back to indexCal Newport Reacts To Elon Buying Twitter | Deep Questions Podcast
Chapters
0:0 Cal's intro
1:0 Cal talks about a recent Scott Galloway article about Elon
4:45 Cal talks about Twitter not getting enough value out of its users
7:30 Subscription model for Twitter?
12:20 Where Cal disagrees with Galloway
15:15 Cal and Jesse talking about Elon's purchase of Twitter stock
00:00:00.000 |
All right, so we have listener calls as a listener calls episode. 00:00:02.600 |
We've got some good calls queued up last week. 00:00:08.400 |
Cal reacts to the news where we take something that's in the news 00:00:20.040 |
So on Monday's episode, we talked about the New York times decision to stop 00:00:29.680 |
Now we have another article, which Jesse just handed to me when I got to the HQ 00:00:34.280 |
today, and it has to do about the other major Twitter story in the news this 00:00:38.400 |
week, which is Elon Musk buying a 9% stake in Twitter and gaining a seat 00:00:47.520 |
This seems to have been causing a lot of debate. 00:00:50.480 |
I mean, I've talked to some people about this and academic circles and et cetera. 00:00:58.040 |
About Musk in particular, I think people have a hard time trying to figure out, 00:01:05.680 |
Do I think he's interesting or do I think he's terrible? 00:01:07.560 |
Cause he, he doesn't make any of those categorizations easy. 00:01:13.880 |
Like Jesse, let me ask you pro Musk, anti Musk. 00:01:19.960 |
He gets a lot of press cause he's, you know, so ridiculously rich. 00:01:34.720 |
He's in the news all the time now, and he's going to be in 00:01:38.800 |
I mean, I'm, I'm looking forward to the, the Walter Isaacson biography on Musk. 00:01:43.640 |
I don't know when that's coming out, but he's such an interesting, weird character. 00:01:48.040 |
I think it's going to be a fascinating book and Isaacson because 00:01:52.080 |
I mean, I think the thing about Musk is that he has done objectively sort of 00:01:57.720 |
impressive, uh, error defining things in the world of business. 00:02:03.720 |
He just made, uh, affordable space travel and industry. 00:02:08.480 |
Those are crazy things to do and just became the richest 00:02:13.800 |
When he interacts with the world, however, he does so in like a really weird way. 00:02:26.360 |
So then, you know, he's not, he's not particularly super conservative. 00:02:31.480 |
So the conservative is like, I guess we like this guy. 00:02:34.440 |
He's not very interested in, very interested in like woke ism. 00:02:37.640 |
So like more of the, the left, the farther left is like, I 00:02:42.560 |
Like no one's really sure how they feel about him, but anyways. 00:02:45.520 |
The more proximate question here is how do we feel about him 00:02:52.840 |
It is an article by professor Scott Galloway from NYU. 00:02:58.200 |
It's Galloway's dissection and opinions on Elon's purchase of Twitter stock. 00:03:06.240 |
And so I thought I would do here is summarize, uh, the major point of 00:03:10.280 |
Galloway, give you my reaction to that point, and then talk about a couple 00:03:13.880 |
of the things that Galloway says that I somewhat disagree on. 00:03:17.520 |
So let's start with Galloway's main point, which is one I actually agree on. 00:03:21.040 |
And let me actually preface this all by saying, if you have to choose 00:03:24.400 |
between me and him on anything, having to do with Twitter, you 00:03:32.240 |
He was part of an activist shareholder movement that helped got, uh, to 00:03:36.280 |
help get Jack Dorsey removed from the Twitter board of directors. 00:03:38.680 |
So this is someone that actually knows a lot about it. 00:03:40.560 |
I don't, but I do have a microphone in front of me. 00:03:51.560 |
This is why Musk was able to buy so much stock at basically a discount. 00:03:59.080 |
It's an undervalued stock and it's undervalued because 00:04:09.200 |
Twitter is doing what $4.5 billion in 2021 compared to 115 billion for 00:04:19.280 |
They don't realize how much it still dominates the advertising market. 00:04:22.000 |
Uh, you know, meta had to create, it created its own ecosystem 00:04:28.200 |
Google is basically still selling ads on the rest of the internet. 00:04:32.080 |
