InvestorQ : What are the changes that Elon Musk is trying to bring about at Twitter?
Angel dcosta made post

What are the changes that Elon Musk is trying to bring about at Twitter?

Juvina Maggie answered.
3 weeks ago

Elon Musk of Tesla has just completed the acquisition deal for Twitter for a consideration of $44 billion. That is top dollar billing and he needs to quickly justify this cost in terms of revenues, profits and reach. Here is what Musk has already started out at Twitter. The first agenda is to get the team right and he wants to move away from the informal college culture that Jack Dorsey had set up at Twitter. To begin with, Musk has fired the CEO Parag Agarwal and most of the top management team. He has also pruned down heavily on the Asia and India franchises and is also taking steps to make Twitter monetarily viable.

Musk always felt that Jack Dorsey ran Twitter more like a college club than a proper business and that was not sustainable anyways. He has been very aggressive in downsizing with. The employee cuts are likely to be around 50%, but it may be much higher by the time the saga ends. He wants to cut the employee cost in a big way, streamline operations and ensure that there are business minded people on the job who can actually leverage the franchise of users that has been built up by Twitter over the years. But the more immediate concern for Elon Musk would be urgently cutting down on the cash burn.

Cash burn at Twitter, according to Musk, is about $4 million a day. That means Twitter is burning nearly $1 billion a month and about $12 billion a year. Revenues are still far off, so profits are not even the issue now. Over the years, Jack Dorsey had become closely wedded to the product, and he had virtually put aside the business part of it. That is what Musk is planning to change. Cutting manpower is the first step and then it is about operating costs. Musk plans to charge $8 per month for the Verified Blue Tick and that is likely to partially offset the costs. Only once the cash burn in contained that Twitter can think about profits.