Elon Musk has renamed Twitter to X, a name that it does not own the trademark for, in a move that cost the company — which had its valuation cut by nearly $30 billion in late May — billions of dollars in brand value.
Newly-minted CEO Linda Yaccarino claimed that “X” would be “the future state of unlimited interactivity, centered in audio, video, messaging, payments/banking - creating a global marketplace for ideas, goods, services and opportunities,” a concussive word salad that conveys nothing. Yaccarino followed up by saying that “fans and critics alike have pushed Twitter to dream bigger, to innovate faster…” and that “we’ve already started to see X take shape over the past 8 months through our rapid feature launches.”
The “rapid feature launches” include encrypted DMs (which Musk said you should “try, but not trust”), a “new” paywalled Tweetdeck, two-hour long video uploads (which have become rife with online piracy), “DM reactions” and tens of thousands of dollars of payouts to right wing lunatics, with most product improvements existing only to buoy Twitter’s deeply-unsuccessful “Twitter Blue” subscription, which also allows the dumbest people of all time to write extremely long tweets.
Musk has yet to deliver encrypted calls, a Twitter video app for smart TVs, a content moderation council, a system to “authenticate all humans,” or to have all major product decisions handled by vote. In eight months he has destroyed the ability for people to verify the information they find on Twitter, annihilated its advertising revenue, banned journalists, and utterly cocked up Ron DeSantis’ presidential campaign announcement.
Most recently, the company reinstated the account of an alt-right influencer — Dom Lucre — after it was suspended for posting child sexual abuse material (CSAM). The since-deleted tweets purportedly depicted the crimes of Peter Gerard Scully, an Australian man sentenced by a Filipino court to life imprisonment plus 129 years after committing a raft of heinous sexual offenses, with his youngest victim aged just 18-months.
Horrific stuff. And I’m admittedly understating Scully’s crimes, because they’re simply too grotesque, too disturbing, to recount in any real detail. They were grave enough for prosecutors to call for the reinstatement of capital punishment, which the Philippines abolished in 2006.
Twitter was never a particularly innovative company, and the only thing that Musk seems capable of delivering at speed is bullshit. The decisions he makes often cause the site to break, and I can’t think of a single post-acquisition change that has meaningfully improved anything, other than the novel yet meaningless ability to see views on tweets. Putting aside the social damage he’s done to Twitter by catering to the worst people alive.
He’s fundamentally failed at making anything out of an acquisition that cost him billions of dollars and publicly embarrasses him 24 hours a day. Musk is no longer compared to Tony Stark or Steve Jobs — he’s the guy who wasted $44 billion and made a Colgate executive concerned about his “racist rhetoric.” Musk’s “Midas Touch” has a distinctly shitty odor, carrying with it the promise that you’ll have to continually deal with the whims of a man who has proven to be astonishingly bad at business.
Conspiracy theories that say that Musk’s plan was to destroy Twitter in an act of “cultural vandalism” are as farcical as suggesting that Musk wanted to “build the everything app” on top of a website for tiny little messages. Musk has no grand plan. He has no strategy, no product roadmap, no organization, and no “goals.” He has the ability to get news outlets to incredulously post that he’s going to do something just by saying he’s going to do it.
He doesn’t need to show proof, despite the fact that he is one of the world’s most prolific liars, constantly embellishing with the full knowledge that at his scale, people have to cover what he says, even if it’s complete nonsense. He didn’t want to buy Twitter in the end, and even when he did want to, he waived due diligence, lacking basic curiosity about the thing he was buying.
Musk has failed to deliver on so many promises that there is an entire website dedicated to chronicling them, including but not limited to turning CO2 into rocket fuel to doubling Starlink’s download speeds to 300Mbps by the end of 2021. Each statement earned top tier media coverage and, of course, never happened. Musk is fully aware that the majority of the media will print almost anything he says while never truly holding him accountable, meaning that there is always the appearance of growth and production without ever really needing to do anything.
The remarkable thing is that he’s done it for years. The new Tesla Roadster was promised in 2014, then promised “within four years” in 2015, then it was “some years away” in late 2016, and then it was “unveiled” in late 2017 for availability in 2020. In June 2018, Musk said that it would “include 10 small rocket thrusters arranged seamlessly around the car” to “improve performance,” and October 2018 would show a gormless Jay Leno the outside of a Tesla Roadster that he would never actually get to see move. In 2020 Musk would delay the Roadster “until late 2021,” and in 2021 he pushed its release date until 2022, then to 2023, when he would delay it until 2024 — a decade-long delay that the media would call “four years late.”
