Talk about not getting the point

Followers of Elon Musk’s Twitter account will know that the world’s richest man is partial to attention-grabbing statements. Even so, it was notable when he told Twitter staff this month that bankruptcy at the company isn’t out of the question.

Twitter’s owner has admitted that the business has suffered a “massive drop in revenue” after campaign groups raised concerns about content moderation standards and warned the company’s remaining staff this month that it could lose billions of dollars next year.

Will the world’s richest man really let an influential social media platform go bust? At least not in the short term, experts say. But advertisers are Twitter’s main source of revenue – 90% of Twitter’s $5.1bn (£4.2bn) turnover last year – and his decisions over reinstating banned accounts risk alienating them further. On top of that, he needs money to service interest costs on the near $13bn of debt he took on to buy the business for $44bn.

No, that’s not the point Musk made.

Rather, that if the firm – as with any other firm – carries seven levels of bureaucracy all getting fat and happy off market level wages then it is indeed possible that it will go bust in the fullness of time. Therefore something needs to change – fire half the staff for example.

His comment wasn’t about he’s bought it, whoopsie, at all.

19 thoughts on “Talk about not getting the point”

  1. The entire article is an affronted throwing toys from the pram.

    And I’d love to see Apple try to boot Twitter from its app store. Now that’ll be Popcorn-worthy..

  2. I get the free speech argument that Musk leans heavily on (despite there not really being any issue of free speech online for the people he’s courting), and the logic that ‘clearing out the woke deadweight’ in the house of Twitter will make a leaner, more efficient company that appeals to some hitherto untapped market. It all sounds very liberating.

    However, Twitter’s problems have never been that Trump can’t post on there, or that there are too many developers – but that running a global infrastructure of that scale is insanely expensive (see the problems Amazon is having loosing money on the Echo). Cutting the workforce doesn’t really address that issue, but (may) result in a degraded service – not just to public users in terms of support, moderation and service availability, but also to the real clients, the advertisers.

    As I said, it’s an appealing narrative – that they’re loosing money due to too many of the wrong kind of staff – but there’s really not much evidence that this is the case. They can be leaner, sure, but that doesn’t magically mean profitable, at least at a scale that matters.

    All of this is depending on the theory that Musk can expand and monetise the userbase – something Twitter has been attempting to do for years without much success. Unless there are hoards of rich conservative Americans that were previously so offended by the management that they refused to join, we’re back to tweaking the App to get more ads and more appealing content.

    More ads is difficult if you’re making yourself unappealing to advertisers. Constantly picking fights with companies in order to appeal to end users really misses the point of who the real customer is on these sites. More appealing content is a perennial problem for social media – good luck with that. Meanwhile, to achieve his goal, Musk is reportedly servicing a multi-billion dollar debt on top of the already loss-making service.

    It all looks more like a crusade than any real business plan.. or any real plan at all.

  3. Why is there an assumption that the current advertisers (presumably focussed on the previous lefty ishoos-obsessed users) won’t be replaced by other advertisers (focussed on normal people)?

    And if in the meantime he takes an axe to Twitter’s infamously unproductive oxygen thieves and can offer better rates or make more money from the advertisers he does have so much the better

    Personally I couldn’t care less if Twitter survives or does but it seems to me that a lot of the current criticism is from people peeved that their favourite echo chamber is permitting people in

    The digital equivalent of NIMBYs

  4. Frankly that’s just culture war nonsense. The current largest spending advertisers on Twitter include – Nestle, Verizon, Unilever and GlaxoSmithKline. These are companies that don’t actually care what your politics are, just buy their shit please.

    “I couldn’t care less it Twitter survives”… “infamously unproductive oxygen thieves” – I think you do care, a lot.

    Honestly, it’s a fantasy that Twitter is somehow repressing right wing voices. Some of the strongest right wing voices I read online are on Twitter – along with pandemic conspiracies, arguments over climate change and all the other culture war nonsense. So far, the only additional people Musk is permitting to join are Asian escorts that are flooding in while moderation is down. Yay! Free speech!

    Musk is (as usual) lying to you – don’t get played by him.

  5. @AndyT

    “I think you do care, a lot.”

    Nope, never used it and care little for those who do/did

    If Musk can make some money out of it, good on him but I still don’t care

  6. “Musk is (as usual) lying to you”

    Possibly. Then again, the same goes for any and every politician, and a significant fraction of “Journalists”.
    And the Salt he’s harvesting from the Snowflakes goes quite well with the popcorn.

    He may be lying, or not, or… But he’s definitely delivering the Goods while being entertaining as hell. Something that can’t be said from the politico’s and “Journalists”…

  7. I’d say Starfish has it. Those that lose most from companies not advertising on Twatter is the companies themselves. If you’re not visible in the marketplace, you will lose sales. Or what’s the point of advertising in the first place? So companies withholding advertising to try & change Twatter policies can only be a short term phenomenon. Eventually they’ll have to come back or be outcompeted in their own markets by competitors who haven’t. Musk just has to hang in there & ride it.

