ColdFusion - Elon's Twitter Circus (With Updates)

Starting point is 00:00:01 Hi, welcome to another episode of Coldfusion. You've all read the news stories. Twitter seems to be in chaos. After his purchase, Elon Musk has flipped the house upside down. He fired the CEO, CFO and head of policy while also disabandoning the board of directors. And that's just the start. Next, he went after the employees, firing close to 50% of total staff. And for those remaining, he issued an ultimatum, either work insane hours or quit.

Starting point is 00:00:28 Lawsuits were filed, advertisers left and the future of the site became unclear. This is perhaps the first time that we get to see the inner workings of a CEO publicly trying to figure out how to run a large and influential company in real time. Since the peak of his wealth, Elon has lost $200 billion, becoming the first person to do so. He also claims to be in danger after revealing ties between the FBI and Twitter. So what is going on here? It's now 2023, so let's recap the chaos and take a look at what's happened since. Is Twitter really on a collision course of bankruptcy, or is it gaining a fresh start?

Starting point is 00:01:08 Let's dive into the story of drama, lawsuits and a lot of tweets to try and figure this out. Despite Twitter only having a fraction of the users of Facebook, Instagram, or even Snapchat, over the years it has become one of the most influential platforms for real-world discourse. Billions of dollars can be lost over a single tweet. grassroots movements can be started over a single tweet. The lives of public figures can be altered over a single tweet. However, due to a smaller user base, Twitter has largely been unprofitable,

Starting point is 00:01:50 having only two years of profit in the past 10 years. Previous management tried to fix the issue by any means that they could. They purchased many companies such as Vine and Periscope and added a few new features to the platform. The results were mixed at best, and the company may have been facing bankruptcy if nothing changed. This is the point where Elon gets involved in the company. He was always a big Twitter user and a substantial Twitter critic.

Starting point is 00:02:18 Yet things quickly changed as he got invited to join the board of directors. Leaked text messages showed that Jack Dorsey, the founder and former CEO of Twitter, was very fond of Elon. Jack wrote to Elon, quote, You care so much, get its importance, and could deaf help in a measurable ways. Jack Dorsey had told Musk the previous year when he was still CEO of Twitter that he wanted to give Musk a seat on the board, but they refused, citing that Musk would be too much of a risk. Yet just as Dorsey was beginning to celebrate, Musk screwed the whole thing up.

Starting point is 00:02:49 He criticised Twitter publicly, and Parag-Agwal, the then-current CEO of Twitter, sent Elon a tense message. Quote, you are free to tweet, is Twitter dying, or anything else about Twitter, but it's my responsibility to tell you that it's not helping me make Twitter better in the current context. Next time we speak, I'd like to provide you perspective on the level of internal distraction right now and how it's hurting our ability to do work. Musk seemed to take this message to heart, replying harshly, quote, what did you get done this week? I'm not joining the board.

Starting point is 00:03:19 This is a waste of time. We'll make an offer to take Twitter private. This was a very unexpected due turn. Elon began soliciting bankers and other tech billionaires for cash to finance the takeover. In the following weeks, Musk announced the restructuring plans that, according to his estimates, would quintipple Twitter revenues by 2008. While everything seemed to be going according to plan, on May 13th, Musk halted the deal, citing more bot activity on the site than he was first told about.

Starting point is 00:03:49 Some argued that this might serve as a pretext for Must to bargain for a lower price, or exit the deal altogether. After all, he was paying a huge premium for a stock in a declining market. On the 12th of July, Twitter sued Musk, essentially forcing him to complete the agreement. The move seemed to work, as on October 4th, Elon proposed the completion of the deal, before the beginning of the trial scheduled for October 28th. And so, after months of back and forth, Musk was the majority owner of Twitter,

Starting point is 00:04:18 and yet, the drama had only begun. Due to large deficits in the Twitter budget, Musk's priority became putting the company's finances an order first. Not only did Twitter lose money for years, but while financing the acquisition, Musk had to take on a $13 billion loan. Analysts project that he's likely to pay around $1 billion in interest payments alone,

