BRIAN KENNY: On March 10, 1874, Alexander Graham Bell launched a brand new period in communications with the memorable however mundane phrase, “Mr. Watson, come right here, I need you.” 132 years later, in March of 2006, Jack Dorsey launched one other communications revolution with the uninspiring and maybe even much less memorable phrase, “simply arrange my twitter.” All lowercase. By the best way, that first-ever tweet offered at public sale for two.5 million in 2021, proving that somebody was in truth impressed. Few would’ve predicted in 2006 the influence that this clunky social platform with 140-character restrict would have on the earth. And looking out again, nobody can deny how profoundly it has altered the media panorama and public discourse. However within the public sq. that Twitter aspires to be, everybody has a megaphone, together with those that search to unfold disinformation. Lately, Twitter finds itself on either side of the battle between free speech and censorship, all whereas making an attempt to maintain a worthwhile enterprise mannequin. Which begs the query, who on earth would wish to handle that? In the present day, on Chilly Name, we welcome Professor Andy Wu and his co-author, Goran Calic, to debate their case entitled, “Twitter Turnaround and Elon Musk.” I’m your host, Brian Kenny and also you’re listening to Chilly Name on the HBR Podcast Community. Andy Wu’s analysis focuses on how expertise entrepreneurs manage and mobilize sources to attain scale for aggressive benefit. Goran Calic teaches on the DeGroote Faculty of Enterprise at McMaster College, and his analysis focuses on understanding why some people are extra inventive and a few organizations are extra revolutionary than others. And also you each wrote this case collectively. Thanks for becoming a member of me.

ANDY WU: Thanks for having us, Brian.

GORAN CALIC: Yeah, it’s nice to be right here.

BRIAN KENNY: Nice to have you ever on Chilly Name. Andy, you’re a repeat buyer, so thanks for coming again. Clearly, this case is considerably ripped from the headlines. I imply, these are all latest developments and I believe all of our listeners have most likely been following the story and there’s been salacious particulars and who is aware of what Elon Musk is as much as. So the case actually delves into a few of why he selected to do that and what are among the choices that he has when it comes to making an attempt to show Twitter round. So why don’t we simply dig proper in and begin with telling us what the central challenge is within the case and what the chilly name is that you simply use to start out the dialogue in school.

ANDY WU: So, the central challenge of this case is managing strategic change in a expertise firm with community results. And given the present financial atmosphere, there’s lots of expertise corporations on the market which are in a scenario like Twitter that basically want to rework themselves and discover profitability or discover a new path for the corporate. And I like to start out this class with the very primary query of: When you have been Elon Musk, would you might have acquired Twitter for 44 billion {dollars}? Sure or no? And we dive proper in.

BRIAN KENNY: I guess that there’s most likely lots of attention-grabbing views on that one. Why was it essential to you to put in writing the case?

ANDY WU: So, first is that we wish to be sure that college students perceive that we’re in a section of expertise the place companies want to rework themselves oftentimes right into a extra worthwhile mode from the expansion section that they’re beforehand in. After which that course of could be very, very tough. There’s problems with tradition, there’s problems with expertise, and we would like college students to discover these sorts of points. Second, I believe that the Twitter case is an actual microcosm for understanding the way forward for the media and data atmosphere. I believe watching what’s taking place right here can inform us loads about the way forward for social media, the way forward for mainstream media, and so forth.

BRIAN KENNY: Do you guys each tweet, I’m curious?

GORAN CALIC: Very not often, however sure. Browse greater than tweet.

ANDY WU: Yeah, I tweet often, however not sufficient.

BRIAN KENNY: I joined the platform in 2008, so shortly after it launched, and like everyone else, I used to be making an attempt to determine what is that this factor all about, how is it going for use. And I used to be occupied with it extra from a branding perspective. I characterize the HBS model and the way ought to HBS responsibly use it. And I assume my query is, why would Elon Musk care a lot about this, sufficient to purchase it for 44 billion {dollars}?

