Although Elon Musk has had a lot of success in the business world and has ambitious ideas, it seems that not only is his current management style not good for Twitter because of his previous experiences, but the haste in repaying debts makes That the richest person in the world does not follow a logical path.
When Elon Musk completed the deal to buy Twitter, his terms were somewhat similar to those of Steve Jobs. The late co-founder of Apple had returned to his own company in 1998 after about a decade to turn things around. He had a new plan to create new products and a new advertising campaign to turn the page for the company.
Despite Jobs’ decades of experience in the tech world and his detailed plans to re-direct Apple, it took nearly nine years for his efforts to bear fruit. The company didn’t become a money-making machine until the introduction of the first-generation iPhone in 2007, and without that product, it probably wouldn’t be even close to where it is today.
Now that Elon Musk owns Twitter, this social network is almost in the same situation. Twitter is losing money and has long been known as the second-tier social network in terms of number of users. However, according to Elon Musk’s own tweets, what led him to buy the company was his view of Twitter as a public arena for conversations in the world.
The richest person in the world wanted to increase freedom of speech on Twitter and quickly make changes to this social network. Part of the reason for this rush is to get heavy bank loans that he now has to pay back. That’s why he quickly started making changes on Twitter.
Elon Musk manages Twitter like a startup
Musk’s approach to Twitter is similar to that of a typical startup. This management style makes sense for a company that is very small in size and runs on investors’ money. Few people in the technology industry are as familiar with the ins and outs of this management style as Elon Musk. Musk has shown how successful he can be in the field of entrepreneurship with SpaceX, Tesla and even PayPal.
But Twitter is not a startup. Here we are a mature company that, if the new owner is not careful, may make irreparable mistakes. Although about half of Twitter’s employees were laid off a few days ago, the company still has thousands of employees. The number of daily active users on this platform is about 240 million users, and although the company earns $5 billion a year, it now has to repay $1 billion a year due to Musk’s debts.
Although Musk has done things in the past that were considered impossible, Twitter is a different challenge than any of the controversial entrepreneur’s previous experiences. Musk’s management principles have been very successful for building a physical product, but he seems to be missing out on the complex policies that are required to run a social network. The leader of a social network must be able to balance the needs of users and advertisers and even be accountable to regulators and politicians.
As one of the prime examples of social network leaders, Mark Zuckerberg says his day job is like climbing a hill while being punched in the stomach. However, Mask’s reaction to these punches has been to reciprocate. The incident apparently made brands hesitant to buy ads on this platform. In the following, we will discuss this issue and Mask’s withdrawal in this regard.
All efforts to monetize Twitter have failed
Twitter started in 2006 and didn’t really take off until a year later. But since the South by Southwest conference, it started to grow. In 2009, Evan Williams, the company’s CEO at the time, announced that if the number of users on the platform reached one billion, they would easily become profitable. However, Twitter never reached a billion users, and their advertising business model has only been profitable in less than 20 years.
During these years, in addition to Williams, “Dick Costolo” and “Jack Dorsey” also tried to make the company profitable, but they were unsuccessful. Now Elon Musk is trying to find a way to overcome this problem and it seems that he wants to do it before the end of this year.
But only by looking at his other successful businesses can he realize how irrational this haste is. When Musk came to Tesla in 2008, it had been five years since the company was founded. However, it took another 12 years for Tesla to finally post its first annual profit in 2020.
On the other hand, although SpaceX does not publish its earnings report, we all know that it is not possible to build spacecrafts quickly with acceleration and it takes years for a rocket to successfully go into space.
Of course, everything happens faster in the world of social networks, but this acceleration should not be unreasonable. Experts generally knew that Twitter’s workforce needed to be adjusted, but rushing to lay off employees could leave the company with talent that could change the fortunes of the social network.
Numbers do not predict a good future
“Turner Novak” is a venture capitalist who recently discussed the issue of Musk and Twitter in an article. He says overall he hopes the world’s richest man can save the social network, but based on the numbers, it doesn’t look like Musk and his supporters are in good shape.
Elon Musk has taken control of Twitter in a situation where the company is in a deep financial crisis. He signed the contract to buy this social network when the technology market was in a better state and the shares of social networks had not experienced such a heavy fall. The stock value of Meta and Snap (Snapchat’s owner) has now reached two-thirds of their last year’s value.