Starting point is 00:04:44 every single year. All of this is in addition to selling almost $20 billion in Tesla shares in 2022, 3.4 billion of which was in November alone. With that said, Musk had to either cut expenses or increase revenues, and his plan seemed to involve both. Right from the get-go, he did not hesitate to dissolve the entire board of directors, sacks several top executives, and fire hundreds of employees. By the time the first week had ended, less than 50% of the entire workforce was left. Musk was trying to patch a $4 million a day loss. Since the average engineer at a big tech company has a salary of around $100,000 per year, at the end of the day, millions of dollars would be saved even with a severance package

Starting point is 00:05:30 and a possible lawsuit or two. Many employees took to social media to protest the way that they've been treated, even launching a class action lawsuit. According to them, Musk needed to give a 60-day notice to some employees, but he would counter that the severance package that he offered was much. larger than required by law. Adding to all of the chaos, many top management positions stepped down, while some employees were almost forced to sleep at the office to make up for the loss in manpower.

Starting point is 00:05:57 To compensate for that, Musk brought in engineers from Tesla, SpaceX and the Boring Company. They were responsible for figuring out how to make the infrastructure of the company lighter on resources, playing a key part in determining who goes and who stays. Due to that, many employees were laid off by mistake and later asked to return as managers realized that they didn't have the personnel to execute some new features they were planning. Yet the cost cutting didn't end there. According to some reports, around 5,000 contractors were laid off as well, with heavy cuts to the content moderation team. On November 7, 90% of Twitter India's staff was fired.

Starting point is 00:06:36 To further save costs, in January of 2023, Twitter staff cuts occurred in Brazil, Australia, as well as other locations. Meanwhile, in the US, a data centre in Sacramento was. shut down and another one in Atlanta is downsizing. In Elon's mind, there's just too many people working at Twitter for what's actually needed. Well, I think you could just stand back and say, without knowing how many employees Twitter has at all, and say how many people are really needed to run Twitter. Like, let's say you don't know what the employee head count number is at all. How many people are needed to keep the site operational? Like, let's say, excluding product evolution, you basically have to keep the servers going and you have to have customer,

Starting point is 00:07:14 sort of a support function to take down a material that is in violation of the law. How many people, what's the minimum number of people? That's in the hundreds probably. It's not, exactly. It's not like a giant number. Yeah. Twitter saw as like 2,000 people, right? Yeah, we still have 2,000.

Starting point is 00:07:27 On the 9th of December, Reuters would report that Twitter would be sued for disproportionately firing female staff. The drama intensified even more two weeks later, as Elon issued an ultimatum to the rest of his personnel. He would call it hardcore mode, and his aim was to push stuff. to create a so-called Twitter 2.0. It was simple. Either work those insane hours or quit and get a hefty severance.

Starting point is 00:07:52 The move was supposed to kick off the creation of a new culture within Twitter, where only the passionate survive. Within the company, the move was not as popular as 1,200 employees rejected the proposal and left, but now this left the company with a critically low amount of people. Concerns from former staff grew that the site could soon break because of the low levels of engineers. levels of engineers. Musk would have an all-hands-on-deck meeting on the 10th floor of Twitter's San Francisco headquarters. He would call all engineers who could, quote, actually write software and show him examples of recent code they were responsible for.

Starting point is 00:08:27 He even encouraged staff to fly to San Francisco the same day, if need be. Ironically, Twitter employees had been locked out of the building until Monday for fear of sabotage, so there was some confusion about how people would get in in the first place. It really was crunch time. Massive and very messy layoffs, as well as the general chaos, created fear among advertisers on the platform. General Mills, General Motors, Pfizer and Audi had all suspended their advertising activity for fear of damaging their brand due to exposure to unsafe content. On the 9th of December, Twitter would announce the rollout of new controls for brands

Starting point is 00:09:03 to prevent their ads from appearing above or below tweets that contain any key words that they want to avoid. According to the New York Post, around 50% of the top of the top of the top of the media. 100 advertisers such as AT&T and Wells Fargo still have not returned as of January 2023. To rely less on advertisers Elon has been trying out different strategies. Many of them were scrapped even before being implemented. Such was the case with transforming Twitter into a blockchain-based platform where, quote, you have to pay a tiny amount to register your message on the chain, which will cut out the vast majority of spam and bots. There is no throat to choke, so free speech is guaranteed."

Starting point is 00:09:45 One particularly interesting conversation happened between Elon Musk and none other than Sam Bankman-Fried. Sam was willing to finance Twitter for $5 billion if Musk agreed to let him, quote, do the engineering for the social media blockchain integration, end quote. In light of recent news and an arrest, it seems that Twitter dodged a bullet by rejecting this idea. As far as ideas that did become a reality, Musk asked users to pay an $8 a month subscription fee if they wanted to keep their verification.