ANDY WU: Nicely, we are able to solely speculate what’s occurring in his thoughts right here, however I believe the scenario right here does have some clear curiosity to Musk. First, simply to set the baseline, I believe the rationale you’re asking the query is that the fact is that only a few individuals really use Twitter. There’s extra folks that use Snapchat than Twitter, and there’s 10 social media platforms youthful than Twitter which have extra customers than Twitter now. So why will we care right here? Nicely, when you take a look at Twitter, in truth, there’s undoubtedly segments of elite customers that very, very intensely use Twitter. I’m occupied with academia, I’m occupied with finance. However on your curiosity, Brian, I believe we should always speak about journalists. And so what was superb in regards to the knowledge right here is simply the distinction. 13% of the common US inhabitants makes use of Twitter to get information. 69% of journalists use Twitter as their high one or two social media platform for his or her job. And 83% of journalists between 18 and 29 use Twitter as their high one or two social media platform for his or her job.

BRIAN KENNY: In order that’s fairly outstanding. And that does converse to the best way it’s form of recreated the media panorama. I imply, that’s the channel that they’re utilizing now to get their information on the market.

ANDY WU: Completely. Yeah. And so you may take into consideration politicians and enterprise leaders that wish to talk with journalists and journalists that wish to talk with one another– Twitter is the place that occurs.

BRIAN KENNY: Yeah. I discussed Jack Dorsey’s opening tweet; uninspiring opening tweet (all in decrease case). Can we speak a little bit bit in regards to the historical past of Twitter? As a result of I’m positive for lots of our listeners, they simply assume it’s at all times been round and it began in 2006, so it’s not that outdated.

GORAN CALIC: No, it’s not. And as you appropriately talked about, it occurred in 2006 and it was fairly casual. Like lots of tech startups, when you can think about, Jack Dorsey had no thought what it could finally become, and he initially didn’t develop it as a startup in its personal proper. So Twitter was initially developed as a messaging service for a podcasting startup that Jack Dorsey was solely part of, finally grew fairly much more profitable. And between 2006 and 2012, there have been dozens of different third-party builders and startups utilizing Twitter knowledge for their very own functions for various startups. So it had really grown fairly a bit bigger than Jack Dorsey and the opposite founders had initially anticipated.

BRIAN KENNY: And there have been lots of third get together apps that have been developed to make Twitter extra usable and more practical in some methods. Are you able to describe just a few of these?

GORAN CALIC: Sure. So that is a part of the historical past of Twitter that most individuals aren’t acquainted with. So most individuals don’t know that the Twitter chook was not invented by Twitter. The time period “tweeting” was not invented by Twitter. Each of those have been invented by Twitterrific, and sooner or later in time, so let’s say pre-2010, a lot of the improvements that we’re acquainted with in 2022 and 2023 have been developed by these third-party apps. Simply to present you one different instance, some eyes invented search. So lots of the preliminary innovation and modifications in issues that we discover acquainted with Twitter weren’t developed by Twitter itself. So the innovation occurred exterior Twitter.

BRIAN KENNY: Which is actually attention-grabbing as a result of if you concentrate on that as being contributing indirectly to their progress and the best way that they scaled, they finally turned to that spick it off. They shut these third events out. Why would they try this?

GORAN CALIC: So 2010 once more to 2012, Twitter determined they needed to earn money from tweeting, they usually thought one of the simplest ways to do that was by way of promoting, which we simply briefly mentioned. The issue was that most individuals that entry Twitter knowledge by way of Twitter itself did it on-line by way of twitter.com. Initially. When the iPhone was launched and smartphones extra usually, individuals began shifting their utilization of Twitter to cell functions. Most individuals then began shifting to 3rd get together app builders, which meant that management over the income mannequin was exterior Twitter. So what Twitter, as a way to seize most of this income did was purchase probably the most profitable third-party app developer, which was Tweetie. Nonetheless, they nonetheless face lots of competitors. You had all these Twitter functions which have been capturing customers, after which Twitter began doing one thing which was very attention-grabbing. First, they restricted the variety of customers that may very well be acquired by these third get together apps to a couple of hundred thousand individuals. After which they began closing entry to a few of these third get together apps for doubtful phrases of service violations. Till finally, most third get together app builders determined, nicely, we are able to’t actually reliably earn money from the Twitter database, they usually simply began shutting down, and the remaining is historical past. Twitter now has a monopoly in how everyone accesses the Twitter database, whether or not you’re doing it by way of twitter.com or by way of a cell utility.

