Elon’s missteps are not only alienating advertisers, even worse, now he’s costing them billions in stock valuations, likely prompting a new slate of lawsuits and damages. He continues to almost daily make snowballing errors into an avalanche of failures of what may become the worst acquisition of all time next to the Time Warner deal.
As I wrote about in my new book Beacons of Leadership, I talk about the challenges of taking over companies and pulling them back from the brink of bankruptcy as I have successfully. Why is everything going wrong for Elon? Well its a few things:
1. Operating from Ego.
Elon has been operating in an ego state where he believes his own reputation and swagger is impenetrable. Ego got him into this mess. Ego had him into lording around in Twitter to self-indulge his ego to the point of committing to buying it for a figure far beyond its worth at the top of the market. His ego believes he can buy and fix anything and in doing so he convinced himself he could easily fix Twitter and now he’s entered a gauntlet of failures that are compounding.
Sadly, many people worship money and people who make money and regard billionaires as infallible business gods. Billionaires assume that their achievements, sometimes involving luck, means they can solve the world’s problems. Books have been written about how many times they fail and actually make the world worse.
Most CEOs know you shouldn’t make a brash ego, vanity purchase and the boards are there to regulate that. It appears that many of Elon’s advisors on the deal were some from the political right who may have sought to encourage him to buy it for their interests rather than on the merits of the financials. If you’ve seen the text messages from the deal now released in a lawsuit, it was awful advice he was getting from people willing to sacrifice him for their gain.
2. Overpaying at the top of an economic market with clouds looming.
Again overpaying by ego. He contracted to buy Twitter at the top of the market, thinking by ego he could fix anything. Shortly after, market corrections lowered the value of the company. It became clear he was buying a company anywhere 2 to 3 times its valuation. Then he attempted to break the deal and could not.
He blindly ignored the coming recessionary conditions coming as the Federal Reserves tightened the economy. Now the scenario looks even worse as all tech companies took a massive stock dive. Most likely if he would have waited till now, Twitter stock price valuation would be around 7-10 billion, meaning he’s now overpaid by 4-5 times the value.
3. NEVER PANIC EARLY.
On my podcast, The Chris Voss Show Podcast, we had Apollo 13’s Fred Haise on to talk about the astronauts’ training and survival in the snowballing failures of the mission that had their lives on the line. The title of the book is from NASA’s training: NEVER PANIC EARLY. In his NASA training, it taught them that panicking will escalate problems and even amplify other failures. They go through thousands of hours of problem solving testing to teach them not to panic, but to METHODICALLY, rationally problem solve. Even in the face of death, which is itself a whole new panic potential.
Again, from my book Beacons of Leadership, bailing out failing companies is a DIFFERENT skill set than building them. Elon is used to slowly, methodically building, block by block, testing, failing small experiments in a business. Since his usual business’ are startups, it’s all “up,” the sky is the limit, plenty of runway time. Conversely, when you are trying to pull a company out of descent to its death, it’s a much different game, as many times you are up against the wall, out of time, and the gun of bankruptcy is pressed up against your head. Downward spiral is the rule of every day and you can see the ground coming up at you, which is daunting. Usually, your destination is inevitable. You’re just fighting the odds. You are fighting to right the plane in the short time you know you have left. “Just be calm,” says the man with the gun pressed against your sweating forehead.”
Instead, through over paying for an ego project, he’s taken a slow descending plane, torched it on fire and geared it into a death spiral. To resolve the mistake of overpaying, he’s brazenly in a callus manner showing instability and chaos, laid off or lost a massive amount of stabilizing staff, including those that made the platform safe for his core income: advertisers. You overpay, then you have to do massive layoffs. Even worse, he’s made ego “score settling” layoffs, bans from his platform and ego posted on Twitter unstable, panic perceived rhetoric further causing advertisers to be skittish.
Doubling down on the oligarch ego “I alone can save it” he’s shockingly attempted to threaten, call out and shame advertisers. Never bite the hand that feeds you and in response advertisers have pulled back to limit the fallout after recently going through similar issues with the Kayne West’s public meltdown. Now he’s switched gears to pleading and begging, while giving everyone the impression through his constant communication that he and Twitter are unstable and panicking.
