Elon Musk’s Twitter Takeover: 5 Key Lessons for Business Owners
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Published:
December 18, 2022
Reading Time:
6 minutes
Elon Musk is a man who needs no introduction. He is a legendary entrepreneur who does things that seem to be straight out of a science fiction novel. Whether it’s battery-run cars or private space shuttles, Musk has created some of the most astounding things on this planet.
However, Elon Musk's Twitter takeover was rather surprising. Why would a person who is so deeply into technology get involved in a social media platform of all things? Well, we still don’t understand this.
But hey, there are many other things all business owners can learn from this event. In this article, we will discuss 5 key lessons from Elon Musk's Twitter takeover that entrepreneurs should keep in mind.
So, let’s dive into it.
However, Elon Musk's Twitter takeover was rather surprising. Why would a person who is so deeply into technology get involved in a social media platform of all things? Well, we still don’t understand this.
But hey, there are many other things all business owners can learn from this event. In this article, we will discuss 5 key lessons from Elon Musk's Twitter takeover that entrepreneurs should keep in mind.
So, let’s dive into it.
Lesson #1: Almost Anything Can Be Bought With the Right Money and Strong Reputation
Want to buy a new pair of shoes? You’ll need around $44. Want to buy a brand-new car? Well, maybe for $44,000, you can have one. And if you want to buy one of the most popular social media platforms, even that is possible if you have $44 billion. However, there’s one key aspect that we must discuss here. Elon Musk didn’t just throw $44 billion in cash and buy Twitter like it's candy.
Several financial institutions, including Morgan Stanley and Bank of America, provided him with $13 billion in debt financing. Now, banks won’t just give out billions of dollars like that to any Tom, Dick, or Harry. However, they did give this enormous sum to Musk because, well, because he’s Elon Musk!
Musk has a proven track record of using large amounts of money wisely. In 2002, after selling PayPal to eBay, Musk had around $170 million left. Here’s how he used that money: he dedicated $100 million to SpaceX, $50 million to Tesla, and $10 million to SolarCity.
Even though the last one doesn’t exist anymore, both SpaceX and Tesla are generating billions to this day. Musk has shown the world how he can turn seven digits into ten digits. This is why investors trust him with big money. This signifies the importance of reputation in the business world. Maybe no one would sell Twitter to a lottery winner who has $50 billion. However, if it’s Elon Musk, then they may consider it.
Several financial institutions, including Morgan Stanley and Bank of America, provided him with $13 billion in debt financing. Now, banks won’t just give out billions of dollars like that to any Tom, Dick, or Harry. However, they did give this enormous sum to Musk because, well, because he’s Elon Musk!
Musk has a proven track record of using large amounts of money wisely. In 2002, after selling PayPal to eBay, Musk had around $170 million left. Here’s how he used that money: he dedicated $100 million to SpaceX, $50 million to Tesla, and $10 million to SolarCity.
Even though the last one doesn’t exist anymore, both SpaceX and Tesla are generating billions to this day. Musk has shown the world how he can turn seven digits into ten digits. This is why investors trust him with big money. This signifies the importance of reputation in the business world. Maybe no one would sell Twitter to a lottery winner who has $50 billion. However, if it’s Elon Musk, then they may consider it.
KEY TAKEAWAYS
- It wasn’t just money that assisted Elon Musk's Twitter takeover, it was also his successful track record as an entrepreneur.
- Buying businesses that have a very strong political inclination can come with a unique set of ongoing challenges.
- Musk laid off thousands of his employees at Twitter, but replacements are hard to find. This is why you should always plan the human resources side of things beforehand.
- When you buy a very renowned brand, most people don’t care about the new owner of the brand. They are more attached to the brand itself, not the owner.
- Mergers & Acquisitions must be done under expert supervision. M&A consultants can be of great help in such events.
Lesson #2: Mixing Politics and Business Can Result in Unprecedented Events
Politics and power go hand in hand. Since the dawn of human civilization, humans have engaged in political battles to expand their territory, gain more power and prestige, and acquire generational wealth. The advent of the internet just took this battle online. Politicians and politics enthusiasts started using Twitter to gain support for themselves and take support away from their opponents. It’s said that even the staff at Twitter was heavily involved in politics. A business that is so into politics at such a large scale has probably never existed before.
Furthermore, Elon Musk's Twitter takeover was also deeply influenced by politics. It seems like he felt that Twitter was under the control of one particular political group. When the Twitter acquisition was formally completed, Musk tweeted: “The bird is freed.” To which Thierry Breton, the Commissioner for Internal Market of the European Union, replied: “In Europe, the bird will fly by our EU rules.”
