Elon Musk's Twitter Takeover: Good Or Bad?

I'm just thinking back as we're talking about this to all the times I didn't make the call, I didn't do the thing, and I thought I was being the nice guy, I was just being a coward. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Deiss.

Hey, everybody. Welcome to an episode of Business Lunch. I am Roland Frazier, one of your co hosts, along with the inimitable Ryan Deiss. Ryan, what's going on?

Just still sitting around unable to be imitated? No, man, I'm feeling great because we are on the other side of a really busy event season and I feel like I love events, I love getting to hang out with our customers and clients, but man, they're a lot of work. And, and while that is the work that we do some of the time, it's nice to be on the other side of it and get back to the other kind of work that we do because they're so all consuming.

I love the events and I also don't hate when they're over. It's a nice relief. We also, like we came out of. So we've been off the air of recording these for about five weeks because we had all of those events, four in a row, followed by a three week vacation together pretty much in, in France. We went to all of the fun wine places that one might want to go if one was in Bordeaux.

Us and our wives. I want to make sure we don't start any rumors here. Us and our wives. Along with our wives, Roland and I taking a romantic trip through France.

Yeah, we had separate rooms. I mean, our wives had a room and we had a room and it was, you know, it was very nice. So that was really cool. And then we came back into two weeks of events in Austin. So. So this is our, this is like our comeback tour, return tour. Anyway, lots of stuff going on. So we were trying to think about some, some cool things to talk about. And one of the things we had been chatting about that we decided we would just do live here for you guys or unplanned is to talk about what's going on with Elon Musk. So Elon, on a whim kind of said, I'm going to take over Twitter and threw out an offer and signed a contract and then said, I'm not interested in that. And they said, the heck you aren't and basically said, we're going to hold your feet to the fire. It looked like he was going to not really go his way in court. And so he decided, okay, I'm going to do it. And so he bought a $44 billion Twitter. And there's been a lot of talk about how terrible a business person he is by all of the people who are writing articles who have never owned a business in their life. And so we thought that because we share some views on this, we thought it would be interesting to talk about the good side of this. Like maybe he is making some decisions and maybe the guy who's the richest human in the world right now and also has started multiple game changing companies knows a thing or two about business. So I'll let you start, Ryan, and we'll talk about a couple things. I'd like to talk about the mindset. I'd like to talk about leadership. I'd like to talk about kind of moving forward with what you believe or know to be right, even when there's a lot of flack that's coming around you. I think those are three things that we could talk about because they, there's a lot of good business lessons, I think, in what's going on right now.

