Why is the world's most successful entrepreneur screwing up Twitter so badly?

There's no shortage of commentary from people baffled by what's happening at Twitter. There are many who have disliked Elon Musk for a long time who feel this is just "more reasons to dislike" him. I feel I'm a fair bit better than average at understanding him, for while I have often been critical of his actions, I have generally always understood them at some level, in a way not all do. But I'm not alone in feeling at a loss to understand what's going on now.

It seemed strange that he would buy Twitter, mostly because he has so much else on his plate with Tesla, SpaceX/Starlink, Boring, Nuralink and other ventures. And he knows that it wasn't a good idea to take on more, but did so anyway. At those other companies, and his ventures of the past like Paypal/X and Zip2, he is a leading candidate for the most successful entrepreneur in the history of humanity. He's no "one hit wonder" who got very lucky. I have read many people who don't believe he's a great entrepreneur, saying that (obviously) that all the real work in the trenches was done by employees, not by the boss, or that Tesla made use of EV and solar subsidies, and SpaceX on government contracts. Those things don't alter the equation at all. A great entrepreneur can be a great inventor, but pushing others to be great inventors is actually the skill of the greatest.

Even so, if your conclusion is that he's not a great entrepreneur, then there is not much merit it trying to understand why he would make such mistakes. You will conclude he was an extraordinarily lucky fraud that has now collapsed, and you can stop reading now. But you probably won't because Musk has become so polarizing that analysis of him has become more tribal than anything else, and people will will deprecate me for evaluations that don't match their preconceptions, as happens when it goes tribal. (My articles on Tesla alternately trigger people saying I'm a Tesla hater or a Musk apologist, sometimes even the same article.)

I will admit to never having been that enamoured with Twitter, though Elon clearly was and is, and that played a role in this purchase. That is part of why I wondered why he wanted to take it on. I mean almost all of us are heavy users of some internet social or media property, and probably all of us have thought, "If I ran this, I can think of many ways to make it better." This perhaps played a role, but was not enough to justify this.

As expected, there was a deeper plan. I knew this, because several other smart people also participated, and invested billions in the Twitter deal. Including Jack Dorsey, who has forgotten more about Twitter than any of us will ever know. Some of the details of that deeper plan were revealed, confirming long speculation that the goal is to move Twitter to be a universal platform with payments, the way that WeChat is in China, and to also support a creator economy, as YouTube does.

No question, those are plans which, if done well, could easily justify even the $44B price, especially at the time it was negotiated. These spaces are ripe for improvement -- indeed either one of them can justify that price. In order to conquer them, it can make sense, if you can afford it, to start with a site that has almost half a billion users. People have bought sites for less, and there aren't too many half-billion user properties out there for sale.

On the surface then, if you have the world's greatest entrepreneur ready to make a play for two large opportunities given the headstart of half a billion users, it's easy to see that looking like a good idea and good investment. As we all know, the market tanked not long after the deal, and Twitter's current market value is probably only 1/4 of what it was. Musk wanted out of the deal -- both because the price became too high and because he knows that he doesn't really have time to do it -- but failed to get out. Rather than face a lawsuit he decided to go with his plan.

The ego gets in the way

The baffling thing to most of us is that what he's done in his first 2 weeks doesn't seem at all like what you would do to execute that plan. Normally, you would try to keep a hands-off approach on the asset you bought until you had more of the tools in place to execute on the planned change. You would not want to risk that user base, or the company itself, until you were ready for your revolution.

Elon Musk is different, though. Unlike most people of great success, he refuses to moderate himself because of it. Most people, as they get more important, end up moderating and self-censoring themselves, or get pressure from those around them to self-sensor. Almost all of them are slightly saddened by this -- getting richer and losing, rather than gaining freedoms because of it. Wealth beyond a certain level is no longer to buy toys or luxuries, it's a tool to do big things in the world you want to do. Most of us have pondered, "what can I do to fight climate change?" and been frustrated that we can only do a little. People with Elon Musk's money and abilities can set out to do something much bigger -- and indeed he's done more than even most governments in the world.

Yet Elon Musk refuses to let his wealth and fame become a cage. If he feels like tweeting something ridiculous, or calling a rival "pedo boy," he just does it, even it will cost him a lot, because, after all, he can still afford it. He can afford a lot.

