Peter Thiel calls Warren Buffett a 'sociopathic grandpa from Omaha'; What Elon Musk's dance with Twitter really means; Enrique Abeyta and Scott Galloway's comments; The Fortunes of MacKenzie Scott

1) I almost feel bad for billionaire venture capitalist Peter Thiel because terrible things are about to happen to him. How do I know? Because he ran his mouth last week, bashing Berkshire Hathaway (BRK-B) CEO Warren Buffett: Peter Thiel calls Warren Buffett a 'sociopathic grandpa from Omaha' and bitcoin's 'enemy No. 1'. Excerpt:

At a bitcoin conference Thursday, billionaire venture capitalist Peter Thiel said Warren Buffett tops an "enemies list" of people who are trying to stop the cryptocurrency.

"Enemy No. 1," Thiel said to a booing Miami crowd, is "the sociopathic grandpa from Omaha." Buffett's Berkshire Hathaway is based in Omaha, Nebraska.

Thiel, who by 2018 had reportedly amassed hundreds of millions of dollars worth of bitcoin through venture firm Founders Fund, also called out JPMorgan (JPM) CEO Jamie Dimon and BlackRock (BLK) CEO Larry Fink. Thiel presented large graphics with images of the two financial executives and their bearish comments about bitcoin.
        
The images all contained the word "gerontocracy." About Dimon, Thiel said his views are part of "the New York City banker bias."

Thiel held up a headshot of Buffett with the words "rat poison" on it, referring to the time the Berkshire CEO dismissed bitcoin using that phrase. Another quote from Buffett read, "I don't own any, and I never will." Earlier this year, Berkshire invested $1 billion in Brazil's Nubank, an online bank that's popular among crypto investors.

The Miami tirade is Thiel's latest and boldest public attack on the people he sees as standing in the way of bitcoin's progress.

"This is what we have to fight for bitcoin to go 10x or 100x from here," Thiel said.

Thiel should have learned from Chamath Palihapitiya's hard experience. In my February 24 e-mail last year, I mocked Palihapitiya's hubris:

My observation over the past two decades is that anytime a "new economy" guru compares himself to – while also trash-talking – the Oracle of Omaha, the market soon punishes his hubris! The King of SPACs Wants You to Know He's the Next Warren Buffett.

Sure enough, every company Palihapitiya's associated with has completely imploded since then, as I've covered in various e-mails:

• SPAC Wipeout Is Punishing Followers of Chamath Palihapitiya (4/21/21)
• Was Chamath predictive of SPAC decline? (8/27/21)

2) Speaking of billionaires running their mouths – or, in this case, their fingers – the never-ending, highly entertaining circus that is Tesla (TSLA) CEO Elon Musk took another wild turn with the announcement that he would not, in fact, join Twitter's (TWTR) board. Here's an article about it, which quotes my colleague Enrique: What Elon Musk's dance with Twitter really means. Excerpt:

But as long as his attention is sustained, it's unlikely that Musk would make such a big play for Twitter if he didn't also have strategic business interests, said Enrique Abeyta, a former hedge fund manager and editor of Empire Financial Research. It's nearly impossible to start a new social media platform, so Twitter offers the digital equivalent of prime beachfront real estate that just needs some tinkering and fresh ideas, which could range from taking it private to shifting to a subscription-based model with fewer speech restrictions, Abeyta said.

"He clearly has shown an interest in combining his philosophical beliefs and interests with his economic ones," he said. "I think it would be very dangerous to discount him."

COULD MUSK BE TWITTER'S CEO?

Probably not. Neither Musk — who already serves as CEO of Tesla and SpaceX and has dabbled in a number of other technology ventures — nor most investors are likely to think that's a good idea.

"He'd rather be the chairman, the spirit animal, the man who saved Twitter and also made $10 billion on it," Abeyta said. "He's the richest person in the world. Being CEO sucks."

And here's the take of the Wall Street Journal's "Heard on the Street," highlighting Twitter's opportunity to grow its new paid-subscription service: Social Media May Have to Embrace the Musk. Excerpt:

Some of his other, now-deleted weekend tweets were more constructive and point to a possible future path that would reduce the company's dependence on advertising. In one, he said that Twitter Blue, the platform's relatively new paid-subscription service, should remove all ads and offer other sought-after features like an authentication checkmark...

Nonetheless, look for Twitter to lean into subscription: The company, which last year generated about $5 billion in ad revenue, could conceivably generate half of that sum by charging less than 5% of its "monetizable daily active users" less than $20 a month for access to exclusive features or fewer ads. If that seems far-fetched, consider that Mr. Musk just spent billions of dollars in an attempt to make Twitter work his way.

This is something Scott Galloway also highlighted in his recent blog post, which I covered in yesterday's e-mail. Galloway wrote:

Twitter should move to a subscription model (#fu*kingobvious). 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. This leads to a myriad of benefits, which is why recurring-revenue businesses register greater growth and retention and bigger valuations.

Nothing better illustrates the value of Twitter to its users than Tesla. The carmaker spends almost nothing on advertising (GM (GM) spends $2-plus billion per year), yet it has built the best brand in the industry. This is a function of performance (outstanding products, exceeding targets) multiplied by reach. The reach is a function of Elon's 80.9 million PR agents (i.e., his Twitter followers). The social network could charge Mr. Musk $10 million a month and – after making a series of ad hominem attacks on the board/company/CEO – he would pay it. Nearly every Fortune 10,000 company and A/B/C list celebrity who uses the platform as a real-time communications tool would pay fees scaled by follower count.

In addition, ad-supported media is what drives the engagement cycle, the bots, and the misinformation plaguing Twitter. Cleaning that up would be good for business and for the commonwealth. False stories on Twitter are 70% more likely to be retweeted than true ones – and spread six times faster.

Enrique and I continue to believe that Twitter's stock is now in play and is going up from here...

3) A fascinating profile of one of the most influential people in the world, who's given away a staggering $12 billion in only three years! The Fortunes of MacKenzie Scott. Excerpt:

A privileged child, she left a Connecticut boarding school after her family declared bankruptcy. In college, a loan from a friend helped keep her from dropping out. That allowed her to carry on studying creative writing under the acclaimed novelist Toni Morrison, who would become her mentor and help her achieve her own life's goal of becoming a novelist as well.

And as a recent college graduate working in recruitment at a financial firm, she married the man in the office next to hers, Jeff Bezos, and moved to Seattle to help him pursue his dream of an online retail empire – one that would make each of them among the wealthiest people in the world even after their marriage dissolved.

A few months after their divorce was finalized in 2019, a new shell company was quietly set up in Delaware called Lost Horse. Soon, representatives from Lost Horse were calling nonprofits around the country about multimillion-dollar donations from an anonymous giver.

The secret benefactor turned out, of course, to be Ms. Scott. Her sudden spate of giving has now reached 1,257 groups, from little-known charities to mainstream organizations like Habitat for Humanity, which last month received $436 million, her largest known gift.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.