BRIAN KENNY: And that may very well be good or dangerous as we’ll speak about a little bit bit additional on within the dialogue. You identified one thing actually attention-grabbing there, Goran, which is that the discharge of Twitter predated the discharge of the iPhone. So I didn’t even take into consideration that earlier than, however that’s the best way that all of us entry our social networks and our social apps today, which I assume leads me to the query about how have they grown compared to among the different social networks which are on the market and which are lively today?

ANDY WU: So Twitter definitely had a burst of progress in its very early days, however because the mid 2000 tens, Twitter has definitely had very sluggish progress in comparison with a lot of the competitors in social media. Now, this I’d say comes down to 2 issues. One is that to Twitter’s constructive profit, they really have closely dominated the segments that they do nicely in. So for instance, journalism and finance. However on the similar time, the shortage of innovation has restricted their means to attraction to the broader inhabitants. In order we all know from Instagram and TikTok video and photographs are fairly essential to the overall inhabitants, and Twitter’s been held again on that.

BRIAN KENNY: I can bear in mind on many events, significantly as we have been making an attempt to determine as a model the right way to use Twitter, we’d oftentimes go to log in and it could be shut down. You’d get that little … that they had the icon of the unhappy chook, I believe it was shut down. So that they had lots of technical points early on. That they had a fairly unstable platform. What have been among the issues that have been plaguing them as they tried to scale?

ANDY WU: Completely. So there’s each organizational and technical challenges right here. So organizationally, they’ve had lots of management turnover by way of the years, and that’s been made it tough to be constant in regards to the firm. I believe on the technological entrance that you simply identified … so internally and publicly, individuals confer with this because the fail whale. And so now we have to remember the fact that the unique base Twitter infrastructure, database and all these techniques really date again to the early 2010s. And they also’re utilizing really fairly even right now, fairly antiquated and fragile infrastructure that doesn’t scale nicely versus applied sciences which are constructed cloud-native for right now.

BRIAN KENNY: So, the case goes into some element in regards to the danger averse nature of the best way they function. Nevertheless it looks as if within the house that they’re in, that isn’t essentially at all times one of the best strategy and it could have hindered their means to succeed a little bit bit. Are you able to speak about what was on the root of a few of that risk-averse tradition?

ANDY WU: So, I believe we are able to take a look at the chance aversion each from the attitude of the staff in addition to on the degree the board of the administrators. And so for the staff, I believe there’s two issues driving the chance aversion. The primary is that the staff have been impressed by the outsized position that Twitter had on the earth at massive, they usually didn’t wish to take any possibilities breaking that system. They only needed to maintain it functioning as is. And a core attribute of, a minimum of within the early and center days of the corporate, of what they believed made that work was the simplicity of the product and ease of the enterprise, which is to say that any innovation, any risk-taking are issues that make the enterprise much less easy. And so, these are issues that we’d naturally wish to work towards. After which if we flip now to the board of administrators, I believe it is a actually attention-grabbing scenario the place the board, it now, appears significantly risk-averse as a result of they’re very, very fearful of public backlash from any sorts of modifications they will make to the enterprise. And right here’s a method to consider it, Twitter is the place buyers go to complain about public corporations. And so when you make a change that impairs that have, you’re going to get immediately complained at by yourself enterprise, by yourself platform.

BRIAN KENNY: Yeah. However is {that a} technique to run a social media community? You concentrate on fast-moving industries. I imply, I believe this is likely one of the quickest on the market.

ANDY WU: Completely. And I believe that we’d most likely advise towards doing that. Look, we’re sympathetic to the staff and to the board about why they have been in that scenario. However definitely, there’s loads of innovation alternatives which are fairly apparent on reflection that they really tried. So many issues like podcasting and video and every little thing. They really both acquired corporations or tried constructing these themselves they usually simply wouldn’t convey it to market. Trying again now, I believe it’s clear they need to have carried out that.

