Elon Starts Bribing His Biggest Fans As He Admits The Company Is Still Burning Cash (Despite His Earlier Claims To The Contrary)

Failures

from the full-tilt-twitter dept

It seems to anger certain Elon Musk fans every time I mention it, but pre-Elon Twitter was generally doing okay. Not great. Not terrible. Just okay. It wasn’t printing cash like Meta or Google, but it had been steadily increasing revenue and was profitable in 16 of the previous 20 quarters before Elon took over. There was a big paper loss in the 2nd quarter of 2020 due to a single noncash deferred tax asset, and many people see that giant loss and mistakenly think it showed the company was deep in the hole. However, you can tell it was nothing given that most analysts basically ignored that single big loss and focused on the underlying advertising and user numbers.

Elon has admitted multiple times now that he basically set fire to Twitter’s value and what had been a growing revenue stream. So it’s little surprise that he admitted it once again over the weekend, tweeting an admission that the company had lost around 50% of its advertising revenue.

The more interesting bit here, though, was him admitting that the company was “still negative cash flow.” Remember, in February, he had said the company was “trending to breakeven” and in April had suggested that it was now there. That April statement included him claiming that “most” advertisers had returned to Twitter, which Musk is now effectively admitting was a lie. And, his prediction that the company would be “cash flow positive” in the 2nd quarter didn’t quite pan out, I guess.

Of course, both of the things he complains about are directly due to Musk’s own terrible decisions. Advertisers have bailed because of his terrible choices, setting fire to brand safety efforts and driving away top tier advertisers (and users), and the “heavy debt load” was entirely due to his decision to finance $13 billion of the takeover with debt, on which the company how has to pay interest.

Both of those moves could have been easily avoided.

On top of that, you have to wonder how a company that was effectively breakeven before all of this is still cash flow negative when he’s (1) fired somewhere around 80% of the employees, (2) stopped paying rent (3) refused to pay out owed severance packages (4) not paying lawyers and PR companies or (5) cloud computing bills. He’s also shut down one of the company’s three data centers and closed offices (or been evicted from them).

What expenses is he actually paying?

Well, it seems he’s paying out what can only be considered bribes to some of his favorite Twitter users. Back in February, Elon announced that the company would start sharing ad revenue with Twitter Blue subscribers.

But since then there had been not a peep, even as some users raised questions about such payments.

Then, finally, late last week, some users started tweeting about how they had received their first payments, though many noticed that these payments were basically only going to Elon Musk’s favorite reply guys. This left some others (including some other Musk stans) pissed off that they weren’t getting their share of the cash.

Among those in Twitter’s payout pool was Andrew Tate, who tweeted that he received $20,379 under the new program. Tate wrote that “every penny” of the proceeds will go toward his Tate Pledge charity initiatives. The former pro kickboxer, who once tweeted that women should “bare [sic] some responsibility” for being raped, last year claimed tech platforms had banned him for what he said were “traditional masculine values.” Tate has 7.1 million followers on Twitter; his Twitter account had been banned in 2017 and was reinstated after Musk acquired the social network. Last month Tate was charged with rape and human trafficking offenses in Romania. Earlier this week, Tate and his brother Tristan sued a Florida woman and others, alleging they conspired to falsely accuse the Tates in the Romania case, the AP reported.

Also getting Twitter payments were Brian Krassenstein ($24,305) and Ed Krassenstein ($24,877), entrepreneurs who originally rose to prominence on the platform with their relentless anti-Trump tweets. “Now I’m going to stop promoting border crossings and begin promoting Tesla vehicles,” Ed Krassenstein joked in a tweet. “I assumed I’d would be getting paid around $500 or so for the past 4-5 months. I thought, it would be pennies on the dollar compared to what George Soros pays me (sarcasm).”

In 2019, the Krassentein brothers were banned by Twitter for allegedly using fake accounts to amplify their reach (which they denied). Following Musk’s takeover of the company last fall, Twitter reinstated their accounts in December.

Other Twitter users who shared ad-revenue payouts included podcaster and political commentator Benny Johnson ($9,546), Ashley St. Clair, a writer for political satire site Babylon Bee ($7,153), and an anonymously run account called End Wokeness ($10,419).

One user, who was not included, emailed Twitter and heard back from the company confirming that those selected were not based on the criteria stated in Twitter’s blog post about the program, but rather the payouts went “to a selected group of people.”

That email is all kinds of hilarious. In case you can’t see the image, it says:

Thanks for reaching out about being unable to receive your payment from Creator Ads Revenue Sharing on Twitter. We have information for you.

Currently, creator ad revenue sharing is only available to a selected group of people.

We hope this clarifies your concern.

Indeed, you do have information.

So… to sum up: Elon’s own decisions destroyed the company’s revenue and saddled it with way more expenses in the form of debt interest/repayment. The company is bleeding users and revenue, and despite promising a large group of users payouts if they joined his failed “Twitter Blue” program, the company is only paying that money to a small handpicked group which seems to consist almost entirely of accounts that suck up to Musk on the platform.

I might not be an intergalactic business genius, like many people assure me Musk is, but I fail to see how this strategy succeeds.

Filed Under: advertising, breakeven, bribes, cash flow, elon musk, shared revenue
Companies: twitter