All right, so we have listener calls as a listener calls episode. We've got some good calls queued up last week. However, we debuted a new segment. Cal reacts to the news where we take something that's in the news and I give you my opinions on it. I thought that went well.

So we thought we would do it again. So on Monday's episode, we talked about the New York times decision to stop encouraging their reporters to use Twitter. Now we have another article, which Jesse just handed to me when I got to the HQ today, and it has to do about the other major Twitter story in the news this week, which is Elon Musk buying a 9% stake in Twitter and gaining a seat on the Twitter board of directors.

This seems to have been causing a lot of debate. I mean, I've talked to some people about this and academic circles and et cetera. People are really all over the place. People are all over the place. About Musk in particular, I think people have a hard time trying to figure out, do I like this guy or hate this guy?

Do I think he's interesting or do I think he's terrible? Cause he, he doesn't make any of those categorizations easy. Uh, so, so it's, it's always unclear. Like Jesse, let me ask you pro Musk, anti Musk. I think I'm pro Musk. Yeah, for sure. He gets a lot of press cause he's, you know, so ridiculously rich.

Yeah. He's going to begin. He's going to be around for a long time. He's not even that old. He's not that old. Yeah. I think he's not that much older than us. He's like 10 years older. Yeah. I mean, he's going to be in the news. He's in the news all the time now, and he's going to be in the news for a long time.

Yeah. I mean, I'm, I'm looking forward to the, the Walter Isaacson biography on Musk. I don't know when that's coming out, but he's such an interesting, weird character. I think it's going to be a fascinating book and Isaacson because of his stature can get access. I mean, I think the thing about Musk is that he has done objectively sort of impressive, uh, error defining things in the world of business.

He just made electric cars and industry. He just made, uh, affordable space travel and industry. Those are crazy things to do and just became the richest man in the world doing that. So it's like a larger than life character. When he interacts with the world, however, he does so in like a really weird way.

He he'll be joking. He'll be, uh, say non sequiturs. He has no particular tribal allegiances. So then, you know, he's not, he's not particularly super conservative. So the conservative is like, I guess we like this guy. I don't know if we like this guy. He's not very interested in, very interested in like woke ism.

So like more of the, the left, the farther left is like, I guess we just like this guy. Like no one's really sure how they feel about him, but anyways. The more proximate question here is how do we feel about him buying a 9% stake in Twitter? And this is the article that Jesse gave me.

It is an article by professor Scott Galloway from NYU. It's Galloway's dissection and opinions on Elon's purchase of Twitter stock. And so I thought I would do here is summarize, uh, the major point of Galloway, give you my reaction to that point, and then talk about a couple of the things that Galloway says that I somewhat disagree on.

So let's start with Galloway's main point, which is one I actually agree on. And let me actually preface this all by saying, if you have to choose between me and him on anything, having to do with Twitter, you should probably trust Scott. He's actually been involved. He's had a stake in Twitter.

He was part of an activist shareholder movement that helped got, uh, to help get Jack Dorsey removed from the Twitter board of directors. So this is someone that actually knows a lot about it. I don't, but I do have a microphone in front of me. So I figured we should talk about it.

So here's Galloway's main point. Twitter is not doing well. This is largely acknowledged. This is why Musk was able to buy so much stock at basically a discount. Galloway acknowledges smart move by Elon. It's an undervalued stock and it's undervalued because Twitter is not doing well. There's different ways to look at it.

Galloway has a bunch of charts. One of them is of ad revenue. Twitter is doing what $4.5 billion in 2021 compared to 115 billion for meta and 209 billion for Google. Everyone sleeps on Google. They don't realize how much it still dominates the advertising market. Uh, you know, meta had to create, it created its own ecosystem in which it can sell ads.

Google is basically still selling ads on the rest of the internet. So people forget how much money they're producing. Galloway also talks about the enterprise value per daily active user. For Twitter, it's 131 compared to almost $300 for meta. So they're not doing very good job of actually getting value out of their active user.

