The late American novelist Kurt Vonnegut, in a lecture at Case Western Reserve University, explained that stories have a shape. In the session titled ‘Shape of stories’, he draws a straight line from top to bottom on the margin of a board, and then marks the top end as ‘G’ — meaning good fortune, and the bottom as ‘I’ — meaning ill fortune. And then, from the middle of that line, he draws a horizontal line —‘B’ for beginning, and ‘E’ of end of the story.
Using the graph, Vonnegut jokingly notes the method as a scientific way to write stories that could be fed into a computer, which in turn could push out a desired output. He roughly sketches eight story formats on the system involving the two axes. The shapes largely follow a pattern of an average start going bad, and finally ending well — like a reverse S-shaped curve on the X-axis. The essence of each of these patterns is in the flow of the story. And if the story of Elon Musk vs Twitter were plotted on Vonnegut’s graph, the system could possibly develop a brand-new shape. Let’s go to the starting point, or point B in Vonnegut’s graph, to see how things unfolded just a few months before things heated up between the world’s richest man and the micro-blogging site.
Musk’s Point ‘B’
In November 2021, the CEO of Tesla tweeted a survey asking his roughly 62 million followers (at that time) whether he should sell 10% of his shares in the car company. Over 3.5 million users participated and nearly two-thirds voted in favour of the share sale. The tweet came after some U.S. lawmakers proposed taxing billionaires. At that point, the Tesla CEO faced a tax bill of nearly $15 billion, and some of his stock options were due to expire. Therefore, he was going to sell the shares anyway, with or without the Twitter survey. Still, the tweet had an impact.
The following Monday, Tesla shares fell. The tweet, and the share price drop did not go well with the Securities and Exchange Commission (SEC), which had previously, in 2018, ordered Musk to get his tweets approved by a lawyer. The regulator opened a new investigation into this tweet to check whether Musk complied with the 2018 agreement. The regulator later revealed details of the probe on March 22, 2022 in response to a motion filed by Musk’s attorney asking a Manhattan federal judge to scrap the 2018 agreement, including pre-approval of Musk’s tweets by a lawyer.
And while the drama around the November 2021 tweet unfolded, Musk gradually built his stake at Twitter. On January 31 he bought a little over half million shares at $36.83 apiece. And since then, on nearly every single trading day, through April 1, he bought million more shares of the company.
Twitter’s Point ‘B’
Around the time when Musk posted his survey tweet, Twitter co-founder Jack Dorsey was running Square and Twitter. Investors questioned his management style and were worried that he was stretched too thin by his roles at both companies. A year earlier, activist investment fund Elliott Management had sought to remove Dorsey as CEO of the company. Finally, Dorsey capitulated in November 2021, and made way for Parag Agrawal to take over the reins of the social media company. Twitter’s shares rose. As Dorsey was exiting, and just as Agrawal was gradually settling into his new role, the issue of censorship and content moderation on Twitter started to gain momentum.
The Tesla CEO was one of the vocal critiques of the company and its policy on content moderation. He began posting his views more frequently and vocally with surveys on whether the platform should or should not censor content.
The plot thickens
On March 25, the Tesla CEO tweeted a survey asking whether Twitter “rigourously” adhered to the principles of free speech. A month later, after rejecting an offer to join Twitter’s board, Musk made an open offer to buy the company for $44 billion at $54.20 a share. Twitter’s board resisted Musk’s offer by evoking a “poison pill” provision to stop the Tesla CEO from forcibly taking over the platform. Twitter then had a change of heart around the time when Musk raised the issue of bots and spam accounts on the platform. He then asked the company to show proof that spam accounts were fewer than 5% of its total users. He also requested the company to share the necessary data with his team to verify the same. But the company replied that a calculation of such accounts could not be performed externally because it would require them to share private information. Twitter employs human reviewers to manually examine accounts at random, and these reviewers verify accounts based on a combination of private and public data. Accusing the company of withholding data on spam accounts, Musk said he was terminating the deal. In response, Twitter sued the world’s richest man in order to force him to close the deal.
The story’s denouement
Just before the case was all set to go on a five-day trial on October 17 in Delaware Chancery court, Musk had a change of heart. On October 4, the billionaire offered to close the deal as originally agreed upon and requested the court to delay the hearing. The change gets him about 10 days as the hearing is postponed to October 28. This means that Musk has to close the transaction against the backdrop of a difficult debt market.
Twitter sees Musk’s final offer to close the deal as a shift in the original terms as he is making the closing contingent on the debt financing coming through. Twitter does not see this as a necessary condition to complete a merger deal which was signed in April.
The company also sees the possibility of Musk walking away from the deal if the debt financing falls through. In such a scenario, Musk may end up paying a $1bn termination fee. And, there is, of course, the possibility of an out-of-court settlement between the two parties. This could keep important records from coming up in public view as part of the five-day trial. Even as Twitter users, employees and investors wait and watch how these scenarios play out, Musk has turned into a perfume salesman on the micro-blogging site.
To his 100 million followers, he tweeted on Thursday, “Please buy my perfume so I can buy Twitter.” This switch blends two of Vonnegut’s story shapes, possibly into a new one. The late satirist plots Franz Kafka’s Metamorphosis lead character at the lower end and moves it out down into infinity after the man becomes an insect.
Perhaps, by the end of October, Twitter investors will know if they cornered a good deal at $52.40 per share, or whether the billionaire walked off leaving a $1 billion cheque. Either way, the past few weeks have been good for the company. Its stock price has jumped roughly 19% since October 3.