Elon Musk has just bought Twitter for $44 Billion a fact that will almost certainly not have escaped your attention.
Buyers Remorse
It will also be clear that he had a severe case of buyers remorse half way through the transaction and tried to trash the financial reputation of the platform in order to back out, or at the least lower the asking price.
You’d probably try and get out of a deal that was clearly over-priced in a world where tech-stock prices were nosediving all around you. The question is, would you do that at the cost of devaluing the very asset you’d leveraged yourself to the hilt to own?
Gerald Ratner Backstory
For those that don’t recall the story of Gerald Ratner, it’s a good place to start when considering the place Musk now finds himself in.
In the late 1980’s Ratner was the worlds largest Jeweller, he owned over 2,000 jewellery stores on 2 continents, had a personal fortune in the millions and dined with prime ministers and business titans all around the world.
His stores sold mass market jewellery to a broad consumer base and this was his bread and butter. Large volume, low margin (similar to Twitter, except it was actually profitable!)
Now here’s where it gets interesting. In April 1991 Ratner was invited to speak to 4,000 representatives of the Institute of Directors at the Royal Albert Hall in London.
Prawn Sandwich lasts longer
During that speech he became synonymous with the complete self-imposed kamikaze implosion of a financial empire overnight. A kind of Liz Truss of earrings and charm bracelets.
During that speech Ratner notoriously said he sold a pair of gold earrings for 99p, less than the price of a Marks & Spencer’s prawn sandwich, only the prawn sandwich would probably last longer. He also pointed out that his H-Samuel stores sold a cut-glass sherry decanters complete with six glasses on a silver-plated tray for £9.95.
Because it’s crap
“People say how can you sell this for such a low price? And I say, because it’s crap.”
Bang! He lost it all. Front page newspaper headlines screamed ‘Crapners!’, he lost his £650,000 a year salary, £500,000,000 was wiped off the company value in a moment.
So when Elon Musk says that Twitter has lied about the number of bots and fake accounts,
When he blames advertisers for being too responsive to activists, despite the fact that the use of the N-word increased by 500% within the first 12 hours of Musk’s ownership, according to Forbes. The number of tweets with antisemitic rhetoric, racist terms and hostile LGBTQ attacks also spiked.
As with Tesla Musk fired his communication team at Twitter, even the employee that accompanies him to a meeting to reassure advertisers, found out they’d been fired.
Marketing is not rocket science right?
The consensus seems to be that Musk is a genius and if you can design rockets you can surely do marketing (I mean any idiot can do marketing right?)
So when Steven King wrote and questioned the $20 charge for a blue verified status, Musk imnstantly dropped the price to $8. He backed that up by saying that someone had to pay for his overpriced takeover.
No reference to value for the customer, simply a justification based on his costs and yet again the reinforcing the point that the company he bought is crap.
I stand to be corrected, but being good a genius at engineering, does not make you good at marketing, or indeed people management.
Twitter may go on to be a success under this kind of leadership, but just because you’re big, does not make you too big to fail.
Just ask Gerald Ratner!
The speech best bits
You can see his speech here.
