The incredible disappointment of Elon Musk's first weeks owning Twitter (PART TWO)
And how he can turn it around
What was Elon Musk thinking?
I’m not asking rhetorically.
$44 billion is a lot of money. Almost surely more money than any individual has ever spent on anything. Ever. For $44 billion, Musk could have built homes - nice homes - for 100,000 families. He could have created a dozen permanently free universities across Africa. If he’d really wanted to bring joy to the masses, he could even have dragged the Knicks from Jim Dolan’s cold dead hands and fixed them. Just spitballing here, I’m sure you have your own ideas on how to spend $44,000,000,000.
But it’s not your money. Or mine. It’s Musk’s (a few billion dollars from outside investors notwithstanding).
And he chose to spend his $44 billion on a social media company that had about $5 billion in sales and no profits in 2021, and is constantly being sued by its users. He probably paid at least double fair market value for this gem, at a time when he was arguably the only realistic purchaser. (Though, to be fair, he couldn’t know how badly technology companies would perform in the months after he made his offer.)
(I JUST NEED $45 BILLION SO I CAN BUY TWITTER FROM MUSK)
I thought I knew.
I thought Musk feared the increasing hostility to freedom of speech from the Biden Administration and the woke left. I thought he understood Twitter’s crucial role as a worldwide platform for journalism, especially outsider journalism.
If that’s why he bought Twitter, Musk had a clear path forward after he took over. Three paragraphs would have done the trick:
I support free speech and debate. I believe anyone can be a journalist. I believe honest speech will defeat lies and hatred will eventually die of its own ugliness if we let it expose itself. I believe government or private efforts at censorship are counterproductive. I want Twitter to be the world’s town square - and open to all.
I am immediately ending all Twitter’s strike policies and speech codes, except for those against harassment, fraud, child pornography, and/or other criminal behavior. Twitter will no longer play hall monitor. To the extent the First Amendment permits speech offline, even if it is ugly or hateful or untrue, Twitter will permit it online. Of course, our users remain liable for what they say, just as they do offline.
I am also unsuspending anyone whom Twitter previously banned for violating those codes, and firing the executives who devised those policies and the “Trust and Safety” and other employees who enforced them. I no longer need their services.
Then Musk would have been wise to wait.
Let the lefties shriek and threaten to quit Twitter. They wouldn’t. Twitter is nearly irreplaceable for anyone who wants to be a part of the public discourse and doesn’t have a huge audience already.
Let advertisers threaten to leave. They wouldn’t. Reddit, Twitter’s closest competitor, is filled with scum (check out the subreddits devoted to incest or cocaine if you want to have a nice afternoon) - as well as blue-chip advertisers like The Wall Street Journal and Kraft. Advertisers don’t really care about the underbelly of social media sites, as long as their ads don’t run on those pages.
Within weeks, the hubbub would have died down. Musk could easily have spent that time looking under the hood at Twitter’s engineering and software and advertising units, figuring out how much bloat it had, which employees were essential and which were not.
Twitter is a simple company conceptually. About 90 percent of its revenue comes from advertising, which it sells against the impressions its users generate. Although Twitter is (or should be) open to all, it functions more like YouTube than Facebook, more top-down than peer-to-peer. A small number of users generate a vast number of hits. Elon should understand this reality better than almost anyone, because he probably is responsible for more Twitter traffic than anyone, now that Donald Trump is gone.
But Twitter has until now had one huge advantage over YouTube or the video sites. It does not have to share its revenue with its creators, even the biggest ones. (All by itself, that fact shows how important Twitter is to its biggest users; content creators will move from TikTok to Instagram or YouTube or vice-versa for a better revenue share, but Twitter offers access to a different audience, one that does not exist elsewhere.)
So Musk’s path seemed clear. Embrace free speech and otherwise move carefully. Make the philosophical change that his takeover promised, but take his time understanding Twitter as a business.
After all, Musk has two other huge and enormously complex companies to run, and a couple side projects too. (Like Neuralink, “a neurotechnology company that develops implantable brain–machine interfaces.” Oh.) The man is busy. He doesn’t need a $5 billion fixer-upper.
But it wasn’t my $44 billion.
And Musk had other ideas.
In fact, he went exactly the opposite way.
On free speech he has been worse than a disappointment. Not only has he not ended the speech codes or reinstated banned users, he has added censorship and “moderation.”
Conservatives have cheered some of these moves, such as his flag of a demonstrably untrue Tweet from President Biden. Conservatives are wrong, and so is Musk. He will only lose if he digs Twitter deeper into controversies over what speech is accurate and what isn’t.
Musk’s quick ban of Kathy Griffin for parodying him was even more inexplicable and made him look thin-skinned and hypocritical.
Even worse, Twitter is STILL CENSORING BANNING ACCOUNTS THAT QUESTION COVID COUNTERMEASURES.
Musk appears torn between two impulses.
He wants Twitter to be a place for free speech and citizen journalism. He said so again on Tuesday morning, tweeting “Twitter is All The News… By The People For The People.”
But he also wants Twitter to host "accurate" information, as he or some other arbiter sees fit. He can’t have both.
And despite his brilliance, Musk’s other businesses are essentially engineering and manufacturing companies, which are by their nature process-driven and top down. A Tesla assembly line is no place for unfettered and endless debate. Musk may be less comfortable with free speech than he thinks - as the Twitter employees he has fired for talking back to him have learned.
While he dithers on free speech, Musk has made several ill-considered - even panicky - decisions about Twitter’s business. A week after the takeover, he fired about half Twitter’s employees, a stunningly deep cut for a company of Twitter’s size, especially considering that it must operate continuously and malicious hackers regularly attack its systems. The cuts were so hasty that Twitter resorted to asking some employees to return to work within days.
Musk justified the cut by saying advertisers had fled Twitter and even raise the specter of bankruptcy. The bankruptcy comment was particularly bizarre.
Even if half of Twitter’s American advertisers left overnight and Twitter had NO associated cost reductions with that loss of revenue (from paying commissions to its sales staff), the company would be losing only about $25 million a week - a pittance compared to the $44 billion Musk spent to buy it. No one spends tens of billions to buy a company, then gives up the equity by filing for Chapter 11 weeks later.
Musk’s verification scheme has turned out to be another huge miss, for at least three reasons.
First, Twitter’s most important users get no financial rewards for the content they produce. Verification was a cheap - essentially free - way to make them feel more connected to the platform. Now it’s gone.
Second, limiting verification enabled users with hundreds of thousands or millions of followers to see easily if other large accounts had responded to them. They could then respond quickly, opening the conversations and debate that make Twitter unique. But opening verification means that the accounts with large audiences no longer pop out in replies.
Third, users have abused the verification process to make parody accounts that appear verified and wreak havoc - most notably when a parody of Eli Lilly’s account announced the company’s insulin would be free. Making matters worse, Twitter did not respond for several hours.
Not surprisingly, Lilly said it would pull its advertising from Twitter, making the verification plan an expensive and self-inflicted wound and forcing Twitter to suspend the program.
Meanwhile, Musk also seems to be pushing ahead with a plan to make Twitter a payments site, which at best will cost it many millions in regulatory fees and significantly add to its complexity to operate. He seems to want to make Twitter an entirely different company - but when exactly does he plan to run it?
So why did Musk buy Twitter?
At this point, your guess is as good as mine.
But it is not too late for him to reverse course, to go back to the only reason that made sense - to make Twitter a worldwide beacon for free speech and journalism.
It’s his money and his choice.
I hope he makes the right one.