It sure looks like Elon Musk is deliberately
destroying X
Jyoti Mann
and Lara O'Reilly Nov 30, 2023, 2:36 PM CET
Elon Musk
appears hellbent on taking a wrecking ball to X.
The
billionaire owner told major advertisers "go fuck yourself" at The
New York Times DealBook summit Wednesday, and may have killed any hope of
restoring the company's advertising business.
His
diatribe came shortly after major advertisers including Apple, Disney, IBM, and
NBCUniversal joined a raft of brands paused advertising on the site after Musk
appeared to endorse an antisemitic trope.
He
apologized for the post Wednesday, but blamed fleeing advertisers for trying to
"blackmail me with money" and attempting to "kill the
company."
Musk's
latest remarks are unlikely to help X's CEO, Linda Yaccarino, bring those
brands back.
"Makes
it very tough for Linda," Martin Sorrell, founder and executive chairman
of advertising group S4 Capital, said of Musk's comments. "Clients don't
like controversy."
Musk's
middle finger to advertisers could give weight to a theory he wants to
deliberately sabotage X.
The
billionaire had last year tried to back out of his $44 billion offer to buy
what was then Twitter, but financed the deal by borrowing $13 billion from a
consortium of banks. Those banks have since been trying to sell the debt —
which looks increasingly worthless as Musk drives X into the ground. In the
meantime, X and Musk must pay millions of dollars in interest to their
financiers.
Musk may be
looking to reduce those payments by ensuring X isn't worth very much, Bloomberg
commentator Matt Levine posited in January.
"The
banks want to sell it — they are not normally in the business of holding on to
buyout debt for this long — and if Musk bought it he could lower his interest
payments," Levine wrote. "In theory, the more unpleasant he makes it
for the banks, the cheaper the debt will get."
"I
don't understand Elon's endgame," Lou Paskalis, former head of global
media at Bank of America and CEO of marketing consultancy AJL Advisory, told
Business Insider.
Paskalis,
who has been a vocal critic of Musk's Twitter takeover, said the "go fuck
yourself" comment was likely pre-planned, making it clear Musk doesn't
want to cultivate advertisers, despite advertising accounting for the majority
of X's revenue.
"But
he's smart, he knows it's illegal — although usually hard to prove — to
intentionally devalue an asset to manipulate creditors, and he knows how to
make money so I have to believe he sees an entirely new revenue model that the
rest of us don't yet recognize," Paskalis added.
X is now
worth less than half the amount Musk paid for it, BI's Grace Kay and Kali Hays
reported last month. Musk earlier said the company had negative cash flow due
to the drop in ad revenue and its heavy debt load.
Musk has
previously said he wants to make X an "everything app" to include
features like video and payments, and one that is less reliant on ad dollars.
He has already moved to diversify X's revenue by rolling out a paid
subscription feature.
But it's
not been enough to make up for the shortfall in advertising.
"There
is no way back, there is no way to reverse the statement Elon made
yesterday," said Ruben Schreurs, chief strategy officer at the marketing
consultancy Ebiquity, which works with major advertisers. "This is the
nail in the coffin."
Ebiquity,
which works with 70 of the world's top 100 advertisers, said only two of them
advertised on X in September.
X CEO
Yaccarino, a former NBCUniversal ad executive who was charged with restoring
the company's ad business, sat in the audience at the DealBook conference on
Wednesday.
In the
hours after, she tweeted in support of Musk, saying the interview had been
"wide ranging and candid," offering him a chance to apologize for his
earlier tweets and provide "an explanation and an explicit point of view
about our position."
"And
here's my perspective when it comes to advertising: X is standing at a unique
and amazing intersection of Free Speech and Main Street — and the X community
is powerful and is here to welcome you," Yaccarino wrote in the tweet.
X didn't
immediately respond to Business Insider's request for comment, made outside of
normal working hours.
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