aliens, starting with Fermi's Paradox, that if extraterrestrial life is so likely, we must have seen evidence of it by now.
But just the other day, I ran into a piece by Jazz Shaw at Hot Air, One WSJ editor's war on UFOs. Note the subdivision we're beginning to see on the right: The Wall Street Journal was the intellectual sponsor of supply-side economics and neoconservative foreign policy that underpinned Reaganism, while more recently it's been never-Trump. Hot Air, on the other hand, has been both never-Trump but anti-establishment Republican as well, which means it's anti-Wall Street Journal. And now it's pro-UFOs, which the WSJ is anti:
A reader pointed me to one of the stranger articles to ever grace the pages of the Wall Street Journal last night. Holman W. Jenkins Jr. is a member of the WSJ’s editorial board who reports on business and financial matters. But the subject he weighed in on yesterday had little to do with those matters. The title was, “The UFO Crowd Wants an Alien Invasion for Christmas.” The even more curious subtitle reads, “The Pentagon discovers it’s not the flying saucers but their admirers who may be the real security threat.”
. . . It appears that Mr. Jenkins was upset about an email he received from a reader named Lex Fridman. Fridman apparently sent an insulting note criticizing a recent column that Jenkins had published, also on the subject of UFOs. It quickly became obvious that the WSJ editor is very much a skeptic (to put it mildly) when it comes to the idea that some UFOs may be of nonhuman or extraterrestrial origin.
It's hard to outline exactly what Jazz Shaw is for, but if the WSJ is agin' it, he's at least an agnostic:
Just as with the rest of us, Holman Jenkins is welcome to his own opinions and most of us have no way of proving him wrong. If anyone deep inside the government or the military-industrial complex actually does know the full truth behind the UFOs, they’re not bringing that information out for public consumption… at least not yet. I have no idea who, if anyone, is inside of those craft. And I say that as someone who has seen five of them myself over the past two years.
Well, maybe not even an agnostic if he's seen five of them in the last two years, huh?
[M]aybe it really is aliens from elsewhere. We just don’t know yet, but I’m not writing off the idea. When Jenkins speaks of the vastness of space being too great to cross, I agree that it’s too great for us to cross, at least for now. But if there’s a civilization out there that had a million-year head start on us, who knows what they might have cooked up?
But if nothing else, aren't we back to Fermi's Paradox? If we postulate there's a civilization out there with a million-year head start, then let's postualte they've come up with warp drives as well as light sabers and death stars, and flying across the width of the universe at warp speed is no more challenging than flying a B-52 to Guam. But if so, why haven't we seen them?
And this leaves aside the question Holman Jenkins himself raises, which is that even if such a civilization with a million-year head start exists, if it's more than a million light years away, there's no way we can know about it, and if Jazz Shaw objects that maybe they've found something faster than the speed of light, we've still got the retort that if so, why haven't we already heard from them, then?
To which Jazz Show can still answer he's seen five of them just within the last two years. How can anyone argue with that?
This is the US right in the wake of Ronald Reagan, William Buckley, and Rush Limbaugh (who we must recognize was a Buckley protégé). We've got to come up with people smarter than Jazz Shaw or Ben Shapiro, but the Wall Street Journal isn't what it used to be, either.
Pretty much at random, I ran into this video, in which Vivek Ramaswamy says pretty much what I've been saying about Elon Musk, that the US right sees him as something between a messiah and a caudillo who's going to fix everything that's wrong by fixing Twitter, which in my view can't be fixed. At about 10:30, he says "On the right, there's something about the new hunger for a Christ-like figure, and Elon Musk is the latest Christ-like savior figure for the day. I guess when you don't believe in actual Christ, you start looking for Christ substitutes instead."
The term “woke,” which dates back nearly a century, was initially used in Black communities to describe a raising of consciousness and has since become a catchall denoting awareness of a range of social-justice issues. In recent years, “wokeness” has also become, in conservative circles, a subject of suspicion and ridicule: shorthand for performative righteousness, like “political correctness” before it. Opposition to woke principles has become a business opportunity, too.
