Elon’s $8 Mistake Just Cost Companies Billions, What’s Next?

It would be fair to say that every day at Twitter has been eventful since Elon Musk’s USD 44 billion takeover on Oct. 27. What began with the famed business tycoon lugging a sink into the Twitter HQ grew into an ouster for the majority of top executives at the social media company. This was followed by company-wide layoffs that saw around 3,700 employees out of jobs.

And if the drama unfolding in the first two weeks of the Twitter takeover were not enough, the third week saw utter chaos on the platform as Musk’s confusion and insistence to democratise the ‘blue checkmark’ for USD 8 per month unleashed impostor accounts on Friday, which shaved billions of dollars from many companies’ market caps.

Lack Of Nuanced Leadership

As the world prepares for a potential recession in 2023, most of the BigTechs have made moves towards streamlining their workforce. This has included Meta’s 11,000 and Microsoft’s possible 1,000 job cuts in recent times. During its Q3 earnings, Intel too said that it would cut 20 per cent of its staff over the next year, while Google has introduced a hiring freeze in most areas of its business.

Twitter in the meantime cut half of its workforce within days of Musk’s takeover. The world’s richest man had already aired his views on the social media platform being overstaffed and cutting the workforce by 75 per cent. After cutting lesser jobs than he probably wanted to, Musk turned his attention towards slashing the loss-making proposition Twitter had turned into. The new CEO of the company said that the ‘blue bird’ was losing USD 4 million per day and needed to find a way to change that.

From the outset, Elon Musk seemed to have a plan for Twitter’s premium subscription (Twitter Blue) to address the company’s losses. While he ruminated over the pricing of Twitter Blue on the micro-blogging platform, he received significant pushback and eventually decided to settle on a USD 8 per month subscription for anyone who would want a blue checkmark.

But what seemed like a ‘plan’ caused utter chaos this week as Musk-led Twitter rolled out “Official” labels to distinguish between accounts with blue checkmarks and official accounts of powerful individuals, government entities and companies. But uncertain and unsure leadership at Twitter meant that the label was rolled back within hours, making everyone wonder on what was to unfold next.

Musk in a tweet responded to popular YouTuber Marques Brownlee saying that he had “killed it [ the ‘official’ label]”. He added that “Blue check will be the great leveler”, essentially backtracking on the idea of handing out gray checkmarks to influential accounts on Twitter.

As joked about and expected, the impostor accounts surged on Twitter even as Musk warned of purging accounts that try to take on identities of popular entities and individuals.

On Friday, conglomerates including Lockheed Martin and Eli Lilly lost billions of dollars in market caps due to tweets made out of impostor accounts that had acquired the blue checkmark by paying USD 8. What was touted to be the “great leveler” by Musk shaved significant market caps from these high-valued companies.

Eli Lilly on Thursday was trading at USD 368.36. The impact of impostor tweets resulted in the trading price hitting USD 345.26 on Friday. 

Meanwhile, defense and aerospace company Lockheed Martin’s trading price came down from USD 490.66 on Thursday to USD 463.64 on Friday after the impostor tweets.

Noted Epidemiologist and health economist Eric Feigl-Ding on Twitter said that he had learned that Eli Lilly executives are “raging and furious at losing USD 20 billion in market cap” from impostor tweets.

While these companies were adversely affected by the erratic rollout of Twitter Blue for USD 8 and rollback of the “Official” label, there was – unsurprisingly – a surge of fake accounts impersonating noted figures, dead and alive. For example, one could see a verified Pope John Paul tweeting conspiracy theories, and accounts impersonating Meta CEO Mark Zuckerberg and former US president George W Bush. There were also fake accounts impersonating major companies including Twitter, Apple, Nintendo and Chiquita.

This fierce rise of impostor accounts and causing chaos meant that Twitter had to roll back the Blue subscription. Further, Twitter also brought back the “Official” gray badge for government bodies, influential leaders and companies.

The impersonation was hardly surprising but Musk’s unwillingness to have a foresight of this chaos unfolding seems – at the very least – strange. Having built stellar companies such as SpaceX and Tesla, it was expected that Musk would bring nuance and precision leadership to the languishing social media platform. But instead, Musk himself has confessed to not knowing the proper direction for the company as he tweeted that Twitter would try the trial-and-error method in times to come. This brings to light the plausibility of further chaos ensuing on the platform before the dust settles (if it does).

Speaking exclusively to BW Businessworld on Musk’s leadership, founder and CEO of TeamLease Edtech Shantanu Rooj said, “We need to wait for some more time to see the impact of all of these things before we make a call on whether this is a right decision or wrong by Musk.”

“But looking at his stellar background and his ability to transform businesses, I would not doubt his actions at this point in time and would observe it some more before coming to a conclusion,” he added.

What’s Next?

With most of the Twitter senior executive team gone, it’s hard to gauge who Elon Musk could turn to for advice to run Twitter efficiently. The leadup to Musk’s Twitter acquisition gave everyone the feeling that he did not really want to acquire the platform. While he is known for his radical approach to problems and respected by many for the businesses he has built over the years, Musk has never really dealt with a business that was in the public view and ‘handled’ public views. His erratic and disruptive approach could mean that more chaos would possibly ensue in the near future. Under Musk’s leadership, advertisers have already chosen to abandon Twitter and reevaluate their strategy for the platform.  

Moreover, Musk himself has said that the recession could bring in the possibility of bankruptcy for Twitter, which means that the company needs to fast work out a path to profitability. The future of Twitter, for now, remains uncertain but Musk seems to revel and thrive in such situations. Possibilities remain open.