On top of that, his fame and success have also made it so many of the unfiltered things he does don't end up costing what you imagine they might. (You might find chilling parallels to the way Donald Trump discovered that he could say all the unsayable things, that he could "shoot someone on 5th avenue and not lose any votes." I don't think Musk is like Trump, but having this happen teaches some bad lessons.)

Musk also has a history of going with his gut when most think he's crazy -- and then being the one that was right. He's done this multiple times. This also can go a bit too far, though generally I would say we need people who can do that, and should tolerate their failures.

Even with all of this, he's going further than anybody expects. Twitter might be bloated, but firing half the staff immediately is unlikely to be wise short of a huge cash emergency. Particularly with some of the teams that were cut, like the site reliability engineers who keep the site up.

He also grossly misunderstood how the half of the public that doesn't love him has grown to resent him. He knows about that, but in his other ventures, he keeps selling as many Teslas as they can make. He's good enough in those ventures that lack of demand was never a problem. Tesla cars are fantastic, and you routinely see people say, "Elon is crazy, and that concerns me, but this is such a great car I would buy it again." Not so with Twitter, which he didn't build, and which users don't pay for. His personal brand's love-him-or-hate-him reputation doesn't mesh with users of a social/media site.

He should have known that, but again perhaps simply wants to not care if people hate him because, he can afford it.

He can even afford the collapse of Twitter, though even his wealth and reputation would see significant pain because of that.

Are we missing something?

Some of the moves he has made have some sense to them. He fired Twitter's PR team. He did that at Tesla long ago, and while it mildly frustrated those in the automotive press, he largely got away with it. While Tesla does no marketing or PR, it has not suffered for it. It seems less likely this would be true for Twitter, but one can understand why he would think this is a move the public won't understand but can make sense. Similarly he has pushed for hard work schedules and deprecated work-from-home at his other companies, it's no surprise he wants to continue that here, nor is it a surprise that others don't like it. He's also had a long career of capricious firing (though perhaps not on this scale) and warnings of bankruptcy. And certainly radical "how could a CEO ever say that?" tweeting.

It seems likely that his long term plan is to move away from Twitter's current (troubled) revenue model of advertising in the tweet stream. Otherwise it's hard to explain his lack of concern over that, though he seems to have been shocked with how much he hurt it, again because he underestimated the resentment he's engendered of late, and added to with the political implications of some of his moves.

His vision of the future Twitter -- one that other smart people bet billions on -- may not call for the work of the people he dismissed or the aspects of the platform he is putting at risk. That still doesn't justify dismantling them in a haphazard way which alienates the user base.

Alienating the user base has also come from more controversial and political questions. Donald Trump has, unfortunately, caused a large sector of the public to lose their (clearly not very strong) support of free speech. While these people are (in my view) wrong to sacrifice the importance of free speech just for the sake of stopping Trump and those like him, there is no doubt that a large group has made that choice, and they would be driven away by changes around this, even before they happen. (Many announced rejection of Twitter even before any changes were made.)

Musk has also shown he isn't the free speech devotee he claimed to be. While it's not uncommon for people who imagine they support free speech to have exceptions -- and Musk has said that parody impersonation is one of his exceptions, except when the joke is ruined by large labels -- proper defenders of free speech make their exceptions with deliberation and care, not capriciously. Even the appearance of caprice, as is to be sure when the enforcement is done on people ridiculing you, will be sure to drive people away. Indeed, it can be argued that even if you do want to block something, you make an exception for attacks on yourself, as hard as that may be, because of the strong impression of conflict of interest that causes.

Instead, Musk banned Kathy Griffin and others immediately, posting after the fact that parody without the word parody in the name will cause a permanent account ban. While I personally think that is a bad policy, that is just my opinion. One can more objectively say that the way it was done was capricious and with a strong impression of conflict of interest, which is not wise.

Twitter, Elon Musk has said, is the internet and the world's "town square." It's not clear that's true, but it is one of the few platforms where one regularly communicates with much of the whole audience, as that is much more rare in places like Reddit and Facebook which might be other candidates for the nexus of community online.