So what should be done about this? Galloway has a sol a solution that he calls hashtag expletive deleted obvious. And that solution is moved to a subscription model. Here's Galloway's elaboration, corporate users and users with large followings would pay for a fraction of the value they receive. I have long advocated for this model by shifting the company's revenue source from advertisers to users.

Subscription aligns economic incentives with user experience rather than user exploitation. As I hinted, I agree with that. I agree with that move. I think it would be an exciting move, not just for Twitter, but because of the precedent it would set for how social media could operate in the future.

I think Galloway is absolutely right when he argues ad supported, ad supported social media platforms have completely misaligned incentives. I wrote about this a while ago for the New Yorker wrote a piece a couple of years ago about indie social media, where I got into this more, but the issue is.

With an ad supported social media platform, all that matters is engagement. How long do we keep you on the platform? The more you're on there, the more ads we can put in front of you, but also the more data we can gather from you to target those ads and neither of those objectives are aligned with what is going to be the most satisfying experience for a user or what's going to be the best experience for a user from even just a, a privacy standpoint or any other standpoint you might want to look at.

When you put all the data you can find about a user into a black box, machine learning algorithm to have it figure out what to show you so that you'll stick around more, what you're doing is getting artificial neural networks to learn. The darkest recesses of the human brain to figure out about the brain stem, to figure out about our, uh, our tribal reactions, our fear reactions, right?

There's very powerful things in the human psyche and those artificial neural networks that are taken in all this data and running their multi-arm bandit reinforcement algorithm to try to figure out what makes you stick around later than, than farther than others. It's just figuring out stuff that darker souls in the past had also deduced.

Let's make you angry. Let's make you sad. Let's get your back up against the wall and feel like there's a fight to be had. And Twitter is really good at that because the main grist for Twitter is individuals, uh, individual interaction, right? It's words from people and you interacting with words from other people.

It's not pictures of things. It's not articles or videos that maybe people are talking about is just direct human interaction, going through a curation algorithm. This is trying to maximize engagement and it creates. Terrible Lord of the flies. Everyone going after everyone, seven seconds after being on Twitter, you feel upset.

That is the outcome. And so I think Galloway is onto something. If the money is from ads, then the money is from users wanting to pay that ad revenue. I mean, not from ads, I'm sorry. Subscriptions. The income comes from users wanting to pay those subscription fees. Why do users want to pay subscriptions to things?

Not because, uh, I use it all the time, but because they value what they get when they do use it. It's a completely different model. And now you want the experience to be informative, uplifting, interesting, entertaining. It's a completely different incentive. Now, I don't know if I share Galloway's, uh, optimism that this would create a monster company.

I think once you start charging, you might have a severe contraction of user base, right? But I think it would be a very profitable company and a very useful company. And I hope that actually happens. Now there's different ways to go forward here. It could be the, the people who post have to pay, but anyone can read.

I think that's probably fine. Um, I think he didn't mention this, but I think getting rid of pseudo anonymity would be good. It's a real people talking to other real people. You kind of have to stand by, uh, you have to stand by what you're doing. You know, I think that would be good.

There's a lot of other details to work out, but I really do think it probably would become a better experience if it was subscription based and it would teach the world. You can run a really profitable, good online user generated content company without having to have ads be what's at the core of it.

Now, if it was very profitable and grew to be really big, that'd be great because then more people would do it. I don't know if it would be, but I liked the idea. So I mentioned two things I didn't quite agree with Galloway about. Again, defer to him, but let's just throw it out there.

Number one, his enthusiasm for Twitter, he calls it, uh, can't find a wording here, but basically he calls it like one of the most important companies like in history. What's the way he talked about this? I can't find his exact wording, but it's like, this is obviously like one of the most important companies in the world that it's, that its impact on the world is critical and it's, it's so it's very important what happens to it.

