Start Up No.1786: what Musk needs to do with Twitter, North Korea hackers launder crypto, Russia bans, and more

He said he would, and he has – Elon Musk is buying Twitter for $44bn. Now the difficult work starts. CC-licensed photo by Steve Jurvetson on Flickr.

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A selection of 11 links for you. Not limited to 280 characters. I’m @charlesarthur on Twitter. Observations and links welcome.

Elon Musk reaches deal to buy Twitter • The Washington Post

Douglas MacMillan, Faiz Siddiqui, Rachel Lerman and Taylor Telford :


“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in the release [announcing the acquisition]. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”

Musk‘s Twitter deal expands his portfolio, which already includes rocket building company SpaceX, which has aspirations of landing on Mars, and the electric carmaker Tesla, that has pushed electric vehicles into the mainstream.

“He’s more powerful than countries now,” said Ross Gerber, a Tesla investor close with Musk who said he had bought Twitter shares last week in hopes the deal went through. “He has the most important technology asset in America … probably one of the most strategic military assets in the world … and now he has one of the most important communications tools in the world.”


Just let those words bounce around your mind for a little bit: more powerful than countries. (“How many divisions does Twitter have?” you ask. Well, it tells your people what’s happening, so you figure it out.)
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Elon Musk’s backing means Twitter needs ads to stay aloft • WSJ

Dan Gallagher:


Brian Wieser, global president of business intelligence at ad-buying giant GroupM, says most advertisers who work with Twitter “strongly prefer content standards” on the service.

That may not matter a great deal to Mr. Musk, who said of his own Twitter campaign that it “is not a way to make money” in an onstage interview at the Ted conference, on the same day of the filing describing his financial support. But more than half of that backing comes in the form of debt, from Morgan Stanley and “certain other financial institutions,” according to the filing. That means Mr. Musk will need to preserve Twitter’s cash flow—and ideally grow it—to service the debt. Some of that debt is in the form of margin loans backed by Mr. Musk’s Tesla shares.

Doing that without advertising would be difficult. Ads account for nearly 90% of Twitter’s revenue now, while data licensing provides most of the rest. The company launched Twitter Blue —its first consumer subscription offering—last year, rolling it out to the U.S. market in November. Chief Executive Parag Agrawal said on Twitter’s last earnings call in February that the company has seen a “strong response” from “our most heavy users” for the service. But he added that Blue is “not critical” to reaching $7.5bn of revenue in 2023, a target set at an analyst meeting in early 2021.

Mr. Musk will likely have his own goals in mind, and a privately held Twitter would be accountable only to him for reaching them. But since Mr. Musk has elected not to pay for Twitter entirely out of his own pocket, he’ll have to be accountable to others as well.


There’s such myopia around this. Twitter’s ad models is terrible, and is part of why it has been so anaemic for years. There are so many possible business models: direct subscriptions, paywalled accounts (you already can’t retweet a locked account, so some of the infrastructure is there), much more targeted advertising, licensing tweets, licensing the “social graph” of who follows who and what topics, and any and all mixtures of those.

Musk has proven, at SpaceX and Tesla, that he can attract and manage really good engineers who do remarkable work; Twitter’s team need to prove their mettle now. The content moderation can remain as it is for now; that’s not the hinge feature of the network. Nor, dammit, is an edit button.
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The is no such thing as a good billionaire, and Elon Musk is no exception • Metro News

Joshua Potash is an adjunct lecturer at City University of New York:


On October 31 last year, Elon Musk sent out a tweet which claimed that if the United Nations put forward a proposal to solve world hunger with $6bn, he would contribute the money.

Two weeks later, the head of the U.N.’s World Food Program tweeted out a $6.6bn plan to ‘avert famine in 2022,’ tagging Mr. Musk and generating major headlines. But, as of February, 2022, the WFP had not received a cent from the world’s richest man. 

While Mr Musk may not have been convinced by the UN plan, it came as little surprise to me that a billionaire chose not to donate a huge chunk of his wealth to solve world hunger.

People like Elon Musk don’t get rich by giving money away, but in this particular case, however, the issue goes far beyond one flippant tweet. It looks like Musk’s attitude towards the World Food Program is part of a larger pattern. 

When Covid hit the United States, in March 2020 Musk tweeted that, ‘SpaceX is working on ventilators too.’ Instead, Musk made a donation to a number of hospitals of ventilation equipment which turned out to be breathing devices more commonly used for treating sleep apnea than those found in intensive care.

Similarly, in 2018 Musk pledged that he would ‘fund fixing the water in any house in Flint, Michigan that has water contamination above FDA levels.’