  8. @bis

    I think Musk is brighter, more determined and visionary than any of his critics

    He has deep pockets and is busy shedding costs while encouraging innovation from his developers

    The shroudwavers added nothing to Twitter, they were part of the lefty backing band

  9. Andy T

    The biggest controllable cost of any business is the payroll expense which is where you start if you (are competent) want to reduce costs significantly. Payroll expense is not just wages but all the benefits that go with it plus infrastructure to support staff numbers.

    The lower your payroll expense, the higher net profit/lower net loss. If you can maintain or increase output with fewer staff that increases productivity and efficiency.

  10. If advertisers are withdrawing from Twitter, then unless their managers are idiots, they cannot be getting significant business out of it which they would miss, in which case why advertise there in the first place? So they are idiots whichever way you look at it.

  11. “If you’re not visible in the marketplace…” – if you think that’s a problem Apple has, you’re deluded. If they pull the app from the store (I’d be amazed if they did), why would other advertisers stick with a platform that’s just lost a third of it’s audience?

    It’s amusing that the liberal left emotionally invested in him and excused his lies because he was “one of them”, saving the planet with EVs. Now the disenfranchised right are emotionally investing in him and excusing his lies because he’s “one of them”, saving the planet with free speech. The guy just tells people what they want to hear, then moves on to the next thing before anyone starts paying attention. He is an absolutely brilliant businessman, but simultaneously the walking personification of Dunning Kreuger effect.

    It’s pretty unlikely Twitter will break under his watch, but he’ll probably appoint someone else to run it and move on in the next few months.

  12. And I’d love to see Apple try to boot Twitter from its app store. Now that’ll be Popcorn-worthy..

    Yes, I would expect there to be a high proportion of Apple users who are Twitter users. Tim Cook would think twice before taking popular toys away from his customer base, particularly as he’s struggling to make new gadgets to sell to them at the moment.

  13. John B –

    “The biggest controllable expense” – yes, absolutely, and a change of management is the perfect time to go hard on efficiency. You then say “If you can maintain… ” – that is of course the question, and will be the real test of Musk’s leadership. I figure it’ll take six months or so to find that out, but I’d be really surprised if Twitter collapses.

    “If advertisers are withdrawing…” – in the short term, I suspect they’ll get a lot of free publicity from pulling their ads. If they re-join in a month or two, of course they’re hypocrites, but certainly not stupid for taking advantage of the situation.

  14. . . . running a global infrastructure of that scale is insanely expensive . . .

    Not cheap, but Twitter should be amongst the cheapest to run social media. It’s mostly handling text, sometimes with attached pics and video. Its data storage and bandwidth has to be a lot smaller than Facebook or YouTube.

  15. PJF – the biggest expense usually isn’t storage or bandwidth, it’s CPU usage. So anything that has an ‘algorithm’ selecting what you can see (even if it’s “just” the most recent posts from your friends) is very, very expensive.

    Ironically, YouTube as probably the largest single data source on the planet, scales better than Twitter.

  16. “Frankly that’s just culture war nonsense. The current largest spending advertisers on Twitter include – Nestle, Verizon, Unilever and GlaxoSmithKline. These are companies that don’t actually care what your politics are, just buy their shit please.”

    You really haven’t been following the march of woke through the mega-corps have you? The idea that they are just all about the $$$ these days is a joke. Did you not hear about the Gilette ‘toxic masculinity’ ad? The one that insulted their target audience (men needing a shave) and cost them £8bn in brand value writedowns?

    https://campaignbrief.com/get-woke-go-broke-gillettes-toxic-masculinity-ad-via-grey-new-york-haunts-pg-as-shaving-giant-takes-us8-billion-writedown/

    Then there was the boss of Unilever who decided that its brands should all target ‘social responsibility’ as part of their marketing campaigns, which resulted in stagnating sales, a languishing share price, the arrival of a bottom feeding hedge fund vulture on the share register, and the ‘retirement’ of the CEO.

    https://www.thisismoney.co.uk/money/markets/article-10395761/Has-Unilever-woke-good.html

    There’s a similar tale at Disney, with all its current woke film and TV offerings, which are all tanking. Strange World, its recent LGBT kids movie is projected to lose $147m. And its CEO has just walked the plank too.

  17. . . . it’s CPU usage . . .

    Interesting. With the aforementioned Apple angle I wondered if Twitter might be one of those operations with server farms running racks and racks of M1 Mac Minis, but the hardware level seems way down the pecking order of technologies the engineers like to talk about.

    I did find this anecdote:

    .

    12 years ago, Twitter’s office used a Mac Mini to tunnel into the servers. One day, an IT guy found it in the closet.

    “Anyone know who owns this?”

    “Unplug it. Someone will show up.”

    Everyone lost access to servers. Huge crisis. It became known as the “Load Bearing Mac Mini.”

    https://twitter.com/sandofsky/status/1592223884107218944

    .

    I quite like the idea of a vast global technology infrastructure unknowingly relying on an unmarked and forgotten tiny personal computer left in the back of a cupboard.

  18. John B said:
    “If advertisers are withdrawing from Twitter, then unless their managers are idiots, they cannot be getting significant business out of it which they would miss, in which case why advertise there in the first place?”

    The Principal / Agent problem – been a staple of economics for some time. Basically the people running large companies generally have different objectives to the shareholders.

    Corporate workers happens because they’re more concerned about what their other half’s friends think about their job than they are about profits.

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