BRIAN KENNY: Yeah, you talked in regards to the management modifications and Jack Dorsey got here and went already, so he’s been there twice in a management position. And it jogged my memory a little bit little bit of when Steve Jobs got here again to save lots of Apple, it was form of driving in. And even Dorsey I believe sooner or later thought, “This isn’t working. I can’t repair this.” In order that they’ve bought a CEO in there now, Agarwal, I neglect his first identify.

ANDY WU: Parag Agarwal.

BRIAN KENNY: Yeah. Thanks. I assume what sort of situation was the agency in when he stepped in to take the position and what have been among the issues that he’s tried to do to get it unstuck?

GORAN CALIC: Yeah, so I believe it’s essential to keep in mind that at this cut-off date, Twitter had been underperforming, not simply the competitors and never simply conventional competitors, the New York Occasions, however the S&P 500 for very a few years. And also you had massive buyers like Elliot Administration who have been clearly very sad with this. You have got this cash caught in an organization you count on will do extraordinarily nicely, and it’s not even performing in addition to a various portfolio of companies. So, they have been agitating for change. And having introduced Jack Dorsey in a second time, they realized he wasn’t actually the change they have been searching for. Jack Dorsey was spending lots of time on his different startups or simply away from the agency, and it appears like they have been searching for a way more hands-on supervisor. And that is the place Agarwal is available in. So he replaces Jack Dorsey, finish of 2021, and begins fairly radical modifications for Twitter at the start of 2022. And it’s essential to bear in mind at this level that he isn’t the primary to do this. Others have tried and failed. So simply to present you type of an impression of what he tried to do is he began with a very broad reorganization of Twitter by restructuring it in a manner the place he eliminated the chief design officer, head of safety, chief data officer, head of engineering, head of communications, head of HR.

GORAN CALIC: So he is available in, makes these drastic modifications, and he explicitly says, “My imaginative and prescient for Twitter is a daring one.” And what does that imply? So it means he needs to make Twitter open for growth once more. Like we talked about early on, lots of preliminary innovation got here to those third get together apps, which we’re have been competing to seize customers– doesn’t exist anymore. Twitter’s the one one. So he needs to open it up for growth and extra innovation. He additionally needs to combine crypto. Lots of people are doing tipping on or by way of Twitter. He needs this now to be carried out by way of Twitter itself to seize a few of these exchanges. He additionally is considering creating an open protocol the place Twitter may join extra seamlessly to LinkedIn, to Fb, to Instagram. And he doesn’t have very a lot time to implement this. So he’s not CEO for very lengthy, however he had a daring imaginative and prescient for the corporate.

BRIAN KENNY: Yeah. What was the agency’s enterprise mannequin at the moment? What have been among the issues that they have been doing to generate income?

ANDY WU: Twitter’s main enterprise is promoting promoting. In order that’s about 89% of the income. After which it additionally makes some quantity of income from promoting its knowledge. So let’s begin with the promoting. So the promoting enterprise is been a problem for Twitter, despite the fact that it’s its main income supply. And it’s a problem as a result of Twitter simply can not, or won’t have among the similar benefits that say Fb and Meta have in promoting, which is to say Fb and Meta is a pacesetter in what we name direct response promoting, which is to say you should utilize knowledge to immediately goal a particular buyer after which get that buyer to instantly purchase a pair of footwear or obtain an utility. In distinction, Twitter has primarily been counting on model promoting. And so that is corporations like Nestle, Unilever, Verizon, who wish to usually put out a model picture, however there’s not an apparent return on that funding, I imply because the problem with common advertising and marketing would at all times be. However the issue is that that could be a much less precious type of commercial than direct response promoting. I also needs to point out there’s a enterprise right here in promoting knowledge. That is fairly a high-margin enterprise. So what Twitter did and nonetheless does is license knowledge to hedge funds and market analytics companies for supporting their analysis and their funding actions.