So people forget how much money they're producing. 00:04:34.720 |
Galloway also talks about the enterprise value per daily active user. 00:04:39.080 |
For Twitter, it's 131 compared to almost $300 for meta. 00:04:42.880 |
So they're not doing very good job of actually getting value 00:04:49.520 |
Galloway has a sol a solution that he calls hashtag 00:04:56.880 |
And that solution is moved to a subscription model. 00:05:03.040 |
Here's Galloway's elaboration, corporate users and users with large 00:05:08.440 |
followings would pay for a fraction of the value they receive. 00:05:10.920 |
I have long advocated for this model by shifting the company's revenue 00:05:15.920 |
Subscription aligns economic incentives with user experience 00:05:25.800 |
I think it would be an exciting move, not just for Twitter, but because of the 00:05:28.720 |
precedent it would set for how social media could operate in the future. 00:05:34.720 |
I think Galloway is absolutely right when he argues ad supported, ad 00:05:40.600 |
supported social media platforms have completely misaligned incentives. 00:05:46.600 |
I wrote about this a while ago for the New Yorker wrote a piece a couple of 00:05:49.960 |
years ago about indie social media, where I got into this more, but the issue is. 00:05:54.080 |
With an ad supported social media platform, all that matters is engagement. 00:05:59.880 |
The more you're on there, the more ads we can put in front of you, but also 00:06:02.560 |
the more data we can gather from you to target those ads and neither of those 00:06:08.240 |
objectives are aligned with what is going to be the most satisfying experience for 00:06:14.160 |
a user or what's going to be the best experience for a user from even just a, 00:06:17.880 |
a privacy standpoint or any other standpoint you might want to look at. 00:06:21.360 |
When you put all the data you can find about a user into a black box, machine 00:06:25.200 |
learning algorithm to have it figure out what to show you so that you'll stick 00:06:29.040 |
around more, what you're doing is getting artificial neural networks to learn. 00:06:34.800 |
The darkest recesses of the human brain to figure out about the brain stem, to 00:06:40.020 |
figure out about our, uh, our tribal reactions, our fear reactions, right? 00:06:44.520 |
There's very powerful things in the human psyche and those artificial neural 00:06:48.360 |
networks that are taken in all this data and running their multi-arm bandit 00:06:53.120 |
reinforcement algorithm to try to figure out what makes you stick around 00:06:57.800 |
It's just figuring out stuff that darker souls in the past had also deduced. 00:07:05.960 |
Let's get your back up against the wall and feel like there's a fight to be had. 00:07:09.960 |
And Twitter is really good at that because the main grist for Twitter is 00:07:14.720 |
individuals, uh, individual interaction, right? 00:07:19.500 |
It's words from people and you interacting with words from other people. 00:07:25.000 |
It's not articles or videos that maybe people are talking about is just direct 00:07:28.960 |
human interaction, going through a curation algorithm. 00:07:32.920 |
This is trying to maximize engagement and it creates. 00:07:37.880 |
Everyone going after everyone, seven seconds after being on Twitter, you feel 00:07:46.120 |
If the money is from ads, then the money is from users wanting to pay that ad 00:07:54.920 |
The income comes from users wanting to pay those subscription fees. 00:07:57.840 |
Why do users want to pay subscriptions to things? 00:07:59.720 |
Not because, uh, I use it all the time, but because they value what they get when 00:08:08.760 |
And now you want the experience to be informative, uplifting, interesting, 00:08:14.540 |
Now, I don't know if I share Galloway's, uh, optimism that this would create a 00:08:23.520 |
I think once you start charging, you might have a severe contraction of user 00:08:30.360 |
But I think it would be a very profitable company and a very useful company. 00:08:34.880 |
Now there's different ways to go forward here. 00:08:36.760 |
It could be the, the people who post have to pay, but anyone can read. 00:08:41.560 |
