Musk's top-down approach will harm Twitter, says Manish Maheshwari

Large platforms can also go into exponential decay if the network effect stops working in their favour, Maheshwari said

Manish Maheshwari, former India head of Twitter, has been following Elon Musk’s actions closely. As an old timer, Maheswari believes that some of the business decisions may be good but the top-down approach of Musk will harm the company. In an interview with Shivani Shinde, he talks about some of the business decisions Musk has taken and whether other platforms have the potential to dethrone Twitter. Edited excerpts:

What do you make of some of the actions taken by Musk?

There is clearly a lot going on there and everyone is keen to know the next development at Twitter. But a change in ownership means there will be changes to strategy. At Twitter, there are three clear dimensions to the decisions taken so far. First is user focused. Twitter always prided itself on anonymity, and pseudonymity, which allowed users to express themselves freely without reprisal. For instance, in Japan, a single user has 2-3 accounts to match different personas. 

These are personal accounts, parody accounts and official accounts, among others. Along with that, Twitter also allowed essential services to be run on the platform. For instance, these services would be used for rescue operations, by allowing open APIs. Through these, one can create a bot for automated updates, say for weather or natural calamity. However, today, the use of bots only has a negative connotation. Musk, on the other hand, is very clear that he wants human users on the platform, and ideally a paying user. He spoke about $8 verification, which is a big change and will also change the dynamics of the platform. All this means that users will have to tweet under their name and be responsible for what they say. 

This means you have to be careful. Second, is revenue. Twitter was dependent on advertising as revenue. More than 90% of revenues came from advertising. Now, what is a clear change is that he wants to reduce the percentage of revenue from advertising, and he wants to increase the subscription business. This changes the whole dynamics, because if you have to go the subscription way, you have to think about user value. You have to think about giving them something for which they would be willing to pay. The value creation for users has to be in such a way that they are willing to pay month on month. This is a big shift as it changes your relationship with the advertisers as well as users.

The third aspect is content or the creators. Today, there is no way for creators to monetise their content. You cannot make money on Twitter if you are one of those who creates amazing content. Twitter tried this through two initiatives Tipjar and Ticketed Spaces. But since these were not the focus at that point of time, it was a half-hearted effort from the company. I learned that Musk wants to revive creator monetisation and get into revenue-share agreements with creators. This is with the thinking that if creators are able to monetise their craft on Twitter, they are more likely to put exclusive content and also drive engagement. All these three sound like great strategies, in my way, but it's different from what Twitter used to be.

So is Musk correct in the way he is changing things?

I do not have any problem with the business strategy and the thinking there. The real problem is the way he has come in with a top-down heavy-handed approach, firing half of the employees. And, the way he sent an email asking people to adhere to a “hardcore” work culture or hand over their resignations. This has caused a lot of good and hardworking people to rethink and evaluate whether they should stay with Twitter. Now, that’s a real risk, because for a technology company your real assets are talent, the user base and reputation in the market. Otherwise, any app can be Twitter. From the functionality part, most apps in the space are similar and even Koo can be the next Twitter. What differentiates a platform is the people associated with it and the people using it.

What happens to Twitter?

It’s an amazing platform with an excellent brand recall. It has amazing engagement from world leaders and it is a place where news breaks. I do not expect Twitter to become irrelevant overnight. But the fly wheel that keeps running because of the creators and the users can halt because of these changes. We have enough instances in the tech world, such as Orkut and MySpace. Large platforms can also go into exponential decay if the network effect stops working in their favour. The real thing to look for is important creators that drew influential conversations on Twitter moving away and spending most of their time on Instagram, Mastodon or Koo. That is a signal that the Twitter flywheel will stop rotating sometime. I am seeing in the US and a little in India, too, that people are looking for alternatives. 

Do you think platforms like Koo and Mastodon can replace Twitter?

Koo has all the right kinds of people on its platform. If there is no clarity on Twitter and there is no help and support and people do not see engagement, they will start moving away. If 15 years back you would have asked me if one would leave Orkut, the answer would have been a no. But here we are. It’s a matter of time. Will it reach a tipping point and start going down? At this point, things look like they are going downhill compared to improving. But Musk is a smart guy. I hope he figures it out. But one should keep in mind that social media is a different animal than, say, making a car or a rocket.

When you say monetising creators, do you think Twitter will be successful? 

That's a game where you have so many heavyweight players like YouTube, TikTok, and Instagram. Twitter will have to find its unique angle.

Musk said that the company is going into bankruptcy, but on an annualised basis, Twitter was at a breakeven point. What is your view? 

Yes, before Musk took over the company on an annualised basis Twitter was almost breaking even. But the moment he came on board, advertisers left because they were not sure what was happening and they did not want to get caught in the controversy. Also for advertisers, Twitter is just 1 per cent of their spends. With one stroke, he cuts the revenue of the company, costs go up for which he starts to sack employees and he has acquired the company by raising debt. This means he has interest to pay. So, in this situation, the bankruptcy comments are not unthinkable.