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Monday, April 25, 2022
$78,107-a-year columnist gives Musk financial advice
Megan McArdle, who earns $78,107 a year writing at the Washington Post, and whose net worth is $1 million to $5 million, very publicly gave Elon Musk the benefit of her financial acumen today.
It was awesome.
To promote her column — “Buying Twitter is one thing. Changing it? Good luck with that” — she tweeted:
“The first thing to point out is that this deal makes no financial sense for Elon Musk. He’s paying a premium for the stock, the total value of the acquisition is almost a fifth of his net worth, and there’s no obvious way he’s going to squeeze more money out of Twitter operations.
“The carrying costs for the debt he’s using to fund the acquisition are major, possibly as much as a billion a year.
“Even for Elon Musk, this is a lot of money.”
Fact-check: His net worth is $273 billion or so. One beel-yun dollars in “carry costs for the debt” is not going to bankrupt him.
And oh yes, he can and will squeeze a profit out of Twitter.
Her tweetstorm went on: “The second thing to point out is that it will be much, much harder than most people think to remake Twitter as Free Speech, Inc.
“Twitter’s moderation policies are more driven by its left-leaning customer base, the preferences of advertisers who don’t want to offend said base, and the cultural preferences of its progressive junior staff, as by the desires of senior management.”
Fact-check: The junior staff like her at the Washington Post do what senior management says or they get their columns spiked.
“Ah, you say, but a bold leader can counteract those tendencies. Which, sure, but said bold leader is going to be rather busy running Tesla and SpaceX and so forth.
“He can certainly order people to take the heavy hands off the ban-hammer, but day in and day out, it is still lower level employees who will be making the ban decisions, because no one wants an actually unmoderated platform full of spam and child porn.
“No matter what new policies Musk sets, there will be gray areas. And it is Twitter’s progressive workforce, not Elon Musk, who will be making the calls in those gray areas.
“It’s hard enough to gut-rehab a corporate workforce and culture with a leader who is tirelessly dedicated to the task full time.
“Sure, Musk could just fire most of the staff. He can destroy Twitter, for the low low price of $46 billion. But actually making it into the thing he and many others want pretty skeptical.”
Betting against Musk is a low percentage move.
The column itself was a little longer version of what she said.
She began, “Elon Musk has always been seriously weird, but his weirdings have rarely been serious. His periodic flights of fancy, like pricing Teslas in bitcoin, or musing about taking the company private, are simply the billionaire equivalent of getting a face tattoo — from the temporary tattoo booth at a school fair.”
Yes, she was clever. She was so clever that she was boring.
She missed a good opportunity to compare what Musk is doing to what the second-richest man in the world did when he acquired the Washington Post.
Jeff Bezos did not install himself as editor and edit copy all day. He had his senior management at WaPo make the progressive liberals bend to his will. Even after stepping down as CEO of Amazon, Bezos isn’t running WaPo directly.
McArdle can pretend all day that she writes what she wants, but as a former newspaper columnist, I know better.
She lives in Washington and this passage in her column reflected that, “Ordinary people tend to think of ownership and control as functionally the same; I bought my house, I get to decide if I want to renovate. But homeowners making changes only have to worry about the local building authority, the reliability of their general contractor and the laws of physics. They don’t have to contend with 7,500 employees with their own ideas about how the house should look — and who will, in many cases, fiercely resist attempted changes.
“Corporate renovations are a whole different level of difficulty. There are certainly policies Musk could alter by executive order, and thereby immediately improve the public discourse. He could rejigger the algorithms to show us tweets in simple reverse chronological order, rather than promoting the tweets most likely to “engage” us, which would make users less likely to encounter the latest highly engaging outrage. He could de-emphasize advertising, which would lessen advertiser pressure to ban offensive speech. He could ax the retweeting functions that promote the formation of cancellation mobs. All those things would make a big difference — but they would also probably make Twitter a less viable business, costing him a bunch of money.
“And probably the hardest thing to fix is the one thing that Musk’s fans (and maybe Musk himself) are imagining he can jettison: its moderation policies. Which brings us back to Twitter’s 7,500 workers.”
Ah, McArdle thinks the 7,500 employees at Twitter are civil service and cannot be fired.
But they can be fired and I believe many will be axed if only to cut costs. Maybe CNN+ will hire them.
Musk is not a Gulliver to be tied down by the Lilliputians in his employ any more than Bezos is. Musk can always bring back Jack Dorsey as CEO to run the place.
People have pooped on Musk for — oh — 20 years or so. He made Tesla work. He made Space X work. He is making the Boring Company work.
Musk did not become the world’s richest man by caring what $1,500-a-week newspaper columnists have to say.
Making Twitter work seems easy. Its ad revenues were $5 billion last year. Becoming Free Speech Inc. is a great marketing move. Musk can cut expenses, increase revenues, make a profit and service that burdensome debt, which is less than 4/10th of 1% of his net worth.
McArdle will get a nice 5% raise next year, which will cover about half that Bidenflation that is raging in America.
Note: There will be a 7 PM post on CNN+, whose situation is even worse than we thought.
Posted by Don Surber at 4/25/2022 03:00:00 PM