So, what can we learn from this? Well, first, if you get involved in businesses that are politically oriented, you’ll face way more legal and bureaucratic challenges. Even if you officially own the business, politicians who don’t agree with you will find ways to make you operate in their way. Secondly, having a politically neutral stance as a business will not completely free you of bureaucracy. However, it’ll make running a business a heck of a lot easier.
Furthermore, Elon Musk's Twitter takeover was also deeply influenced by politics. It seems like he felt that Twitter was under the control of one particular political group. When the Twitter acquisition was formally completed, Musk tweeted: “The bird is freed.” To which Thierry Breton, the Commissioner for Internal Market of the European Union, replied: “In Europe, the bird will fly by our EU rules.”
So, what can we learn from this? Well, first, if you get involved in businesses that are politically oriented, you’ll face way more legal and bureaucratic challenges. Even if you officially own the business, politicians who don’t agree with you will find ways to make you operate in their way. Secondly, having a politically neutral stance as a business will not completely free you of bureaucracy. However, it’ll make running a business a heck of a lot easier.
Lesson #3: Old Employees Are Hard to Replace
Unless you’ve been living under a rock, you already know how Elon Musk's Twitter takeover resulted in thousands of layoffs. The result? Well, the remaining employees have to work twice as hard and burn out. The boss even told them to go hard or go home. In his own words, Musk said, “This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”
Seems like he assumed that after letting go of thousands of employees, he could find 5000 new hires just laying around. However, this was far from the truth. The company seems to be struggling to stay afloat. And the reason behind this is not money, it’s human resources.
To make things worse, Musk ordered most of his employees to ditch remote working and return to the office. Before Elon Musk's Twitter takeover, Twitter, just like Facebook and Google, had some of the most liberal and progressive working arrangements in the world. Now it’s gone. That’s why so many employees, who were not fired, left the company on their own.
Let’s just hope that Elon Musk knows what he is doing. Because no one can run such a gigantic and global social media platform without “people”.
Seems like he assumed that after letting go of thousands of employees, he could find 5000 new hires just laying around. However, this was far from the truth. The company seems to be struggling to stay afloat. And the reason behind this is not money, it’s human resources.
To make things worse, Musk ordered most of his employees to ditch remote working and return to the office. Before Elon Musk's Twitter takeover, Twitter, just like Facebook and Google, had some of the most liberal and progressive working arrangements in the world. Now it’s gone. That’s why so many employees, who were not fired, left the company on their own.
Let’s just hope that Elon Musk knows what he is doing. Because no one can run such a gigantic and global social media platform without “people”.
Lesson #4: Customers Care About the Brand, Not Who Owns the Brand
According to Statista, the number of Twitter users in 2022 was 329 million and is expected to grow to 340.2 million by 2024.But why? Why is the number of Twitter users growing despite the negative publicity? Well, this signifies that ultimately, most users care about what they are getting out of something. Users just want a good experience and value out of a platform—most of them don’t care about office politics. Elon Musk is even planning to monetize users who create good content on Twitter. This means that Twitter could become a direct competitor to YouTube, which only pays creators 55% of the ad revenue they bring to the video-sharing platform.
At least Musk, being an insanely successful entrepreneur, understands this part of consumer behavior. He knows that if he can provide the market with something better than the existing one, there is no way he can fail. This teaches us a vital lesson: Once you’ve built a strong brand image in users’ minds, it cannot be reversed overnight. However, Musk still needs to hurry and show his magic before people start viewing the Twitter brand as something negative.
Lesson #5: Mergers and Acquisitions Should Be Handled by Experts
Whether you merge two existing companies and make them one, or acquire an existing company, you should always hire merger and acquisition experts. It’s a tedious and lengthy process, but we can shed some light on a few important factors. So, let’s quickly discuss the actions you should take before acquiring a company.
So, if you want us to introduce you to one of these experienced senior freelance consultants, get in touch.
- Due diligence: This must be done. You have to check all the background information, finances, legal issues, and other verifications before making someone’s company your own.
- Human resource planning: When businesses merge or get acquired, team members come under a lot of stress. For most people, mergers and acquisitions are synonymous with layoffs! So, don’t do what Musk did. Plan the human resources side of things way in advance.
- Strategic alignment: How does acquiring a company align with your strategic corporate interests? You must have a clear vision about where you want to take a company after you acquire it.
- Hire M&A consultants: Merger & Acquisition consultants can help you choose the right companies to merge with or acquire. To be precise, they can assist you with target identification, due diligence, debt and equity financing, and business valuation. It’s recommended that you don’t handle M&A alone if you don’t have enough experience doing it. Fortunately, there are plenty of freelance consultants available today. So, you don’t have to do it alone.
So, if you want us to introduce you to one of these experienced senior freelance consultants, get in touch.