The Cybertruck, announced in 2019 with production to begin “late 2021,” before being delayed until 2022, then to 2023, then to 2024. Tesla would announce that its first Cybertruck had been built in mid-July of 2023, only for Musk to walk it back and say that this was only a “release candidate.” The media happily updated their stories to reflect this statement, despite Tesla’s craven attempt to mislead the public into believing the Cybertruck had entered production. To be clear, there’s another word I’d use to describe a “release candidate” — a beta, much like that of Tesla’s unsafe and unreliable Full Self-Driving Beta software, which currently appears to have a “phantom braking problem.”
The fact that the Cybertruck wasn’t ready, and was unlikely to hit its promised release deadlines, didn’t stop Tesla from accepting thousands — and potentially millions — of pre-orders, however.
Elon Musk is the minimum viable product of capitalism. He’s realized the exact amount he has to do to stay relevant, continually using the media to pump out half-stories based on tweets or off-handed comments, knowing he will never be held accountable by investors or the general public. xAI, his new company, is allegedly promising founding members 1% stock options that are “like a $200 million signing bonus,” suggesting a $20 billion valuation based on Elon Musk existing and saying that its goal is to “understand the true nature of the universe.” Whether or not it’s related to Musk’s alleged “TruthGPT” product is irrelevant. Musk says stuff, has money, and the media covers it as if it’s the unassailable truth, regardless of whether there’s any proof that anything actually exists.
He’s an inventor that invented nothing, a chief executive that has never executed, and a marketer that never markets a real product. His most successful companies were built by and run by other people, while the ones he did build never seem to deliver. He is well aware that he gets credit for things he did not build or will never build, and will continue to vaguely suggest something will happen as long as he continues to be rewarded by a compliant media and growth-drunk private and public markets.
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The “Everything App” that Musk is allegedly building — one that he says, but has yet to show even the loosest wireframe of — would require him to plan and deliver an app that combines financial services with a social media company under an FTC consent order he has already possibly violated. Musk plays fast and loose with regulation, regulators and the law itself, using his massive wealth to delay and encumber those who seek justice for him not paying his bills or staff. This “move fast and break things” methodology has never faced off against America’s financial regulators, who wield a great deal more power than the opponents he’s faced previously because the American government needs you to handle money in a very, very specific way.
Learning Corner: Musk’s obsession with X.com comes from one of his first companies (also called X.com), an early online bank that was fraught with infighting, eventually merging with Confinity (retaining the X.com name), a competitor that had a peer-to-peer payments product called “PayPal.” Musk would eventually get ousted as CEO while on his honeymoon because everybody else realized that PayPal — which it immediately changed the name to — was a viable business and a better product.
Musk’s lax approach to data security and privacy will immediately become a problem if “X” decides to handle anyone’s money as he has suggested in the past. And even if he’s capable of delivering this non-existent and entirely theoretical product, FinTech is rarely profitable, with payments — the specific thing that Musk is discussing — having some of the thinnest margins.
Regulators are also extremely aggressive in fining financial services companies that fail to protect their customers from fraud, and Musk’s track record is terrible. In 2000, X.com allowed thieves to steal tens of thousands of dollars from customers because X didn’t verify the details of the bank they were withdrawing funds to. A security consultant referred to the breach as “an appalling lack of security.”
It’s worth emphasizing the logistical complexity of what Musk is proposing. In order to build a globe-spanning fintech app, X would have to obtain licenses in every jurisdiction it operates in, and then build or acquire the rails necessary to connect the app to the local banking network. As McKinsey points out, fintech rules vary wildly between states, even in places like Europe where legislation is often created on a supranational basis by the EU. Some markets (like Germany) are easier than others (like Poland) to enter.
And it would need to adhere to financial services regulations on an ongoing basis, which adds further headaches, both from a legal and engineering perspective. Things like AML (anti-money laundering) and KYC (know your customer) rules differ subtly between states, and violations can result in tough financial or criminal penalties. Staying compliant requires spending money and hiring people — both of which Musk has proven averse to — and can’t be accomplished through automation alone.
