Elon Musk: Always A Douche

[OttoVonBismarck]

Sorry, do you think it was a good business decision for Elon to randomly shit out a controversial tweet about an inflammatory racial incident that happened almost 9 years ago?

[Berkut]

No, and nobody has said it was a good idea. Who are you arguing to passionately with?

[OttoVonBismarck]

I wasn't arguing with anyone, I posted yet another negative news article about Elon running Twitter because:

1. This is a thread for exactly that purpose
2. Because it was just published today so was both topical and not previously shared

You seemed to take some umbrage with me posting it, but due to a vague post of yours I was left having to guess what that umbrage was, hence my using a question mark in my response.

[Berkut]

My umbrage is with the fact that you could not just post the article, you had to add in the ranting about fictional Muskies defending it on grounds that nobody defended it on except in your mind.

[Berkut]

My umbrage (or rather my bemusement) is with the fact that you could not just post the article, you had to add in the ranting about fictional Muskies defending it on grounds that nobody defended it on except in your mind.

But Musk knows better, because he's rich, and in some Muskie's minds, that is intrinsic evidence you know everything, because you have to be a genius to own a lot of money and have a big company.

[Berkut]

Sorry, do you think it was a good business decision for Elon to randomly shit out a controversial tweet about an inflammatory racial incident that happened almost 9 years ago?

For the record, it is yet another in a rather long list of examples of Musk being a fucking moron and apparently incapable of knowing when to keep his rather dumb views to himself.

But this isn't new. It's like posting another example of Trump being Trump. 

This is the guy who thought it would be a good idea to bicker with some dude trying to save kids in a cave by calling him a pedophile. 

The only difference between him and Trump is that I actually think Trump is stupid enough not to recognize how stupid he is, while Musk seems to have some kind of compulsive disorder or something.

[Jacob]

I wasn't arguing with anyone, I posted yet another negative news article about Elon running Twitter because:

Thank you for that. I'm enjoying watching the drama of Twitter's current trajectory and Musk's flailing about. I really do wonder how it'll all pan out.

Actually, that's a question for the thread - what's the next steady state for Twitter, do you think?

1) Twitter eventually returns to more or less normal, with a few minor changes overall - all this sturm und drang in the end matters little.

2) Twitter remains a viable and important social media actor, but with Musk's political imprint (incl. controversial "free speech" and bullying etc) - yet becomes profitable again.

3) Twitter dwindles to fringe status, being important for Musk's fellow travelers but irrelevant for larger audiences.

4) Twitter deflates or implodes and goes the way of MySpace and the like.

What do you folks think this saga will go?

[HVC]

It'll muddle along until the FTC fines start coming in*. Then declares bankruptcy and tries to sell off any IP he can. Blame woke people and declares moral victory for free speech since he tried but everyone ganged up on him.

*can FTC fine Musk directly?

[Berkut]

I think Twitter is going to cease to exist as we know it. That is my bet.

[Barrister]

1) Twitter eventually returns to more or less normal, with a few minor changes overall - all this sturm und drang in the end matters little?

2) Twitter remains a viable and important social media actor, but with Musk's political imprint (incl. controversial "free speech" and bullying etc) - yet becomes profitable again.

3) Twitter dwindles to fringe status, being important for Musk's fellow travelers but irrelevant for larger audiences.

4) Twitter deflates or implodes and goes the way of MySpace and the like.

What do you folks think this saga will go?

It's so hard to say, isn't it.

One big factor is if Twitter starts having more and more technical issues - that could seriously drive users away.

So far though I heard the analogy that threatening to go to Mastodon (or whatever) was like threatening to move to Canada if Trump won - nobody really means it.  So far Twitter is still quite usable and you don't have to pay the slightest attention to Musk's ramblings.

The big gamble though is that right not Twitter is an advertising company, and Musk's antic seem almost guaranteed to drive advertisers away.  That imperils Musk being able to pay his $1 billion in interest payments.

My marker then is this: in 2-3 years Musk can't afford to make his interest payments, has long grown bored with being the Chief Executive Troll at Twitter, and sells out to his creditors at pennies on the dollar, leaving Twitter slightly diminished but still chugging along.

[Sheilbh]

1) Twitter eventually returns to more or less normal, with a few minor changes overall - all this sturm und drang in the end matters little?

2) Twitter remains a viable and important social media actor, but with Musk's political imprint (incl. controversial "free speech" and bullying etc) - yet becomes profitable again.

3) Twitter dwindles to fringe status, being important for Musk's fellow travelers but irrelevant for larger audiences.

4) Twitter deflates or implodes and goes the way of MySpace and the like.

What do you folks think this saga will go?

No idea.

I think that if there's technical issues from all of this turmoil it could end very rapidly.

The slightly bigger issue from what I can see is that as others have said it's an advertising business and I think Musk's focus on things like subscription models or monetisation of creators fundamentally misunderstands Twitter. I think they missed the boat for lots of the things that are advertised on Twitter where there is a subscription/monetisation model (longer form newsletters and podcasts). At the minute I can't really see why anyone would subscribe to Twitter or what content they'd pay for. Which means, I think, you end up back at advertising.