The CEO of Tesla bought Twitter for almost 9 times the company’s 2021 sales. In addition, the debt interest of the funds he took from the banks for this transaction has made the situation even more difficult. Also, let’s not forget how crowded the social media market is today. With this account, Elon Musk’s work will be even more difficult than previous CEOs.
Of course, Tesla and SpaceX were burdened with a lot of debt along the way. These companies and Twitter all fall into the category of tech companies because they have a lot of programmers. But social networks are hardly placed in this classification next to car and rocket manufacturers. Having faced the challenges of science and materials in his previous adventures, Elon Musk now has to manage a platform that deals with people, people whose behavior is infinitely complex and infinitely difficult to predict.
Elon Musk said in an interview that his ultimate goal is to create an application called X for “everything”. This superapplication, of which the WeChat mask is a good example, is supposed to include many of one’s tasks, such as messaging, social interactions, and payments. However, some experts believe that such superapplications will not succeed in the Western world, because there are various, free and good options for each of their services that discourage people from relying on one program.
However, the new owner of Twitter has various short-term plans for this social network to start making money as soon as possible.
Will Elon Musk’s War Room succeed?
Elon Musk has formed a “war room” with a group of friends and colleagues and is evaluating all possible ideas for revenue generation. One of these ideas is to add a blue tick to the Twitter Blue service and get paid for it. This is a bad idea because the blue tick is what gives Twitter credibility and makes users the audience of this social network. Many people who go to Twitter like to read the content of celebrities, government officials, and reputable journalists, and this distinction was marked by the blue tick.
But now this important feature has become a part of Twitter Blue service that anyone can get for their account. Elon Musk’s initial idea to monetize the feature was to charge $20 a month, but criticism of the price change was so widespread that he eventually announced a price of $8.
Now, if 1% of the current 240 million Twitter users subscribe to Blue’s new service, the company will earn $230 million annually. But this figure is far from the expectations of the new owner of Twitter, who wants to get most of the company’s income through subscriptions instead of advertisements.
In the best case scenario, if the number of Twitter users reaches 1 billion daily active users and 5% of them buy the Blue service, the annual revenue of the social network will be 4.8 billion dollars. Such a development would certainly be welcome for Twitter, but history has shown that users do not react well when faced with platforms that ask them to pay for access to various features. This issue itself is another risk that can cause users to run away from Twitter.
The revival of Vine
Twitter’s new owner’s war room is mulling another idea: reviving the Vine service. Vine was a short video sharing product that Twitter took down in 2016. Maybe if this didn’t happen, Vine would have become something like Tik Tok, but in any case, it was the decision of the Twitter managers to end the service.
Musk has now asked Twitter engineers to bring the service back to life before the end of the year. However, one of the company’s employees anonymously stated that the code of this program is so outdated and outdated that it would be easier if they wanted to produce this service from scratch.
One of the reasons why Vine was shut down was that Twitter executives believed that the service was distracting them. When Steve Jobs re-entered Apple, he abandoned part of the side projects to focus on the main projects. As a result, it’s strange that Musk wants to monetize himself with a spin-off.
Elon Musk knows when to back off
Of course, despite all these hasty decisions, Musk knows well when it’s time to back off. Some time ago, he assured other companies in a post that Twitter is not going to become a “hell valley for free speech” and that everyone is not going to say whatever they want on the platform. He knew that this chaotic situation would make companies hesitant to buy ads on this social network, and this happened anyway.
Now, big brands such as General Motors, Volkswagen, Pfizer and several other companies have announced that they will stop buying ads on Twitter for the time being to answer some of their questions about the future of this platform. Elon Musk also promised to leave this task to a council made up of diverse opinions, in response to another concern of critics regarding the reopening of blocked accounts.
With this statement, he somehow acknowledged that content management is not as easy as he said before, because Musk wanted less controls on content and different voices, even extreme voices in right-wing currents, could be heard.
Twitter’s current CEO attended a 45-minute meeting this week with leaders of civil rights groups and social media experts and agreed not to make any changes to Twitter’s policies until the US midterm elections.
One of the calls from experts at the meeting was for a slower decision-making process on Twitter’s future, something Elon Musk probably doesn’t have an ear for. Of course, they requested that the figures fired from Twitter cannot return to this social network until the new rules are formulated, and Elon Musk accepted this offer.
However, it is not possible to say how reliable the words of the world’s richest person in this meeting are, because one of the attendees of this meeting says that they asked Musk to take a few months to formulate new policies and he accepted this offer. But Musk recently announced in a tweet that these changes will be implemented in a few weeks.