Elon Musk completed his takeover of Twitter and fired Chief Executive Parag Agrawal and Chief Financial Officer Ned Segal, according to people familiar with the matter.
So on second thought, I think Elon is going to be forced to sell Twitter soon. Hear me out.
While Elon is wealthy af, very little of that is liquid assets. The largest portion of his assets are tied up in Tesla stock. So if he’s doing a purchase like this, he either is selling Tesla stock or doing a leveraged buyout using the Tesla stock as backing. Problem is, Tesla’s value has dropped significantly year-over-year. Banks are reluctant to loan and Tesla stocks will be sold at a discount. And considering that Twitter is not a great investment to begin with, it eventually may be more advantageous to just get out of his little vanity social experiment.
It’s all going to depend on whether he figures out a way to monetize Twitter. One way that was floated before was to create a paid tier and use that as a source of revenue instead of ads and analytics. Cutting down 75% of employees and moving to this model could actually make Twitter profitable.
I’m curious where that 75% of employees would even come from. I have my doubts that they can just slice off 3/4 of their workforce and not jeopardize the long term viability of the company. Not to mention I assume tasks like reviewing reported tweets must be highly labor intensive.
It looks like they have monetized their API. I can’t see how they monetize the actual UI itself.
My experience is that SV companies tend to hire people as part of demonstrating growth to investors. Layoffs starting with the data engineering team is suggestive that they may deprioritize analytics going forward. Twitter having less moderation going forward is also highly likely. At the end of the day these companies just care that enough users stay on the platform to monetize. Remains to be seen where this goes, but it’s certainly possible for twitter to be profitable if they focus on direct monetization. For example, if they charge a fee for blue check accounts that could create a significant revenue.
The irony is that Twitter isn’t even really that big of a platform as Internet giants go. It has outsized influence because it’s the platform of choice for media outlets, journalists, celebrities, etc.
So on second thought, I think Elon is going to be forced to sell Twitter soon. Hear me out.
While Elon is wealthy af, very little of that is liquid assets. The largest portion of his assets are tied up in Tesla stock. So if he’s doing a purchase like this, he either is selling Tesla stock or doing a leveraged buyout using the Tesla stock as backing. Problem is, Tesla’s value has dropped significantly year-over-year. Banks are reluctant to loan and Tesla stocks will be sold at a discount. And considering that Twitter is not a great investment to begin with, it eventually may be more advantageous to just get out of his little vanity social experiment.
It’s all going to depend on whether he figures out a way to monetize Twitter. One way that was floated before was to create a paid tier and use that as a source of revenue instead of ads and analytics. Cutting down 75% of employees and moving to this model could actually make Twitter profitable.
I’m curious where that 75% of employees would even come from. I have my doubts that they can just slice off 3/4 of their workforce and not jeopardize the long term viability of the company. Not to mention I assume tasks like reviewing reported tweets must be highly labor intensive.
It looks like they have monetized their API. I can’t see how they monetize the actual UI itself.
My experience is that SV companies tend to hire people as part of demonstrating growth to investors. Layoffs starting with the data engineering team is suggestive that they may deprioritize analytics going forward. Twitter having less moderation going forward is also highly likely. At the end of the day these companies just care that enough users stay on the platform to monetize. Remains to be seen where this goes, but it’s certainly possible for twitter to be profitable if they focus on direct monetization. For example, if they charge a fee for blue check accounts that could create a significant revenue.
The irony is that Twitter isn’t even really that big of a platform as Internet giants go. It has outsized influence because it’s the platform of choice for media outlets, journalists, celebrities, etc.
It’s basically a glorified RSS feed
In fact, Techlore got banned from there and created their own update system complete with an RSS feed.