The infusion is a significant validation for Musk, whose pursuit of Twitter was until recently viewed as a quixotic effort to recalibrate the treatment of free speech on the social media platform, and raises the likelihood of the deal being finalized in the coming months, said Dan Ives, managing director at Wedbush Securities.
“You have a who’s who of Silicon Valley and the investing landscape of America behind Musk,” Ives told The Washington Post. “It’s not just Musk himself trying to fix Twitter.”
The backing of tech titans such as Marc Benioff, a friend of Musk’s and a Tesla board member, solidifies the idea that Musk is intent on making Twitter more profitable. This marks a turnaround from last month, when the Tesla CEO said in an interview at a TED conference that he was not interested in the economics of the transaction and acknowledged the deal might not work out.
Elon Musk spoke of possible job cuts at Twitter with bankers
The investment eases some of the financial pressure Musk has absorbed in pursuit of the social media platform. The investments mean Musk’s margin loan — which allows him to borrow against the value of securities he already owns — has been halved from $12.5 billion to $6.25 billion, according to the Securities and Exchange Commission filing dated Wednesday.
However, Musk still must come up with $21 billion in cash he does not yet have or publicly spelled out how he’ll obtain. The bulk of his $268 billion fortune is tied up in his stock holdings, including Tesla, though he recently sold more than $8 billion of his shares in the electric automaker.
Musk’s Twitter focus has investors worried about his day job at Tesla. The automaker’s shares slid 7.9 percent amid a broader market sell-off on Thursday. Twitter stock climbed nearly 3 percent.
Twitter’s board signed off on the $44 billion deal late last month, giving the world’s richest person command of a highly influential platform. The acquisition followed weeks of evangelizing on the necessity of “free speech,” as Musk seized on Twitter’s role as the “de facto town square” and took umbrage with content moderation efforts he views as an escalation toward censorship.
Musk’s positions on free speech and how to police the site have put him relatively at odds with current Twitter leadership, raising questions about how he will steer his changes through and whether they will affect the executive suite.
CNBC, citing unnamed sources, reported Thursday that Musk is expected to step in as temporary CEO after he completes the takeover. The current chief executive, Parag Agrawal replaced Jack Dorsey in November. Twitter declined to comment.
Elon Musk purchases Twitter in deal worth about $44 billion
To steer this ship, Musk may lean on the expertise of his new backers.
Ellison, who committed $1 billion, co-founded the business software company Oracle in the 1970s and grew it into one of the world’s biggest tech companies. In the past decade, he gave up the CEO role, purchased the Hawaiian island of Lanai, and spent more of his time backing an America’s Cup sailing team.
Unlike Musk, Ellison is not known for being politically outspoken. However, in 2015 and 2016, he donated more than $5 million to two political action committees that supported the campaigns of Sen. Marco Rubio (R-Fla.), according to records on OpenSecrets. A spokeswoman for Oracle did not respond to a request for comment.
Sequoia Capital, which committed $800 million to the Twitter deal, has a long history with Musk. Besides backing two of his current projects, SpaceX and The Boring Co., Sequoia helped him launch one of his first companies, X.com, which eventually merged with another start-up to become PayPal.
Mike Moritz, a partner with Sequoia who made a significant investment in X.com, once advised Musk not to tie up his wealth in one business, according to the book, “The Founders,” by Jimmy Soni. Don’t “have basically everything except your house and car in a company,” he said.
Roelof Botha, whom Musk recruited out of Stanford to eventually become PayPal’s chief financial officer, is poised to take over leadership at Sequoia this summer. Moritz led the firm until 2012 and is now a partner.
“For over two decades, we’ve had a front-row seat to Elon’s business and technical prowess,” a Sequoia spokesman said in a statement. “We see, as he does, the opportunity to drive meaningful product innovation that will help unlock Twitter’s full potential as a global platform that connects the world.”
4/Elon is the one person we know and perhaps the only person in the world who has the courage, brilliance, and skills to fix all of these and build the public square that we all hoped for and deserve.
— benahorowitz.eth (@bhorowitz) May 5, 2022
Ben Horowitz, investor and co-founder of Andreessen Horowitz, which contributed $400 million to the new deal, said in a Twitter feed that the venture capital firm believes in “Elon’s brilliance” to make Twitter “what it was meant to be.”
“While Twitter has great promise as a public square, it suffers from a myriad of difficult issues ranging from bots to abuse to censorship,” Horowitz said. “Being a public company solely reliant on an advertising business model exacerbates all of these.”
He said Musk was “perhaps the only person in the world” who could fix these problems. The praise echoes that of conservatives who have championed Musk’s bid and characterized him as a crusader for free speech, saying he will make the platform “great again.”
Musk has become one of the leading champions of cryptocurrency, which perhaps explains why Binance plans to invest $500 million toward the Twitter purchase.
Elon Musk and the great man fallacy of the technology sector
The world’s largest crypto trading platform contacted Musk after he made his initial bid, and the billionaire welcomed a discussion on how crypto technologies could be harnessed to improve the social media site, according to Patrick Hillman, a Binance spokesman.
He said Musk’s team expressed interest in using blockchain technology — the foundation of cryptocurrencies like bitcoin — to counter spam and fake accounts on the site. “We’re excited to be able to help Elon realize a new vision for Twitter,” Hillman said.
Binance has drawn scrutiny from regulators who are concerned it may be used for money laundering and tax evasion. The company says the blockchain is a safer and more transparent place to do business than traditional banks, and says it works with regulators and shares information with them when requested.
Other investors include Qatar’s sovereign wealth fund and Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, who originally rejected Musk’s $54.20 a share offer, saying in an April 14 tweet that he didn’t think it came “close to the intrinsic value” of the company. Musk fired back on Twitter, asking the prince to disclose how much of Twitter Saudi Arabia owned and for him to spell out the nation’s views on “journalistic freedom of speech.”
U.S. intelligence has concluded that Saudi Crown Prince Mohammed bin Salman ordered the killing of Washington Post contributing columnist Jamal Khashoggi, a critic of the Saudi government, at the Saudi Consulate in Istanbul in 2018. Now, the prince has agreed to convert his stake in Twitter — worth nearly $2 billion — into a stake in the private company.
Tory Newmyer contributed to this report.
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