BRIAN KENNY: One of many strikes that Agarwal made that, I don’t know if he ended up regretting it, was that he invited Elon Musk to be on the board of Twitter. How did that play out?

GORAN CALIC: So, he had some non-public conversations which finally grew to become public by way of this messaging app, Sign, with Elon Musk. I believe the frustration that lots of people have had with Twitter was that it wasn’t very revolutionary. And the concept was if we convey on Elon Musk, if we placate him, perhaps even to some extent, he may convey some innovation to the agency, some change, however he additionally received’t be fully harmful. Now, Agarwal had invited Elon Musk to the board, an invite Elon Musk had first implied he would take, after which actually over that weekend he determined towards it and on Monday had filed an modification to his 9% acquisition of Twitter, stating that he was all for buying a a lot bigger strategic stake within the firm. So it appears that evidently over the weekend, he had made the change from 9% possession to “it’s attainable that I need purchase all the firm.”

BRIAN KENNY: Which sounds completely on model for Elon Musk as we’ve now come to know him.

ANDY WU: Sure, very a lot Elon.

BRIAN KENNY: One factor that we didn’t contact on have been among the content material administration points that not simply Twitter is coping with Fb and different platforms are coping with them as nicely, however content material moderation has change into more and more essential, significantly as we take a look at among the misinformation that’s been unfold on lots of these platforms. How was Twitter managing the content material moderation a part of what they do?

GORAN CALIC: So, Brian, I believe it’s essential at this level to essentially emphasize how extraordinarily tough content material moderation is. So Jack Dorsey is on file together with numerous individuals to say that content material moderation at scale, which is actually what Twitter is doing, is actually unattainable. And the rationale for that’s setting any type of arduous and quick rule, let’s say automation, which is required when you might have lots of of hundreds of thousands of month-to-month lively customers is tough when these content material moderation guidelines are utilized not simply inside a heterogeneous nation like the USA, which has lots of completely different and numerous views, but additionally throughout nations. We now have to keep in mind that 75% of Twitter customers are exterior America. So, content material moderation is difficult. So how does Twitter do it? Usually talking, Twitter together with Fb, and different social media platform, begin with some type of automation the place both an algorithm or an AI will flag content material after which the flagged content material, if it’s egregious sufficient, may very well be eliminated instantly by this algorithm. However more often than not that doesn’t occur. That flagged content material then reaches the eyes and ears of precise human beings who look by way of it, learn by way of it, and in circumstances of the place it clearly violates the phrases of service, that content material is eliminated. However sadly, there’s a portion of content material that matches on this grey zone the place actually individuals are not that positive whether or not to take away it or not. So, then you might have these stay discussions the place selections to average content material occur in actual time. And usually talking, Twitter wasn’t nice at doing this in a way that on the one hand, there have been individuals asking for far more moderation to take away far more content material. And then again, there have been individuals saying that, look, we would like extra stuff saved on, we’re being banned and we don’t even know why. And the reason being, like I defined, typically content material moderation occurs in actual time and folks make selections in actual time, that are typically opaque and never fairly clear.

BRIAN KENNY: And there’s subjectivity concerned there clearly.

GORAN CALIC: That’s proper.

BRIAN KENNY: And that’s AI just isn’t infallible as we’ve come to understand with ChatGPT.

ANDY WU: Completely.

BRIAN KENNY: So, that’s bought a protracted technique to go earlier than you may utterly depend on that. As we take into consideration the board itself with the invitation out to Elon to affix them, how was the board composed and what was the composition of the wage construction of among the senior executives at Twitter?

GORAN CALIC: So, a few attention-grabbing issues in regards to the board’s composition is the board didn’t have as massive of an fairness stake in Twitter as we’d usually count on, and possibly much more surprisingly, on the time of case writing. This may be a number of months after Elon Musk’s acquisition, bear in mind individuals began talking up, there was pushback from the board itself, we discovered that the Twitter board didn’t use Twitter very a lot. And we’d’ve anticipated that the Twitter board can be very lively. I imply, there are board members which have tweeted zero instances to the purpose of case writing. Now, in the case of compensation, I believe an attention-grabbing factor to spotlight is that Twitter used stock-based compensation, the brief type, which is SBC for a lot of of their staff. And what this actually means is compensating individuals not with a direct wage, however with possession within the agency. And as we mentioned earlier, Twitter’s worth saved declining, which in apply meant that folks needed to be incentivized, be issued extra inventory, which then continued to say no. So, greater than different companies in tech business, which granted do use stock-based compensation to a big extent, Twitter relative to them used it fairly a bit extra. So staff relied closely on inventory possession for compensation at Twitter.