Yeah, I mean, just setting kind of the, the stage. I mean, he, Elon, came in and, and yeah, bought this company for $44 billion and kind of made that offer when the markets were still high. You know, it, it pulled back to, I mean, not quite half, but obviously he's buying it for more than it's worth today. And he's buying a company that, if his tweets are to be believed, and I have no reason to believe they're not, is losing about $4 million every single day. And what I really respect about what he's doing is a couple things. One, he's being incredibly transparent, right? And saying, like, this is what I'm going to do and then actually doing it. And people are critiquing that, but then they'll also critique people who aren't transparent. So I find that part mildly comical. But when he said, I'm going to lay off 50% of Twitter's workforce, I mean, everybody got, you know, everybody's grasping for their pearls. How dare you. Well, the company's losing money. And what I really appreciate, I mean, so a couple things on this, the decision that he made to lay these people off was a business decision. A lot of people are turning it into, like, well, he's obviously just this Evil monster. But no, he bought a company. It's no longer just out there spending other folks money like it's his money, the money that he's raised from his investors. And he's like, I've got to turn this into a profit. And this business is bloated. Just like every other Silicon Valley business, this business is bloated. And so he's making a business decision to say, there don't have to be this many people. And the reason I think that that's smart and just going to cut 50% is most leaders. So how does this apply? You're like, yeah, but I'm not Elon Musk. I didn't buy Twitter. How does this apply to me? Well, we're entering into what I think most would say, if we're not already in a recession, going into one. And a lot of our listeners, I'm sure, are going to have to make some difficult choices over the next 12, 18, 24 months, perhaps including a reduction in force. Right. Needing to make a layoff. And what most leaders do is they try to figure out, they're like, oh, we need to cut. What's the minimum amount that we can cut? Like, oh, let's go and cut 10%. Let's cut 10%. That's what they. Oh, we need to cut 10%. And so they do an across the board 10% cut. And guess what? That doesn't fix it. And so they got to come back later and it's another 10%. And what could have been done in kind of one fell swoop, very strategically instead, because they were trying to be egalitarian and they were trying to be quote, unquote, fair, they made an across the board cut of not quite enough. So they had to keep coming back and making more cuts, more cuts, more cuts. They generally still wind up running out of money. Morale is actually way worse because they spread out the difficulties over time. They continue to create more angst. I mean, people like, oh, when's the next shoe going to drop? When's the next axe going to fall? Elon just went in and said, look, it needs to be 50% less than it is right now. Let's decide where the 50% are going to come from. So he understood, what does Twitter do? At the end of the day, we're software media company. Okay, who are the people in this organization who are creating the value? What's the programmers? So he cut 50%, but he cut, like very few people from the programming team. Got a whole lot of middle managers and people who are just kind of pushing stuff around. So again, you can say it's mean, but that his job ain't to be nice. This ain't show friends, this is show business. And he's got $44 billion on the line. So to me, I think it is a lesson in if you have to do a reduction in force, this is how you do it. You should cut more than you think. You shouldn't do an across the board cut. You should cut strategically into the areas that aren't directly impacting the customer value. So I think just from the outside looking in, just what is basic business 101, good leadership in a crisis practice? You know, a, a, I don't know. What do you think?

Yeah, I agree with you 100%. And one of the things that I was seeing is that there, there, there are articles now that are, they're like, well, but then immediately the, like the next day and during the same weekend, Friday they got this notice, let's say then Sunday, the people that were their managers were on the phone saying, you know, hey, we actually want you back. And so that, that it's just a, you know, a total cluster. And it's a lot to do. Think about having thousands and thousands of employees and having to make a decision like that because you're burning for, you know, $4 million a day is a lot to burn. And especially when it's your money and you're. I, I just think that it's going to be chaotic. Like you can't sit around for 60 or 90 days to do a study because that costs you hundreds of millions of dollars to do so.

Like $4 million a day.

Yeah, 4 million would be what, 120 million a month? So that'd be 1, 2, 360 million.

Yeah, a quarter billion dollars.

So to have some disorganization and have some turmoil as a result of trying to take action or taking action fast and then saying, oh, no, we actually are going to need this. To me, that's like, good for you. And I think everybody did okay in that deal because they all got paid more than the company was worth. The company clearly had ridiculously bad management for years and needed to be shaken up. So good job with that. And then I think the other thing is, is what I have seen him doing is.

Can I tell a quick story, Roland, that people might appreciate on the, just the, the. Because I think it's important to talk about the bad side. We talk a lot about business scale and growth and all this stuff. But look, the reason that the the reason the reward is there is. Is because the risk is there, too. And you and I have. Have a mutual friend. He's the CEO of. I don't know if they're valued at a billion dollars, but they're. They're definitely. They do well over 100 million in revenue, so probably, if not a billion, pretty close to it. And some years ago, they needed to do a reduction force. They had overhired. The growth wasn't there, and so they needed to go and lay some people off. And this, you know, this is pre Covid. So everybody was coming to the office, and essentially people got notices. Hey, we're going to have a company meeting. Some of the folks were going to go in one room, and a bunch of the other folks were going to go into the other room. And basically all the people who were in one room were told, hey, unfortunately, today's your last day. And the people who are in the other room, you know, we're told, hey, guys, you know, I've got some bad news. You know, we're having your layoff. If you're in here, it means your job is secure, you're safe, you're fine. But unfortunately, the other room, you know, some of our friends and colleagues are being told that they no longer have a job. And really bad, really brutal. Obviously, everybody's going to come out of these rooms and they have to deal with the reality. What he was saying, he's like, there are about a half a dozen people who went to the wrong room. Right. And so some of the folks went into the room thought they were fired, and they weren't. Some of the folks went into the room, thought they were safe, and it turned out, oh, no, I'm sorry, your job isn't here. And he felt awful about it, but they were literally, you know, this company had, I want to say, five or six hundred employees at the time.

