Elon Musk discovers hard lessons the hard way that Twitter trolling is more fun than moderating

Although I didn’t think Twitter would be so chaotic, I have to admit that it was. This is so frustrating. Awoooou (wolf howl)Twitter is back! We’re no longer locked in here with Elon Musk — Elon Musk has taken refuge in this place with us.

Musk assumed control of Twitter in October 27th. Since then:

Okay! Okay! Some thoughtsWhat the fuck is happening. Musk is not the only one who has changed his mind about Tesla. He did so when he decided to be a Tesla CEO. Going to close all brick-and-mortar stores Tesla stores, He then reversed himselfOr, the time that he decided that Tesla would accept Bitcoin until, uh, it didn’t. Teslas were going to be built by an “alien dreadnought,” which didn’t work. Musk’s quick reversals have become a common occurrence. It’s just that Tesla is a business Musk built around his fandom, who are more understanding of this kind of behavior. 

Twitter is however an acquisition, and it is not always full of Musk fans. That means it’s a much less forgiving environment for Musk. It’s like, an A small subset of early Twitter usersAre You are a terrible forum goon — Drilled is the most well-known of all. — and they LoveFucking with people. Plus, Musk’s Twitter Blue plan to devalue verification check marks motivated a bunch of people who didn’t like Musk to go out with a bang by impersonating him, They knew it would drive him crazy.. It most likely did. That would be why his first policy change was to Increase punishments for impersonation.

Shenanigans are fun, but here’s the thing to keep in mind: Twitter is loaded with debt from the acquisition and needs to pay roughly $1 billion a year on it. In 2021 Twitter has raised $5 billion RevenueThey did not make any profit. “This isn’t complicated,” says Mike Roberts, a professor at the Wharton Business School at the University of Pennsylvania. “He owes a bunch of money, and he’s gotta raise money somewhere, somehow. What I wonder is about the ability of Twitter to pay this debt.”

Musk must figure out how to make his money, while others scream at him or impersonate him. Fun job!

Fire lots of people to get cash. However, this can lead to the loss of many engineers who could help make Twitter more appealing. This is not a big problem since all tech companies are laying off employees right now. Musk has the ability to hire cheap talent if necessary.

This does not solve the larger problem of revenue. Last year, 89 percent of Twitter’s revenue — about $4.5 billion — came from advertising. The rest of the company’s income came from other streams, such as data licensing. 

Let’s focus on the advertising problem for a minute. Many companies have stopped spending.One ad executive was on a call to Musk called his behavior “petulant and thoughtless.” This is an Right now problem because the fourth quarter is the most important one for any business that relies on advertising — including this here website. Musk acknowledged that Twitter has seen major advertisers leave during crucial periods for its financial success. “Twitter has had a massive drop in revenue,” He tweeted.

It does get worse, and this part isn’t Musk’s fault. Advertising costs fall when the economy slows down. So even if Musk weren’t doing wild stuff to alienate advertisers, such as tweeting conspiracy theories about Paul Pelosi, Twitter might have been in trouble anyway. Musk has made it clear that he and his company are a loose group, so anyone who wants to reduce advertising spend may be inclined to first cut Twitter.

Now, Twitter did set up Tips — a way to send cash to people you like — but it doesn’t take a Reduce that amount. Super Follows takes a cut of the revenue, which allows you to make your tweets a subscription-based service. Twitter’s share is dwarfed by the fees taken by Apple for in-app purchases.

In terms of revenue, the action is centered around Twitter Blue, a premium-tier version that allows users to edit their tweets. Musk raised the price for this product to $8. It may not be enough for its costs to cover them.. Let’s do some back-of-the-envelope math, shall we? One year of Twitter blue costs $96, but I’m going to round it to $100 to simplify the math. If 10 million people sign up for a year, that’s $1 billion in revenue right there. Easy, right?

Well, no, because this is the internet, and there’s forum drama.  Blue users get a blue check mark, which looks exactly like the check mark verified users get — but Twitter Blue customers don’t have to verify their identity, which is how an account with a blue check mark and the display name “Nintendo of America” Mario flipping the bird!. This might seem enough to the unwary user. Actual Nintendo account to do brand damage.