BRIAN KENNY: Which you assume can be a motivating pressure, however on this case it doesn’t sound prefer it essentially was with that entrenched tradition of danger aversion. Musk used Twitter, although, he used it loads, he was a fairly lively voice on Twitter. Is that honest to say?

ANDY WU: Positively honest to say, he may even be probably the most lively individual when it comes to what he’s keen to say on the market among the many high individuals on Twitter.

BRIAN KENNY: At one level, the case alludes to the truth that Musk considered beginning his personal social platform like, “I’m carried out with Twitter, I’m simply going to create one thing from scratch.” And he talked to Jack Dorsey and I believed it was attention-grabbing what Jack’s recommendation was on beginning a social platform. What did he advise him?

ANDY WU: So, now we have to recollect right here that by way of Dorsey’s management and his departure from the agency, I believe there’s an actual sense of remorse on Dorsey’s half, and he actually, I believe takes lots of time to mirror on what may have gone otherwise at Twitter. And so on account of that, Dorsey’s recommendation to Musk is definitely that Twitter shouldn’t even actually be a enterprise. What we actually want out there may be an open supply protocol much like the messaging app, Sign the place we simply have a protocol for data switch. And from Dorsey’s perspective, the important thing benefit of that’s that’s the type of protocol and platform that may’t be managed by advertisers and might’t be managed by governments. And that’s one thing that I believe Dorsey appears actually regretfully upon about the place Twitter has gone.

BRIAN KENNY: That additionally poses all types of problems from a enterprise perspective as a result of how do you make {that a} income producing enterprise, proper?

ANDY WU: Completely. The open supply, in fact is tough to monetize. And on high of that, the reality is free speech is definitely tough to monetize. So now we have probably the most free speech right now in, for instance, when you’re on a message group in WhatsApp with your pals otherwise you’re on the discussion board, 4chan. Nonetheless, advertisers and a complete bunch of different events don’t need something to do with that. And it’s arduous to convey that cash in.

BRIAN KENNY: So how did the board react to Musk’s takeover bid?

ANDY WU: So, the board undoubtedly resisted the takeover bid at first. I believe some individuals have thought there was a greater valuation on the market, and I believe they didn’t fairly say this publicly, however I’d suspect that a few of them additionally thought it could not be a great future for humanity for Musk to be proudly owning Twitter. Now after that time, a pair various things occurred. I imply, the primary is that the corporate and the board did exit to buy the corporate round to different attainable acquirers, they usually ended up being declined by Disney, Google and Microsoft.

BRIAN KENNY: They did have a chance at one level although to most likely stroll away from Musk as a result of he was actually equivocating about his resolution. I at all times puzzled why they didn’t take that in the event that they have been so involved about him stepping in and taking up.

ANDY WU: And Brian, that is I believe an actual quirk of historical past right here, as you already know and everyone knows that starting in that point interval, there’s an actual decline within the expertise inventory market valuations for Twitter and all types of expertise corporations. And it grew to become clear at that time within the time interval that, in the summertime of 2022, that in actuality Twitter’s valuation was a lot decrease within the public markets than it could be for the acquisition value that Elon Musk had most likely overbid on earlier that spring. And so this grew to become financially the fitting resolution, I believe for the shareholders. And it’s a very humorous scenario to see Musk and the board switching their very own positions on whether or not or not they wish to do that. And I believe it’s fairly clear from what occurred in that summer season of 2022 that Musk knew he had overpaid and was making an attempt to dig himself out of it.