The article suggests Ramaswamy is in fact pushing his own investment fund on the basis that it specifically doesn't do woke investing. Certainly there's no shortage of opinion leaders on the right who've deliberately built corporate careers at Fox and elsewhere by selling their political views, but that doesn't automatically make them wrong. Asked by his interiewer in the video to outline his position on the corporate woke, he says, beginning about about 3:00, that the current situation can be traced to the 2008 financial crisis:
What happened in '08 was that capitalists went from being viewed as the good guys, the heroes in the pre-2008 era, to being viewed as the bad guys by the old left afterwards, especially on the heels of receiving the government bailouts, what happend was that [the capitalists] said, "Instead of the Old Left coming after us and doing the things that Occupy Wall Street wanted us to do, we'll make a bargain: we'll use our corporate power to advance the objectives of a new left that had slightly different concerns than the old left." The old left was about economic redistribution, take money from those wealthy corporate fat cats and give it to poor people. This new sort of, we'll call it the woke left, that emerged around the same time, around the time of Barack Obama's election as President of the United States, was what [the woke left] said was actually the theory of the case was slightly different. We care more about systemic racism and misogyny and bigotry and climate change and the racially disparate impact of climate change and so on. And so what they said was, "Look. If you advance out objectives, we'll look the other way to leave your power structure intact."
The transition of capital from good guys to bad guys in 2008 is well illustrated in the film The Big Short, and I can't discount Ramaswamy's point. Nevertheless, I've also thought that the fall of the Soviet Union removed the threat of proletarian revolution from the political agenda of First World capitalism, which in turn took away the basis for Fabian socialism in the Western democracies. This has left progresssivism without a clear direction.
Whether this can be traced to the 2008 crisis or the end of the Soviet Union, the immediate effect has been the same. A less visible side effect on the right appears to be that if history ended with the demise of Soviet Russia, then Russia has otherwise ceased to be an existential threat to the West. This seems to be at the root of the current (and growing) view on the right that supporting Ukraine isn't necessary, the US investment in the war is misdirected, and Zelensky is a scammer.
I would add, whatever Mr Ramaswamy may view as the resolution for the corporate woke problem, the woke platform simply isn't stable. Marx had nothing to say about gender dysphoria, climate change, or systemic racism, and he specifically abjured any alliance of the working class with the petty criminal underclass. Marxism, though, was stable enough to drive certain political theory for much of the 20th century. The woke substitute isn't even that stable.
I think Ramaswamy is correct insofar as he recognizes the woke left is not the old left. Commentators like Mark Levin who insist this is still Marxism should know better. But Musk is the guy who sued Amber Heard to retrieve the fozen embryos he made with her. Definitely he's not the guy to fix anyhing.
I'm still trying to think through just what Twitter is -- it's not so much a product as a figment. To the left, it's a sort of totemic representation of civic harmony and correct opinion that's now under threat as Elon Musk eliminates moderation. To the right, it's a representation of everything that's wrong with the polity, which Elon Musk will correct in a grand gesture of civic good will.
CNBC reports that as Tesla shares sank eight percent on Tuesday to a new 52-week low, CEO Elon Musk took to Twitter to argue with investors and blame the stock downturn on macroeconomic factors rather than his focus on Twitter in recent months.
Tesla shares closed on Tuesday around $138 per share, eight percent lower for the day which was largely mixed for other stocks. Long-time Tesla bull Ross Gerber tweeted that the stock price was being affected by the company having “no CEO” implying Musk was distracted with Twitter.
Clearly Musk is being forced into doing something about that Twitter distraction, which he brought on himself largely by drinking his own Kool-Aid. According to the New York Post,
A report from CNBC claims that Musk is “actively looking” for a new CEO to replace him. How long that search could take remains unknown at this time. But if and when he does “step aside,” he won’t be gone from the scene. Even if he’s not technically the CEO anymore, Musk will reportedly still be directing software development, security, or other functions, so he won’t disappear entirely.
. . . “The question is not finding a CEO, the question is finding a CEO who can keep Twitter alive,” Musk tweeted Sunday.
The Post has reached out to Twitter for comment. Musk eliminated the company’s communications team last month.
Other tweets from Musk suggest nobody so far has been interested in the job. Again, my view continues to be that Twitter is less a product than a figment that provides something of little actual value. Musk has simply been proving this in allowing himself to be backed into buying the company. The Post noted,
Musk has yet to publicly indicate whether he has developed a short list of candidates. But some of Musk’s top advisers who have been active at Twitter since his acquisition are potential options, according to Bloomberg.
The outlet noted that investor Jason Calacanis, former PayPal executive David Sacks and Andreessen Horowitz partner Sriram Krishnan have all played an active role in Musk’s Twitter takeover.
Elon Musk compared Twitter to a plane crash, as he explained his rationale for cutting costs at the company by enacting mass layoffs in the weeks after he bought it.
