Elon Musk is thought to have paid about $44 billion to buy Twitter. That was last October. Yesterday he made his latest attempt to wreck it.
He posted these tweets:
Not only did he introduce limits on the number of tweets a person could see when his whole business model is utterly dependent upon users seeing as many as possible so that they might also see the content paid for by the advertisers on whom he is dependent, he also did what is called a 'Ratner'.
In 1991, Gerald Ratner, the then CEO of his eponymously named jewellery chain, said to a conference of the Institute of Directors:
We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, "How can you sell this for such a low price?", I say, "because it's total crap."
Overnight he destroyed the credibility of his business by suggesting what it was selling was worthless.
Musk tried to do the same yesterday. His third tweet, in effect, said:
Get off your phone, stop reading tweets and get a life.
He may have a point. Despite the widespread belief that I spend my whole life on social media, I do not. I think doing so is destructive.
However, when it is your job to sell social media if you are to have a hope of a) your business surviving and b) repaying the cost of your investment, then you cannot c) ration the amount of your social media you will let someone see and d) tell people this is because looking at it is not good for you. That, though, is what Musk did.
I would like to say that Musk hit new depths by doing so, but very clearly Gerald Ratner got there first.
I would also like to say that Musk was aberrant in saying this, but this is just the latest in a long line of fiascos from him.
So what is going on? It seems to me that what Musk is displaying, albeit in extreme form, is the inability of most corporate managers to appraise the risk inherent in their own behaviour when they are paid so much that they believe the myth that they are always right.
Seen like this, there is nothing unusual about Musk. The bosses of the water companies that are in trouble display the same trait: they took on inflation-linked debt that will now kill their companies because they believed in their ability to forecast low inflation forever.
The Bank of England thinks it is right on interest rates when it glaringly obviously is not.
And Keir Starmer thinks throwing Labour supporters out of his party is the way to win support.
This type of stupidity is commonplace. And we all suffer for it.
What is the answer? Good governance, the ability to listen and big doses of self-doubt are the answer.
Continually asking the question "Suppose I am wrong?" is the requirement of good management. Those in higher management rarely ask it. And so we get profoundly costly failures.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Humility is required to ask “Am I wrong?” It’s highly ironic that the Witch-Finder General Keir Starmer is throwing social democrat opponents out of the Labour Party because he’s decided what the people want is a Tory Mark 2 Party but the vast majority people are heading in the opposite direction appalled at the damage the Mark 1 version has inflicted on the country. So yet more turbulence ahead until the Labour Party comes to its senses!
Isn’t there a (relatively) risk free way to point out that Labour has got it so wrong, in the upcoming bye elections? Vote anyone but Labour, even if it means a Tory getting back in. That may wake them up! It hardly matters, in the scheme of things if a Tory gets back, but if Labour fail to meet their expectations it, surely, must make them think?
So nothing new the Ancient Greeks named it. Hubris.
As for senior water compan/OFWAT bosses…..far too many look to be members of the Dunning-Kruger Club. First rule of the Dunning-Kruger Club; you don’t know that you are a member.
Something else from the ancient Greeks: epistemology: what do I know, why do I know it, on what foundation is it built etc etc.
The failure to question “conventional wisdom” is rife.
Personally, I prefer doubt, uncertainty & the possibility of being wrong. This does not preclude the ability to identify one course of action being preferable to another, but it does hedge it round with “checks and balances”.
But when you have vast quantities of money – you lose sight of where you came from & think that your good fortune was largely down to your own genius – as opposed to (often) a good measure of luck & being in the “right place @ the right time.
Until circa Thursday I could look at Tweets – (I’m not registered with Twitter). Now that is not possible …………oh dear, I am so utterly heartbroken. (snigger).
I know it’s not exactly being cheery on a Sunday morning but its even worse than that.
What these idiots do is surround themselves with people of less calibre or on a nodding ideological acquaintance to ensure that they are not challenged at all in their assertions. And then then the whole thing exists as a self reinforcing bubble, where the pricks are safely ensconced inside from reality.
It puts me in mind of the Hans Christian Andersen’s fairy tale “The Emperor’s New Clothes” where a little boy, let’s call him Richard, points out what nobody else chooses to see. That all the pomp and frippery is based on nothing substantial at all.
While I have no objection to the child being called Richard, it is interesting to note that, in the original story, it was a child who saw through the emperor’s new clothes. I wonder why it is accepted in this country that it was a boy?
I am not presumptious enough to think I have seen through the emporor
And I think the child was a person – their gender need not be specific
Will Hutton is touting something he calls a Public Benefit company for the water and sewage industry in the Observer today. Could somebody explain to me how this works. Does it mean no profit distribution until an investment target is achieved? And who will police that target not a “revolving door” OfWat surely? That’s the same sleight of hand Gordon Brown played giving the Bank of England so-called independence. It leads to trouble with it’s arms-length approach, you get rogue players!
https://www.theguardian.com/commentisfree/2023/jul/02/now-water-bosses-you-must-show-how-capitalism-must-work-for-the-common-good
https://www.theguardian.com/environment/2023/jul/01/exclusive-uk-water-giants-recruit-top-staff-from-regulator-ofwat
I hope to have something on this tomorrow.
