The landlord beat him to it and cut the Muskian Knot.
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Be interesting to see if Twitter makes much money.
I tried to run an ad this week on Twitter. The problem was I could not enter into the customersâ interests for targeting. No go! Worthless.
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In other Twitter news, apparently Twitter has been saving money by not paying their Google Cloud bills. Hilarity ensues. Not mentioned in the article many users are reporting outages today.
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Seems most likely that they arenât paying office rent, cloud bills, etc. so they can negotiate concessions. I mean, whatâs the plausible alternative: Elon is just trying to self-destruct his own company?
The cost to the suppliers (landlords, Google Cloud) of Twitter switching (to another building, cloud provider) is much higher than giving them a 5-15% discount. Twitter would also have major switching costs, but those are short-term. The tradeoff is probably worth it.
Just my two cents.
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He has vacated one building in San Francisco entirely. Mid-lease. Thatâs not ânegotiatingâ, thatâs dishonestly abrogating a contract midstream. If he wanted concessions, the way to do that is to approach the other contract holder and say âI need to re-negotiateâ. Saying âIâm going to stop paying whether you like it or notâ is a tactic I hope you donât often face in your business.
(Different issue if he had declared bankruptcy, there are laws and remedies for that eventuality. Thatâs not what happened.)
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If you were paying for ads on Twitter, how would you react if your ad views had just been slashed? If this continues for more than a day, I expect Twitter and Musk will be sued by companies that were promised some number of eyeballs that Elon is not delivering.
And the content the drives those eyeballs is provided for free by the usersâwhich are now being throttled. Something doesnât quite add up.
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Well, it ainât $44BâŚ
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No Musk in all likelihood Musk laid off the people who negotiate contract and or write the check in accounts payable.
It is amazing what happens to a company with a blind layoff process. Another reason for bureaucracies. The bureaucrats follow who does what. Slash and burn can kill a good company in a matter of one quarter.
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Again, I donât purport to know everything that Elon/Twitter are doing, and Iâm not trying to die on a hill defending them either. Based on what you said, I agree that it sounds like theyâre breaking their lease contract. Idk whether theyâre doing that for leverage or if they actually want to move somewhere else.
Thatâs also one particular case. I was just speaking in general about why someone might break their lease.
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In 10 years, business schools will be using Muskâs turnaround of Twitter as teaching examples. He took over a company with revenues of $1.18 billion, over $13 Billion in debt, under $1.2B in FCF and burning through $4M a day shareholder money. if it becomes cash-flow positive in under 4 quarters, it would be one of the fastest, most successful turnarounds in history!!! Twitter was a financial disaster that had no hope of lasting when investors shut-off the $ and no matter what you think of Musk, turning it into a viable business with a profitable future should be recognized.
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Except that ad revenue in 2021 was $4.51 billion in 2022 $4.4B and this year is estimated to come in at $4.74 billion. So even with the dramatic slowdown in advertising all media saw in 2023, Twitter will actually be positive. Despite all the media praying for and popularizing the âTwitter is failingâ narrative, Twitter will actually be ad revenue positive. Something the NYTimes, NBC, MSNBC and CNN can not claim.
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By the way, you cannot sue a media platform for falling short of audience projections. They are projections. All you can get is "make-goodsâ which is additional advertising on the platform to make-up for the shortfall.
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Let me know when Musk gets his (and his friends) $44 billion out of Twitter.
Slashing expenses is not a long term strategy for success.
Sure, business schools will be using this as a teaching example.
Just not the one you think.
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So the consensus is, one way or another, it will be a case study.
DB2
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A common âJCâ ploy: they think they are such hot stuff, vendors will do anything to keep them as a customer. Radio Shack President Bernie Appel insisted RSâ 40% price premium over Best Buy/Circuit City was justified because, in his words âwe do people a favor when we sell them our stuffâ. My DM got his marching orders too. He called me up and asked âdo you think our product is worth the price?â (if you want to keep your job, you answer in the affirmative) Seemed customers didt not feel all that wowed by RSâ logic tho.
Of course, unlike RS abusing itâs customers, Twitter has contracts. Of course, the response will be âof course Iâm stiffing you. Donât like it? Iâll keep it tied up in court for years, while you donât collect a pennyâ There are plenty of âJCsâ that use the courts to delay enforcement actions.
Steve
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Perhaps not. Case studies depend on getting financial and operations data to analyze. Now that Twitter is privately held, that data might be hard to come by.
âPeter
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In real time it is hard for us, but the data are out there and available for private equity investors.
Edit: So I imagine the full story will come out in due time, but might be well after the fact.
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Musk will be successful here. How successful is another matter. $44 B successful? Yes certainly because that is a low Mcap for a major SM.
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Fair enough. The path to significant public disclosure is probably either an IPO or a suit by one of Muskâs equity partners.
Neither of those are all that unlikely. I could see either happening down the road.
âPete