"This company is like you're in a plane that's headed towards the ground at high speed, with the engines on fire, and the controls don't work," Musk said in a Twitter Space late Tuesday evening.
. . . Staff numbers have fallen from 7,000 to roughly 2,300 since Musk took over, per Insider's Kali Hays. The New York Times also reported that Twitter has stopped paying rent on its offices, and has refused to pay $200,000 in costs for private jet flights.
During the Twitter Space, Musk also spoke about his meetings with advertisers, explaining that they asked "hard questions" about their return on investment because of the declining macroeconomic situation.
"When you do not have a clear answer, then advertisers don't want to advertise because they're being sane," he added.
So the bottom line is that Musk allowed himself to be pushed into buying Twitter when he apparently had no notion about the company's basically nonexistent business model. Within weeks of his arrival, he discovered too late what he presumably should have learned earlier through due diligence, except he apparently boxed himself in with the terms of his $44 billion offer. No wonder the Twitter board sued him to go through with the deal, he bailed them out and will take the blame for the disaster they brought on.
I assume the investors he convinced to go in with him on the Twitter deal are unhappy, but now he's also got the Tesla shareholders on his case.
Here we are in Advent, waiting for the messiah, and some people think his name is Elon. Except that the poll he ran about whether he should step down would make even John the Baptist wonder whether he is the one. The puzzle for me contnues to be the sinecure problem: Twitter pre-Elon is said to have hired some dozens of ex-FBI agents into sinecures, except their job at Twitter was to control the narrative. But if a sinecure is a do-nothing job, how were they expected to contol the narrative?
Other accounts suggest that much of the roughly 10,000 workforce pre-Musk got free meals, free red wine on tap, yoga rooms, work-from-home, pet insurance, and much more. Yet Musk laid at least half of them off, and Twitter stayed up. That says to me that it wasn't just the former G-men who got sinecures. In the video below, Jay Bhattacharya, a Stanford Medical School professor and prominent COVID skeptic who was shadowbanned from Twitter for "misinformation" under the old regime, recounts a personal tour he was given of Twitter headquarters that Musk gave him after taking over.
He spends most of the time outlining the specifics of his trendlisting, but I found other details of Twitter's current state more interesting. At about 7:00, he speaks incidentally of the tech people currently at Twitter, who he says are primarily engineers brought over from Tesla who are "still trying to figure out the system". At about 11:00, he says,
You walk into Twitter headquarters, it looks like a five-star hotel that's been abandoned. There's a very fancy restaurant-looking thing, there's all kinds of -- the decorations, the artwork, it all looks like a five-star hotel. But nobody's there. Almost nobody's there. Except . . . that, when you go into the engineering area, with all of the cubicles, it's filled with lots and lots of people trying very hard to make sure Twitter doesn't explode or something. It's Saturday, during the day, and they're working hard. I meet with Elon briefly, he sends me to an engineer. He introduces me to an engineer who was assigned to help me. So I learned a few things.
But at that point his interlocutor steers him back to what Elon told him, not the engineer, but I was much more interested in the engineer. What I gather from Dr Bhattacharya's account of the current Twitter work environment is that, having fired or encouraged the resignations of Twitter's own engineers, he's brought a bunch of "engineers" over from Tesla. Now, "engineer" is a difficult term. At various times, I've been called an "engineer" although I never had the title on a business card, in part because I've been told that in some states you can't call yourself an engineer unless you have a degree or a certification in it. My degrees are in Eng Lit, and I worked with software, not strength of materials or something. So Dr Bhattacharya's use of the term is at best imprecise, although it's not his fault.
But there's still a problem. As far as I can tell, nobody at Tesla worked with the specific circumstances of social media that Twitter has. They did internal network, they did payroll, they did inventory, they did data base. It doesn't matter how many dozens Musk brought over, even if they were his best guys at assembly line automation, they wouldn't know a thing about Twitter. It doesn't matter if they were working their little heads off all day Saturday, it wouldn't help.
This is one of my main takeaways from my career in tech, that if people are working all day Saturday, as Dr Bhattacharya relates, if they're working all night, working all weekend, it's a key sign they don't know what they're doing. That's because they, or at least the people they're replacing in Twitter's case, had months, probably years, to do the work they were supposed to be doing, and they didn't do it (we're back to the meaning of "sinecure"). A few frenzied all-nighters aren't going to make up for years of free red wine and yoga rooms.
