Elon Musk Twitter is already well on its way to suffering a fate worse than death – irrelevance, less than a year after he bought the company.
The one thing that made Twitter special has been destroyed by Elon Musk.
In May, while Gov. Ron DeSantis announced his presidential candidacy on Twitter, the platform failed to even hold it together – a situation that was also seen during Rihanna’s performance at the Super Bowl halftime show. Its current state is far from what Elon Musk had promised: a free-speech and bot-free haven. In fact, every new feature Mr. Musk has released – be it longer tweets or the rate limit – has only made the product worse by making it glitchier, bottier and spammier than ever.
Over 90% of Twitter’s revenue comes from ads – the company’s last public financials showed that. It must be a stable, reliable place for both the users who create content as well as the clients who buy ads to succeed in that business. During the Super Bowl of advertising, if an advertising platform can’t be trusted, then what good is it?
Competition in the social-note space has been heating up with the launch of Meta’s Threads. Less than a day after its debut, it had garnered over 30 million users—including public figures like Rep. Alexandria Ocasio-Cortez, Jennifer Lopez, and Steph Curry. This undoubtedly came as a blow to Elon Musk who though he had recently challenged Zuckerberg to a cage fight, could only express dissatisfaction on Twitter following Threads’ sudden success: “It is infinitely preferable to be attacked by strangers on Twitter, than [to] indulge in the false happiness of hide-the-pain Instagram.”
Twitter’s strength as a platform was relevance. It never really made money, and it wasn’t the biggest social network. However, when something happened, people went to it to find out more. Its appeal was its ability to collect information about the present moment, whether it was a death of a notable member of society, a weather event, or traffic. Musk’s fumbling, however, is sulking all of that relevance and leaving other platforms open.
According to Elon Musk Twitter could become a “one-stop-shop” for ride-hailing, shopping, and everything in between. What’s more likely is that he will turn it into former President Donald Trump’s Truth Social – a digital megaphone for a narcissist and all the people who adore him.
I told you he was overpaying for Twitter in the early days Elon Musk takeover, but after the deal went through, I said he had no clear strategy to turn the business around. In those respects, I think I was right. However, all of this is unraveling much more quickly than I expected.
Twitter certainly required a transformation. Even prior to the take-over, it needed fresh management, an appraisal of the firm and expenditure in product development to bring in new users. But Elon Musk wasn’t the type of person you’d usually entrust with such a task. All the companies he’s started have been pioneering entities in industries that were just emerging. What brought success for those enterprises wouldn’t necessarily be beneficial here; still he went ahead and gave it a try. Over 70% of Twitter’s staff were fired without any regard for their expertise on the matter. He had the stubborn opinion that working at Tesla made him an expert advertiser as well — which was clearly not the case. Plus, Elon Musk failed to take into account what consumers wanted from Twitter, believing his heavy tweeting dependency already provided him with all the answers. Needless to say, being immensely rich doesn’t equate being able to comprehend why regular people would use this platform.
Here’s an example. The Metropolitan Transportation Authority, which controls New York City’s subways and buses, sent out automated alerts about service changes and emergencies for years. As a result of the symbiotic relationship, users depended on the platform for updates about stalled trains and late buses, while the MTA had a quick, reliable way to communicate with them.
In April, Elon Musk refused to allow access to aTwitter program that had benefitted the MTA for years. His justification for this move was so he could ask users to pay for the application programming interface. He assumed that national weather services, governments, and emergency-response agencies needed Twitter more than vice versa. However, the MTA estimated it would cost $50,000 a month to pay up, and they were unwilling to do so. This prompted Musk to reverse his decision and give back access free of charge. By doing so, he revealed his bluff – one which was not particularly strong.
“The only difference between Twitter and Elon Musk other companies is that he treats Twitter users worse than his employees,” Vicki Bryan, the founder of Bond Angle, told me over the phone.
A major problem with Twitter’s product is Musk’s tendency to not pay his bills on time, which has frustrated Tesla’s suppliers for years. Because Musk refuses to pay the rent for a few of Twitter’s offices, Goldman Sachs is holding bad property loans for Twitter’s landlords and Goldman Sachs.
