How to lose control of a global social media conpany
Dear Mr Musk,
Let us imagine, purely hypothetically, that:
One of the world's biggest social media companies is infiltrated by Russian bots; grossly overstaffed by greedy incompetent lazy fools, and drenching money.
Hence their managers, all potentially on the hook for unpleasant federal crimes like fraudulent trading, look for a fool to invest in it and thereby shift responsibility to their new fool, while cashing in on their shaireholdongs before the bubble bursts .
That fool is you.
Rather than hire decent lawyers, you hire crap ones. The result of this is that you pay a substantial deposit before you do your full due diligence; but the terms of the contract are that even if you find huge problems on undertaking your due diligence, you can't get out of the deal because the legal agreement requires you to prove actual detriment to the company's market value as a result of what you have discovered. Absent finding dead bodies in the company closet, this is virtually an impossible threshold to pass.
Hence you buy the company under the duress of a court's razor - in Delaware, a jurisdiction whose courts you know nothing about. (Delaware is a notorious jurisdiction for spurious shell companies - it's how it makes its money, and unsurprisingly the courts of Delaware are similarly aligned.)
You end up being majority shareholder and sole director, having fired the entire management who were up to corrupt / negligent things - exactly what they all wanted, to escape their legal liabilities.
To reinforce their immunity from legal liabilities, they all give the typical press release for crooked directors - 'maybe we overstretched ourselves - we didn't realise what we were doing - we are so sorry to everybody'.
You imagine you have fired the lot of these bastards. But in fact you have not. Those you didn't spot start taking advantage of your weak spots - such as your desire for open democracy on the social platform.
They start off with something harmless and that you won't recognise - e.g. a public vote on whether Donald Trump should be allowed back onto the platform.
What a lot of rubbish. He doesn't even want to be back on the platform. He has set up his own rival platform called 'Truth Social'. Silly as his product might be, what interest does he have in undermining his own product by rejoining yours?
You hardly help yourself when you announce that you would support his Republican opponent in the 2024 US General Elections.
Then these same advisors encourage you to hold a public poll as to whether you should remain as CEO. Swallowed by your own ego, you fall for it.
Do not forget that large numbers of the users of your social media platform are Russian bots. Strangely enough, they get to vote too because you have not yet worked out how to eliminate them.
Hence you lose the poll and you are now staring at your own resignation from the head of the company in which you are the majority shareholder.
You look like a bit of an idiot, to put things mildly.
Now if you continue along this course, the next CEO is going to be out to shaft you in all sorts of imaginative ways.
Firstly he or she will make sure that all those disloyal staff you didn't fire (actually they were all disloyal and you should have fired 100pc of them, not just 50pc) do what he or she wants, not what you want; on pain of threatening to devalue the company you bought for so many billions to zero.
Secondly he or she will pursue a course, in the event that Twitter does indeed go bankrupt (as you have yourself foreseen), of ensuring that the legal paperwork lines up to blame you, not the prior management who sold this crock of shit to you.
So far, you have acted foolishly.
Thankfully there is room for recovery; and we give you this advice because, although a fool so far in this transaction, we believe you are a good man who can learn from his mistakes and thereby cease being so foolish. You might even turn this round - if you follow our advice.
The first thing you do is to scrap the poll about you. Simply announce that you won't be taking any notice of it. You will be able to think of some silly reason. You are very clever.
Secondly, stop firing people and start hiring them. The people who do the firing will be your new people you have hired. They will be loyal to you, because you hired them; and they will be able to spot all the micro-political details you did not and could not have noticed when buying a very large company staffed with all sorts of strange people with their own motives and incentives.
Stay away from politics. You have no business giving your opinions on Donald Trump and you should not so. Whatever else Donald Trump may be, he is a very capable and dangerous politician and you should not be pissing on his shoes. Nor for that matter should you be wiping them, save to the extent that prudent businesses in the United States often make the same annual donations to both political parties (not to individual politicians). And that is the extent of your proper involvement in politics.
Being rich is not the same as being politically astute. You need politically astute advisors, as this is manifestly an area in which you are currently lacking.
You will have some grasp, we are sure, of basic economics. The theory of the firm (that is, collective ownership of an enterprise such as distributed ownership of shares, etcetera) is that the owners should choose the management, not the customers or the public at large. You have no idea who really voted for or against you; but it's not important. This is not a socially owned company in the Soviet style. It is a private business owned mostly by you. If you don't do a good job, the markets will get rid of you. Opening yourself to deselection by Russian bots is just silly. The purpose of your company is to maximise your own shareholder value, not to maximise the interests of the Russian government or something else ridiculous.
We also note a terrible flaw in the electoral process. Once a person had voted, the results so far became transparent. So if I'm a Russian bot wanting to know how it's going, I vote (one way or the other) and then I get a readout of how many more Russian bots I need to activate to get the result I want within the sort of margin that makes the whole thing look vaguely legitimate. In other words, you made yourself a victim of what Russians call 'managed democracy'.
One thing you might do to get rid of the bots is to require KYC on new clients. You can't do it all straight away or your current clients would resign in large proportions. But in my business, law, we want to know who our clients are, so we ask them for a passport copy and a document showing address. In principle, any Twitter user who doesn't want to provide Twitter with this information is a problem. That is typically because (a) they want to use Twitter to break the law; (b) they want to use it to unjustifiably defame people; (c) they are bots so they don't have such documents; etcetera. Note that a mobile phone number, that can be purchased as a SIM card without ID documents in street-corner kiosks in 95 per cent of the countries of the world, is not KYC! It is pretend KYC for social media companies who in fact are perfectly happy with bot infestations because it's all traffic against which they can trade advertising revenues or sell personal details. We might mention WhatsApp, Viber, Telegram ...
It is an integral part of KYC that you unconditionally promise not to give the KYC documents or the information in them to any third party whatsoever save pursuant to court order (e.g. if the FBI is after the user of a Twitter account); to reinforce this you need to store all KYC documents away from everything else in a separate super-protected 'special room' (we are stretching the physical-electronic analogy here but you get the idea). That is what lawyers do as a matter of routine and clients are in consequence generally happy to provide KYC documents. At least, the sorts of client you want are.
KYC is what you ought to be moving towards. At the same time, an ever-encroaching sense of exclusivity will assist your brand upwards from just being a pile of mixed garbage, which is what it is now.
Remember: you are never the cleverest man in the room. Not you, not me, not Donald Trump, not the Russian bot specialists or anyone else. Politics is a constant battle and compromise between competing forces. The wise person, who survives political skirmishes, never forgets this. They change their narrative according to the convenience of the winds.
The PALADINS. We are here to serve.