This report is purely speculation on my side. Expected events are not set in stone and are completely reflective of my opinions as a result of my experiences in M&A, company transformations and research done around this.
Step 1: Take it private
Once Elon Musk completes the acquisition, it will be taken off the market and set to private (De-listed from the New York Stock Exchange - NYSC).
This is a complicated process that is already set in motion. If you hold stock at the point of the de-listing event, you will be compensated at the rate of 54.2 USD per share you own. We expect this to take approximately six months, after which only a select few investors (up to 2000) will be allowed to participate on a private basis.
Once de-listed, you will not be able to buy/sell the stock of Twitter anymore until it is re-listed again.
Step 2: Focus on the product's core purpose and make it great
While the “marketing position” for this takeover is built on providing a highly liberal platform enabling broader free speech etc., it remains a business that needs to attract, retain and grow higher organic (not bot-driven) activity from regular users.
Based on what Elon said, I see Twitter under Elon delivering with practicality to the improve the value and ease of use:
- Putting the algorithm that prioritises the news feed on open-source enables people to scrutinise and be better ambassadors for the way news is presented to people (smart, brilliant). While just posting the code to open source will not tell you very much, it extends an olive branch towards transparency and dispels conspiracy theories by reducing suspicions of corporate agendas behind news positioning (e.g. work agendas, political angles) and more. This idea is both feasible and advisable.
- Improving the value of the news signal/feed by eliminating polluters with an agenda (bots and spam, over-censorship to the benefit also of a woke, political or other extreme agendas). To defeat the spambots, Twitter will need to build its own bot to detect and ban spamming sources. While this is not impossible, it is prone to also ban a bunch of human "false positives". Calibration of the anti-spam-bot will be needed, but everyone should be prepared that there is no perfect anti-spam technology. Based on modern AI capabilities, this approach is feasible and advisable.
- Enabling people to edit and put in longer tweets. These are top feature requests around the core value of the product and should be considered feasible and advisable.
- Authenticating humans. Validating that people posting comments are people (not bots). This helps people know that posts and comments are coming from a person to promote discourse. It is understood that Twitter has long weighed this idea internally, wondering whether making people confirm their email or phone number could help reduce harassment and spam. Now that the company will be private, this idea is feasible and advisable.
The stated aim of this acquisition is to turn Twitter into a haven for “free speech.” There's just one problem: Twitter and many other social platforms have been down this road before, facing challenges such as:
- Contending with the realities of hundreds of millions of people’s worst instincts as they express themselves online.
- Companies do not want their ads running against posts that misalign with their values, incite violent threats, promote hate speech, and perceived/actual misinformation aimed to tip elections or undermine public health.
- The term 'legal' alone already offers some interesting challenges as one may need to question the legality of content shared on a geographic/per-country basis.
While I am sure that fellow social platform founders like Mark Zuckerberg, and Jack Dorsey, agree with Elon's stance, I am also sure they had to compromise to balance personal views and business needs. It will be interesting to see how far Elon will be willing to take this.
I think this will be partially achieved.
Enable people to pay in the currency/coin of choice
Subject to roadmap priorities, I can see the company accepting new payment methods (e.g. Bitcoin, Dogecoin) and supporting broader forms of content consumption and distribution via NFTs can be a value-added built on the core abilities above that would remain core.
Step 3: Align operations to required operational parameters
Now that the company is not public anymore, one key investor group is involved that is aligned with Elon Musk's plan.
This means setting the stage with the leadership and operational team on what ROI is required in the coming periods, say;
- First three months
- Next three months
- Next 12 months.
I talk more about the addressable financial and operational issues in Exploring both sides of the Elon-Twitter takeover bid (Updated 23-Apr-22)
Step 4: Shrink to Grow
The key change will be under the hood in operating the business. Elon is infamous for building organisations with internal cultures that are hyperfocused on achieving exceptional performance and productivity while ensuring product value is central to its customer target.
The financial model can be “relatively easily fixed” through an approach known as “shrink to grow” that Elon has proven he can deploy through his Tesla, SpaceX, PayPal and other ventures.
Elon must have already identified the economic model that would de-risk his immediate investment over a couple of years while re-factoring and focusing on product value for end-users and businesses worldwide.
This is highly destructive to the current culture, employee composition, working methods, etc. It is a very blunt operation, which can destroy cultures and ways of working to be replaced with something new. A new way of thinking, operating and reaching new levels of performance.
Whether for the better or worse will be in the eye of the beholder. Some employees will love it. Most will hate it. Many will no longer be with Twitter for long.
Step 5: Grow
Based on a reset product and operating model, it is here where I believe he really wants to go.
The real value of Twitter for Elon is in its ability to use social graph technology to support hyper-targeted audience engagement in the future. While Facebook understands who you know, Twitter understands both who you know and what you are interested in. It does this by knowing your immediate circle of friends, people you follow, topics you care about, news you read and actions you take (and at what time) such as (likes and re-tweets).
By eliminating the polluters of the quality of the signal (bots and spam), Elon will have access to a high-value signal that can be used for hyper-targeted communications globally. This is the hidden power Twitter can have on cultural impact. With this, Elon can go after leaders such as LinkedIn and Facebook in a better, stronger, and faster mannerism. Add to that the potential of being the highest provider of value signal news to agencies globally, and you now understand how beneficial this is to Elon. Add to that the potential of Elon investing in news entities (e.g. CNN or similar setups), and you now have production + distribution under your control. There is a very viable economic model here.
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