With Meta Threads hitting the news with millions of new users exploring a new social media, now would be a good time to take a look at what Threads is seeking to replace – Twitter. More importantly, let’s take a look at who is running it – Elon Musk.
Threads is similar to Twitter in some ways although it has a number of features that seek to make it unique. But Twitter was one of the originals, coming to light between the good old days of MySpace and the modern teen-driven video-sharing apps like TikTok or Snapchat.
Since taking over Twitter last year Elon Musk’s reputation as a maverick entrepreneur has hit the stratosphere faster than one of his SpaceX rockets. And yes, it’s not all been good. Firing people over Zoom, and an abrupt and dismissive approach to HR for one thing would not exactly work for almost anyone else.
I have always said you should learn from other people’s mistakes rather than your own! And I reckon all entrepreneurs can learn from Elon Musk. He does things that most people can only dream about, and that makes him a fantastic, iconic entrepreneur. Good or bad, it makes his work and life a great example for us all. So here are SIX things we can all learn from Elon Musk’s unprecedented time at Twitter.
1. Stick to your knitting – don’t stray too far outside your area of expertise
Elon was certainly an enthusiastic, and some might say notorious, Twitter user. But until he spent $44 billion to buy it, he had absolutely no expertise in running a social media company or anything similar. His background was in engineering, not media. Just because Musk himself has an interest in saying things on Twitter and being a figurehead for his design, engineering and technology business, he did not qualify as an expert in social media. Famously he has done well to create ‘something out of nothing’ in the past, but considering his early track record at Twitter, there is a chance he could create ‘nothing out of something’ – fast!
My advice is to follow your passion but focus your energy on things where you actually have expertise too. Few people can cope with the pressures of running an unfamiliar business while hitting a steep learning curve on the basics. Yes, there are transferable skills, but business success can often turn on nuance and detail. Hitting the ground running means you could miss some really important stuff.
2. Make sure you do your due diligence
In this deal, not only did Elon Musk fail to do sufficient research and background checks but he actually waived his right to due diligence prior to signing a multi-billion dollar deal!
Most people believe that he should have determined the accuracy of the information he was relying on before signing the contract. He relied completely on Twitter’s public filings.
Twitter has confirmed this: “Prior to entry into the merger agreement, Mr Musk did not ask to enter into a confidentiality agreement or seek from Twitter any non-public info regarding Twitter.”
This meant he was pretty powerless when it came to negotiating post-deal when a lot of that information proved to be less than reliable.
My take: don’t skip the sometimes less-than-exciting tasks like looking at the books, checking the numbers and running an expert eye over the stuff that matters. If you don’t have an expert eye yourself, you’ll need to get some help with this part – do it. A little cost now will seem very cheap later if things don’t work out.
3. Make sure you don’t overpay
Most people – including some big-time analysts of all kinds – agree that the price Elon Musk paid for Twitter, at $54 per share, was way, way too high. Musk even admitted, ‘Obviously, myself and the other investors are overpaying for Twitter right now’.
Why? Twitter has struggled financially since Musk took over.
After saddling the company with $13 billion of debt, his rather erratic decision-making and issues around content moderation have now led to a decline in advertising revenue of 50%. That’s a disaster. His attempt to recoup that revenue by selling previously free Twitter Blue subscriptions has so far failed to take off. At the end of March, less than 1% of Twitter’s monthly users had signed up, and by May, many of them were no longer subscribed.
To me, it doesn’t matter whether you are buying a cup of coffee or a global business – make sure you get the best price and know exactly what you are buying. Musk’s lack of true understanding of the engine room of the business he bought has led to a fall in confidence, and the loss of key personnel and income.
4. You need a clear value-add strategy
Twitter is pretty much unrelated to any of Elon Musk’s other businesses, so it’s hard to see how they can add value through business synergy – apart from grabbing headlines, rocket ships don’t have much in common with social media!
So, as an acquisition, Twitter is not going to increase the market size or the market share of his other businesses. And they, in turn, will have little impact on Twitter.
As it happens, quite a few Tesla shareholders were so spooked when they discovered that Musk was looking to get into the global social media company at the top of the market and become so distracted by it, that they have been dumping shares.
Since he bought Twitter, Tesla’s share price has actually more than halved to $150. This is not helped by Musk selling nearly $40 billion of his own Tesla shares in the past 14 months. To buy Twitter, Elon Musk took out loans of $12.5 billion.