Um, I think he didn't mention this, but I think getting rid of pseudo anonymity 00:08:45.840 |
It's a real people talking to other real people. 00:08:49.460 |
You kind of have to stand by, uh, you have to stand by what you're doing. 00:08:54.000 |
There's a lot of other details to work out, but I really do think it probably 00:08:56.640 |
would become a better experience if it was subscription based and it would teach 00:09:00.900 |
You can run a really profitable, good online user generated content company 00:09:07.640 |
without having to have ads be what's at the core of it. 00:09:11.240 |
Now, if it was very profitable and grew to be really big, that'd be great 00:09:16.320 |
I don't know if it would be, but I liked the idea. 00:09:18.000 |
So I mentioned two things I didn't quite agree with Galloway about. 00:09:22.560 |
Again, defer to him, but let's just throw it out there. 00:09:24.760 |
Number one, his enthusiasm for Twitter, he calls it, uh, can't find a wording 00:09:33.080 |
here, but basically he calls it like one of the most important companies like in 00:09:42.800 |
I can't find his exact wording, but it's like, this is obviously like one of the 00:09:45.560 |
most important companies in the world that it's, that its impact on the world 00:09:48.680 |
is critical and it's, it's so it's very important what happens to it. 00:09:53.080 |
I don't have the exact, the exact terminology. 00:09:57.760 |
I think there's ironically an, an, an echo chamber, uh, around Twitter for 00:10:03.880 |
It disproportionately matters for a very small segment of the population that has 00:10:09.720 |
a lot of power for reporters and for politicians, um, for people who are 00:10:14.160 |
involved in, in criticism, content producers, writers, like there's a pretty 00:10:20.240 |
small group that has a lot of influence on culture to which Twitter is at the 00:10:24.320 |
And I think that is easy to generalize and be like, this thing is at the 00:10:33.200 |
And maybe this is what Galloway had in mind for most people. 00:10:37.400 |
They don't care about Twitter, or if they use it, they use it. 00:10:39.400 |
Rarely like I would, which is, I need to look up what this nationals beat 00:10:45.080 |
reporter is saying about what just happened in the baseball game. 00:10:49.600 |
And, but they are getting a second order impact because as we talked about on 00:10:52.640 |
Monday, the news they're encountering, the bills being passed in Congress, like 00:10:57.240 |
a lot of that is being influenced by Twitter. 00:10:58.960 |
So they do have a second order impact, but I think 99% of the people in our 00:11:03.360 |
country, if you turn Twitter off tomorrow, wouldn't notice. 00:11:08.000 |
So I don't think it's as central, uh, as the people who are in that world 00:11:12.080 |
think it's central to their world, but they don't realize that that's, that's 00:11:18.200 |
The second thing is Galloway's evaluation of Elon. 00:11:24.400 |
Let's get to the question of, is it good or bad for Twitter? 00:11:28.400 |
And what Galloway says is like, yeah, it's kind of mixed. 00:11:30.840 |
Like the, the, the fact that, you know, you bring in this, this larger than life 00:11:35.480 |
character, who's obviously a genius and you put them on the board, it's 00:11:39.120 |
It was smart for Twitter to put them on the board. 00:11:41.320 |
It's better to have activists on your board than to be attacking 00:11:44.520 |
He said that there's Twitter needs a kick and that might be a kick, but he's really 00:11:54.040 |
He will tweet off all sorts of random things. 00:11:57.400 |
He might take Twitter in arbitrary directions. 00:11:59.680 |
Uh, Galloway was upset that Elon was just doing like Twitter polls about major new 00:12:04.160 |
features, like that he might just add an edit button because people said that was 00:12:08.360 |
a good idea and a Galloway's right about that. 00:12:12.080 |
And so you worry about what that's going to do over time to 00:12:16.120 |
The place where I probably disagree with Galloway though, and it's a disagreement 00:12:20.320 |
I have with a lot of people is it seems like a lot of people, especially around 00:12:24.440 |