After the pledge, his Foundation donated $480,000 to fund water filtration systems in a dozen schools in the city, in a year when his net worth was already $19.9bn.

In 2018, the year of his bold pledge to the citizens of Flint, an investigation found Musk had paid no federal income tax.

It would be wonderful if the richest people on Earth used their wealth for good, but they don’t. The collected wealth of billionaires is not being used to end hunger or homelessness.


Now: you could argue that creating reusable rockets (SpaceX), really usable electric cars (Tesla), just-in-time online delivery (Amazon) and, er, reusable rockets (Blue Origin) takes humanity further into the future. But as Potash points out, they could actually do both. Donating billions need not distract Musk from running Tesla or SpaceX for a moment.
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Elon’s giant package • Margins by Ranjan Roy and Can Duruk

Ranjan Roy:


In 2019, when Musk was promising robotaxis in a year, it really captured people’s imaginations. Nowadays, it just doesn’t feel like anyone other than Cathie Wood & team are pretending to take those magical, futuristic business lines seriously (yes, ARK’s new model says robotaxis will be 62% of total Tesla revenue by 2026).

Even that whole dancing robot thing showed the difficulty of capturing our collective imagination. For those unfamiliar, last November Tesla announced a humanoid robot thing. The presentation ended with a guy in a robot suit dancing (yes, this is real).

On the recent earnings call, Musk gave a half-hearted statement about how this theoretical line of humanoid robots could be worth more than electric vehicles for Tesla. The whole thing has honestly felt a bit routine. I’ve watched this stuff for years, and maybe it’s overall Elon-promise fatigue, but a lot of these moonshot proclamations have started to feel a bit throwaway – from Elon, from the fanboys, from the press, from the entire infrastructure that once was manic over them.

However, the Twitter thing really lit a fire. Maybe Musk was really going to join the Board and be a cooperative part-owner, but the moment he saw the energy the potential purchase generated, he went all in. Musk buying Twitter has generated the conversational energy that rockets and robots once did.


And, as he goes on to point out, Musk and his brother and the ARK Investment company have all been selling Tesla stock (ARK even while it suggested a higher price target for the stock). So this is about the “next thing”, and putting himself in a place where the Securities and Exchange Commission can’t touch him.

Musk isn’t a fool (don’t let the tweets fool you), and Roy tries to see the bigger picture. We all see the rain-dirty valley; what shape is the Brigadoon?
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Hot/Crazy scale test • Individual Differences Research


The Hot/Crazy Scale is a phenomenon popularized by the sitcom How I Met Your Mother and is well-known in internet pop culture. Some claim that the theory is pseudoscientific, while others maintain that it’s backed by proper studies. The theory holds that it’s possible to decipher how you should regard a potential partner based on their levels of “hot” and “crazy.”

This version of the Hot/Crazy Scale Test presents an updated and gender-neutral approach to the theory.


Wonder if we could get Twitter’s new owner to answer this. It’s only 20 questions (and not about whether you’re animal/vegetable/mineral), so quite quick. Of course the problem is whether you’re being truthful about yourself. At least it’ll distract you from doing Wordle for a few minutes. Oh, you already have?
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North Korea hackers still accessing money they stole from Axie Infinity • The Washington Post

Tory Newmyer and Jeremy B. Merrill:


The cybercriminals’ continued access to the money, more than $600m stolen from the Axie Infinity video game, underscores the limits of law enforcement’s ability to stop the flow of illicit cryptocurrency across the globe. The hackers are still moving their loot, most recently about $4.5m worth of the Ethereum currency on Friday, according to data from cryptocurrency tracking site Etherscan — eight days after the Treasury Department attempted to freeze those assets by sanctioning the digital wallet the group used in its attack.

The gang, which the Treasury Department identified as the Lazarus Group, also known for the 2014 hacking of Sony Pictures, so far has laundered nearly $100m — about 17% — of the stolen crypto, according to blockchain analytics firm Elliptic. They moved their haul beyond the immediate reach of US authorities by converting it into the cryptocurrency Ethereum, which unlike the cryptocurrency they stole cannot be hobbled remotely. Since then, the gang has worked to obscure the crypto’s origins primarily by sending instalments of it through a program called Tornado Cash, a service known as a mixer that pools digital assets to hide their owners.

Authorities and major crypto industry players are scrambling to keep up. Treasury sanctioned three more addresses associated with the gang on Friday, as Binance, a large international crypto exchange, announced it had frozen $5.8m worth of crypto the hackers had transferred onto its platform.

