The Twitter Situation

(Written on Saturday, November 5, 2022)

Not really a product related post today, but somethings I need to say regarding the dumpster fire that Twitter is rapidly becoming, and what it means to me, and my audience.

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On with my thoughts…

The lead up to Musk’s purchase

In the early spring of 2022, as news leaked out about Elon Musk of Tesla and Space-X fame had acquired a sizeable block of Twitter stock (9.2 % of the float) and became the largest shareholder, I became concerned as he uses Twitter to be an edgelord sharing stolen memes (he is notorious for not crediting others work. Read up on how he backed his way into being the “founder” of Tesla. Hint: he wasn’t a founder) punching down, and in general being a grade A asshole.

Just what Twitter needed, the richest man on the planet who seemed hell bent to add one of the old guard of the social media companies to his toybox.

Then there was the dance about him joining, then not joining the board, and finally, in late April, he negotiated an offer to buy Twitter and take it private in a deal valuing the stock at $54.20 a share.

n.b. - Musk has this warped mentality as if his persona was frozen as a 14 year old boy who thinks he is clever. In 2018 he posted (on Twitter, naturally) that he had “secured funding to take Tesla private at $420 a share”. A reference to smoking cannabis. He also has an affinity for the number 69, and it is no accident that the Tesla models are S, 3, X, Y, to spell out SEXY. Childish shit indeed, that most people grow out of by the time they exit high school

He did one incredibly stupid thing in his rush to get the offer before the board for ratification. He waived the usual due diligence that is customary, nay, essential as part of any deal of this size. He essentially put forth a contract to buy Twitter for $54.20 per share, as-is without any deep analysis of operating and operational parameters. It was just a bauble that he wanted to continue his edgelord behavior.

I will spare you the interregnum until the purchase closed on October 27, 2022, but needless to say, the ZIRP era ended, interest rates are rising faster than at any time since the early 1980s, and all the major tech companies have slumped in share price 40-60% (and that includes the source of most of his wealth, TSLA). Musk tried to back out, claiming bots, and spam accounts were too high, but since he waived the due diligence, and signed the contract with performance clauses (turns out that Twitter’s board was pretty savvy in the terms) he had no easy way out.

In September when shit got real with the Chancery Court of Delaware, Elon Musk was facing discovery, a slew of text messages he exchanged with the other titans of industry (that is a laugh, the messages show them being rather droll, and practically begging to be part of the deal) were made public, and two days before he was set to be deposed, something where he wouldn’t be able to meme his way out of, he decided that perhaps actually consummating the deal was in his best interest after all.

Now we are caught up.

The Musk Era of Twitter Begins

I had always thought that Musk would fail to turn Twitter around. He loves to talk about true freedom of speech, and how there should be no limits. But that never really has been the case at least in regards to himself. He is quick to sue for libel, to bully and threaten outlets, and to get in spats. Say something bad about Tesla, and he was happy to punch down, and pile on.

Thus I always took his free speech absolutism with a large grain of salt.

Knowing that the deal to buy Twitter Musk found investors and with his resources he pooled about $31B of the total $44B cost, he lined up the old guard of Investment Banks to borrow the last $13B.

That last $13B is an ominous number. That means to service that debt, Twitter will need to pay about $1B per year in interest alone. Twitter has never been consistently profitable and has never had that sort of free cash flow.

Musk now needs to get Twitter to generate enough cash every year to pay that ‘nut’.

Most of Twitter’s revenue comes from the selling of ads.  They generate about $5B a year in revenue, and not surprisingly, it costs a lot of money to run the infrastructure. They spend about $450M per year in R&D, about 9%, which is low for a tech company, but not terrible. Selling ads is expensive, it requires sales and account reps and a lengthy cycle of sales discussions to build the trust. Since Twitter has a history of platforming some truly awful people, companies who advertise on Twitter want to be assured that the company polices the awful and prevents their “brands” from being seen next to an Inforwars post. Or much worse.

It is that last bit that Musk seems to have screwed the pooch with. A prolific shit-poster Musk doesn’t seem to get that normal companies can’t bask in “owning the libs”, calling a dive rescue person a “Pedo” because he lives in Thailand, and said that Musk’s idea of a mini-submarine was a non-starter, and many other examples of this, he seems stunned by advertisers “pausing” their buys, blaming the “activists” when just a few days into owning Twitter, he indulges the MAGA right’s fantasy that the attack on Paul Pelosi could have been a drug fueled lover’s tiff, the people who buy ads just might be queasy of the future of Twitter.

Then there was the top down boss from hell driving all the engineering teams to implement some new feature (turns out that taking “Twitter Blue” adding the Verified checkmark, and charging $20 (until a spat with THE Stephen King got that lowered to $8) a month, wiping out the intent and purpose of verification, culminating in laying off 50% of the entire staff of Twitter 8 days after taking the reins, gutting teams, and handled in probably the least humane way possible.

All in Musk’s effort to juice the free cash flow quickly to satisfy his creditors.

To say that today, 9 days into the Rein of Musk at Twitter things look bleak would be the understatement of the millennium.

Why I care?

I ought to not give a damn. I don’t make my living on Twitter. I have a modest account (1500 people I follow, about half that number follow me), and I like the product management community there, I have been interacting with it since I discovered it in 2009 (in 2016, I deleted my account and restarted to cleanse some early tweets that had come to haunt me) and have made a group of peers that I genuinely enjoy interacting with.

For this newsletter, which began as a blog when I made an attempt to go consultant between gigs (turns out that to be a consultant, not only do you need chops, but you need to always be selling yourself to find the next contract, and I hated that) it is how you, my subscribers have found me, and liked it enough to smash that subscribe button.

But, while I figured that Musk would take a couple months before trying to make great changes to the platform, and then to take measured bets, giving them time to either work or be discarded, he seems hell bent on trying to turn it around overnight, and in just 8 days, I think that I may just pull the plug on Twitter.

I will probably not delete my account. My posts will likely still be automatically become tweets, but what Twitter was to me, is soon to be so toxic, so painful to use, so turmoil laden that I may just delete the app from my phone, and I will add the

127.0.0.1       www.twitter.com
::1             www.twitter.com
127.0.0.1       twitter.com
::1             twitter.com

lines to my hosts file(s) and thus I will never visit Twitter again.

In a way, this is for the best. I probably waste an hour a day scrolling through my timeline, interacting with my music and product management follows.

I am on Mastodon, but that service is just not Twitter, and I suspect that it will never be a true replacement for what I loved about Twitter.

The end of an era.

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