BRIAN KENNY: So right here he’s strolling in with the kitchen sink into the foyer final summer season of with that form of obscure reference to let this sink in. I believe that was what he was making an attempt to get throughout with individuals. And he finds himself in a scenario, what are among the choices that he has to consider as he appears on the scenario he’s inherited right here?

ANDY WU: And in order Musk has taken over the corporate, he needed to borrow some huge cash so as to take action. So, the cloud that’s hanging over him proper now’s over a billion {dollars} in curiosity funds a 12 months. And so now we have to do one thing to ensure the enterprise could make these curiosity funds. And naturally, now we have to consider income choices. And there’s a minimum of three income choices that we all know Musk and his workforce have been debating. And so, the primary possibility is to keep up or enhance the promoting enterprise. And once more, that is one thing that Twitter has struggled with previously, however there’s undoubtedly prospects in how do they will do it higher. However on the similar time, as we all know from Musk’s private curiosity, he’s not significantly all for having promoting be his massive phase of the income. One, as a result of it conflicts along with his notion of free speech. The advertisers do desire a secure atmosphere of content material. The second is that it additionally conflicts along with his means to self-aggrandize on the platform. And so promoting is essential, however I believe they wish to get out of it. The second income alternative that Musk is especially enthusiastic about is the notion of premium consumer memberships. And there’s alternative ways this may very well be structured, however you may think about the concept right here is that customers would pay $8 a month or extra and get a set of premium options. I believe one of many hallmarks of that our listeners may pay attention to is the famed-up blue check-mark and the concept that we may promote individuals verification within the blue check-mark as a part of that premium membership. I believe there’s different prospects of actually making a premium membership stand out. For instance, if in case you have a premium membership, they could be capable of increase your tweets above different folks that don’t. And you possibly can think about what else they’d do. However once more, previously, in different companies and for Twitter itself, getting individuals to pay for a social media account just isn’t one thing that traditionally works. And once more, it immediately works towards the community results it’s essential to make the enterprise work. Third, and once more, one other factor Musk is especially enthusiastic about is the notion of turning Twitter into an every little thing app. And you should utilize, for instance, WeChat in China as a mannequin, however the thought right here is Twitter may, for instance, go into monetary providers, peer-to-peer funds and monetize in that path. The attention-grabbing a part of the historical past right here for that possibility is that keep in mind that Musk was a founding father of x.com, which was joined up with PayPal, and keep in mind that Musk was really an govt that was fired from PayPal. And so, it is a likelihood if he may do the monetary providers factor, it is a likelihood for him to attain what he had didn’t do on the very, very starting of his profession. There’s one fourth possibility I wish to point out right here, Brian, and this isn’t one thing Elon Musk says, but it surely’s one thing that we ask our college students about as a chance. The ultimate chance right here is to interrupt up the corporate. And so the concept right here is that you’d separate the social graph and database a part of the enterprise from the front-end user-facing advertising-facing utility. And so, the concept is that the API can be offered by the backend enterprise to the front-end enterprise and the entrance finish enterprise would pay for the fitting to make use of that API and preserve ongoing utility exercise. Now, the rationale that is attention-grabbing and we would like college students to debate about it, is that this opens up the likelihood that backend social graph enterprise may really re-license the API to different new third-party functions. And actually that is the concept of taking Twitter again to the pre-2010, the pre-Tweetie days.

BRIAN KENNY: Yeah, again within the good outdated days because it have been. It appears additionally simply to the informal observer of which we’ll name myself, that Elon has taken a step backwards when it comes to being so forthright about his concepts for the corporate. I believe he was waffling on the blue check-mark factor, and I believe he was making individuals nervous, frankly, and he appears to have acknowledged that and form of taken a step again and is permitting others to return ahead because the form of enterprise minds round the place he’s taking Twitter. Is that honest to say?

ANDY WU: I believe that the early days of what we’ve seen in Musk management listed here are type of symbolic of the broader management model he has, which is one undoubtedly of danger taking. And I simply wish to remind our listeners right here that Musk comes from a tradition say of SpaceX the place they will blow up 100 million greenback rockets and also you simply transfer on along with your life and it’s wonderful. So I’ve to think about from his perspective, messing up the blue check-mark just isn’t that massive a deal.