Starting point is 00:10:18 This was supposedly to cut out spam and ensure legitimate use on the platform. But many thought that this method was heavy-handed as it crippled the functionality of other users. The part of what I'm trying to achieve with this sort of enabling everyone to be payment verified with Twitter Blue is to try to get as many people payment verified as possible. It's only eight bucks a month. effect will be over time that the verified users will be, will pretty much always be at the top of comments and search and you won't really see, you'll have to scroll far to

Starting point is 00:10:56 see the unverified users which will be the bots and trolls and whatnot. From a strictly financial view, the move made sense. Since there are more than 420 million verified users, even at a low conversion rate, this new income stream could have made a difference to the bottom line. However, the launch was a complete disaster. Elon didn't foresee human nature, possibly due to reduced or non-existent teams to control the rollout, the feature became a tool for mass impersonation. At first, it was funny to watch the chaos online as more people started joining in on the trend, impersonating Mario, Pepsi, and some very recognizable people and companies. Before long,

Starting point is 00:11:36 the trend ended up causing a lot of damage. There was one very famous example. The stock of Eli Lilly and Co., a huge pharmaceutical company, flash crashed due to a troll impersonating their account, letting people know that insulin was now free. The real account of the company had to quickly come out and clarify it that the other tweet was a troll. Although some say that this was well deserved for the company, it became clear that if this trolling reached the sphere of politics or even geopolitics, the consequences could be less amusing. After the chaos, this method of verification was promptly scrapped and is now undergoing review. Musk would also clash with Apple which he accused of trying to sabotage

Starting point is 00:12:16 Twitter. He contemplated the idea of building his own smartphone but just two days later he would say that it was a misunderstanding and had been resolved. EU regulators are looking at the situation closely as Twitter no longer has a data protection officer putting it in violation of the GDPR standard. Cutting down on moderation staff also doesn't help with EU regulators. Twitter has also disbanded their Brussels office. due to concerns over if the company would be able to abide by EU rules. There's also a bunch of new feature ideas that are being thrown about.

Starting point is 00:12:52 To name a few, making the algorithm open source, dividing Twitter into different tiers, and giving priority ranking to tweets. There's also talk of the relaunch of Vine and a feature that allows users to pay to talk to celebrities. In February of 2023, it was also announced that long-form tweets would be available. Features include bold, underline and italic font choices. One concept that's been particularly underlined by Musk is the concept of transforming Twitter into an X app. Think of it like a Western WeChat. It would offer services such as messaging, social networking, peer-to-peer payments and e-commerce shopping.

Starting point is 00:13:29 Quote, I think there's a real opportunity to create that. You basically live on WeChat in China because it's so useful and so helpful to your daily life. And I think if we could achieve that or even close to that with Twitter, it would be an immense success. End quote. The big reason that Musk is running after this idea is simple. WeChat makes a lot of money by simply taking a small cut out of all the transactions that users make. At a reasonable volume, this becomes a very lucrative business. Yet the success of the plan would fully rely on the confidence that people have in posts on social media.

Starting point is 00:14:00 This is one of the main reasons that super apps work in China, as 58% of users trust content brand posts on social media. In the United States, this figure is only 20%, and this puts the whole plan into question. The Twitter Files saga was a politically charged dramatic reveal of the behind-the-scenes workings of Twitter. Elon Musk began to reveal them to the public in early December. The topic began with the suppression of a story regarding Joe Biden's son, Hunter Biden, who left his laptop at a repair shop. According to the New York Post that broke the story, the laptop included unsavory images of illegal activities, emails hinting at possible corruption, and much more. This all blew up on Twitter, 20 days before the 2020-11.