This is part of Musk's problem and why he's now toying with stepping down. But the overall conundrum is bigger. Twitter had a product of sorts, although it lost $1.4 billion in 2020, somewhat less in 2021, but is projected to lose far more this year. In other words, it sustained the free red wine and pet insurance for 10,000 employees for a while, but even after laying half of them off, that's not going to fix it. Nor is a big show of we're-working-all-weekend gonna help a thing. But even with a team of "engineers" with no social media experience trying to keep Twitter from exploding, its silly rinky-dink product just keeps on keepin' on, which itself is probably a misleading indicator.
[I]n response to a tweet suggesting that Musk already has a successor picked out, Musk tweeted, “No one wants the job who can actually keep Twitter alive. There is no successor.”
Does this sound like someone who’s about to step down? It sure doesn’t sound that way to me. The fine print of the poll is that anyone who would take over as CEO of Twitter would need to have the same vision for the platform as Musk does, and that’s a rather significant caveat.
A new CEO would need to have the same vision for Twitter as Musk? Pray tell, what on earth is Musk's vision? Nick Arama at Red State:
He tweeted on Sunday that there was “no successor” because “no one wants the job who can actually keep Twitter alive.” So it sounds like he was feeling out folks but hadn’t had luck yet.
According to CNBC’s David Faber, sources told him that Musk had been looking for a CEO since before the poll. As we’ve said, he always intended to put a CEO in charge which was why the left cheering and trying to bomb the poll was funny because having a different CEO didn’t mean that Musk was going away, just that he wasn’t going to be the day-to-day head of operations.
. . . But it doesn’t sound like he has the person yet, so don’t count on him leaving immediately. Sounds like it’s going to take a while yet. This isn’t going to make those on the left happy.
Just you wait! Elon's still going to fix Twitter, and that's going to fix everything. Oh come, divine messiah!
Every indication I've seen from the whole Twitter saga is that the company was some sort of hybrid between a boondoggle and a bubble. Its product isn't something easily explainable; it started with a 140 character limit that was raised to 280, which simply privileged the inarticulate and turned the whole exercise into something between a video game and Scrabble. It wasn't useful as a communications tool, because it left little room for any capable rhetoric and none at all for exposition or argument.
Twitter, as a company whose product is social influence more than software or stuff, has less money to throw around, but they have something that is perhaps even more valuable to the Elite™: it is a chokepoint through which most information flows, and hence is a place where The Narrative™ is fleshed out.
Their protection money, so to speak, was handing over at least partial control to the powers-that-be of the information flow.
That’s why, over the past few years, Twitter has become a home-away-from-home for FBI retirees.
. . . Twitter had little money to give, but they could offer sinecures for clients of the powerful, and the ability to control the flow of information. And that is what they did.
Tiny slices of language at 140 or 280 characters per post are information? I can get more information from a skin cream commercial. Our cat conveys more information by mewing and tilting his head. Twitter is not much more than a certain kind of noise. We might get a little farther if we allow that the retired FBI guys were in sinecures, "a position requiring little or no work", but that's just another way of saying they weren't doing anything, and that conflicts with the assertion that they were controlling the information flow.
So the retired FBI agents were pretending to control something that a certain class of consumers chose to call "information". In the most critical case at hand, they sought to limit a certain level of superficial noise over Hunter Biden's laptop. Now, I simply don't understand how you can explain "Hunter Biden's laptop" in 280 characters. At best, you can post a link to a story that gives an outline of the case in maybe 2000 words. Twitter is thought to have controlled the case by banning the New York Post, but how did that stop Hunter Biden from becoming a meme? I, or indeed anyone, can post the photo at right, and a huge segment of the population will not only recognize it as the First Cokehead, but will chuckle yet once more at the whole narrative. How did all those retired FBI agents stop a single thing?
I think the answer is that Twitter did little to control the Hunter laptop story, and the biggest beneficiary of Twitter banning the New York Post was the Post itself, as its own headlines reflect. They used to sell books by saying they were banned in Boston, after all.
I think the main issue with Twitter is that it was somehow able to convince a lot of people, certainly much of David Brooks's New American Upper Class, who could flatter themselves with blue checkmarks, that influential people hung out there. And a bunch of Inspector Clouseau wannabes from the FBI convinced people at Twitter that they needed to be put in do-nothng jobs that allegedly "controlled information" from people who convinced themselves and their peers that they had important things to say. In 240 characters.
And Elon Musk decided he was gonna fix this, and a lot of influencers didn't want him to. And in the process, a whole bubble is bursting. So far, we've been mostly getting information about Elon Musk's actual business judgment. But how did Twitter manage to convince anyone that it mattered in the first place?
