Oct 29, 2022 - Economy

Musk and Zuck show just how expensive power can be

Illustration broken up hundred dollar bill

Illustration: Sarah Grillo/Axios

Elon Musk and Mark Zuckerberg have both vaporized tens of billions of dollars in personal wealth in their idiosyncratic attempts to control the systems underpinning the quotidian lives led by the rest of us.

Why it matters: These actions — Zuckerberg pivoting to the metaverse, Musk buying Twitter — are unprecedented in their expense. They reveal a world run not by faceless corporations, but by unpredictable and capricious individuals with almost no real financial constraints.

Driving the news: On Friday, Elon Musk bought Twitter for $44 billion, or $54.20 per share.

  • It's impossible to say exactly how much he's overpaying by, but my favorite rule of thumb is that the nominal Twitter share price, absent the takeover bid, would be very close to the nominal Snap share price, which is now less than $10. (The two stocks moved in lockstep before Musk revealed his interest in Twitter.)
  • By that math, Musk and his silent-partner co-investors are paying a premium of about $35 billion so that the memelord can own his preferred social network.

Between the lines: Musk has said, as recently as Thursday, that he didn't buy Twitter to make more money.

  • There are many theories for what plans Musk may have for Twitter; the only thing that's sure is that he is bound by no fiduciary constraints.

Reality check: Facebook shareholders could be forgiven for thinking the same thing about Mark Zuckerberg, who — thanks to his company's dual-class voting structure — retains outright control despite owning only a minority stake.

  • Flashback: In October 2021, Zuckerberg announced a rebrand to Meta, and a profound shift "from being Facebook first as a company to being metaverse first."
  • In the year since then, quarterly revenues have fallen by 4%, but thanks to increased spending on the metaverse, net income is down 52%. The company's shares have fallen by 70%.

By the numbers: The cost to Zuckerberg personally has come to some $104 billion.

  • The other half of the ad-sales duopoly, Alphabet, is down only about half as much as Facebook over the same period.

The bottom line: Twitter and Meta control four of the most powerful and important public utilities in the world. Musk has complete control over Twitter; Zuckerberg has similar control over Facebook, Instagram, and WhatsApp.

  • Both have proved themselves willing to sacrifice almost unimaginable sums of money in the pursuit of even greater influence over how we all live our day-to-day lives.

💭 Felix's thought bubble: I often say that it's easier to turn power into money than it is to turn money into power. Musk and Zuckerberg have demonstrated just how expensive power can be — and how much certain men are willing to pay for it, all the same.

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