Starting point is 00:14:45 and it was immediately crushed by Twitter themselves. In December of 2022, Elon Musk and journalists Matt Taibi and Barry Weiss released documents of the internal happenings at Twitter during the peak of the Hunter Biden story. The release largely didn't paint Twitter in a positive light. The second leak suggested that a secret group at Twitter who were high up in the chain of command, such as the head of legal and the head of trust and safety, made decisions behind everyone's back without overview and these decisions were in regards to moderating Twitter. Certain trend topics were blacklisted, certain topics weren't allowed to go viral. Since then,

Starting point is 00:15:22 multiple Twitter files have been posted detailing the alleged shadow banning of right-wing personalities and internal communications when Trump was banned from Twitter. And here comes the controversy because people on the right say that this is a smoking gun and the trust and safety team at Twitter were essentially the ones running the show, while people on the left say that there's really nothing to see here. Some more Twitter files claimed that up to 80 FBI agents were being deployed as a form of mass surveillance on Twitter. A Twitter executive confirmed and described how they gave data to the FBI. It was also claimed that there are multiple branches of the U.S. government involved in social media manipulation and surveillance.

Starting point is 00:16:00 And now to the latest batch of the Twitter files, the ninth installment claims both the FBI and CIA have moderated content on the social media platform. the documents which were released on Christmas Eve in a series of tweets. Our part of owner Elon Musk's effort to document how the company was run before he took over. Twitter files all revolves around alleged communications and coordination between Twitter and other government agencies, including the FBI. Independent journalist Matt Taibi is the one behind this latest Twitter thread that was posted on Saturday. And he wrote on Saturday, quote, The files show the FBI acting as a doorman to a vast program of social media surveillance and censorship, encompassing agencies across the federal government from the State Department to the Pentagon to the CIA.

Starting point is 00:16:52 Taibi claims that Twitter kept in contact with so many agencies, including the Department of Defense and the FBI, that it lost track. Taibi also describes regular meetings of executives with FBI personnel and other agencies. Interestingly, it was also stated that there are a dozen former FBI agents that became Twitter executives, some of whom were paid by the FBI while at Twitter, and Twitter as a whole got a bunch of money from the FBI. The FBI has since hit back, saying that this is all essentially misinformation, but strangely, they haven't refuted any of the claims to date.

Starting point is 00:17:27 After these revelations, Elon stated that he is now, in quote, crazy danger. It is all just insane, but the FBI and other government government agencies being involved in surveillance somehow doesn't surprise me. Left and right media outlets have differing opinions on the validity and importance of these leaks. And I'm not even American, so I'm going to just end this here. Elon admitted that he never had the ambition to be the CEO of Twitter and wants to give the job to someone else. At the end of last year, Elon put up a poll on Twitter asking users if they wanted him to step

Starting point is 00:18:00 down. They said yes. A clear successor hasn't been determined yet. So in conclusion, with Twitter, what happens next is anyone's guess? It's a messy chaotic situation that's going to be an uphill battle. Elon tweeted that bankruptcy is still not out of the question for Twitter. According to the New York Post, in early 2023, the value of Twitter is expected to be down by 50 to 70%.

Starting point is 00:18:29 According to one source that spoke to the publication, Musk's loans, quote, ought to be marked down by 70% of their value. To add to this, Twitter's head of HR and engineering are leaving. The whole fiasco may impact Elon's other ventures. Shareholders of Elon's other companies worry about his involvement in too many projects at once. And to some degree, public opinion on Elon has shifted. For example, as outlined by Bloomberg, a large number of people who bought Teslas were left leaning. They felt neutral to positive about the Tesla brand.

Starting point is 00:19:03 But as Elon exposed more and more of his personality over Twitter, they now have a bitter taste in their mouth. And as a whole, it's affecting Tesla's brand. image. Tesla stock has tumbled 70% since its peak, partly from macroeconomic situations, but this situation certainly isn't helping. Whatever the case, it's clear that Elon's Twitter takeover has gotten off to an extremely rocky start, but predicting where this one goes is extremely murky. If he chooses the wrong successor, Twitter will crash and burn, but if his successor does an amazing job Twitter could thrive, surprising a lot of people. I think it's It's too early to tell at this stage, but I'll be watching closely.

Starting point is 00:19:44 Interestingly, Twitter has rose to the number one spot on the App Store under the US News category at the start of 2023. So perhaps it's a tiny but a fleeting sign that things may not be a complete failure. Let's wait and see though. So what do you guys think? Feel free to let me know in the comments below. So that's about it from me. I'll play you out with a new track I made over on the second channel.

Starting point is 00:20:06 Admittedly, I've been having too much fun making music over the past few months. So my name is Degogo and you've been watching Cold Fusion and I'll catch you again soon for another episode. Cheers guys. Have a good one.

ColdFusion - Elon's Twitter Circus (With Updates)

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