Why Twitter May Well Be Elon Musk’s Folly

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This podcast reviews the history of Twitter, and why it is in such a business predicament. From start-up through 2013 Twitter delivered on its Value Proposition of connecting like minded people organically, and providing an ad platform for reaching potential customers and growing your business. Under CEO Costolo Twitter had revenue growth and revenue/user growth that beat both Facebook and Amazon.

But over the last 6 years a distracted CEO Dorsey failed to keep a focus on the Value Proposition, and failed to further develop the Value Delivery System. Revenue growth stumbled, and Facebook leapt ahead of Twitter in all metrics. Now Dorsey has no idea what the Value Proposition should be, nor how to direct enhancements to the Value Delivery System. So he sort of stepped aside, then convinced the Board to walk away from the company entirely. But at the same time, Musk has given no indication as to what he thinks Twitter’s Value Proposition should be. He talks about tweaks to the Value Delivery System, but there is no linkage to how that will improve Twitter's value for customers – nor any indication how he plans to increase value enough to grow revenues. Things thus look pretty dicey for a leveraged buyout that shows no sign of having a clear strategic direction.

If you want to succeed in business you have to know your Value Proposition, and constantly evolve your Value Delivery System in order to constantly grow revenues at 10%+ per year. Musk did that with Tesla, Solar City, Space X and The Boring Company. But nobody’s talking about how Musk, or Twitter, will set a strategy, or invest in the platform to grow ad revenues.

In 2015 Adam Hartung laid out how Costolo did a great job of targeting customers and delivering value when he was fired, raising concerns for investors based on his termination.

https://adamhartung.com/costolo-should-not-have-been-fired-twitter-investors-worry/

Later in 2015 Adam laid out the task in front of Dorsey if he wanted to succeed. The task Dorsey failed to even understand much less accomplish. Thus putting Twitter in this confusing, undirected, and low-growth situation.

https://adamhartung.com/will-jack-dorsey-get-it-at-twitter/

Had Twitter taken Adam’s advice then, the company wouldn’t have lost its way, becoming a puppet for politicians, extremists and bots. It’s a lesson in why you should listen to Spark Partners now.

Thinking Points:

  • Do you know your Value Proposition? Do you know your customers and why they buy from you?
  • Do you focus your resources on updating your Value Delivery System so your value remains high?
  • Do you keep a clear eye on growing revenues as the #1 metric for measuring sustainability and success?

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