4. Throwing switches and banging buttons.
It’s become apparent in the burning death spiral plane’s cockpit, he’s panicking and starting to just flip switches and bang buttons to find anything that works. NEVER PANIC EARLY. At this point, you’re just hitting anything to change course, instead of making methodical, well thought out decisions. He’s playing the ego invincible game of rash, quick decisions that work in a startup that has time, but not in a falling burning plane emergency with all the alarm bells screeching at you.
The opposite of what the Apollo 13 astronauts knew, each one of his panicked decisions is failing, compounding in a snowballing effect to create more problems. And now to make matters with advertisers worse, by rashly approving a new blue check system to fix a bleeding hole, he has opened brands and advertisers to an escalating unsafe and unstable environment where they can be copied and their brands trust and reputation to be subverted by trolls. The result being now those brands and advertisers attacks by trolls taking advantage of panicked decisions are costing investors and companies billions of dollars in stock losses and most likely future lawsuits to come at Elon’s Twitter. He’s literally starting to cut wings and rudders off the plane in hopes of saving it. If he didn’t have advertisers scared off fully yet, they are now completely on the fence now.
5. If you’re going to put out a fire, it’s best NOT to set YOURSELF on fire or the fire crew.
Having a gun up against your head, panicking, it doesn’t help to panic the crew trying to help you save the crashing plane by threating to shoot them as well sending out “save us or else” bankruptcy type emails. You’re not going to get the brains and performance you need if everyone is in fear and flight mode. In fact, some are jumping out or many are looking for the exits. Apollo 13 mantra applied to the entire crew: Never Panic Early. All three had to remain calm and work together to problem solve. They never panicked and methodically did their tasks.
Twitter, since its inception, has always been the “clown car that crashed into success.” It had a multitude of opportunities to be the first lead in so many technologies now commanded by other apps. The “3 stooges” who started it with massive infighting seemed at every turn to do every misstep possible to make it fail and losing never ending amounts of money. Along with users and developers who dragged the three stooges into adopting their successful features, VC’s were able to navigate, and carry it until they could dump it on public stock holders. After that, Twitters been a poorly managed, marching zombie since. By any means, for anyone interested in buying Twitter, they came away knowing it was a terd that so many suitors have passed over until Elon’s ego got the best of him.
Summary
Like the Rime of the Ancient Mariner, Captain Elon has shot down the Twitter bird and like an albatross, it has been hung around his neck and the curse, as they say, “goes on and on” adrift from that fatal egotistical shot.
If I were Elon, I would have been more methodical and appeared more controlled. I would have blacked my communication out or limited my communications to those that have first been screened through serious advisors. But again, this is the same ego issue that got him in trouble tweeting with the SEC. It’s why advertisers see his long pattern of self-sabotage. I would have brought in a well regarded CEO by advertisers who is used to enlisting and having healthy relationships with them. Show stability and competence, not panic and derision. It hasn’t helped his ego to manipulate politics or make conspiracies worse on Twitter has worsened his and the platform’s reputation.
Can Elon save Twitter? If you understand the math of his overpaying 4-5 times burn rate, the damage done to attract advertisers, scaring off current clients, making the instability and toxicity of the platform even more unfriendly to brands and advertisers, and now picking up lawsuits from companies stockholders, I’m not sure even a bankruptcy would save it. Twitters and Facebooks ship have sailed as TikTok now rules the social platforms for audience attention. Most likely it will end up like Tumblr, bottomed out and sold for pennies on the dollar. I predict this will go down as the biggest acquisition flop since the Time Warner deal. Even now Elon thinks he’s winning with all the bad press attention, but really people are just tuning in for the crash. No one’s going to build a business on a crashing plane.
Elon might have been better served by that popular adage of late “Fuck around and find out.” He’s about to find out.
Podcast: Play in new window | Download (Duration: 16:48 — 11.5MB) | Embed
Subscribe: Apple Podcasts | Spotify | Amazon Music | Pandora | iHeartRadio | Podchaser | TuneIn | Deezer | RSS | Subscribe Links
