5 Business Lessons from Elon Musk’s Acquisition of Twitter
Elon Musk, the CEO of Tesla, is known for using Twitter to tease out various thoughts. The world’s richest man regularly tweets about his business interests, cryptocurrency, politics, and life in general. However, he has made the ultimate best of one of his biggest interests.
Twitter announced that it has accepted Musk’s offer to buy the publicly-traded company for $54.20 a share, valuing the social media network at $44 billion.
Musk reiterated in the press release that “free speech” is critical to Twitter’s future.
This is despite the fact that most of his suggestions for improving the social network, such as adding new products, combating spam, and opening up its algorithms, were already in the works before his dramatic intervention.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said.
“I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”
The Twitter-Musk purchase dance has been quite brief, especially given the magnitude of the transaction.
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Why Elon Musk purchased Twitter
1. To reduce censorship
Musk has been outspoken in his criticism of Twitter’s content moderation rules, stating that the platform must be a true venue for free speech. He expressed his hope that even his harshest critics will continue to use the site “because that is what free speech means”.
2. To be able to control the narrative of what others say about him
It could be speculated that Musk’s purchase of Twitter, could be to direct the narrative of himself on the platform despite his disguise of reducing censorship on Twitter.
3. To meet up with his billionaire peers
In August 2013, Jeff Bezos – the world’s richest man at the time, paid $250 million for The Washington Post.
Laurene Powell Jobs, the CEO of Emerson Collective, bought majority ownership in the The Atlantic magazine for more than $100 million a few years later.
In 2018, it was billionaire Marc Benioff’s turn, when the founder of Salesforce purchased Time magazine for $190 million, his own favourite publication.
One can say, Elon Musk purchase of Twitter is to join of his billionaire peers. However, the deal outperforms that of Bezos, Jobs, and Benioff by a long shot.
And now to the crux of the matter:
Business Lessons to learn from Elon Musk’s purchase of Twitter
1. Be strategic from day one
Elon Musk is a great illustration of why must be cautious with our time, money, and energy. He had already established a precedent that he was monitoring Twitter by becoming the platform’s largest individual shareholder, with a $3 billion position equating to 9.2 percent of the company’s shares.
That in and of itself says a lot. Musk is a hardware provider in the knowledge economy, transforming the way we think about electric cars, rockets, satellites, and advanced battery technologies.
2. Be unpredictable
Elon Musk didn’t become Twitter’s biggest shareholder, just to be a part of the board of directors. That would have been a very predictable move.
However, Musk’s stockholders were enraged, and they sued him for what they perceived to be clear stock price manipulation.
Notwithstanding, the heat Musk reaffirmed his position, saying that he’d rather acquire the entire platform.
3. Keep an eye for a lucrative market
According to recent social media industry statistics, Twitter is now one of the most popular social networks in the world, based on active users. Twitter has 192 million monetizable daily active users in the fourth quarter of 2020.
Elon Musk stated that one of his motivations for owning Twitter is to realise its “amazing potential” – and that he isn’t even interested in generating money from it. He already has plenty of it, and multibillionaires can afford to prioritize differently.
4. Due diligence
Before you put your money into any investment, you must first understand it. Elon Musk is a Twitter fanatic with 83.8 million followers. He tweets a lot, sometimes controversially, and sometimes disastrously.
After one tweet wiped $14 billion off Tesla’s stock price, the SEC barred him from tweeting about the company, and he was sued for defamation over a tweet about a cave diver in which he referred to him as “pedo person” (the cave diver lost).
However, Elon Musk has continued to share his thoughts on Twitter, in the face of growing criticisms.
5. The power to negotiate is as valuable to money
Elon Musk’s $44 billion offer for Twitter is simply too excellent to pass up. Prior to the purchase, the world’s richest man agreed to pay $54.20 per share for the social network, but if the company rejects his non-binding offer, which he defines as “best and final,” he may sell his 9% holding.
One may argue that Elon Musk’s negotiation power was one of the primary factors in that moved the board of directors to sell Twitter.
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