The cat-and-mouse game unfolding between law enforcement and the North Korean hackers is another example of how criminals have learned to target the growing crypto economy’s weak points. They exploit faulty code in decentralized crypto platforms, use tools that help them hide their tracks such as converting assets to privacy-enhancing cryptocurrencies like Monero, and take advantage of spotty law enforcement coordination across international borders.


It seems we’re being told that crypto isn’t anywhere near as regulated as normal currencies. Hard to credit. (Nice intersection of North Korea stories, hacking stories and crypto stories.)
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How the Eindhoven heat battery can quickly make millions of homes gas-free • Eindhoven University of Technology


The idea that started it all was the heat battery as a storage medium in homes. In the meantime, however, the consortium is also looking at heat storage in office buildings, greenhouse horticulture or, for example, electric buses or luxury ships.

But, they realised, if this thermal battery [which uses the reversible exothermic reaction of potassium carbonate with water] can store heat loss-free, it can also be transported loss-free. After all, nothing else happens to the dry salt as long as no water is added. This is exactly where the thermal battery could make the difference, because other forms of heat transport, such as through pipes or phase transitions, always run up losses.

The consortium therefore also focuses their attention on industrial residual heat as a heat source, a kind of ‘heat waste’, such as that generated as a by-product in factories or surplus heat from data centers. This heat is not so ‘hot’ anymore; at temperatures below 150ºC it has no value for most industry.

For homes, however, such heat is very useful. Such temperatures are more than sufficient for heating your home or taking a hot shower. If industrial residual heat could be used to heat homes, you have a win-win situation: homes could be made independent of gas – an even more urgent need given the dependence on (Russian) gas – and CO2 emissions would be reduced.

Adan does a quick calculation. “In the Netherlands we have about 150 PetaJoule (a number with 15 zeros) of residual heat from industry per year. That would enable you to take almost 3.5 million homes off the gas, which is more than twice the target of the Dutch government, namely 1.5 million homes gas-free by 2030.”

If you superimpose the locations of the sources of industrial residual heat and homes on a map of the Netherlands, Adan says the match is reasonably good. There is no more than 30km (18.6mi) between them.


Using a crystal for energy storage is a simple enough idea, but getting it to industrial (or domestic) scale is a lot tougher. (Thanks Titus for the link.)
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Deadly divergence: how Brexit could become the new killer on Britain’s roads • The New European

David Ward:


From July 6th proven life-saving technologies such as autonomous emergency braking and intelligent speed assistance (ISA) will be a mandatory fitment for new model passenger cars and commercial vehicles across the EU. The so-called General Safety Regulation (GSR) will be phased in over a number of years and eventually apply to all new vehicles on European roads. Once fully implemented by EU Member States, the GSR is expected to save 25,000 road deaths and 140,000 serious injuries. [ISA equipped vehicles continuously detect the speed limit through a combination of digital maps and cameras. It prevents the driver from exceeding the limit but can be overridden if needed.]

However, the UK government is undecided on whether or not to apply the new regulations and the Department for Transport is consulting on what to do. Meanwhile, the minister for Brexit opportunities, Jacob Rees Mogg told MPs last week that “we should put divergence behind us” and not look “over our shoulder saying the EU is doing this, and, therefore, we should do it too”.  He then illustrated his point by mentioning forthcoming EU vehicle safety requirements for speed limiters. His comments were clearly prompted by stories in the Daily Telegraph and the Daily Mail quoting Brexiteer backbench MPs warning about “Big Brother in the cockpit”. 

Lost in this ideological argument about the UK’s post Brexit scope for regulatory freedom is any focus on the need to reduce the 33,000 deaths and serious injuries that have occurred on British roads in the decade from 2010-2019. According to the UK’s Transport Research Laboratory the GSR package has the potential to have a greater safety benefit than the introduction of seat belts. They estimate it will prevent 1,762 deaths and 15,000 injuries and deliver £7 billion in net economic benefits by 2037. Crucially the 15 measures in the GSR aim to improve safety not just for vehicle occupants but for vulnerable road users – pedestrians and cyclists – too. 


Not sure even the Haunted Hatstand could argue that more people dying on the roads is a Brexit benefit.
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Yesterday, was banned by the Russian government agency Roscomnadzor, the “Federal Service for Supervision of Communications, Information Technology and Mass Media.” Roscomnadzor is responsible for censorship within Russia, a busy occupation these days. Since the start of Russia’s war against Ukraine on February 24th, Roscomnadzor has banned hundreds of sites including Facebook, Twitter, Instagram, Google News, BBC News, NPR, and Amnesty International.