BRIAN KENNY: Not a giant deal.

ANDY WU: That’s proper. It’s a danger he can take. And so I believe they’re able to take dangers, however I do assume he has acknowledged progressively that he actually must be aware of the stakeholders. I believe in his early days he was far more antagonistic to advertisers, however as soon as he took over, he reached out to the advertisers saying, look, I wish to preserve you guys alongside, we’ll preserve issues secure round right here.

BRIAN KENNY: And fairly antagonistic to his worker base too. I imply that it has not been a cushty place to be an worker for the final 12 months or so.

ANDY WU: Actually not from the attitude of the folks that used to work at Twitter. And so he’s been very aggressive about imposing when it comes to what he calls an especially hardcore tradition, and that’s uncommon to how Twitter operates, that’s uncommon additionally to how say Google operates, however that’s really how he operates Tesla and SpaceX and that type of very, very intense atmosphere. And it appears to work okay there. Though once more, tons and many turnover in these corporations as nicely.

BRIAN KENNY: Proper. So that you’ve bought most likely one of many largest risk-takers in enterprise taking up one of the vital risk-averse corporations in tech. Attention-grabbing.

GORAN CALIC: That’s precisely proper.

ANDY WU: Yeah, it may work. It may very well be harmful.

BRIAN KENNY: Hey, this has been an awesome dialog. I’ve yet another query and I’ll let every of you reply to it in your personal manner, however I’m questioning if there’s one factor you need listeners to recollect in regards to the Twitter case, what wouldn’t it be?

ANDY WU: Many expertise corporations right now, Twitter particularly, however there’s others too, have to undergo critical strategic change as a way to make these companies work, each when it comes to reigniting progress or when it comes to shifting to profitability. We would like our college students and our listeners right here to take a look at this Twitter scenario as a chance to study the fitting and probably mistaken manner of managing strategic change. And so what we advise individuals to do is to start out by wanting ahead at a imaginative and prescient. So the place would you like the corporate to go? After which to cause again to the stuff you wish to protect within the enterprise and the stuff you wish to change and the way rapidly you need make these modifications.

BRIAN KENNY: Yeah, Goran.

GORAN CALIC: I believe the large takeaway that Andy had talked about this is considering the pace of change. So one factor Elon Musk clearly highlighted, the second he took the corporate over and fired half the staff was he needs to maneuver actually quick. And I believe the preliminary response is “that was manner too quick.” He may have taken longer. He doubtlessly needed to rehire among the individuals he’d let go. However I believe the query we’d like college students to consider is: what’s the proper pace? We all know that his sources are restricted. We all know he has a billion-dollar curiosity cost to do. We all know the corporate most likely has extra staff than it may well deal with in the mean time. We see Meta is now letting individuals go; similar with Amazon. So the query is, when you don’t wish to fireplace individuals, the place will the income come from? And when you do, how lengthy does it take? Is it 90 days? Is it 30 days? Is it 100 days? It most likely isn’t on the primary day. So I believe the pace of change actually is an attention-grabbing takeaway from this case.

BRIAN KENNY: Nicely, it’s an awesome case. It’s been an awesome dialog. Andy Wu, Goran Calic, thanks for becoming a member of me on Chilly Name.

GORAN CALIC: Nice.

ANDY WU: Thanks, Brian.

BRIAN KENNY: It was a pleasure. When you get pleasure from Chilly Name, you may like our different podcasts, After Hours, Local weather Rising, Deep Goal, IdeaCast, Managing the Way forward for Work, Skydeck, and Girls at Work. Discover them on Apple, Spotify, or wherever you hear, and when you may take a minute to charge and overview us, we’d be grateful. When you have any options or simply wish to say hey, we wish to hear from you. E-mail us at coldcall@hbs.edu. Thanks once more for becoming a member of us. I’m your host, Brian Kenny, and also you’ve been listening to Chilly Name, an official podcast of Harvard Enterprise Faculty and a part of the HBR Podcast Community.