Dhe first message Elon Musk sent to his new hires on Thursday didn’t leave much room for optimism. “Honestly, the economic picture ahead is bleak,” he wrote in an email to the remaining employees of the short message service Twitter. By then he had laid off half the workforce. “Especially for a company like ours that is so dependent on advertising in a challenging economic climate.”
The future of the company itself is at stake: “Without significant subscription revenue, there’s a good chance Twitter won’t survive the upcoming economic downturn.”
No tech company has received as much attention as Twitter in recent weeks – even though there has been a lot going on with the competition. After all, Meta boss Mark Zuckerberg just had to announce the layoff of 11,000 employees and admit his own mistakes in corporate strategy. But compared to the spectacle on and on Twitter, such news pales.
First released, then brought back
First employees were fired, then some of them asked to come back. First, the verification of profiles should cost 20 dollars a month in the future, but then again only 8. That the blue tick behind the user name would lose its original meaning, as critics warned in advance, became apparent over the course of the week: masses supposedly dived verified fake accounts of well-known personalities and companies.
According to media reports, the German Ministry of the Interior, the Ministry of Foreign Affairs and the government as a whole are now watching closely how Twitter is progressing. In any case, the chaos is so great that some observers are wondering whether they misjudged the business genius Elon Musk.
Being on the verge of bankruptcy with a company is not a new experience for Musk. The recent success of Tesla and SpaceX makes it easy to forget that the success of both was once in the balance. A few years ago, at the “South by Southwest” digital festival, Musk talked about how he was worried about the future of his company in 2008. Musk faced a choice between pouring his remaining fortune into either Tesla or Space X and sacrificing the other company — or splitting the money and risking both going bankrupt.
He decided to split up. In addition, he had to borrow money from friends to save Tesla and only secured the car manufacturer’s further financing at the last moment, on Christmas Eve. After that, a remarkable success story began that made Musk the richest man in the world.
Twitter’s troubles didn’t start with Musk
Will he be able to lead a company from the brink of insolvency to success this time too? One thing is clear: Twitter’s problems didn’t start with Musk. Unlike competitors like Instagram or YouTube, the platform has not yet managed to build up a profitable advertising business. On Twitter there are rather few consumer-friendly influencers and all the more argumentative journalists, politicians – and a significant number of conspiracy theorists and other extremists. Although Twitter has become perhaps the most influential social medium, it has not yet been possible to make money from it.
Musk has also recognized this, which is why he wants to focus more on subscription revenues. So far, however, there is little evidence that the change in leadership has helped. The fact that Musk took the company public for a purchase price of $44 billion doesn’t make it any easier. As the New York Times reported, Twitter will have to spend a billion dollars a year on interest payments in the future, up from only 50 million dollars. At the same time, Musk himself acknowledged that revenue has plummeted “massively” because advertisers have turned away from the platform since the acquisition.
So the search for new sources of income continues. In a conversation with employees, quoted by the American tech magazine “The Verge”, Musk stated that he wanted to convert Twitter into a payment platform. That would go in a similar direction to his announcement in October that the Twitter purchase was a first step towards building an “everything app”, comparable to the Chinese platform Wechat.
If he succeeds in doing this, he could care less about the alienated advertisers and about saying goodbye to Twitter as a marketplace for ideas for creative people and intellectuals. Either way, the platform would then be unrecognizable. But there is still a long way to go until then.
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