Elon Musk hasn’t been getting much love lately.
In the months since the Tesla co-founder and CEO gained control of Twitter, he has lost his top spot as the richest person in the world. To add insult to injury, Musk was booed off stage by the crowd at Dave Chappelle’s San Francisco stadium show this week.
“Looks like some of those people you fired are in the audience,” Chappelle joked as the taunt continued.
The billionaire entrepreneur slashed thousands of jobs at the social media giant, removed the company’s “days off” — monthly vacation days for employees to rest and recharge — and ended the work policy at company distance.
Reports have surfaced of even more Twitter employees quitting en masse after Musk told them to commit to “long, high-intensity hours” or walk away. This resulted in the temporary closure of Twitter’s offices in November. Numerous advertisers also fled, taking their much-needed income with them.
Twitter has rolled out plans to start charging users for accessing Twitter Blue, which includes verifying the blue checkmark. The show was short-lived, after some used the subscription service to impersonate major brands, celebrities, and even Musk himself. The company has since relaunched Twitter Blue with a more robust verification process.
That’s not a good look, and many critics are calling Musk inept or insane for blowing his $44 billion acquisition.
But the truth is, Twitter is a business and Musk is a very successful businessman. Here are three reasons why Musk might actually know what he’s doing.
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1. He may be trying to reduce “dead weight”
As a major player in its field, Twitter makes a lot of money, but it also has big expenses.
In the second quarter, the company made $1.18 billion in revenue. Its costs and expenses, however, totaled $1.52 billion. This resulted in an operating loss of $344 million for the quarter.
Therefore, it’s no surprise that cost-cutting is on Musk’s mind.
The move could also boost productivity.
One Twitter user called Musk’s technique “whaling and culling,” with his perspective receiving more than 25,000 likes.
“Elon was looking for whales on the farm. People who hit hard, who actually produce and are hard who have been there for a while. When whales don’t have to carry dead weight, they behave like the equivalent of 10 people,” said Oliver Campbell in a Nov. 18 tweet.
“Second is ‘killing’. When you have the 90% of people who aren’t performing, they actually negatively impact the 10% who are performing above and beyond. And that’s why the layoffs happened.
2. Might be planning a payment game
Many observers have wondered why Musk was willing to spend $44 billion to buy Twitter. A cry for attention? Vendetta?
One possible explanation stands out: payments.
In 1999, Musk co-founded X.com, an online bank that later merged with Confinity to form PayPal.
We all know that PayPal has massively disrupted the payments industry. Would Musk want to do it again?
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According to Caitlin Long, a former banker at Morgan Stanley, the answer is yes.
“He’s been trying to disintermediate ACH his entire career,” he told Fortune, referring to the ubiquitous bank-to-bank electronic money transfers processed through the Automated Clearing House network.
Also, an investor pitch obtained from The New York Times suggests Musk has resurrected Name X, a mysterious new Twitter product set to launch in 2023. Musk expects Product X to amass 104 million subscribers by 2028.
3. He is the second richest man in the world
Finally, let’s not forget that Musk has a pretty impressive track record in running businesses.
In addition to Tesla and X.com, Musk is also the founder, CEO and chief engineer of SpaceX, a company that designs, manufactures and launches advanced spacecraft and rockets.
Musk also co-founded Neuralink, which develops implantable brain-machine interfaces, and OpenAI, an artificial intelligence research lab.
According to Forbes, Musk is the second richest person in the world with a net worth of $184 billion. Musk had held the stock since September 2021 but was recently surpassed by Bernard Arnault, who is worth an estimated $186 billion.
Of course, not everyone is a fan of his new Twitter strategy. #RIPTwitter has been everywhere, with users saying goodbye and sharing to their other social media accounts in case Twitter collapses.
But Musk may have the last laugh, as discussions on the topic are actually increasing user engagement.
“We just hit another all time high in Twitter usage lol,” Musk tweeted on Nov. 17. “Let it sink…”
On Nov. 26, Musk shared slides from a company presentation on Twitter, showing the platform averaged more than two million new signups per day in the week ending Nov. 16, a new all-time high.
While we haven’t seen him bragging about his December numbers yet, there are efforts to entice advertisers back to the platform. This might be a smart move considering that ad sales account for around 90% of Twitter’s revenue.
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This article provides information only and should not be construed as advice. Comes without warranty of any kind.