Yeah.

And so, look, it's not always going to be perfect. And. And if, as a CEO, if the reason you're not making a decision yet or the reason you're stalling to make a decision is because you're waiting for everything to be perfect, you'll never make that decision, and your entire company will go down. You're going to have to make difficult decisions. People will get hurt. This is one of the challenging aspects of. And this person, again, I know, cared deeply, felt awful about what happened, felt truly, truly, like, wretched about it. He called me, like, just about God, you won't believe what I did. I'm near, near crying. Now, I don't expect anybody who got laid off to have sympathy for this guy because he still had a job and so on, his equity and all that other stuff. But if you're a CEO, if you're the founder of the company, this is what you're signing up for. And it's not always fun. It won't be perfect and people will, will absolutely criticize you. And that's your job, to sit there and take it.

Yeah, and along that line too. We just had our get scalable live event in Austin and we had Marcus Lemonis. And in talking to Marcus, he did actually go into tears saying he had to let, I think it was five or six hundred people that he had to let go. And he is, of everyone I've ever met, the most generous and interested in the welfare of people. He measures his success by literally the growth in what he's able to pay his people, what they're able to take home. And so, you know, another guy that really cares, but he'll also tell you, you know, look, I'm a capitalist and my duty is to do for the shareholders and for the company the thing that is in the best interest of earning profit in the company. I can do that while taking care of the, of the employees and the customers, because I believe those things are truly in the best interest of making a profit on a long term basis. But you have to make hard decisions when you go along and if you don't, then bad things will happen. So, I mean, you won't be there to be able to help them, which is like, it's kind of a do it now or do it later. So you might as well do it now and continue to keep the value there. But the thing that I liked about all three of those situations is that there's lots of people that are going to point fingers at you and tell you you were wrong and you're evil and you're bad. And that's just part of being an entrepreneur. And so part of leadership is being aware that you will be criticized and that there is no thing that you can do that will make everyone happy. There will be. If you do good things for your employees or and maybe in this situation you keep them on longer than you should, then the shareholders should criticize you. And if you let them go too soon, the employees will criticize you. The media just enjoys criticizing everything. And you know, most of the people that write those articles, like I said, are broke and have no businesses themselves. So take that media grain of salt. But the other Thing is, to me, the mindset. And the mindset is that if you go into difficult times, if you go into the things that we're about to go into and you see that you need to make hard decisions like that, then your job, your mindset has to be that there are going to be some things that aren't pleasant, but that ultimately my concern is going to be for the health of the company and the ability to keep going. So I think that, like that mindset of I'm going to have to do things that are hard. And then followed by there will be many critics to tell me why what I did was wrong, to second guess what I did, or just to point a finger without any reason other than to sell their publications. And you've got to brush that off and know that in your heart you're doing the right thing. And if you, if you do that, then I think it's easier to make those decisions. What are your thoughts on that?