I helped build and grow USENET, which definitely was the seat of community for the whole internet up until the early 90s, and I was for many years the most widely read person there. USENET was owned by nobody, which was both an important feature for many of its users, though also its downfall, as it could not adapt to competition because it could not innovate and had no workable decision making process to facilitate innovation. As a single private entity, Twitter can innovate with ease, but it also has become easy for it to gain distrust as a "town square" because of that central ownership, recently made even more concentrated than anything has ever been.

It's even harder to understand the seriously botched changes with checkmarks and Twitter Blue and monthly fees. I can't fit them into any coherent plan, they seem to just be mistakes, done from haste, lack of time to think, or lack of sleep. The latter is something Elon Musk is notoriously afflicted with. Medical research shows that chronic undersleeping is as impairing as being drunk, but people subject to it don't really understand it.

How does he get out of this?

Of course, he must have a real workable plan for the future that makes this all worth it. Unless that plan has no need for advertisers, and is OK with a lot of people avoiding the platform because they don't like what the owner is saying or doing or being, he'll need to reverse those trends, which will be hard. Elon Musk will never escape his brand, and its positive and negative attributes.

He'll need to resolve to avoid apparent conflicts of interest. Actions and policies should always be clearly guided by a reasonable philosophy that users like. He can be a leader in setting that philosophy, but can't ignore Google's rule of "focus on the user, and all else will follow." They must be philosophies that users believe are in their interests, or can at least tolerate. If you want a universal town square, you can't have too many people excluding themselves for emotional, political or petty reasons.

He may have to decide between being a high-volume poster and a setter of platform policy, which is hard. If Twitter is a platform for its users to get their message out, they will like it. If Twitter appears to be a platform for its CEO, it's more difficult. Even if the CEO is working hard to be "just another user" people will not believe it. Like Caesar's wife, there must not even be the appearance of a conflict of interest.

This also has scared advertisers. Even if the plan is to wean off advertising (which is a good plan if it can be done) you want to milk them to get revenue until you are ready to actually get off advertising. You can be honest about your goal -- advertisers will buy ads if they are delivering for them even if you will later decline their money -- but to decline it early is very expensive.

Hiring back some people will help but this wound is almost impossible to fix. When employees see massive change and layoffs, they immediately start doubting that their future with the company is long-term. They start calling recruiters and looking at alternatives. It will be hard to reverse this. You may need some golden handcuffs, but that's hard in a private company, you have to do it with cash, not shares.

What you do with payments can be copied by your competitors, be it your old company Paypal, or the other major social players like Meta, TikTok and even Google and Microsoft. Efforts in the creative economy may be harder to copy -- most efforts there have not gone where they could, and being big doesn't mean you have an automatic win, you just get a short head-start in the race. I have my own ideas of how to make a great creative economy that's not advertising driven, but they remain untested, like most other ideas in this space.

Elon Musk also has to mea culpa. Which he doesn't much like to do but he has done it. Another big error of his are the repeated wildly inaccurate predictions that Tesla FSD will be working very soon, which he has done every year since 2016. He has admitted that he's often wrong on time predictions but declares he is usually right in the end. Not a great mea culpa, but a start -- and he needs to make a bigger one here. He should openly say his Tweets on Paul Pelosi and how to vote were mistakes he regrets, along with his swift moves on firing, blue checkmarks and many others. The reality is that people who do big things make big mistakes, and failure is how people learn, and he should declare that he regrets his failures, which came from overdoing it, and plans to learn from them. That will win some people back, though I am not sure if it will be enough.

Comments

You have some good points, but I really think the crux of power & wealth breeding arrogance and narcissism or egotism, has been exponentially increased due to Social Media and the internet. You and I know what is was like before the Internet. We also know the power of Social Media and the Internet. It's not hard to get to that point - like Trump (or Musk) where you really think you ARE invincible. But...what else is happening now? People are beginning to question and fight against arrogance of the powerful & wealthy. The 'Me Too' movement is a good example of that. Where powerful people could once get away with anything, now they are called out, challenged or put in jail. I don't see this ending well for Musk. Like Trump, his ego will not allow for looking like he was wrong about anything. When you double down, you might win, but the odds are always in favor of the gambler losing if they play too much, too long and too hard.

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