Twitter is a lot of drama, but ultimately this is a common private equity play:
1) take private
2) fire/layoff until things break, patch up / rehire with cheaper labor. Repeat as necessary
3) spit shine/repackage what's left with a theoretically more appealing balance sheet.
4) resell to another sucker...uh, buyer, or take public again.
Fundamentally Musk bought 44 billion for 5 billion of annual revenue, and presumably 5 billion in costs. Unlikely to add revenue in twitter's model, he's cutting costs.
Honestly, at this point, is there revolutionary technology that is needed to keep the lights on at twitter? Do you need graphQL gods and SREs that would ace any Amazon raising the bar and master of silicon valley interviewing?
Nah. He'll honestly probably outsource a ton of the upkeep.
It's ugly, but the Twitter board and shareholders took their money and ran, and abandoned the product and the workforce. They could have backed out and let Elon Musk off the hook of his dumb contract with them, but they just wanted the money, and sold to someone that just wants to get his money out of it too.
There are a few key differences. PE tries not to massively overpay, it'll put more effort into targeted layoffs, and it'll maintain enough of a "business as usual" posture to not scare away advertisers. Edit: they also put in a CEO whose full-time job is being CEO of that company.
But yes, this is very bad execution of the PE playbook.
Elon thinks he's brilliant at everything he tries his hand at, so he thought he'd jump into the private-equity arena and show everyone how brilliant he is.
4) who'd that sucker be? How much hubris would it take to sell investors on the idea of salvaging a failing company that "the guy who killed the internal combustion engine" and "the guy who made rockets land on their tail" couldn't make profitable? If it comes to selling off a failure, Musk's reputation will be quite a dealbreaker. The days of whatever happens, if all else fails we can still sell to Yahoo are long gone. Perhaps China might be interested, for obvious reasons, but surely not after Twitter has gone down fighting, fading away into irrelevancy in the process.
If Elon holds the line on advertising and drops costs such that Twitter turns two billion in profit, they yeah the narrative in the business circles will be that Elon trimmed the fat and turned twitter into a viable property and someone with cash will buy it. I mean, Microsoft paid 8 billion for github! They bought Skype for 8.5 billion (probably like 12-20 billion these days), and THAT was after ebay bought skype for 2.6 billion (and none of the source code rights) in what was considered a vast overpay.
I mean, they got an offer for roughly a 10x deal. At that point it was in the best interest of shareholders to sell. Especially that it was yet to turn a profit.
Like, I like my car, but would probably sell it for an order of magnitude its worth.
Chinese developers are famous for making apps serving 1.4 billion people, with at most 1/3 salary of US, and the willingness to do 996 a whole year around.
I would be surprised that no company in the west take advanced of that.
The mythical man month exposed a wealth of problems in software development, only some of which have been addressed in the last 44 years (MMM was 1979, right?)
2000 miles and a language barrier do not help things.
1) take private
2) fire/layoff until things break, patch up / rehire with cheaper labor. Repeat as necessary
3) spit shine/repackage what's left with a theoretically more appealing balance sheet.
4) resell to another sucker...uh, buyer, or take public again.
Fundamentally Musk bought 44 billion for 5 billion of annual revenue, and presumably 5 billion in costs. Unlikely to add revenue in twitter's model, he's cutting costs.
Honestly, at this point, is there revolutionary technology that is needed to keep the lights on at twitter? Do you need graphQL gods and SREs that would ace any Amazon raising the bar and master of silicon valley interviewing?
Nah. He'll honestly probably outsource a ton of the upkeep.
It's ugly, but the Twitter board and shareholders took their money and ran, and abandoned the product and the workforce. They could have backed out and let Elon Musk off the hook of his dumb contract with them, but they just wanted the money, and sold to someone that just wants to get his money out of it too.