I mean, I'm just thinking back to, I mean, damaging admission time. Right. I'm thinking back to the times when, when I, I didn't make the difficult decision or I didn't have the difficult conversation. And the excuse I gave is that I was being kind, right? I was being kind to the person. I don't have it all figured out. Like, I'm not, you know, I'm not taking the responsibility of this. I'm, I'm, you know, I'm not, you know, putting, you know, the, the team and the people first. Right. And so I delayed making a decision and I called it kindness. Really, it was cowardice. Right. If I'm really being completely transparent, we will couch. We will use kindness as an excuse for not making the decision we know we need to make. And instead we wind up just delaying the inevitable and those people wind up hurting anyway. And we weren't honest with ourselves and we didn't learn. And so don't convince yourself. Like, be, be really crystal clear on, you know, during this season and during this time. Cause look, when everything's up into the right, you know, it's easier, Right. It's also when you get that.

Right.

Yeah. When things get tougher, though, and you gotta start making tough choices, be really clear on your priorities. Right. And if you are the CEO of a company, even if it is yours, right. If you are running the company, even if you're the sole shareholder, right. You're still, you know, your primary responsibility is still to that shareholder, which is you. So take off the CEO hat for a moment and Say, what would you want somebody else to do? If you simply, simply owned the equity in this company and the feeding of yourself and your family and all the impact that you want to make, not just now, but for future generations, was at stake, what would you want that CEO to do? And then put your CEO hat back on and say, okay, what's the right thing for me to do? Even if it hurts? Because that's my job. That's what I'm here to do. And definitely, I'll tell you. If you're the CEO or a manager at a company and you've got other partners, you got a fiduciary responsibility to do the right thing. So none of this, like, I'm going to delay out of. Out of kindness. I feel like there's been so much. You know, we made it to where the primary purpose of companies was to make employees happy and to elevate, you know, the team. We got to get over that crap. All right, that was. That. That might be a nice thing to be able to do, and everything is great, but that is not the purpose of a company unless all the shareholders decide that's the purpose, in which case call it a nonprofit. Right. Okay.

That's all. If you're.

If you're not going to be profitable, at least get the tax advantage for it.

So.

So, yeah, I just. That's. I'm just thinking back as we're talking about this to all the times I didn't make the call, I didn't do the thing, and I thought I was being the nice guy. I was just being a coward.

Yeah, I love it. Awesome. So that's our show for today. Just wanted to kind of talk about some of the things that we saw in that. I think there are some good lessons to take from what's going on with Elon Musk and the Twitter acquisition. And we wanted to share that with you, particularly because we are also evaluating those things, and we have lots of friends and lots of clients that are evaluating things like this as well. So if you found this helpful, please share it with somebody else. We would love for you to just pass a link on and say, you know, hey, if you're going through this, these guys are talking about it, and it might be helpful to you.

Hey, before we go, though, let's make predictions. Let's go on the record.

All right.

What do you think is going to happen with Twitter?

Honestly, I don't know enough. So it's much more of a guess than a. Than an informed thing, but I would never count Elon out, whatever. You know, I think, I doubt that he would commit to going through with this just out of ego, because it's a pretty significant part of his net worth that he's, that he's investing in this. So, you know, I'm going to say they're going to right size, they're going to first principles and go back and look at what makes the most sense. They're going to have some spectacular failures, but he's going to pull it through and it's going to become a profitable company.

Yeah. I'm predicting that Twitter is going to become one of the most important media communications channels. And if they can bring in the payment side of it to where it's kind of the West's version of almost a WeChat, it could wind up becoming one of the most, one of the most powerful companies in the world. And I could be wrong, but like you said, I don't think he might have kind of dabbled into this on a bit of a whim. But now that he's in it, I think you're talking about somebody who placed win and I would not look for this to just be a little kind of side project thing. He was a power user of Twitter long before he ever, you know, looked to acquire it. And, and I think it's going to be, you know, people may not appreciate what he does from, you know, content standards and whatever I'm talking about from a business perspective, I think it's going to wind up becoming a very important, a very powerful company. I think it's going to be within the next two years will go public again. And I think Elon and all of his investors are going to do very, very, very well.

That's my prediction. I like it. Awesome. All right, well, there you go. On the record. We're pro success of this, of this Twitter adventure. So we'll see you guys next time on Business Launch.

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