On Twitter, Musk goes fast and breaks things


Elon Musk’s purchase of Twitter Inc. is garnering a lot of attention and plans to turn around the struggling social network. Much of the debate around the acquisition misses a crucial element of Musk’s glittering track record: He uses software to advance hard problems that were previously unimaginable, then creates a virtuous spiral with investors and users. This approach is key to understanding the future of technology and innovation in general, and Twitter in particular.

I’m not making any predictions on how it will work with Twitter. For one, Musk’s impressive track record of success in businesses that weren’t seen as amenable to radical software solutions. On the other hand, the difficulty of imagining the new and improved Twitter. There isn’t a lot of information to glean from the immediate reactions of Twitter users and advertisers.

Two key points of general agreement, however, are that Twitter somehow created something of great social importance that is still poorly understood, and that Twitter’s old management did a bad job of supporting that importance and monetizing it. Focusing on ad revenue and worrying about reprimands has undermined the platform’s core ethics for its valued users. The old Twitter appears to have spent heavily on staffing initiatives that failed to attract users and were frequently abandoned when they failed to produce quick profits.

Beyond that, there is little agreement. Few people have a clear idea of ​​how Twitter can grow and generate profits. Musk’s early tinkering attempts — shifting revenue streams from advertisers to users, cutting staff and ignoring reprimands — may or may not be helpful, but they don’t point to the goal.

More information can be obtained by examining Musk’s past rather than Twitter’s. People think Musk is a hardware guy — cars and rockets — but he started in software with Zip2 and PayPal Holdings Inc. When he got into hardware, his innovations were about leveraging advances software to accelerate development and reduce investment costs.

In Musk’s texts to Twitter before the purchase, he highlighted his success in building “robust software systems,” presumably the rapid prototyping, production management and simulation tools so fundamental to Tesla Inc’s success. and SpaceX. Musk seems to view Twitter as an engineering problem to be designed from the ground up, rather than a social phenomenon to be monetized. This means understanding the core value of Twitter and creating an infrastructure to support it, rather than making committee decisions to satisfy existing users, advertisers and third parties.

Another driver of Musk’s successes is his storytelling. Musk tells stories that attract both talent and capital to realize his dreams. It’s trickier than it looks. Both talented people and investors are skeptical and hear many stories. Most visionaries struggle to attract and manage the right talent and attract people who bet their own money. Telling stories that appeal to the right creatives and investors, and then managing the mix, is a rare skill. And Musk has managed it in a way that keeps growing: money attracts talent, and talent produces results that attract more capital.

A related and final factor in Musk’s success is his ability to build teams. Musk surrounds himself with exceptional people who can execute his vision and push through his mistakes. It’s already started on Twitter with Musk bringing in other product specialists and innovators like David Sacks, Marc Andreessen and Larry Ellison.

I don’t expect Musk to just tweak Twitter on the sidelines. I expect it to introduce a new software culture built around tools to support flexible enhancements. Musk will tell stories that attract user talent to improve content and software talent to improve user experience. No one, probably not even Musk, has more than vague ideas of what it will look like. But Musk can probably attract all the capital he needs to build and expand it in whatever way looks promising, without having to worry about revenue or profits. Only when it is built will it make sense to wonder how to monetize it.

Of course, all of this could fail. Maybe there aren’t great benefits to changing the software culture. Maybe there’s really nothing to build or monetize. Maybe Musk won’t be able to come up with compelling stories, or too few people will buy into them. Perhaps what is built will not interest anyone. But at least so far no one has gotten rich betting against Musk.

More from Bloomberg Opinion:

• Musk’s massive firing is another sign of Twitter chaos: Mark Gongloff

• Elon Musk sabotages his defense of free speech: Robert A. George

• Musk’s Pay-to-Play plan will make Twitter too clubby: Tim Culpan

Want to know more about Bloomberg Opinion? {NOTICE}.

–With the help of Richard Dewey.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Aaron Brown is a former Managing Director and Head of Capital Markets Research at AQR Capital Management. He is the author of “The Poker Face of Wall Street”. He may have an interest in the areas he writes about.

More stories like this are available at bloomberg.com/opinion

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