So he says that somewhere. I don't have the exact, the exact terminology. All right. I don't completely agree with that. I think there's ironically an, an, an echo chamber, uh, around Twitter for Twitter users. It disproportionately matters for a very small segment of the population that has a lot of power for reporters and for politicians, um, for people who are involved in, in criticism, content producers, writers, like there's a pretty small group that has a lot of influence on culture to which Twitter is at the center of their universe.

And I think that is easy to generalize and be like, this thing is at the center of most people's universes. Most people don't care about it. It's impact on most people is second order. And maybe this is what Galloway had in mind for most people. Uh, they don't use Twitter.

They don't care about Twitter, or if they use it, they use it. Rarely like I would, which is, I need to look up what this nationals beat reporter is saying about what just happened in the baseball game. Right. And, but they are getting a second order impact because as we talked about on Monday, the news they're encountering, the bills being passed in Congress, like a lot of that is being influenced by Twitter.

So they do have a second order impact, but I think 99% of the people in our country, if you turn Twitter off tomorrow, wouldn't notice. They just don't use it that much. So I don't think it's as central, uh, as the people who are in that world think it's central to their world, but they don't realize that that's, that's a more constrained world.

The second thing is Galloway's evaluation of Elon. Let's get to the question of, is it good or bad for Twitter? And what Galloway says is like, yeah, it's kind of mixed. Like the, the, the fact that, you know, you bring in this, this larger than life character, who's obviously a genius and you put them on the board, it's going to shake things up.

It was smart for Twitter to put them on the board. It's better to have activists on your board than to be attacking you from the outside. He said that there's Twitter needs a kick and that might be a kick, but he's really worried about Elon's personality traits. He said, Elon is very volatile.

He will tweet off all sorts of random things. He might take Twitter in arbitrary directions. Uh, Galloway was upset that Elon was just doing like Twitter polls about major new features, like that he might just add an edit button because people said that was a good idea and a Galloway's right about that.

Elon is a volatile person. And so you worry about what that's going to do over time to Twitter and its share value. The place where I probably disagree with Galloway though, and it's a disagreement I have with a lot of people is it seems like a lot of people, especially around here, their take on Musk and Twitter is that, uh, Musk is upset about moderation and what he wants is a unrestricted, basically unrestricted speech on Twitter.

And so typically when people say, here's the problem with people like Musk is they, they want complete free speech. And then like Galloway does, they go on and be like, the first amendment doesn't guarantee free speech to everyone. It guarantees freedom from government intervention, and it's fine for companies to do free speech.

And if you really want to do unfettered free speech where you're just stopping illegal stuff, you get 8chan is terrible. And I think most people would agree with that. I don't think though that that's what Galloway or people like him who are critiquing Twitter. I don't think that's what they want.

I think that's a bit of a straw man. I mean, I think a lot of people, uh, you know, again, especially, and I think here it gets a little bit partisan. Um, they want that to be the thing that someone like Elon is, is advocating for, because it's easy to dismiss.

I don't know Elon. I don't really know his stance on Twitter that well. I know some people who know Elon though, who are in his orbit. So I can kind of guess at where he stands. I would assume what Elon would like his complaint is basically that, no, of course there should be moderation.

If, if Twitter was like 8chan, no one's going to want to use it, at least not at the scale it has, but that this moderation should be more centrist. And I think that's a harder thing to argue about. If let's say you're, you're, uh, you're coming at this more from a position, uh, to the left, that's a harder thing to argue about, which there should be moderation, but the moderation should align more with like centrist positions.

What let's say like the majority of the country might be comfortable with. And, and I think Elon's argument is too often when it's like politically related moderation decisions will align with like a relatively far to the left perspectives that are shared by maybe six or 7% of the country.

And that feels great for those people who share those views, but for everyone else, it can feel arbitrary or weird and, or that they're left out. And so like, we should come at it from a, like a centrist position. If it's something that would upset your aunt, then you're like, okay, maybe that shouldn't be there.

