Transcript
Emma Atkinson (00:05):
You are listening to Radio Ed.
Matt Meyer (00:07):
The University of Denver podcast.
Emma Atkinson (00:09):
We’re your hosts Emma Atkinson…
Matt Meyer (00:11):
And Matt Meyer.
(00:13):
What happens when a divisive tech maven swoops in to purchase certainly one of the most important social media platforms? The times after Elon Musk acquired Twitter, it was pure chaos. Parody accounts and hate speech exploded. Greater than half of all staff were either fired or left willingly. Your entire accessibility team liable for coding related to alt text and video captions was dismantled. Entire industries were disrupted with journalists panicking and academics fleeing to other social networks like LinkedIn and Mastodon. But Twitter still stands and stays within the news, whether it’s due to Kanye West’s antisemitic tweets or Musk’s latest trolling.
Forbes estimates Musk’s Wealth is just shy of 200 billion, making him the world’s richest person. He can afford greater than just a few bad business ventures. Is his purchase of Twitter only a billionaire buying a bigger megaphone, the fashionable equivalent of a railroad tycoon scooping up a newspaper? Or is it a part of his seemingly never-ending quest for relevance?
For this episode of Radio Ed, we examine Twitter’s acquisition and current business model with Daniels College of Business professor, Michael Nalick. For those who’re here for more the social media side of the story, make sure that to stay around. I will be intercutting among the communication theory that has made these previous few weeks so interesting.
If you or your colleagues were sort of teaching the longer term CEOs and managers of the world methods to handle layoffs, what is the broad playbook for something large scale, like what happened with Twitter?
Michael Nalick (01:31):
Our department head, Charles Dhanaraj, sent around an email about Snap CEO, and the way he approached the layoffs, which was a rather more humanistic type of way. You already know, not only like these other CEOs saying, ‘oh, it’s our responsibility,’ which now they’re all saying, ‘it’s my responsibility, we grew too fast.’ That is sort of just like the buzzword of Silicon Valley straight away. ‘My responsibility, but yeah, you continue to are being laid off right before the vacations, so haha.’
The Snap CEO was going into the detail on what happened, after which giving the workers rather more compensation and more training opportunities, and search opportunities, and really transitional opportunities than I’ve seen in these other corporations. So it is a rather more sympathetic, moralistic way of which to approach layoffs of claiming, ‘yeah, it is a needed evil in our business, but this just isn’t something I would like to do, and since of that I will do it in one of the simplest ways I can, which is here’s money, here’s insurance, here’s transitional resources, so I’m not putting you out within the cold, and , this would possibly not take into effect until really after the vacations, although I’m informing you now to get you ready, , the cash and all that and the bonuses – I’m still giving those out through mid-year.’ And, so I feel that is a significantly better way, a minimum of from a public relations/repute, even moral/ethical perspective solution to handle layoffs than not only Twitter but many other corporations accomplish that as well.
Matt Meyer (03:06):
And with Twitter, it didn’t really play out that way. So, were the speed of the layoffs sort of a cause for concern or is it just one other example of Elon Musk sort of cutting through the company red tape? Can it’s slightly little bit of each in that form of situation?
Michael Nalick (03:20):
Well, it is not even really Elon Musk. It is a typical acquisition strategy. I mean, that is what you see in acquisitions. Now, the funny thing is, in acquisitions, it’s always corporations which might be involved. So one company attempting to restructure the acquired company to suit into its space, presence, market, and things like that. That is a person buying an organization and mainly doing the identical strategy as an acquisition strategy. And a part of that’s just swift layoffs, with a view to remake the culture within the image of the acquirer.
Matt Meyer (03:57):
For a very long time, Twitter was the premier source of reports because it happens. In my decade as a newspaper journalist, the usage of Twitter was a part of my performance review. Audience engagement was an enormous a part of a journalist’s job, not only gathering and presenting the news. It was also an area for like-minded folks to collect, for higher and worse. Academics, hobbyists, marginalized communities, and more, all found a way of comradery there. But there have been also spaces for white supremacists and all other forms of hate speech, sparked by agitators and politicians alike. Twitter famously banned former US President Donald Trump within the wake of the riots to the US capital on January 6, 2021. That ban alongside many other barrings undone by Musk, a self-professed free speech absolutist. This was put to the test early in December, when Twitter banned Kanye West for tweeting an image of a swastika blended with the star of David, an especially extreme example of the hate speech that has bloomed on Twitter because the change in ownership.
