The Chris Voss Show - The Chris Voss Show Podcast – Why Elon Musk Is Failing With Twitter

Episode Date: November 13, 2022

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 wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, folks. This is Voss here from thechrisvossshow.com. Hey, thanks for coming into the show today. Hey, I want to do a special one-on-one show. Normally, we have brilliant guests, billionaires, astronauts, CEOs, you name it, governors, politicians,

all the great book authors on the show. You name it, they are on the show. So be sure to subscribe at thechrisfastshow.com. You go to iTunes and subscribe there or youtube.com for just Chris Foss and see all of the stuff we do on LinkedIn and all those crazy places on the internet. I want to talk to you today about an article I've cut. This is talking about why Elon Musk is failing with Twitter. And I'm going to be running through my overview of why I think he is failing at Twitter and what the massive problems are. Recently, just a day or two ago, we saw that the new Twitter checkmark blue $8 thing that he quickly implemented very speedily has caused a flurry of troll accounts that have impersonated

companies, been asking for personal information, been asking for credit cards, and basically ripping people and scamming them off. Even worse, some of the companies on Twitter have been impersonated. Now with the blue checkmark system, Eli Lilly and company was one. And in doing so, someone in the troll account, fake account that was made, put out a tweet saying, we are excited to announce insulin is free now, which of course it's not. And by doing so, they may have cost Eli Lilly billions as their stock precipitously dropped on the news. Even though they tried to correct it through their real company account, it still hit their stock incredibly hard.

And I'm sure that this is going to prompt shoulder lawsuits or maybe a lawsuit from the company directly in and of itself against Elon Musk and Twitter. So it just keeps getting worse where the frying pan just, what is it, jumping out of the frying pan into the fire just keeps getting worse. And I wanted to do a rundown on what I feel Elon Musk is failing and why. You know, I've had some experience bailing out companies and bringing companies back from bankruptcy. I wrote about those in my book. So I'm going to give you the rundown, read you through the article that I've written on thechrisfoshshow.com. You can find it. I might put it on LinkedIn and Medium, so you may be able to find it over there as well.

But be sure to subscribe to the show so you get more of the communications of what we're doing. So let's get into it. The Chris Fosch Show podcast, why Elon Musk is failing with Twitter. All these are my opinion. So take that with a grain of, I don't know, whatever salt. That or just sue me. 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 world's worst acquisition of all time, next to the Time Warner deal, if you're familiar with that. 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 in the past. Why is everything going wrong for Elon? Well, it's a few things. Number one, operating from ego. Elon has been operating in an ego state where he believes his own reputation and swagger is impenetrable. Never think that your stuff doesn't stink. Is that the rule? Ego got him into this mess. Ego had him lording around on 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. A lot of CEOs make this mistake. Fortunately, though, they usually have a board to oversee their errors. 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 it. It appears that many of Elon's advisors on the deal were there for some sort of political right gain who may have sought to encourage him to buy it for their interest rather than the merits of the financials. If you've seen the text messages from the deal that have now been released in the lawsuit, it was awful advice he was getting from people willing to sacrifice him for their gain. Number two, 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 two to three times its valuation. Then he attempted to break the deal and could not. He blindly ignored the coming recessionary conditions coming as the Federal Reserve is tightening the economy. And now the scenario looks even worse as all tech companies just recently took a massive stock dive, some as much as 50%. Most likely, if he would have waited until now, the Twitter stock price valuation would have been around $7 to $10 billion. He bought it for, what, $44 billion? He just needed to wait, I don't know, a couple months. So he's likely paid four to five times the value.