Like maybe that should be the standard and the standard shouldn't be, is this something that is going to upset a, um, like a radical critical theorist? You know, like that's, that's a bigger stance. So I don't know. I, that's another thing I think I disagree with Galloway is like, I don't think Musk wants 8chan on Twitter.

I think he just wants the aunt standard and not the, uh, critical theorist standard, I suppose. So that's where I think, what do you, what do you think, Jesse? Well, what about the part of Elon going out the wrong SEC storm form and what are your views on that?

Yeah. I mean, I think that falls under the he's volatile critique, which is fair. I think there's probably a little bit more planning in it than that. I think it's similar to like the Brady retirement thing. And then him going back, like they have this stuff planned out. So, so I'm not up, I'm not up on the latest breaking.

So is the thought that this is so he can then step back out? Well, he announced it on April 4th or whatever that he broke. Was this, and then the stock price immediately went up, but he had filled out the wrong form. He was technically supposed to announce that like two weeks prior.

In which case, when he was buying all that stock, the price would have gone up. So essentially he saved himself like 150 million, but Galloway was saying that that's fraud. Oh, well that probably, that might be. Yeah. I mean, I think that falls under the volatility. He's not great with corporate governance.

He sort of flies by the seat of his pants. I mean, it kind of works well in creating new industries, but then also causes trouble. Yeah. I think it's, I don't know. I don't, I don't think that he just filled out the wrong form. I feel like he probably, I'm reading this now.

Yeah. It's down the end, like where I see it. Yeah. Yeah. Well, that's, well, that's a whole other issue, but yeah, again, you're bringing Musk into your world. All this stuff follows. Well, a lot of this, a lot of this stuff and like other publications is that's what the headline is about, you know, it's the form thing.

Yeah. It's the form and saving money and buying Twitter. Yeah. To me, that's like the least interesting part of the story. I mean, it's interesting, but I also think it's, that's more like the reason that's the headlines in a lot of places. It's like, we're working backwards from, we don't like this guy.

So, uh, let's emphasize the, like, look, he might've done fraud here, which I, which I think is, is big, but there's also like these huge discussions of like, what should Twitter be? And is he right? Is he wrong? And yeah, there, when I talk to people, I get a lot of like, uh, there people around here are really worried that he's sort of wants to get rid of all moderation, which I, again, I think is crazy.

Like no one would want to use a platform that it's like, eh, people can say whatever, as long as it's not defamation or, or like putting someone in imminent harm, like those platforms exist and they're weird and, and melt people's eyes and they're terrible and no one likes to be there.

Um, and so I can imagine that, uh, assuming he does get to keep his stock. I can't imagine that's what Elon Musk wants. Yeah. Again, I, I really think a lot of these like intellectual dark web types who all seem to like know him are, that's really what they would want is the, what did upset my aunt test.

Yeah. Which would moderate a lot of stuff, but wouldn't completely align with either side of the political spectrums, more extreme stances. Like I think that stance could very well, you know, would moderate things like about vaccine misinformation still in a way that people on the right would be really upset about.

Um, but it would also like not kick people off for things that people on the left think they should be kicked off for. But your aunt would be like, I don't understand what the problem is. Like there's probably a middle ground there. And there's a whole theory in media criticism about, uh, when media outlets like newspapers used to make most of their money off advertisements, the goal is to have the largest possible circulation.

And so the, the second order effect of that is that you get coverage that is aimed at the broadest possible audience, because you need the broadest possible audience to like pick your paper up from the newsstand and read it. So you can get those ad reads. And then when things shifted behind paywalls, it changed all the incentives.

And now it's more about how do we keep the people who are paying us money each month for this excited about this. And the incentives change more towards like, well, let's figure out what. They're into who they support, who they dislike. And like, let's really attack the people they dislike and really support the things they do, like let's validate their, their particular whatever.

And so that's an interesting theory that then you shift towards like a, the Overton window significantly realigns when you shift your actual economic model. And so that's a really interesting theory. And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it.

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And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it.

And I think that's a really interesting way to think about it. And I think that's a really interesting way to think about it.