But on the other hand I don't think there'll be a significant shift away from Twitter. It is still the best social media platform for quick news reporting and sharing journalism - Musk is right when he pointed out how useful Twitter is when there's a story like, his example, FTX (I created a Twitter account during the Arab Spring because of how useful it was at that). Some of the more specific communities might migrate to Tumblr or Mastodon - but those either seem a bit too community or a bit too insular or complex for general use. So I think unless something bad happens technically Twitter will just keep chugging along.

I'm not sure how those two things reconcile into a steady state.

On a personal level the trollling stuff wasn't - and isn't - something I really see. I don't really Tweet. I don't have thousands of followers. So I follow accounts I like and if I see anything I don't like far-right stuff (normally being Quote Tweeted - which is not helpful - or someone retweets a pretty building, I click on the account and, surprise, fascism!). I block and report whoever sent that stuff because I don't want to see it and I don't think there's some duty to see whatever exists on Twiitter or not to moderate your experience. I think the benefit I get from it is exactly that it's curated based on what I'm interested in.

[Admiral Yi]

Elon's motivation appears to not be making money but feeling free to post whatever the fuck he wants.

[Jacob]

Elon's motivation appears to not be making money but feeling free to post whatever the fuck he wants.

Yeah. Which is why it's interesting to see how it plays out.

[OttoVonBismarck]

Twitter the business can basically continue as long as Elon feels like it.

Quick financial picture from 2021, the last year of full results:

Revenue $5bn, $4.5bn of which is advertising.

Expenses $5.5bn

Those expenses will have been slashed considerably. By some estimates we are down to something like 20% of Twitter's original headcount (I've seen some estimates go as low as 12.5%, but let's say 20%.)

Twitter's Cost of Revenue was listed at around $1.8bn, which they explain basically covers almost all the things that you "can't" get rid of--i.e. the servers hosting and running Twitter, and many of the costs associated with that. It doesn't break it down into more detail, let's say he can shave that $1.8bn down to say, $1.4bn, assuming at least some large chunk of salary reductions hit infrastructure teams, and with various satellite offices closing that also reduces some of these infrastructure costs. Again, unless he reduces Twitter to where it can't even function, I'm assuming he will still have a bit of money he has to spend here.

Much of the rest of their $5.5bn in expenses appears to be related to things he appears to not be doing anymore: development of various new products, administrative expenses, advertising, marketing, communications, compliance.

All in it's probably possible with how aggressively he's gutted the company he could have annual expenses down in the $2-2.5bn range. Let's assume $2.5bn as a "bad" scenario.

Revenue wise let's assume he loses 90% of his advertising revenue, which leaves him $500m a year in data licensing revenue and $450m/yr in advertising, or a little under a $1bn/yr. With the interest he has to service, this means broadly Twitter could probably be kept "alive" at a burn rate of $2.5-3bn a year, and some of the advertising revenue would likely recover over time, I assume he will get at least some revenue from whatever subscription service he eventually launches. Unless something big and fundamental changes I see little prospect of profitability, but he could get it down to maybe $1.5bn/burn a year.

The thing is Elon is actually so rich he could just let that burn the rest of his life.

Now, will he want to? I doubt it. I suspect if he eventually realizes that is "as good as it gets" with Twitter, he'll tire of holding it, eat the loss of his investment and sell it for pennies on the dollar to a creditor--possibly the sovereign wealth fund of Saudi Arabia who will find value in being able to look through all of Twitter's data to help arrest/assassinate dissidents.

So really Twitter the business can continue forever, but probably until Musk gets tired of losing money each year on it, which if he isn't enthusiastic about owning it and doesn't see a magical turnaround in the future may be a few years, who knows.

As a platform it's a little harder to predict.

People have in their mind that big social media networks are too big to fail, but that doesn't seem that true, right? Facebook is struggling now and Twitter was struggling before this. Facebook's struggle is it has achieved all of the growth it could reasonably expect to (which is a good position), but now seems to have lost cultural cachet with people under the age of 25, and many simply don't use it. Once something becomes associated with "uncool, old person" tech, it's going to be very hard to ever get those users onto your platform. Over the years, the older population on the platform will die off, and without new replacements the platform will get weaker.

Twitter is probably in a worse place because it isn't as "personal" as Facebook. A lot of people will retain Facebook for the cursory family interactions and old High School friends, even if their engagement with it is really low. On Twitter it is still fairly easy to just use it to follow a few accounts you care about, if that continues it will be relatively easy for many people to stick with it. But if it becomes a real right wing, racist place, a lot of mainstream media for example will pull out. There is a network effect there, if it starts to be perceived that "good" newsrooms and media platforms need to disengage from Twitter, the exodus could be fast.

That is going to have cascade effects--it means the type of engagement on Twitter will move increasingly to the right. Right wing news networks, journalists etc will be more visible as other types of people leave. That will then cause it to be perceived the way Parler or Fox News are perceived now, and that will start to cause disengagement from Americans who don't like that, and that will cause even more cascade effect.

It actually isn't that hard to imagine a scenario where Twitter just becomes a low engagement platform with declining users that loses relevance every single year. It won't have a day where it crashes and burns up like the Hindenburg, but as best we can tell the previous generation of social media which did have some platforms die--they usually don't go out with a bang.

[Jacob]

That's a pretty reasonable analysis OvB