Musk dreams of creating the WeChat or KakaoTalk of America — massive apps combining payments, social media and chat, created by different companies in different countries with different regulatory climates at different times in history. They are capital-intensive apps with massive payrolls. Kakao has 10,000 employees, and Tencent (which owns WeChat) has over 100,000 people and grew WeChat from its already-successful and stable QQ chat (and had over 20,000 people at launch). By contrast, Twitter employs roughly 1,000 people — a fraction of its pre-acquisition headcount.
It’s a dream that’s almost comically ignorant of history and context. WeChat, for example, which blends social media and fintech into a single product, and is the de-facto payment method in the Middle Kingdom. This app was successful largely because, for most of its modern history, China was a cash-centric country with a rudimentary banking system.
The first domestic debit card system, UnionPay, launched in 2003, almost four decades after Barclays bank introduced the world’s first ATM system. Before then, cards only worked in the cities where they were issued, and were rarely accepted by merchants. Credit cards came to China in 1985, almost 35 years after their creation, and were limited to the most affluent in society. Again, widespread adoption was limited.
And although China has gradually opened up its economy to the wider world (starting with the reforms of Deng Xiaoping in 1979 and accelerating after China’s accession into the World Trade Organization in 2001), the country has long resisted the introduction foreign payments providers. For context, Mastercard only received approval to offer bank clearing services in 2020, and only after it agreed to form a joint venture with local companies. The same is true for American Express, which received permission in 2018.
This history matters because it explains how WeChat became so successful. Tencent had an unbelievable advantage — a perfectly straight and clear path to victory. It had a vast, untapped market to exploit and virtually no competition (either foreign or domestic) to worry about. There was no way it could lose.
X, meanwhile, is seeking to disrupt an established and highly-competitive market, where its rivals include Mastercard, Visa, Apple, Samsung, Google, Paypal, CashApp, Venmo, and more. These companies aren’t merely richer and better-managed than Twitter — but arguably more popular and trusted. And whereas Tencent only had to deal with one regulator, X must deal with potentially hundreds.
It almost feels farcical to humor Musk’s idea, because he simply does not execute. His ideas are always half-baked and vague, then handed off to cronies that will then have to find a way to build them into something functional. He’s the world’s highest-paid ideas guy, making ridiculous claims and then treating the people that have to deliver with contempt while continually hogging the spotlight.
And what’s important to realize is that absolutely nothing has changed about Twitter other than the name the company is using. There is no product roadmap, no new features promised, no new hires, and no new product. Linda Yaccarino said that X, “powered by AI,” will “connect us all in ways we’re just beginning to imagine,” a statement that, even charitably-read, means that they are barely coming up with ideas as to what the hell “unlimited interactivity” means.
My prediction is that this rebrand is an attempt by Musk to convince investors to put more capital into a bleeding company, juicing the valuation with promises of “AI” and “connectivity.” I don’t believe for a second that this is part of a plan or a strategy. It’s just more rot economics from The Rot King, a man who has learned exactly what to say and do in order to exploit the markets and media for the minimal amount of effort. And many in the Valley love him because he symbolizes what some founders strive for — appreciation for his existence rather than any specific achievement or contribution to society.
Even if he succeeds in raising funds, building the kind of app he wants to will be extremely difficult, expensive and unprofitable, while attracting the ire of regulators that would love the opportunity to punish him.
And that’s before you realize that Facebook is, on some level, already the “Everything App.” It’s a social network with video, audio, chat and payments already built in, all without having to transact on a network that can’t go two weeks without a major bug or outage. We’ve already got the app, man, and it sucks.
Musk is the loser’s winner — a charlatan that is able to make unfathomable amounts of money despite being nakedly full of shit, using his massive fame and fortune to test society and the markets’ limits. He believes he can get away with anything because he always has, other than one major exception — Twitter.
He didn’t want to buy it, and now it sits there, festering, burning capital and constantly activating his worst instincts, showing the world how much of a rotten little cretin he is.
The “Everything App” is Musk’s last desperate attempt to turn Twitter into something valuable again before selling it off. Without a significant capital injection, all we’ll see is a poorly-designed payment integration that leads to the site breaking and someone losing money due to an obvious bug caused by rushed development timelines.
And I really believe that this will lead to a reckoning for Musk. Twitter burns money, and even adding video and audio to the platform will massively increase both development and cloud storage costs that he’s already struggling with. If he actually makes good on any kind of financial services product, he will turn Twitter into a black hole for capital, one that may very well tank the entire company.
Thankfully, he’s got a lot of experience with his products blowing up.