Twitter was already a bit of a financial basket case. After going public in 2013, it made no money until 2018 and then lost over $1.1 billion in 2020.
So, the big question is, how is Musk adding value to this business? Some could say his high profile and general antics are giving the platform a degree of notoriety. He reinstated a few people who had been kicked off, but that doesn’t really add value. In fact, it just ramps up the uncertainty. He also took a free aspect of the platform – the Blue Tick Verification – and turned it into a paid feature which made some income but alienated quite a few loyal users.
If you are going to take over a business, you need to have a clear plan for what you can bring to the table, an idea of ROI right from the start and some respect for what has worked in the past. Just making changes on a whim looks unstable and causes jitters among loyal stakeholders.
5. Don’t make big changes too quickly
The history of mergers and acquisitions is littered with the bones of deals that failed because of a culture clash.
It seems that as soon as the ink was dry on the deal, Musk literally declared war on the Twitter work culture. He banned people from working from home, closed offices and started a programme of firings and redundancies that looks like it could slash 50% of the workforce.
Key technical people resigned in protest, leaving the platform in a state of high vulnerability to outages.
Even if your intention is to make cultural changes, and even if you have clearly identified that is where you can make a difference, it is wise to tread carefully. Take your time – not just to get to really understand the business in detail, but to show that you have. This kind of highly skilled workforce is mobile and in demand – they can work anywhere. It doesn’t make sense to trample previous cultures underfoot and risk a mass exodus. Your competitors will be the ones to benefit.
6. Don’t alienate your customers
Your customers pay the bills. You have to treat them with respect or they will find another company to do business with.
At one stage at least half of Twitter’s top 100 advertisers left the platform because of what Musk was up to, especially around the sticky issue of moderation.
Musk wanted to make Twitter a ‘town square for the world’ with little or no restriction on what people could say. This might have been OK a few years ago. But in a world obsessed with cancel culture, where a social media backlash can put a serious dent in even a well-established brand (Bud Light for example!) this was just too risky for some.
Concerns began as soon as Musk began overhauling the platform and its moderation policies. White nationalists and other extremists were being readmitted onto the platform, and journalists that dared to criticise him were being suspended. Understandably, advertisers were worried that their brands will be tarnished through association.
Above all, you have to look after your customers, your clients. They pay the bills and without them, you don’t have a business. That is not to say that you should always do what they want – as Henry Ford said, “If I’d asked my customers what they wanted, I’d have invented a better horse!”
But change is costly, complex and can have unintended consequences. Take your time to settle in before you start making the big changes. And when you do, make sure you take your customers with you.
To conclude…
It may still be early days in Musk’s reign, but based on any traditional financial or market-based metric, he has a lot of ground that needs to be regained. Now that Threads has entered the market with the strength and stability – not to mention bottomless pockets – of Meta behind it, Elon Musk needs to get a grip and put in some of the less frivolous, dare I say it sensible hard yards. Then he might start to see a decent return from what was once the most exciting social media platform in the world…
Elon Musk and Twitter – the story so far
How much did Elon Musk buy Twitter for?
Elon paid $44 billion dollars in total for the social media website, with shares bought at $54 each.
Why did Elon Musk buy Twitter?
Despite appearing to experience an initial buyer’s regret as the acquisition happened, Musk stated he wanted Twitter to become “a platform for free speech around the globe.” He denied that the purchase was a profit-driven decision.
When did Elon Musk buy Twitter?
In January 2022, Elon Musk began to buy shares of the company and by April 2022 he was its largest shareholder with a 91% ownership stake. However, he wouldn’t officially conclude the acquisition until October 27th, 2022.
Who owned Twitter before Elon Musk?
Twitter was launched in 2006 by founders Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams. The company went public in 2013 under Dorsey’s leadership, and prior to Musk’s acquisition, majority ownership resided with institutional investors, with the Vanguard Group leading with a 10.3% stake and Musk holding 9.2%. Investment firms Morgan Stanley, BlackRock, and StateStreet owned significant portions as well. Dorsey held a 2.5% stake, with other board members and employees owning valuable shares. Dorsey resigned as CEO in November 2021, and left the board in May, replaced by Parag Agrawal.
Want more fresh insights on business, leadership and more? Subscribe to the Matt Haycox newsletter for the latest industry insights.
