is twitter done?

I'm not cheering for the death of Twitter.

I've been on the platform since October 2008, and it's meant a lot to me. Twitter is where I go to connect with indie hackers, bootstrappers, and tech communities. It's where we debate ideas, share projects, and get feedback.

When Musk announced his bid to buy Twitter, most of my criticism centered on his past bad behavior.

After a failed attempt to get out of the deal, Elon took possession of Twitter on October 27. And I, like many others, wondered what his plans were for the platform.

Since then, lots has happened. 

Many are wondering: is this going to kill Twitter?

To get some perspective, I decided to look at the history of what's happened so far.

A timeline of Elon's Twitter takeover:

• March 26: Elon Musk stated that he has had "serious thoughts" about creating a Twitter alternative due to the need for more "free speech." He began reaching out to Twitter board members and Jack Dorsey.

• April 5: After purchasing 9% of Twitter’s stock (worth $3 billion), Twitter offers Musk a seat on the board. Musk and Twitter CEO Parag Agrawal seem to be getting along.

• April 9: Elon starts tweeting negative things about Twitter, Agrawal responds, and the relationship gets rocky. Elon texts Agrawal saying: “I’m not joining the board. This is a waste of time.… Will make an offer to take Twitter private.”

• April 14: Elon offers to buy 100% of Twitter, stating: “I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. I am offering to buy 100% of Twitter for $54.20 per share in cash. Twitter has extraordinary potential. I will unlock it.”

• April 14: Later that day, at TED, Elon said: “this is not a way to make money. Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don’t care about the economics at all."

One observation: back in March/April, Elon repeatedly said he didn't care about "making money" or the "economics" of Twitter at all.

He said his primary motivation for buying Twitter was to make it a "platform for free speech."

But, since taking over Twitter, most of his actions have been financial:

• Laying off 50% of the company.

• Trying to reassure advertisers.

• Pushing out the new Twitter Blue subscription.

Back to the history timeline:

• April 25: Musk signs a deal to buy Twitter for $44 billion. Elon negotiated the deal quickly and decided not to do any due diligence before the purchase.

• April 27: The BBC reports: “Advertisers nervous of Musk’s Twitter takeover,” and “Twitter currently derives about 90% of its $5bn in annual revenue from advertising.”

• April 26: Wall Street doesn't like the idea of Musk taking over Twitter. Tesla shares drop 12.2%, wiping "$126bn off Tesla’s value amid concern that Elon Musk may have to sell shares to fund his personal contribution" to buy Twitter.

• April 29: Elon sells $8.5 billion in Tesla stock to fund the Twitter deal. This ends up being "9.6m Tesla shares, or about 5.6% of his stake."

• May 6: Elon’s pitch deck with his financial plans for Twitter leaks to the media. Despite what he said at TED, he does seem to care about making money, promising to increase revenue from $5 billion to “$26.4 billion by 2028” and “increase average revenue per user by $5.39.”

A few more observations: 

Musk's decision in April to forego due diligence before purchasing Twitter would come back to bite him.

At this point, Elon buying Twitter starts to appear incredibly financially risky (foolish?) for himself and Tesla. Wiping $126 billion off Tesla's valuation is enormous.

• May 13: Musk seems to get cold feet: “Twitter deal temporarily on hold,” he tweeted, “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”

• July 8: Elon Musk tries to cancel the deal to buy Twitter.

• July 12: Twitter responds by suing Musk to force him to proceed with the acquisition.

• September 29: A record of Elon’s text messages is released in court and publicly. Many of Elon’s wealthy friends’ messages are exposed. Responding to the Atlantic, one executive says: “Everyone looks fucking dumb,” saying that the response from others was, “Is this really how business is done? There’s no real strategic thought or analysis. It’s just emotional and done without any real care for consequence.”

Many folks have forgotten that for 145 days, Elon was fighting hard to get out of the Twitter deal. Most legal observers said his "bots and spam" excuse was lame (if it was a genuine concern, he should have explored it in due diligence, pre-purchase).

