Jack Dorsey: “I grew the company size too quickly”
bbc.com
bbc.com
Post-Musk Twitter can't really afford to do any of that stuff, at least not on spec. They're running (I think by necessity?) a classic private equity playbook here: figure out the core revenue drivers and strip out everything that isn't directly associated with them. Bring costs sharply down, wait for revenue to stabilize, pay off the loans, and then figure out what to do with a much more "efficient" company?
All this just to say: I'm sure they probably did grow Twitter too big. But even accounting for that, private Twitter just has different needs than public Twitter, right?
(The layoffs appear to have been done cruelly and capriciously.)
Saying post-Musk Twitter is using the private equity playbook assumes that Twitter is being handled according to a playbook rather than being done by an incompetent narcissistic sociopath who hyped his way to being a very overvalued) billionaire, bought a company on impulse, and is now has to make more money off Twitter than is likely even possible in order to pay back said loans.
Here's the reality: Musk has big plans for Twitter. Much bigger that Dorsey's or Parag's plans.
He got multiple billion invested by third party because he convinced them that he's capable of multiplying the value of Twitter.
Here's a NYT story from May detailing Musk plans for Twitter based on leaked deck he presented to would be investors.
Here are things Musk pitched to investors, in May:
- Quintuple revenue to $26.4 billion by 2028
- Cut Twitter’s reliance on advertising to less than 50 percent of revenue
- Produce $15 million in revenue from a payments business
- Increase average revenue per user by $5.39
- Reach 931 million users by 2028
- Have 104 million subscribers for a mysterious X by 2028
- Hire 3,600 employees — after shedding hundreds. By 2025, Mr. Musk anticipates Twitter will have 11,072 employees
https://www.nytimes.com/2022/05/06/technology/elon-musk-twit...
The layoffs are necessary but temporary. He plans to grow head count to 11k.
He has a plan. It's not a whimsical or egoistical purchase.
He started executing on that plan the day the deal closed. In 2 weeks Twitter will have shipped a major feature ($8/mo subscription). For context: edit feature took Parag more than a year.
The NYT story and numerous hints Musk dropped about his plans for Twitter directly contradict your "private equity playbook" confabulations.
That is how you grow a business. I'm sure the advertisers will come running to make deals with a man who may or may not lash out at them publicly and send his followers to attack them in the future over any disagreements.
Forgive me if I don’t take his plans for twitter at face value.
and so on and so forth. I dont care for his hyperloop shenanigans ("will never happen" to all of those announcement) nor his Mars dreams, but those are the ones I can think of. There are many more broken Elon promises.
Elon does deliver though. There's no denying that he does deliver good products.
Subscription-based social networking has been tried before: that was the revenue model for LiveJournal/DeadJournal/uJournal/SomethingAwful/Flickr/Del.icio.us 20 years ago. People do pay for it - but only a couple percent of people will pay for it, and that was for companies that charged more like $10/year rather than $10/month. Worse, social networking is a network-driven business where the utility of the product increases the more people that are on it, so if a subscription-based business model results in fewer total users, you end up losing out to a free ad-supported model. This was exactly how MySpace and Facebook totally took over from LiveJournal & Flickr.
It's possible that 20 years makes a difference, and the userbase now is fundamentally different from it was 20 years ago. But I wouldn't bet on it - if anything, the masses are less willing to pay for entertainment than they were 20 years ago, because they have less money. I'd chalk this one up to a businessman with lots of money and experience in other businesses entering a business that he knows nothing about and assuming his experience is transferrable.
Do you mean that he is planning to increase the subscription price for an existing feature called Twitter Blue? Why do so many Musk’s fans have the urge to constantly exaggerate his impact?
He’s definitely reducing reliance on advertising considering how poorly ad sales are going. So we’ll soon be able to mark that one as a « win » I guess. /s
I think Musk plans to change the nature of twitter. He could build a substack and onlyfans clone for starters, but i think his ultimate goal is to make it the Wechat of the US
I personally think Musk ended up with Twitter because he lost a game of chicken with Parag Agrawal, for whom there should be a marble statue erected in Bowling Green commemorating him as a hero of shareholder value. You can think otherwise. You're wrong, but it doesn't matter! We can arrive at the same analysis.
Whatever Musk's grand strategy is, his first order of business is to strip Twitter down to some efficient core. He'll want to put his own big plans in place, not Parag's. Even if you think Musk really wanted Twitter, he certainly didn't want it because he thought there was a lot of value locked up in Twitter's internal plans.
The point is just: Twitter was bound to get a bunch smaller in the near term because the first order of business here is to do a reset, and to shake off all the long-term bets Twitter was making. Public Twitter had to make those bets; otherwise, the only way to value it would be on the ad revenue it was already bringing in.
I cannot discount that Elon may have a master plan here but it did seem he was being outplayed every step of the way because he was so... Elon?