Number three, and this is an important lesson for people in business, people that go into these situations, or life, never panic early. On my podcast, the Chris Fascio podcast, we had Apollo 13's Fred Hayes on to talk about the astronauts training and survival and the snowballing failures of the mission that had their lives on the line, Apollo 13. The title of his book is from NASA's training, Never Panic Early. In his NASA training, it taught him 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 in itself is a whole new panic potential. Again, from my book, Beacon's Leadership, bailing out companies is a different skill set than building companies. It is completely different. Elon is used to slowly, Plenty of runway time. Conversely, when you're trying to pull a company out of a descent to its death, it's a much different game. As many times you're up against the wall, you're 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're 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, though, overpaying 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 callous 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 his oligarch ego, I alone can save it, quote unquote, he 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 Kanye 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. Number four, 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. game of rash, quick decisions that work in a startup that has time, but not in a failing, burning plane emergency with all the alarm bells screeching at you. The opposite of what the Apollo 13 astronauts knew he's doing. Each one of his panic decisions is failing and compounding in a snowballing effect to create more problems. And now to make miners worse with advertisers, 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 brand's trust and reputation can be subverted by trolls. The result being now that those brand and advertiser attacks by trolls

are taking advantage of panicked decisions that are costing investors and companies now billions of dollars in stock losses and most likely future lawsuits to come at Elon's Twitter, just like the Eli Lilly example we talked about. 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, worried about what Wall Street might do if they misread a troll tweet or something that was enabled through his blue check system. Number five, if you're going to put a fire out,

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 threatening to shoot them as well, sending out the save us or else bankruptcy type emails he sent. You're not going to get the brains and performance you need if everybody is in fear and flight mode. In fact, some are jumping out or many are looking for the exits. Apollo 13 mantra of never panic early applied to the entire crew.

All three of the astronauts had to remain calm and work together to problem solve. They never panicked, and they methodically did their tasks. If you watch the interview we did with Fred Hayes, he talked about how they never panicked except for, I think, one moment when they were making entry. But the rest of the time, they were calm, cool, collected. They knew they were going to get out of it. They were never in fear for their life. If you watch the movie, a little bit of it is embellished in the drama, but watch my show. He was cool, calm, and collected.

They weren't worried at all. And that was the thing that got them through it. If one of them, if one of the three of them had started panicking and losing it, they probably would have lost everything and lost all their lives. So that's a real key point. So Twitter, the other important thing that he overlooked, Twitter, since it's his obsession, has always been a clown car that crashed into success. There was a famous book that was written about it, and that was the line I think that was taken from it. Twitter's the clown car that crashed into success.

It had multiple opportunities to be the first lead in so many technologies that is now commanded by other apps. The Three 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 like, for instance, hashtags and retweets that they didn't want to do, VCs were able to navigate and carry it until they could dump it

on public stockholders. After that, Twitter has been a poorly managed marching zombie ever since. By any means, for anyone investing and buying in Twitter, they came away from knowing that it was a turd, and so many suitors have passed it over until Elon's ego got the best of him. In summary, like the rhyme of the ancient mariner, Captain Elon has shot down the Twitter bird like an albatross, and 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 more methodically and appeared more controlled. I would have acted and appeared more controlled. I would have blacked my communication out or limited my communication 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 also why advertisers see as long pattern of self-sabotage as a danger. Likely, I would have brought in a well-regarded CEO by advertisers who is used to enlisting and having healthy relationships with them. I would have shown stability and confidence, not panic and derision. It hasn't helped his ego to manipulate politics on the site and make conspiracies worse on Twitter, and it's damaged the platform's reputation even more because people are going, how crazy is he going to get now?

Can Elon save Twitter? If you understand the math of his overpaying four to five 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 and stockholders, I'm not even sure a bankruptcy court would save it. Twitter and Facebook ships 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 one of the biggest acquisition flops 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. Anyway, guys, thanks for tuning in to The Chris Voss Show. Be sure to subscribe to it on YouTube.com, Fortune's Chris Voss. Follow us on our channels on, let's see, LinkedIn.com and all those different places. Check out my book, Beacons of Leadership, on Amazon. You can order up there as well and hear some of my stories of my business adventures of 35 years.

We appreciate you being here, and we'll see you guys next time.