Have you ever wanted to do the right thing… but couldn’t?
Maybe you spotted an inefficiency at your job…
You had an idea to make things better. But your boss wouldn’t let you make the needed change. Or perhaps your boss wouldn’t even listen to you in the first place.
We’ve all likely experienced this struggle at some point. And the thing is, it isn’t limited to regular folks like us. It goes all the way to the highest levels of corporate America.
In fact, corporate America has a big problem…
Public companies struggle to “do the right thing” if it doesn’t make sense in the short term.
I’m not talking about environmental or moral choices, either. It’s hard to make any big changes at public companies – even if those changes are what’s best in the long run.
Now, we’ve had front-row seats to the media circus around Elon Musk’s “do the right thing” crusade over the past several weeks…
And as I’ll detail today, history shows that he could potentially reap big rewards from this crusade. I wouldn’t bet against its eventual success…
First, let’s start with a similar situation from the past…
In 2013, Michael Dell’s computer company was struggling. Its revenue and profits were tumbling. And even worse, a turnaround didn’t seem likely.
Dell knew the company needed to make changes. But as a public company, shareholders scrutinized every potential change. So Dell made a key move to help him “do the right thing”…
He took the company private.
Dell transformed the business over the next five years. He repositioned the company without pressure from investors. It grew to almost three times its buyout value.
Dell knew what was right for the business he founded. But he needed high-level autonomy to do the right thing. Taking the company private allowed him to do just that.
That brings us to Musk’s very public attempt to do the right thing. I’m talking about his quest to take over social media platform Twitter (TWTR), of course.
At this point, you’re likely aware of Musk’s plan to buy Twitter and take it private. And if you’re keeping up with the news, you know he’s nearing the finish line…
Two weeks ago, Twitter’s board of directors accepted Musk’s $44 billion offer. Now, he has to navigate the process of delisting the shares and removing Twitter from the public market.
Folks, this whole thing seemed like a joke when it started…
Musk had spent time publicly harassing some kid on Twitter. Apparently, he didn’t like the kid publishing constant updates about his private jet’s location.
Then, Musk went on a “free speech” crusade.
It’s a great media circus. But if you only focus on the circus, you’ll miss the point of what’s happening…
Musk believes he can do the right thing for Twitter. And whatever that is, he can’t accomplish it while Twitter is a public company. So like Dell, he’s taking Twitter private…
Musk has a plan. It must be pretty compelling, too. After all, Oracle co-founder Larry Ellison recently committed $1 billion to the effort. And the list of investors is growing by the day.
By taking the company private, Musk will gain the freedom to do what he believes is the right thing.
No one really knows for sure what Musk will do after Twitter goes private. He isn’t a predictable man, after all.
But I wouldn’t be surprised if he makes transformative changes over the next few years. After that, he could try to cash in by taking the company public again.
If that’s how this “do the right thing” show plays out, Musk could do even better than Dell. Remember, he nearly tripled the value of his computer company. Only time will tell.
In the meantime, sit back and enjoy your front-row seat to the show.
Good investing,
Karina Kovalcik