What feels more likely is Elon realized that he, and Tesla, were losing a lot of money, and he got cold feet. It would have been cheaper for Elon to get out of the deal and pay the $1 billion penalty fee than to crater Tesla's market cap and spend billions of his wealth.

• October 5: After months of fighting Twitter in court, it becomes clear that Elon can’t back out of the acquisition. He does an about-face and announces that the deal is back on.

• October 27: “Elon Musk Completes $44 Billion Deal to Own Twitter,” reports the NYT. He quickly fires CEO Parag Agrawal, CFO Ned Segal, “Vijaya Gadde, the top legal and policy executive, and Sean Edgett, the general counsel.”

Once Elon realizes he can't get out of the deal, he shifts gears. He showed up at Twitter HQ on October 26 and has been camped out there ever since.

He immediately fires the CEO, CFO, top legal, and general counsel folks. (Which, in retrospect, was a little hasty? It feels like he could have benefitted from some council).

• October 31: IGN: “Twitter reportedly planning to charge $20 per month for verification, even for those already verified, and the team has until November 7 to implement it or they'll be fired.”

• November 4: Elon laid off about 3,700 people at Twitter (50% of the entire team). He tweets that Twitter is losing $4 million per day and says that the “massive drop in revenue” was “due to activist groups pressuring advertisers.” But a CEO of an advertising firm said: “Advertisers right now are not looking to be associated with the events that are currently happening at Twitter.”

• November 8: it’s reported that Elon has sold $4 billion in Tesla shares. He later shared with Twitter employees that he sold the stock to “save Twitter" and that the company was losing $4 million per day.

These moves show how desperate things are financially for a "private Twitter." Before Musk's takeover, Twitter "had about $6 billion in cash," which could have provided years of runway for the company.

But, Musk admitted that "Twitter was losing more than $4 million a day, largely because advertisers started fleeing once he took over."

You'll remember advertisers were nervous about Musk's Twitter takeover in April. So ad spending likely started falling then.

By the time Elon took over, Twitter may have already lost most of its advertising revenue.

• November 9: the new $20 $8 Twitter Blue verification program launches, but results in people impersonating brands, celebrities, and politicians. A fake account may have been responsible for tanking Eli Lilly’s stock price.

• November 9: Elon appears on a Twitter Spaces (with execs Yoel Roth and Robin Wheeler), seemingly put together to appease anxious advertisers.

Elon's move to add more subscription income with Twitter Blue seems wise. But, there are questions on whether enough people would want verification. And estimates on how much additional revenue it would bring ranged from $15m/year to $115m/year to $300m/year.

• November 10: Elon held his first staff meeting. As reported by the NYT, he told employees, “the economic picture ahead is dire.” IGN reported he also said: “that "bankruptcy isn't out of the question" and that employees "need to be more hardcore."

• November 10: news breaks that key executives have quit. This included “Twitter’s Head of Trust and Safety Yoel Roth,” who “played a visible role in Musk’s version of the company.” Robin Wheeler (head of advertising sales) also quit but was later convinced to stay.

• November 11: Twitter paused the new Twitter Blue verification program, likely due to widespread impersonation. According to this analysis, roughly 140,000 paid subscribers had signed up.
  

These last few days have felt the most chaotic. Even folks that admire Elon as an entrepreneur were questioning his moves:

There are also lots of remaining questions on whether he'll be able to keep Twitter functioning.

Even Elon seems resigned that his Twitter takeover could fail. He told employees that bankruptcy wasn't out of the question, and later tweeted (and then deleted): "did it for the lulz."

If Twitter is losing $4 million a day, that's $1.5 billion a year; plus, Musk is on the hook for another $1 billion/per year in interest payments. And those losses could get worse if more of Twitter's advertising revenue gets eroded (previously $5 billion/year).

According to Forbes, Elon's net worth has already fallen to $199 billion (that's down from $340 billion a year ago). 

So far, he's sold roughly $19 billion in Tesla shares to fund the Twitter takeover; that's roughly 10% of his current net worth. 

If Tesla shares continue to fall, and Twitter continues to burn money, even someone as wealthy as Musk won't be able to afford it.

So, is Twitter done?

Cheers,
Justin Jackson

Find me on Mastodon: @[email protected]