Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

I mean, I'm sure there's an element of truth to that, but I also wonder whether post-Musk Twitter is just on a different footing and trajectory than public Twitter. Public Twitter had to concern itself with Twitter's competitive position among the other tech media giants. It made sense for them to be doing a bunch of research projects, AI, AI ethics, moonshot platform projects, and product launches that might not pay off for 4+ years but also served as competitive hedges against, I don't know, TikTok or Substack or whatever.

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.)

So much baseless confabulation about Musk's supposed "strip and sell" strategy for Twitter.

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.

Well, if he had a plan for right after purchase, he does seem to be executing on that plan extremely poorly. He has seemingly no revenue plan except charging his verified users $8 per month (down from the original $20), and it’s not even going to cover the interest rates of the loans he took out. So he has some real catching up to you to really make some money.

You can tell from the riffing with Stephen King that there isn't really a plan beyond "grow revenue". The $8 figure was pulled out of thin-air in response to criticism.

The most brilliant part of his plan is how he is needlessly antagonizing his own advertisers and threatening to send his crazed followers after them.

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.

Sure. And he's going to take Tesla private and he's going to run SpaceX from his new HQ on Mars. What did you think he was going to say to investors? "This is a disaster and we're all going to lose our shirts"?

TikTok is projected to have a net revenue of 18B in 2023 (23B in 2024)…and that’s mainly from ads. Mastercard revenue is around 18B. If you think Twitter can hit 26B revenue in 6 years, I have a bridge I would like to sell you.

Well, you are missing the fact that Musk ordered Twitter to reboot its short-form video app Vine. Expect tens of billions of dollars in revenue by 2028!

Musk also said we’ll have people on Mars by 2022.

Forgive me if I don’t take his plans for twitter at face value.

Let me add to that list: -- FSD promised Q1-Q2 2017 (never delivered) -- Model 3 will cost $35,000 (starting price >$45,000) -- Summoning your Tesla will be available around 2018 (never delivered) -- No people in the actual Tesla production will be involved (Tesla employs thousands of people in production process. Elon has went back on this) -- Tesla won't be needing another financing round (~20 more financing rounds happened after this announcement, at an avg of $1b) -- By 2020 a Neurolink device will be implanted into a human skull (never happened) -- One million robotaxis by 2020 (never delivered)

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.

Are the assumptions in this plan really realistic, though? A cornerstone to these numbers seems to be the $12B in subscription revenue from the mysterious Product X with 104M users, hinted to be the ad-free "Twitter Blue" that just launched. (Pricing is pretty consistent as well - $12B in revenue with 104M users implies ~$120/month = ~$10/month.)

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.

> In 2 weeks Twitter will have shipped a major feature ($8/mo subscription).

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?

> Cut Twitter’s reliance on advertising to less than 50 percent of revenue

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

what AI? what platform, they crippled it and shat on developers. The best thing to come out of twitter was Bootstrap

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 think a lot of people are going to jump in here making this same point, so just to clear it up: what I'm saying isn't incompatible with any grand design Musk might have on Twitter.

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 think Elon did not so much lose a game of chicken than he threatened to make Twitter share price increase if the Twitter board didn't do what he said.

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?

> Post-Musk Twitter can't really afford to do any of that stuff

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.

It might not need to! I'm mostly not making a value judgement. There's just a narrative about how the layoffs and cost cuts are shedding "bloat". Some of it probably is bloat: Twitter was not regarded as especially well-managed. But a lot of it is stuff that public Twitter probably had to be doing, to satisfy the market, but post-Musk Twitter doesn't need to do.

Has Musk left already‽

I assume they meant post Musk acquisition

I agree with one point of exception:

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.

I don't like him either, but I don't subscribe to the Musk model where he's simply a chaos agent with no regard to consequences of any sort. He didn't want Twitter and got locked into buying it after losing a game of chicken, and now he's scrambling to make some sense of what he's got.

Musk bought Twitter with the same results a redneck buys a jacuzzi at the county faire - it was an expensive impulse purchase and the moment after buying it all your left with is regret

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