But Musk doesn’t mind. When our own Tom Warren took a screenshot of the tweet, a user replied, “The beauty of this is each account that gets verified paid $8. Twitter takes the money and suspends that account. It’s genius and I hope more folks do this. It’s free money for Twitter.” Musk himself repliedTo the user with a bullseye Emoji, a smiling face wearing sunglasses and a bag emoji.

I don’t think a lot of advertisers would want to come back to someone with that attitude toward impersonation, even without an economic downturn. My question is: Users want to stay in that environment — one that’s just gotten a new layer of hoaxing and scammers. Mark Cuban, a billionaire, has complained about the influx in checkmarked users. His mentions have been miserable. Cuban’s thoughts are one reason people stay on the platform — drive him off, and Twitter is less valuable.

Twitter, incidentally, is not under A consent decree signed with the federal government requires full documentation, in writing, of any foreseeable risks of “any product or service affecting commerce.” The changes to Twitter Blue rolled out less than two weeks after Musk bought Twitter. Do You think there’s full documentation about its risks? This sounds like Twitter’s lawyers are worried!

And that’s before we get to Musk’s paywall ambitions. Essentially, he’s told advertisers he wants to de-rank people using Twitter’s free product and make users pay for reach. Your average person won’t pay for reach, but people shilling newsletters, crypto scams, and other annoyances will. That’s it. may get Musk the revenue he wants, but it also degrades the site and potentially means fewer users stick around, making it less valuable for marketers, making them less likely to pay their $8… You can see how that turns into a death spiral pretty quickly.

But I don’t know that he’ll stick to that plan because he’s not especially known for sticking to plans. What I do know is that Musk has a lot of money, and he can give himself some runway to turn Twitter around by simply paying Twitter’s debt himself. Now what? Musk has repaid $3.9 billion of Tesla shares this week, I figure he was putting aside some cash for Twitter’s loans.

There’s a plausible world in which Musk just continues to offload Tesla shares to fund his Twitter experiments. This is not a good outcome for Tesla shareholders. After all, he doesn’t You can find it here to keep advertisers happy, and as long as he’s paying interest, no one particularly cares where the money comes from. As long as he’s got the billions to pay off Twitter’s loans and whatever else, he’s got runway to remake the app into what he wants it to be — whatever that is. 

Let’s talk about the loans for a hot minute. The Twitter debt is currently held by the banks that helped facilitate this deal — unusual since, generally, they try to find buyers for the debt. But Musk’s lawsuit and delayed closing made that harder, and they’re stuck with the loans on their balance sheets. The interest rates were lower at the time they were in this position. By the time the deal closed, though, the appetite for debt had changed, says Anant Sundaram, a professor at Dartmouth’s Tuck School of Business.

And it’s risky debt to boot, Rated B1, which is “on the lower end of the junk rating spectrum,” says Wharton’s Roberts. “Investor appetite for this debt clearly isn’t as large as it was four months ago.” And when Moody’s rated Twitter’s debt, it cited Twitter’s governance — i.e., Elon Musk — as a major driver of risk.

So for the banks, offloading Twitter’s debt now means taking an immediate loss. Banks might choose to keep the debt indefinitely to see if the market conditions change. Twitter may be a shaming source of debt, so it might prove difficult to unload that debt. Musk is now the richest man in the world so banks may be open to negotiating terms for debt repayment. It is unclear how long the loans will be held and who might purchase them. If banks can’t place the debt, that probably does make it difficult for any other leveraged buy-outs in tech to get done.

“I sometimes get the feeling that people underestimate him, and maybe some of it is deserved because he always seems to live on the financial edge with every business he gets involved in,” says Sundaram. “But I’m willing to give him the benefit of the doubt.” Sundaram notes that none of us know what Musk’s financial model for Twitter is; perhaps he factored in losing a third or more of his users. Sundaram believes that Twitter’s worst-case scenario is one in which there are moderation issues. “Then he’s finished.”

Look, I’m sorry, but this is extremely personal as someone who loves Twitter. It is the most funny thing possible, and it’s PerfectFollow us on Twitter. Musk has been giving his Twitter account. It was rather hostileThe tools allow users to effectively trolling Jack Dorsey out of billions. As much as users disliked Jack Dorsey, he was not the kind of person you could effectively troll — and his slow approach to product rollout made it a lot harder to tank the site by shitposting alone. Elon Musk’s Twitter, on the other hand, might just be the greatest show on earth, not least because every poster knows it is totally possible to make him mad online.