Elon Musk: Super-Disrupter

May 12, 2022 • Blog • Boaz Tamir

Buying Twitter challenges us to rethink: How do you define a lucrative deal?

“If I asked people what they wanted, the answer would probably be faster horses…” (Henry Ford)

Even though Elon Musk’s entrepreneurial modus operandi is familiar, he still manages with his every move to surprise us from a different direction. Capital market operators view Twitter’s acquisition as one of the most puzzling events in the history of the technology industry, which characterizes Elon Musk as a super-disrupter, who challenges not only technological development management theories, but also the conventional concepts of “economic value” and “business model.”

No one disputes Twitter’s status as a tremendously influential social network. But despite its social, media and political influence, without a business model Twitter has failed to reach the growth dimensions of Facebook and TikTok. Commentators and analysts are divided: some propose strategic prescriptions to “flood” the company’s business value, while others call for it to be shut down altogether. In the absence of a visible business motive behind the acquisition, suspicion of a manipulative conspiracy is taking hold.

Musk, as usual, is not impressed by the media discourse, despises regulators, ignores skeptics and mocks analysts. In his opinion, Twitter’s cash-flow-based valuation relies on an archaic economic paradigm. The digital technology revolution has fundamentally changed the business reality as well, and with it the point of view from which to evaluate business value.

With a series of initiatives, Musk proved himself a revolutionary who undermines existing paradigms. First he undermined the financial paradigm (PayPal). Then he undermined the boundaries of mobility space (Tesla, SpaceX), and with his latest move he is challenging the economic-business model.

As far as Musk is concerned, Twitter’s strength is in its 217 million users. He calls it “a public square that has earned the trust of users, a necessary platform for democratic resilience and the future of civilization” (April 14, 2922, Ted conference). Musk formulates the organizing framework for freedom of expression as follows: “To allow someone you don’t like to say something you don’t like.” The solution to the need for freedom of expression and public discourse serves as the basis for a business venture and a goal for technological development.

The beginning of a project is driven by a response to a human need. The quality of the response is tested by the entrepreneur’s empathic ability to turn the users’ needs into a product. It is fair to speculate that the Twitter platform will serve Musk as an experimental ecosystem to develop an innovative product, but it is too early to say whether with Twitter’s acquisition Musk will use an inductive research method allowing users to take an active part as design partners in adapting the product to their needs and tastes.

A social network with millions of users thus becomes not only an economic asset but also serves as a development and design ecosystem for a new product. The more the circle of product design partners expands, the more effective a development process will be created that accurately refines the value proposition for the customer and the economic model for shareholders.

The strategic plan to enhance Twitter’s value is focused on strengthening public trust. The moves Musk has announced include moving to open-source software that allows public scrutiny of the algorithm managing the use of personal information; using blockchain information security technology to enable secure network operation; and finally, fighting bots and false and offensive content, while verifying the identity of the speakers.

The business model of Google and the social networks Facebook, Instagram and TikTok relies on information mining and extraction technology and the operation of a confidential algorithm system to identify and monitor users’ behavior patterns. In order to enjoy the benefits of the network, we are all willing to pay the price of the loss of privacy. Musk is challenging, at least with his initial statements, the conventional business model, by pledging to change the basic point of reference for users – to stop offering to sell users’ information for marketing needs and start turning them into customers who are entitled to a personal and community envelope of privacy and confidentiality. It is to them that the company owes loyalty.

Musk does not accept the term “social enterprise” that does not operate within the framework of economic principles. In his view, creating social value is the basis of a business venture, and vice versa, a business venture is also tested by the direct value (ethical, social) that it creates for customers, and that value in turn defines financial value.

The business plan Musk is planning for Twitter includes encouraging private users to join and become active users on the freemium network (B2C) to determine the fundamental value of the platform. Business entities, advertisers, politicians, organizations, companies and national and municipal government authorities (B2B) who wish to have direct contact with their addressees will be charged a premium fee. Musk is hinting that after he completes Twitter’s reform and redesign process, it will increase its economic value, and he will make the company public again.

Does freedom of expression have economic value?

Can an open, boundless public discourse, without controls or content editing, without censorship, without removing tweets and without blocking the accounts of inflammatory parties, preserve an appropriate social and political culture (and who defines that)? Will Twitter become a social platform that reinforces the values of democratic culture? Is breaching the boundaries of the conversation better than a platform controlled by regulation and appointed editors? Or will the talk of an open free market turn out to be a dystopia where the discourse in the “public square” is dominated by a single person?

Musk’s optimistic scenario could undermine the dominance of Google and Facebook in the social media space, hence fundamentally changing the rules of the game on the social networks. And conversely, the realization of the dystopian scenario, an archaic “public square” flooded with extremist and violent rhetoric, or an authoritative takeover of the discourse, may turn out to be a social farce and a colossal business fiasco.

Boaz Tamir, ILE.

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