According to Roscomnadzor, their goal is to block two webpages: “On The Invasion of Ukraine” which outlines our policy and actions regarding the war on Ukraine and addresses FAQ and “Ukrainian Chess Players In Times Of War” which is a piece interviewing Ukrainian chess players on their circumstances and views during the early days of the war. Since uses secure https webpages, Roscomnadzor is unable to ban these single pages and has banned the entire site. Our members report that’s apps are unaffected. We happily encourage our Russian members to continue accessing our site using our apps or any of the many outstanding VPN services that are so essential in Russia.

We reaffirm our condemnation in the strongest possible terms of the Russian government’s war of aggression against Ukraine and will continue to publish content to that effect.


You have to consider how big chess is in Russia to realise that doing this is a big move.
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Belarusian railway saboteurs helped thwart Russia’s assault on Kyiv • The Washington Post

Liz Sly:


Belarus railway saboteurs can at least claim a role in fuelling the logistical chaos that quickly engulfed the Russians, leaving troops stranded on the front lines without food, fuel and ammunition within days of the invasion.

Alexander Kamyshin, head of Ukrainian railways, expressed Ukraine’s gratitude to the Belarusian saboteurs. “They are brave and honest people who have helped us,” he said.

The attacks were simple but effective, targeting the signal control cabinets essential to the functioning of the railways, members of the activist network said. For days on end, the movement of trains was paralysed, forcing the Russians to attempt to resupply their troops by road and contributing to the snarl-up that stalled the infamous 40-mile military convoy north of Kyiv.

How much of the chaos can be attributed to the sabotage and how much to poor logistical planning by the Russians is hard to tell, especially as there is no independent media reporting from Belarus, said Emily Ferris, a research fellow at the London-based Royal United Services Institute. But without automated signalling, trains were forced to slow to a crawl and the number of them traveling on the tracks at any one time would have been severely restricted, she said.

“Given the Russian reliance on trains, I’m sure it contributed to some of the problems they had in the north. It would have slowed down their ability to move,” she said. “They couldn’t push further into Ukrainian territory and snarled their supply lines because they had to rely on trucks.”


As you’d expect, the Belarusian authorities are not pleased, and have sought out anyone who might have been involved, searching their phones for evidence of involvement – such as the Telegram channels through which the sabotage was organised. Eleven people are in prison and could get up to 20 years for “terrorism”.
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Hopin: virtual events start-up struggles as real gatherings return • Financial Times

Kadhim Shubber, Patricia Nilsson and Miles Kruppa:


In November 2020, with the pandemic in full force, British virtual events start-up Hopin declared that a new era of digital gatherings had begun.

Virtual events were “here to stay”, said founder Johnny Boufarhat, as he bragged that there were “more than 15,000 monthly events” available on Hopin’s “Explore” platform. Today, there are fewer than 500 listed.

Boufarhat’s vision made Hopin a pandemic sensation and Europe’s fastest growing start-up ever. Launched in 2019, his company rocketed to fame after Covid hit with a conferencing product that seemed tailor-made for lockdowns.

The 27-year-old raised more than a billion dollars for Hopin in little over a year, reaching a $7.8bn private market valuation that made him Britain’s youngest self-made billionaire on paper.

As top-tier venture capital firms like IVP, Andreessen Horowitz and Tiger Global clamoured to invest, Boufarhat sold $195m worth of his own shares, according to a Financial Times analysis.

With Covid beginning to recede and publicly traded technology stocks being dumped by investors, Boufarhat now faces a moment of truth as he tries to build a sustainable business that lives up to the lofty expectations it set during the pandemic.

“The landscape will look very different going forward. People can now meet,” noted one events industry executive. They dismissed the pandemic-driven online events boom as “a bit of an artificial bubble”.


The staffing numbers have done much the same: down by 12%, or 138 people. Which raises the question of how it needed a thousand-plus staff. OK, so it has studios and meeting rooms. The pandemic really blew some companies up.

Still, Boufarhat has $195m or so to comfort him. The pipeline of money going from venture capital funds to so-so businesses, hus enriching individuals of varying competence (👋 WeWork) continues unabated.
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• Why do social networks drive us a little mad?

• Why does angry content seem to dominate what we see?

• How much of a role do algorithms play in affecting what we see and do online?

• What can we do about it?

• Did Facebook have any inkling of what was coming in Myanmar in 2016?Read Social Warming, my latest book, and find answers – and more.

Errata, corrigenda and ai no corrida: thanks to everyone who pointed out that yesterday’s analysis of Twitter’s cash flow should have said that it has never achieved what Musk needs to service the debt on his loan. (Latest estimates are that it would need about $3bn in free cash flow, which is 3x what it has ever managed annually.)

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