here, their take on Musk and Twitter is that, uh, Musk is upset about moderation 00:12:31.560 |
and what he wants is a unrestricted, basically unrestricted speech on Twitter. 00:12:37.120 |
And so typically when people say, here's the problem with people like Musk is 00:12:43.040 |
And then like Galloway does, they go on and be like, the first amendment 00:12:47.920 |
It guarantees freedom from government intervention, and it's fine for 00:12:51.640 |
And if you really want to do unfettered free speech where you're just stopping 00:12:56.480 |
And I think most people would agree with that. 00:12:58.960 |
I don't think though that that's what Galloway or people like 00:13:06.160 |
I mean, I think a lot of people, uh, you know, again, especially, and I think 00:13:11.960 |
Um, they want that to be the thing that someone like Elon is, is advocating 00:13:19.160 |
I don't really know his stance on Twitter that well. 00:13:21.000 |
I know some people who know Elon though, who are in his orbit. 00:13:26.040 |
I would assume what Elon would like his complaint is basically that, no, of 00:13:31.880 |
If, if Twitter was like 8chan, no one's going to want to use it, at 00:13:36.840 |
least not at the scale it has, but that this moderation should be more centrist. 00:13:41.640 |
And I think that's a harder thing to argue about. 00:13:43.880 |
If let's say you're, you're, uh, you're coming at this more from a position, uh, 00:13:49.720 |
to the left, that's a harder thing to argue about, which there should be 00:13:52.400 |
moderation, but the moderation should align more with like centrist positions. 00:13:56.320 |
What let's say like the majority of the country might be comfortable with. 00:13:59.720 |
And, and I think Elon's argument is too often when it's like politically 00:14:04.760 |
related moderation decisions will align with like a relatively far to the left 00:14:11.240 |
perspectives that are shared by maybe six or 7% of the country. 00:14:14.200 |
And that feels great for those people who share those views, but for everyone 00:14:18.240 |
else, it can feel arbitrary or weird and, or that they're left out. 00:14:22.160 |
And so like, we should come at it from a, like a centrist position. 00:14:24.480 |
If it's something that would upset your aunt, then you're like, okay, 00:14:31.040 |
Like maybe that should be the standard and the standard shouldn't be, is 00:14:34.400 |
this something that is going to upset a, um, like a radical critical theorist? 00:14:39.480 |
You know, like that's, that's a bigger stance. 00:14:43.080 |
I, that's another thing I think I disagree with Galloway is like, I don't 00:14:47.160 |
I think he just wants the aunt standard and not the, uh, critical 00:14:54.200 |
So that's where I think, what do you, what do you think, Jesse? 00:14:57.480 |
Well, what about the part of Elon going out the wrong SEC storm form and 00:15:05.560 |
I mean, I think that falls under the he's volatile critique, which is fair. 00:15:09.880 |
I think there's probably a little bit more planning in it than that. 00:15:14.480 |
I think it's similar to like the Brady retirement thing. 00:15:17.040 |
And then him going back, like they have this stuff planned out. 00:15:20.000 |
So, so I'm not up, I'm not up on the latest breaking. 00:15:23.280 |
So is the thought that this is so he can then step back out? 00:15:26.680 |
Well, he announced it on April 4th or whatever that he broke. 00:15:34.280 |
Was this, and then the stock price immediately went up, but he 00:15:39.120 |
He was technically supposed to announce that like two weeks prior. 00:15:41.640 |
In which case, when he was buying all that stock, the price would have gone up. 00:15:45.800 |
So essentially he saved himself like 150 million, but Galloway 00:15:52.400 |
I mean, I think that falls under the volatility. 00:15:59.640 |
I mean, it kind of works well in creating new industries, but 00:16:05.520 |
I don't, I don't think that he just filled out the wrong form. 00:16:08.240 |
I feel like he probably, I'm reading this now. 00:16:19.200 |
Well, that's, well, that's a whole other issue, but yeah, again, you're 00:16:25.200 |