Reading between the headlines, one can detect hints of Musk’s frugality. Prior to July 4, he declared that daily tweet visibility would be restricted to “improve the experience” and tackle spam bots. This move could damage Twitter’s reputation as a reliable hub for news and dialogue. It’s similar to burning a house down to eradicate termites. If it really is intended as a distraction from his stringent executive approach, then this strategy makes more sense: by late June, Twitter was already months behind on payments for its Oracle database; additionally, CEO Linda Yaccarino had to settle money owed for Google Cloud services. The sustainability of the company without these schemes is unknown, and it is highly likely further partnerships have been jeopardized too.
Yes, maybe limiting user access is about the bots. To Musk, that might be a crusade worth sacrificing the very thing that makes Twitter special. Perhaps he thinks Twitter, a social-media site that has been trying to grow its user base for years, should shrink to fight the bots. There seems to be more reason for the site’s challenges to be understaffed, underdeveloped infrastructure, and a C-suite filled with cheap dilettantes than anything else.
Anyone from Twitter who has a bright idea should share it now, as Fidelity marked the company’s worth down to $6.5 million in May; that’s only a third of its traditional value. According to Bryan, who is familiar with the purchase of Twitter by Musk and its$13 billion debt, this decline in value is exceptionally quick compared to other companies she has followed over her career.
The true worth of Twitter is not the $44 billion Musk paid; it’s a falling knife and a clear sign to Wall Street. That’s why banks such as Morgan Stanley, which agreed to distribute the $12.5 million in debt, have elected to stockpile this junk bond instead of trading it for loose change. According to The Wall Street Journal, Twitter’s debentures form a large portion of the idle $80 billion in “hung debt” on balance sheets — these bonds were issued for a variety of takeovers that nobody desires to buy due to the recent increase in interest rates that has since cooled off the merger market. This, thus, translates into more expensive debt payments for Twitter with no room for experimentation or mistakes if they want to stay afloat financially.
Elon won’t get more debt if the banks can’t sell it, Bryan said. “If the people you sold your debt to can’t sell it, you won’t get more debt.”
Now Elon Musk is the product for Twitter
The May survey by Pew Research found that heavy users of Twitter had decreased in number, likely due to a drop in satisfaction with the product. This is partially attributed to CEO Elon Musk who has become a focus of the site and whose posts have been made increasingly prominent as he becomes aware of waning popularity. Furthermore, another Pew survey reveals that 60% of users have taken an extended break from Twitter over the past year, indicating a collective “Elon exhaustion.”
Alternatives to Twitter have been around for a while now – whether its Mastodon, Post, or Bluesky (created by Twitter’s founder Jack Dorsey) there are plenty to choose from. These sites have slowly gained traction by poaching Twitter users, yet their lack of celebrity presence, brand affiliation and other popular features has prevented the necessary “critical mass” needed to compete with Twitter. However, Meta’s Threads could be the most serious competition that Musk’s beloved platform faces yet. This is due to its direct connection with Instagram; users are being grabbed in bulk and thrown over to Threads rather than being simply poached one-by-one.
The Federal Trade Commission, with Chair Lina Khan leading the charge, has attempted to sue Meta for allegedly copying products from smaller companies in order to uphold its stronghold on social media. However, her legal argument hasn’t held up and chances are that her efforts will not be reinforced by taking Musk’s side. On the other hand, Musk’s attorneys have issued a cease-and-desist letter so that Twitter can take action if Threads is not withdrawn, potentially giving Zuckerberg an opportunity to come out on top in court as well as in the digital sphere. Kudos to all the lawyers!
In light of her résumé, Yaccarino appears to be a competent professional who probably doesn’t need my advice, but I’m giving it to her anyway: Run! Musk is known for micromanaging and penny pinching, which means your expertise will be subverted to his ego in all decision-making. In Tesla, I’ve seen this happen many times. When you’re ready to leave, he’ll fight for every penny you deserve.
At Twitter, Musk’s brand has fused with its products and turned them into a toxic mess. Musk has been successful in the past fusing his brand with his products. As long as Twitter is too toxic to serve as the global watercooler, it’s diminished. Musk’s billions will keep the lights on, but the only people home will be him, a few misguided men who wish he was their dad, and porn bots.
It’s unclear whether any app will be the “Twitter killer,” but Musk’s manners and poor product are already turning the “bird app” into a zombie. Regardless of whether Twitter dies or not, it will certainly not live. It will need brains to sustain itself, but there won’t be enough brains around to feed it. Maybe Musk really wanted this site. At least he will be popular there.
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