Commentary: Here’s what Elon Musk buying Twitter tells us about the economy


LAUSANNE, Switzerland: The world’s richest man is not known for austerity. Companies Elon Musk founded or leads are “moonshots”: SpaceX, The Boring Company, Neuralink, Starlink, OpenAI and, of course, Tesla are all based on lofty ideas that are borderline insane.

Big science projects always require big funding. Had Telsa not received a US$465 million federal loan from the Barack Obama administration’s 2009 Recovery Act, we would not have Model S today. The electric vehicle company would have long ceased to exist because it was then close to bankrupt after burning too much cash.

It is therefore interesting to see Musk going the opposite direction with his plans for Twitter. The latest wrinkle is that he’ll put the deal on hold, pending investigation on the number of fake accounts on the platform.

Such diligence came surprisingly late, given he bought it for a stunning US$44 billion in April. He is, after all, not seeking to revolutionise social media as we know it – he wants to turn it into a money-making machine.

A NEW PLAYBOOK FOR TWITTER

In his presentation to investors, Musk proposed diversifying Twitter’s revenue from sole reliance on advertisements. That should not be a surprise given that he was a founding member of PayPal.

Twitter, for all the influencers it attracts, never helps creators monetise their content. Musk now wants Twitter to be great at e-commerce – from hosting livestreaming to collecting tips via micropayments.

There will also be new features available only for subscribers, and corporate and government accounts can expect to pay a fee to remain active. Data licensing will become possible for third parties.

To do all these without exploding the headcount, the current workforce will be slashed before hiring resumes. The number one priority is to free up cash flow to pay off the debt required for the takeover.



Source link Shopify Tips

Post Author: Adam Jacob

Leave a Reply

Your email address will not be published. Required fields are marked *