Six Lessons We Can All Learn from Elon Musk’s Time at Twitter
With Meta Threads hitting the news with millions of new users exploring a new social media, now would be a good time to take a look at what Threads is seeking to replace – Twitter. More importantly, let’s take a look at who is running it – Elon Musk.
Threads is similar to Twitter in some ways although it has a number of features that seek to make it unique. But Twitter was one of the originals, coming to light between the good old days of MySpace and the modern teen-driven video-sharing apps like TikTok or Snapchat.
Since taking over Twitter last year Elon Musk’s reputation as a maverick entrepreneur has hit the stratosphere faster than one of his SpaceX rockets. And yes, it’s not all been good. Firing people over Zoom, and an abrupt and dismissive approach to HR for one thing would not exactly work for almost anyone else.
I have always said you should learn from other people’s mistakes rather than your own! And I reckon all entrepreneurs can learn from Elon Musk. He does things that most people can only dream about, and that makes him a fantastic, iconic entrepreneur. Good or bad, it makes his work and life a great example for us all. So here are SIX things we can all learn from Elon Musk’s unprecedented time at Twitter.
1. Stick to your knitting – don’t stray too far outside your area of expertise
Elon was certainly an enthusiastic, and some might say notorious, Twitter user. But until he spent $44 billion to buy it, he had absolutely no expertise in running a social media company or anything similar. His background was in engineering, not media. Just because Musk himself has an interest in saying things on Twitter and being a figurehead for his design, engineering and technology business, he did not qualify as an expert in social media. Famously he has done well to create ‘something out of nothing’ in the past, but considering his early track record at Twitter, there is a chance he could create ‘nothing out of something’ – fast!
My advice is to follow your passion but focus your energy on things where you actually have expertise too. Few people can cope with the pressures of running an unfamiliar business while hitting a steep learning curve on the basics. Yes, there are transferable skills, but business success can often turn on nuance and detail. Hitting the ground running means you could miss some really important stuff.
2. Make sure you do your due diligence
In this deal, not only did Elon Musk fail to do sufficient research and background checks but he actually waived his right to due diligence prior to signing a multi-billion dollar deal!
Most people believe that he should have determined the accuracy of the information he was relying on before signing the contract. He relied completely on Twitter’s public filings.
Twitter has confirmed this: “Prior to entry into the merger agreement, Mr Musk did not ask to enter into a confidentiality agreement or seek from Twitter any non-public info regarding Twitter.”
This meant he was pretty powerless when it came to negotiating post-deal when a lot of that information proved to be less than reliable.
My take: don’t skip the sometimes less-than-exciting tasks like looking at the books, checking the numbers and running an expert eye over the stuff that matters. If you don’t have an expert eye yourself, you’ll need to get some help with this part – do it. A little cost now will seem very cheap later if things don’t work out.
3. Make sure you don’t overpay
Most people – including some big-time analysts of all kinds – agree that the price Elon Musk paid for Twitter, at $54 per share, was way, way too high. Musk even admitted, ‘Obviously, myself and the other investors are overpaying for Twitter right now’.
Why? Twitter has struggled financially since Musk took over.
After saddling the company with $13 billion of debt, his rather erratic decision-making and issues around content moderation have now led to a decline in advertising revenue of 50%. That’s a disaster. His attempt to recoup that revenue by selling previously free Twitter Blue subscriptions has so far failed to take off. At the end of March, less than 1% of Twitter’s monthly users had signed up, and by May, many of them were no longer subscribed.
To me, it doesn’t matter whether you are buying a cup of coffee or a global business – make sure you get the best price and know exactly what you are buying. Musk’s lack of true understanding of the engine room of the business he bought has led to a fall in confidence, and the loss of key personnel and income.
4. You need a clear value-add strategy
Twitter is pretty much unrelated to any of Elon Musk’s other businesses, so it’s hard to see how they can add value through business synergy – apart from grabbing headlines, rocket ships don’t have much in common with social media!
So, as an acquisition, Twitter is not going to increase the market size or the market share of his other businesses. And they, in turn, will have little impact on Twitter.
As it happens, quite a few Tesla shareholders were so spooked when they discovered that Musk was looking to get into the global social media company at the top of the market and become so distracted by it, that they have been dumping shares.
Since he bought Twitter, Tesla’s share price has actually more than halved to $150. This is not helped by Musk selling nearly $40 billion of his own Tesla shares in the past 14 months. To buy Twitter, Elon Musk took out loans of $12.5 billion.