(04:47):
The Center for Countering Digital Hate, a watchdog group, said the each day use the N-word under Musk is triple to the 2022 average, and the usage of slurs against gay men and trans individuals are up 58% in 62% respectively. Certainly one of Nalick’s areas of experience is activist CEOs. What happens when an organization’s leader brushes up against the sensibilities of the board shareholders and customer base? For Musk and Twitter, the situation is somewhat different. Musk is one man leveraging his business holdings to purchase an organization. This is not Jeff Bezos using Amazon to buy the Washington Post. That is Elon Musk, front and center within the everyday operations of Twitter.
Some sort of call Elon Musk a champion of free speech, some call him a trolling narcissist. Either way, Twitter has made a bunch of headlines due to Musk’s consistent comments sort of throughout this process. How does any person like Elon Musk potentially help an organization like Twitter along with his personality in the best way he handles that, and the way does it potentially hurt an organization like Twitter?
Michael Nalick (05:44):
Well, I’ve seen data actually yesterday that Twitter’s download, Twitter’s participation rates, , those type of things that indicate activity at Twitter, have actually increased substantially, outside the sort of the margin of error there. And so I feel the general public relations part, the PR a part of this, what is happening Twitter has created sort of – I don’t need to call it excitement –, nevertheless it’s created more recognition, name recognition sort of, , there’s an old saying, ‘any publicity is sweet publicity,’ right? And that is sort of what is going on on with Twitter straight away, is that they are benefiting from the publicity that Elon Musk has created, and he tends to try this. Alternatively, what is the long-term effect of that? Is that this a short-term boost inside the long-term trajectory of Twitter still is negative since the business model really hasn’t modified, or the business model’s changing too radically,
(06:43):
or, , as you’ve got talked about activist CEOs, that happens once they get entangled in activities that their stakeholders are for or against, they usually are split into two. And there is loads of those that don’t love Elon Musk. You already know, he’s created such a persona for himself that he sort of has that split camp as well, where you’ve gotten those that are really for Elon Musk and think he’s sensible and like his ideas and like what he’s doing. After which you’ve gotten those that really dislike him. And I feel, in long run for an organization, that is never thing because that trumps the quantity of supporters, amount of consumers, amount of advertisers that can be in your side.
Matt Meyer (07:25):
The model for Twitter is changing and Musk is on the forefront. Since its founding in 2006, the social media giant has been at the middle of public discourse. Everyone, from pop stars to presidents, have lent their thoughts to the platform. But even with an audience base as high as 450 million users worldwide, it is not an organization that is made money. Promoting has been inconsistent and has dried up at times, particularly during recessions. Musk has shifted towards the membership model, christening Twitter Blue, shortly after the acquisition. He charges $8 a month for the once coveted blue check mark, previously a logo of legitimacy for public figures. The initial rollout had disastrous and predictable results, with parody and impersonation accounts of famous public figures, sprouting like weeds. NFL Insider Adam Shater, right wing pundit Ben Shapiro, and even Musk himself were notable targets and this system was suddenly shuttered lower than a month after launch. The membership model, nonetheless, is at the middle of Musk’s plans to make Twitter profitable. Nalick explains.
Michael Nalick (08:19):
I mean, they appear to be trying to alter that business model because while you realize, strictly on promoting revenue, , obviously it may well fluctuate quite a bit. You already know, promoting is certainly one of the primary things to go during a recession, and most CEOs on the market think we’re approaching a recession. And so, you’ll be able to see him changing sort of the business strategy of Twitter relying purely on promoting revenue, which, frankly, didn’t work previously. You already know, Twitter hadn’t really turned much of a profit, so their business model hadn’t proved itself. And so he’s attempting to add more what I’d call membership. You already know, somethings sort of like a Costco model, that you simply’re a part of the membership club and you purchase into it in order that it provides consistent revenue on top of other revenue that is more discretionary.
Matt Meyer (09:07):
After which can happenings in Twitter influence his other corporations like Tesla? Is that this something that may spill over and sort of his other ventures? Or is it fairly limited to what is going on on with Twitter and sort of that social media space?
Michael Nalick (09:19):
Well, I feel specifically what he’s doing at Twitter is confined to Twitter. Nevertheless, there’s various views of Elon Musk. So if you’ve gotten the view of Elon Musk, that he’s a superb person, that his presence adds to the corporate, , then when you have a look at his other corporations, then you’ve gotten to say, ‘well, how much is Elon Musk really participating in Tesla straight away? How much is he really participating in SpaceX? How much is he participating in these other corporations?’ Given that almost all of his attention is on Twitter and there’s not that economy of scope between his corporations which have spillover effects between these corporations. These are very much unrelated corporations. And so if you’ve gotten attention on one company, it really doesn’t produce any advantages for these other corporations.
Matt Meyer (10:08):
For the user base, Twitter’s doomsday moment got here late in November. Rumors of Twitter’s demise, following layoffs and attrition that cut the corporate’s workforce in half spread like wildfire across the platform. Twitter keeps trucking along and it looks as if it can for the foreseeable future.
