Sep 12, 2023 - Economy

Book reveals Elon Musk's secret deal with Jack Dorsey

Photo Illustration of Elon Musk and Jack Dorsey with the X logo between them

Photo Illustration: Natalie Peeples/Axios. Photo: Chesnot, Bloomberg/Getty Images

Jack Dorsey had second thoughts about supporting Elon Musk's takeover of Twitter, so Musk made Dorsey a secret offer he couldn't refuse, according to the new Musk biography by Walter Isaacson.

Why it matters: The revelation helps fill in some blanks about the financial relationship between Dorsey and Musk, who were longtime acquaintances and mutual admirers.

  • In fact, the former Twitter CEO had suggested to his successor, Parag Agrawal, that Musk be added to the social network's board of directors — well before the buyout talks began.
  • Dorsey also was part of a Twitter board that in April 2022 accepted Musk's $54.20 per share takeover offer, valuing the company at $44 billion, but no longer on that board when it sued Musk to enforce the agreement.
  • Most importantly, Dorsey agreed to roll his 2.4% equity stake into the buyout, which helped Musk lower his own capital contribution by around $1 billion.

As the takeover got closer, however, Isaacson reports that Dorsey began getting cold feet.

  • Some of his concerns were borne of Musk's impulsiveness, which threatened to destroy what Dorsey had spent so many years building.
  • "Musk had called [Dorsey] almost daily over the past week, reassuring Dorsey that he truly loved Twitter and wouldn't harm it."
  • Dorsey was also worried about his own pocketbook and future liquidity needs, despite still being that largest outside shareholder in Block (fka Square).

Musk's solution was a promise: Were Dorsey to ever need money, Musk would buy back his Twitter shares at the original takeover price of $54.20 per share. In other words, $44 billion became Dorsey's valuation floor.

  • Neither Dorsey nor an X spokesperson returned a request for comment on if Dorsey still holds all of his X shares.

The bottom line: Dorsey is leading a nascent social network called BlueSky, but hasn't issued many public statements on Musk's stewardship of his former company.

  • One exception came in July, when Dorsey tweeted: "Running Twitter is hard. I don't wish that stress upon anyone. I trust that the team is doing their best under the constraints they have, which are immense. It's easy to critique the decisions from afar…which I'm guilty of…but I know the goal is to see Twitter thrive. It will."
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