But it means writing some today, and I am not inclined as yet
I’m sure Richard can give a far better description tomorrow than I ever could but in the meantime could I describe my experience of a Community Benefit Society which I think is what Will Hutton means.
My broadband service here in the rural Northumberland North Pennines is supplied by B4RN (always called ‘Barn’). From its website : “B4RN exists to bring world-leading full fibre broadband speeds to underserved rural areas. As a Community Benefit Society, any surplus we make must be put back into the communities we serve.” An example of the surplus is giving free 10Gb internet to schools in the areas in serves. Our local primary school here in Allendale with 120 pupils has probably the fastest broadband in any school in the north east!
I own shares in B4RN but they can’t be sold and I will only receive the same price I paid when traded in. I do get a decent return however. My broadband – 1Gb fibre to the house for £33 per month – it was £30 per month until last year but B4RN raised the price for the first time in 10 years! The downside? – installation is only possible with a substantial community involvement which keeps the price down; is that a downside?
Obviously the situation is completely different for an existing big company such as Thames Water and requires a complete mind change for upper management but why not? Is this a matter of just finding the right people who have a different outlook on life yet have the skills required?
Thanks
I like these entities but I do not think it scaleable to water
In the United States the water and sewage industry is about 87% publicly owned. Investment funding comes in the form of loans from the Federal government and individual states. There is no clamour to privatise the industry!
https://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_the_United_States
https://en.wikipedia.org/wiki/State_revolving_fund
Of the 13% that aren’t publicly owned many are cooperatives especially in rural areas.
There is a willingness for cities to operate other publicly owned utilities such as electricity, internet, cable TV and telephone. Here’s an example:-
https://cities-today.com/chattanoogas-municipal-broadband-pays-off-with-2-69-billion-in-benefits/
Thanks
Pathetic stuff by Hutton. In summary he is saying that “better regulation will work” – whilst ignoring the information asymmetry that exists between the regulator and the regulated. There is also the straw man of £250bn which he claims (with no support whatsoever …hmm nice round number 250bn) would be needed to renationalise. Any company is valued based on profit delivering revenue streams and assets. The profit delivering revenue streams can be rapidly stripped out by lowering the rate of return on assets. 2 – 3% sounds to good to me for A MONOPOLY service (risk = zero). This leaves the assets – mostly fully depreciated.
Having started his hole this is where Hutton gets digging with a will. He notes the massive investments needed for de-carb……….but many of these investments need to go into monpoloy infrastructure companies. This begs the question – why not government making these investments? Why pay private companies with a track record and revenues that would… MAKE THE MAFIA BLUSH.
Time the G found somebody able to string a coherent rgument together. But hey Hutton = vile-liebore.
Much to agree with
I’m disappointed in Will Hutton to be honest even though he became a hero of mine in the 1990’s with ‘The State We’re In’ – he’s emerged as a bit of an ordo-liberal really, which as we should know by now is just a pre-developmental stage of being a neo-liberal at the end of the day.
I need to add something regarding Hutton and the Observer article. Given what follows, my read of the article suggests that Hutton was/is in cahoots with the water industry:
https://www.youtube.com/watch?v=qaDLdq9V1jk
From minute 26, and I draw readers attention to the e-mails from the water industry and how they were very very similar to Huttons article.
Hutton is trying to “frame a narrative” that would allow the water industry to avoid nationalisation & allow vile-libeore to pretend it was doing something.
A veru useful illustration of how UK serfs & peasants are manipulated by “their betters”. Don’t say you weren’t warned
I really cannot understand why he thinks this idea is credible
Richard, what do you think of the model used in Wales, whereby Dwr cymru/Welsh Water is a ‘not-for -profit ‘ company. Though of course we still have problems regarding sewage discharges.
It also used index linked debt so it is bust
I think that’s an important response, though I don’t understand it, because a letter was recently published in the Guardian extolling the Welsh system and I’d assumed that this is the way forward.
Last July, 2022, I was “permanently suspended“ from Twitter. I had no idea why and I appealed and appealed with acknowledgement of the appeals but no change. Suddenly in January of this year I was told that I was being reinstated, and that I had mistakenly been identified as someone who spammed. From what I could see from the Internet this happened to many people. I chose not to re-engage with Twitter, but just to read certain tweets every day without logging on. No I’m required to log on I just don’t bother with it.
I’m completely bewildered by Keir Starmer is doing. Whatever people think about Jeremy Corbyn, he showed there was a huge hunger for change, particularly, thank goodness, in younger people. He is just so cautious and he seems unable to articulate any vision. I don’t understand what he’s doing now, at a time when there is great engagement with politics through Podcasts and sites like yours.
Is Twitter really worth $44 billion? I wouldn’t pay $44 million (not that I’ve got $44 million to spare). I have three Twitter accounts on three devices (2 desktops and a laptop). All three have free Adblockers, so I never see any advertisements. I can’t be the only person using Adblockers. I have always assumed that most people use Adblockers. If Twitter relies on advertising, don’t the advertisers realise that many people (perhaps most people?) don’t see their advertisements? I detest advertising; it’s one of the main drivers of consumerism, where gullible people are persuaded to buy stuff they don’t need. Sorry about the rant. Back to the main question: how on earth can Twitter be worth $44 billion?
It was worth $44bn because that is what he paid.