What if it doesn’t need to?
Chances are 99% of the users use the basic functions, and are just happy with the average twitter experience.
And I’ll tell you what there are even public people that post ok twitter against their will (I’m thinking of journalists and authors that post on twitter because their employer/editor requires them to do so).
Most likely the true value of twitter is the network effect and its critical mass, not much the fancy ai stuff or whatever.
Growth at all costs.
Heck even if you grow at a smaller percentage of what you grew by the year before the markets get spooked and the headlines of doom begin, even for companies doing insane numbers.
Every tech company hires aggressively in a low interest rate environment for two reasons.
1. Money is cheap 2. Bonds return negative yields so all the money flows into risk assets that grow aggressively. Profits don't matter in this environment.
Those that weren't in the workforce prior to 2008 will now learn the importance of profit as interest rates rise to rates we haven't seen in decades.
That has yet to be seen...
Oh and Musk used something >$10Bn worth of loans to buy twitter, so they immediately have a new $1bn/year interest payment to make. That's 3 mil a day alone (check my maths).
Twitter was profitable before this happened, even with the increased headcount. It seems like all the loans Elon took out put a noose around Twitter for no benefit to the platform at all.
If the employment contract says "If you fail, you will need to return all of your compensations", then nobody would agree to work for you.
Now they agree to work for you under the assumption that they will not return what they've earned... then we want to reverse that retrospectively. The contract was signed years ago, but well we are going to change it now. Please return every penny we paid you. That's kinda fucked up to be honest.
I don't want to return money when I fail at my job. It could easily bankrupt me.
Imagine if you are fired and have to return all the salaries and stock you've ever earned.
Are you arguing that it should be the norm and apply to years of employment?
Like if you are fired, you have to return the compensation for the last 4 years?
Then, you showed up and said that crawling back money was already done widely. I responded that it was done limitedly.
Maybe I assume your position, but you didn't make your position clear either...
It doesn't matter because that is not what was agreed at the time of employment.
You are trying to apply your idea retrospectively without any prior agreement.
Now moving forward I can see your idea being implemented but be prepared for c-suite's compensation to skyrocket even more because the downside is much higher... The upside has to be much higher as well.
You misread them, they didn't write that money should be taken from him but rather that he should willingly donate it to be in line with his statements. More so, it was probably just a stylistic device to make a point.
[0] - https://www.ft.com/content/f65414c4-f3e4-4bff-9af0-4960f922c...
Not the best wording.
He should have said he failed to grow revenue and the macro-economy wasn't as expected.
Not really. If your words would hurt other feelings with no upside, it's better left unsaid.
In this case, his words can be interpreted in a bad way easily. The bar for good and unambiguous communication for a 7000-company CEO is very high.
If Dorsey was ranking employees by the pleasantness of their odor or by how attractive he personally found them - I'd agree. No value, even if true, it could hurt feelings and you shouldn't say it. That's not what this is though.
The other equally valid interpretation: It would have been better for twitter and him if he didn't hire those employees.
Isn't everyone at risk, except for those at companies that have already had layoffs?
Times have changed though, the smart ones are getting with the program. The others will have their share price obliterated
If the irony of that just dawned on someone, you're welcome :)
A simple analysis of day 1 to day 3 operations makes that a quick thinking decision.
"https://www.fisherphillips.com/news-insights/fair-warning-co...
Jack has not been the CEO for about a year now, a 50% reduction is hardly due to his choices to expand over a year ago.
How is this cloying ownership and rounds of apologies still a thing? Gaaaaaah this is so infuriating!
Jack is an idealist in a very stubborn way. He sacrificed too much of Twitter’s reputation and neutrality by fighting for questionable causes.
I'd either ignore it, or just change the quote to British English, I assume that's not going too far.
edit: apparently it is going too far. Quoting across the Atlantic is a common issue faced by writers, and it seems the consensus is that you always just quote letter-for-letter.
If he tweets "I realize [sic] this is a silly question", how would they quote it?
You mean "you weren't joking"
Brits are completely aware that Americans spell things differently, personally I don't feel it needs pointing out. Makes it look like the writer thinks Jack is wrong!
Googling "BBC using sic for American spelling" brought me to your comment, and looking at the other results it doesn't look like they do it all the time. Seems silly to have done it at all!
I wager it get's edited away before the end of the day.
No wonder 50% of innocent pedestrians are being trampled.
I too test the happy path once and assume there's no problems.
https://twitter.com/jredmond/status/1588675418064039937
A couple of former Twitter people I know have made similar comments hearing that plenty of good ops people were cut. That sounds like the usual PE death cycle getting started: they’re not critical to daily operations so things are fine and you can say “look, I’m a smart manager” until something breaks. After a while, customers get tired of declining service and the process accelerates.