Twitter was already a bit of a financial basket case. After going public in 2013, it made no money until 2018 and then lost over $1.1 billion in 2020.
So, the big question is, how is Musk adding value to this business? Some could say his high profile and general antics are giving the platform a degree of notoriety. He reinstated a few people who had been kicked off, but that doesn’t really add value. In fact, it just ramps up the uncertainty. He also took a free aspect of the platform – the Blue Tick Verification – and turned it into a paid feature which made some income but alienated quite a few loyal users.
If you are going to take over a business, you need to have a clear plan for what you can bring to the table, an idea of ROI right from the start and some respect for what has worked in the past. Just making changes on a whim looks unstable and causes jitters among loyal stakeholders.
5. Don’t make big changes too quickly
The history of mergers and acquisitions is littered with the bones of deals that failed because of a culture clash.
It seems that as soon as the ink was dry on the deal, Musk literally declared war on the Twitter work culture. He banned people from working from home, closed offices and started a programme of firings and redundancies that looks like it could slash 50% of the workforce.
Key technical people resigned in protest, leaving the platform in a state of high vulnerability to outages.
Even if your intention is to make cultural changes, and even if you have clearly identified that is where you can make a difference, it is wise to tread carefully. Take your time – not just to get to really understand the business in detail, but to show that you have. This kind of highly skilled workforce is mobile and in demand – they can work anywhere. It doesn’t make sense to trample previous cultures underfoot and risk a mass exodus. Your competitors will be the ones to benefit.
6. Don’t alienate your customers
Your customers pay the bills. You have to treat them with respect or they will find another company to do business with.
At one stage at least half of Twitter’s top 100 advertisers left the platform because of what Musk was up to, especially around the sticky issue of moderation.
Musk wanted to make Twitter a ‘town square for the world’ with little or no restriction on what people could say. This might have been OK a few years ago. But in a world obsessed with cancel culture, where a social media backlash can put a serious dent in even a well-established brand (Bud Light for example!) this was just too risky for some.
Concerns began as soon as Musk began overhauling the platform and its moderation policies. White nationalists and other extremists were being readmitted onto the platform, and journalists that dared to criticise him were being suspended. Understandably, advertisers were worried that their brands will be tarnished through association.
Above all, you have to look after your customers, your clients. They pay the bills and without them, you don’t have a business. That is not to say that you should always do what they want – as Henry Ford said, “If I’d asked my customers what they wanted, I’d have invented a better horse!”
But change is costly, complex and can have unintended consequences. Take your time to settle in before you start making the big changes. And when you do, make sure you take your customers with you.
To conclude…
It may still be early days in Musk’s reign, but based on any traditional financial or market-based metric, he has a lot of ground that needs to be regained. Now that Threads has entered the market with the strength and stability – not to mention bottomless pockets – of Meta behind it, Elon Musk needs to get a grip and put in some of the less frivolous, dare I say it sensible hard yards. Then he might start to see a decent return from what was once the most exciting social media platform in the world…
Elon Musk and Twitter – the story so far
How much did Elon Musk buy Twitter for?
Elon paid $44 billion dollars in total for the social media website, with shares bought at $54 each.
Why did Elon Musk buy Twitter?
Despite appearing to experience an initial buyer’s regret as the acquisition happened, Musk stated he wanted Twitter to become “a platform for free speech around the globe.” He denied that the purchase was a profit-driven decision.
When did Elon Musk buy Twitter?
In January 2022, Elon Musk began to buy shares of the company and by April 2022 he was its largest shareholder with a 91% ownership stake. However, he wouldn’t officially conclude the acquisition until October 27th, 2022.
Who owned Twitter before Elon Musk?
Twitter was launched in 2006 by founders Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams. The company went public in 2013 under Dorsey’s leadership, and prior to Musk’s acquisition, majority ownership resided with institutional investors, with the Vanguard Group leading with a 10.3% stake and Musk holding 9.2%. Investment firms Morgan Stanley, BlackRock, and StateStreet owned significant portions as well. Dorsey held a 2.5% stake, with other board members and employees owning valuable shares. Dorsey resigned as CEO in November 2021, and left the board in May, replaced by Parag Agrawal.
Want more fresh insights on business, leadership and more? Subscribe to the Matt Haycox newsletter for the latest industry insights.
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