Michael Nalick (10:23):
The most effective-case scenario is that Elon Musk comes up with a distinct business model for Twitter that one way or the other makes Twitter rather more profitable, he’s attempting to get a linear culture and that it may well survive on this hostile industry that it’s in. The worst-case scenario for Twitter is that essentially it just goes out of business since you see that it’s culture has been modified and it could not attract one of the best employees now due to the culture, and the core infrastructure of Twitter has been gutted, and since of that, if something massive were to occur, akin to a knowledge leak or an outage, or something like that, or there’s a proliferation of an excessive amount of hate speech, or some big moral panic that incites due to something that’s gone on that you may trace back to the layoffs and to the cutting budgets, and to that of Twitter, you’re gonna see advertisers begin to flee, after which the consumers flee, after which users flee, after which it’s just this cascading effect that eventually results in bankruptcy.
Matt Meyer (11:40):
And so it is a very general query, so be at liberty to reply it sort of nonetheless you wish. From a tutorial perspective, , looking ahead 10, 15 years from now, what is going to people be taking a look at which points of Twitter’s acquisition, which points of Elon Musk will people be taking a look at and studying in the longer term?
Michael Nalick (11:58):
Yeah, that may be a very broad query. From my perspective, I suppose that is the strategy that Elon Musk has done again and again and once more through all the businesses he’s been a component of. He has this, , mentality where he forces crisis and he believes when he forces these crises, he could make these cultural changes, get the workers he wants, , does the whole lot else. Nevertheless it’s sort of a manufactured crisis, and that is what he’s done at Twitter. The query is, while this has worked in startups, can it work for mature corporations like Twitter? And so, from a tutorial perspective that is what I’m wondering. Does his management style, does his tactics, actually work for mature corporations, or is it really just strategy on the expansion stage of corporations?
Matt Meyer (12:54):
With the layoffs, headlines, Musk’s large-than-life personality, the reinstatement of Trump on Twitter, and the next ban of Kanye West, there have been quite a few angles to cover, but an important aspect of this story may not be the what, however the why.
Michael Nalick (13:06):
Well, the story is, is that this a business perspective? Why did he buy Twitter? Because when you actually have a look at from a business perspective, and I teach this – he’s just about done the whole lot that I’d say to not do, right? So he’s bought this company, waived due diligence on it, bought it at a premium without every other bidders within the marketplace. So, he overpaid with none reasoning to accomplish that. Then he takes the corporate, it hasn’t been profitable, so it’s a nasty business model, he knows that going into it, and he guts it, the corporate. So it’s sort of what to say to not do in acquisitions, whereas you do not need cultural classes, you do not need employees to go away, you do not need key infrastructure projects hanging on the market, all these various things, and saying what to not do in an acquisition.
(14:02):
It has been done, he’s done it. So from a tutorial perspective, it’s what to not do while you acquire an organization, from every stage of an acquisition. And so then you’ve gotten to think back and consider the rationale of Elon Musk is why did he buy Twitter? Because in every business perspective, it it is not purchase. It isn’t a profit-making company. He didn’t get it out of value. He’s disassembling it, it is not related to every other corporations. It isn’t a part of the portfolio. So it won’t add any value to his other corporations. So why? And I feel that is the most important takeaways. Was this only a hobby purchase? You already know, other people purchase boats and cars and he purchased a 44-billion dollar company. You already know, his other corporations even have some type of mission to them. You already know, Tesla is sort of electrification of the market. You already know, SpaceX goes to Mars. What’s the mission of Twitter? I mean, some say free speech, but so it’s TikTok, so is these other corporations which might be already around which might be actually more profitable, so why not buy those? And so I feel that is the actual motivation in query is what’s his motivation? Because straight away I do not know what it’s because, from a business perspective, it’s definitely not there.
Matt Meyer (15:24):
Is that this something you can compare to Jeff Bezos buying the Washington Post or the, the gentleman who bought the Los Angeles Times? Can it’s in comparison with a legacy media purchase?
Michael Nalick (15:35):
It could possibly be, it could possibly be. But I would not consider legacy media just more legacy. You already know, does this just sort of cement that legacy status or does this cement the status of just sort of him with the ability to dictate what the conversation is in media and society and things like that? And in order that could possibly be a motivation, that would have been it, to purchase a giant megaphone. But again, as I said, the business aspect doesn’t add up.
Matt Meyer (16:14):
Due to Michael Nalick from the Daniels College of Business for joining us on this episode. For more information, try the show notes at du.edu/radioed. Tamara Chapman is our managing editor, and Débora Rocha is our production assistant. James Swearingin arranged our theme. I’m Matt Meyer. That is Radioed.