Well, a lot of this, a lot of this stuff and like other publications is that's 00:16:34.080 |
It's the form and saving money and buying Twitter. 00:16:37.040 |
To me, that's like the least interesting part of the story. 00:16:40.760 |
I mean, it's interesting, but I also think it's, that's more like the reason 00:16:46.960 |
It's like, we're working backwards from, we don't like this guy. 00:16:50.760 |
So, uh, let's emphasize the, like, look, he might've done fraud here, which I, 00:16:56.920 |
which I think is, is big, but there's also like these huge discussions of like, 00:17:02.640 |
And yeah, there, when I talk to people, I get a lot of like, uh, there people 00:17:09.680 |
around here are really worried that he's sort of wants to get rid of all 00:17:14.000 |
moderation, which I, again, I think is crazy. 00:17:16.080 |
Like no one would want to use a platform that it's like, eh, people can say 00:17:20.040 |
whatever, as long as it's not defamation or, or like putting someone in imminent 00:17:23.680 |
harm, like those platforms exist and they're weird and, and melt people's 00:17:27.760 |
eyes and they're terrible and no one likes to be there. 00:17:30.360 |
Um, and so I can imagine that, uh, assuming he does get to keep his stock. 00:17:39.320 |
Again, I, I really think a lot of these like intellectual dark web types who all 00:17:44.640 |
seem to like know him are, that's really what they would want is the, what did 00:17:53.240 |
Which would moderate a lot of stuff, but wouldn't completely align with either 00:17:57.360 |
side of the political spectrums, more extreme stances. 00:18:01.040 |
Like I think that stance could very well, you know, would moderate things like about 00:18:06.120 |
vaccine misinformation still in a way that people on the right would be really 00:18:13.080 |
Um, but it would also like not kick people off for things that people on the left 00:18:19.080 |
But your aunt would be like, I don't understand what the problem is. 00:18:22.720 |
And there's a whole theory in media criticism about, uh, when media outlets 00:18:29.560 |
like newspapers used to make most of their money off advertisements, the goal 00:18:35.360 |
And so the, the second order effect of that is that you get coverage that is 00:18:41.240 |
aimed at the broadest possible audience, because you need the broadest possible 00:18:43.880 |
audience to like pick your paper up from the newsstand and read it. 00:18:47.360 |
And then when things shifted behind paywalls, it changed all the incentives. 00:18:50.960 |
And now it's more about how do we keep the people who are paying us money each 00:18:57.240 |
And the incentives change more towards like, well, let's figure out what. 00:18:59.800 |
They're into who they support, who they dislike. 00:19:02.920 |
And like, let's really attack the people they dislike and really support the 00:19:07.080 |
things they do, like let's validate their, their particular whatever. 00:19:10.120 |
And so that's an interesting theory that then you shift towards like a, the 00:19:13.680 |
Overton window significantly realigns when you shift your actual economic model. 00:19:21.120 |
And I think that's a really interesting way to think about it. 00:19:23.040 |
And I think that's a really interesting way to think about it. 00:19:24.720 |
And I think that's a really interesting way to think about it. 00:19:26.000 |
And I think that's a really interesting way to think about it. 00:19:27.000 |
And I think that's a really interesting way to think about it. 00:19:28.000 |
And I think that's a really interesting way to think about it. 00:19:29.000 |
And I think that's a really interesting way to think about it. 00:19:30.000 |
And I think that's a really interesting way to think about it. 00:19:31.000 |
And I think that's a really interesting way to think about it. 00:19:32.000 |
And I think that's a really interesting way to think about it. 00:19:33.000 |
And I think that's a really interesting way to think about it. 00:19:34.000 |
And I think that's a really interesting way to think about it. 00:19:35.000 |
And I think that's a really interesting way to think about it. 00:19:36.000 |
And I think that's a really interesting way to think about it.