4 Things Upcoming Entrepreneurs Can Learn From Elon Musk’s Twitter Acquisition – Young Upstart

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Elon Musk just bought Twitter.

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According to various reputed media outlets like BBC, Elon Musk took control of Twitter on October 28, 2022 for a total of $44 billion. The world’s richest man (at the time of writing this article) and the CEO of both Tesla and SpaceX had been teasing the deal for some time now. After months of fiddling with Twitter he finally got what he wanted.

Elon Musk’s take on Twitter has had many consequences. It also provides a lot of lessons for up-and-coming entrepreneurs.

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Four things young up-and-coming entrepreneurs and startups can learn from Elon Musk’s take on Twitter:

1. Social media platforms cannot make money without ads.

Social media platforms like Twitter and Facebook are free to use. As a result of this, they have to run ads to manage costs and run their business.

The idea behind social media is that users will be able to connect with others who share their interests in exchange for providing their personal information to these platforms. The problem is that this information is not valuable in itself. It becomes valuable only when it is used by advertisers to target consumers with relevant ads.

Thus, if a social media platform wants to earn money, it has two options. It either has to charge its users for using the platform or earn money from the advertisements shown on the platform.

Twitter was free to use, but it failed to generate much advertising revenue due to various social pressures. For them to run ads without incurring a financial loss, they have to retain old customers or at least find people who can match their standards and generate the same amount of revenue.

A strategic B2B account planning process is important in this regard. This requires the business to ensure strategic account management, which means maintaining key accounts to maximize revenue. Such a comprehensive account planning process also helps in various financial decision making processes.

If only Twitter had ensured such a strategic approach, they would not have suffered financially by losing ad revenue.

2. Not all businesses can afford to pay higher salaries to their employees.

There are many reasons why not all businesses can afford to pay higher salaries to their employees.

First, the cost of living varies greatly in different regions. This means that a business located in an area where the cost of living is high, such as New York City, will have a hard time paying competitive salaries with other businesses in its industry.

Second, not all businesses have the same profit margin. Some businesses may be able to pay higher salaries than others because they can charge a higher price for their goods or services.

Third, some industries require low turnover rates and, therefore, cannot offer high salaries as they will lose many employees who could not find jobs elsewhere.

Despite being a tech giant, Elon Musk still had to lay off many of Twitter’s high-paid employees because the business was not performing well. According to PayScale, the median salary on Twitter ranges from $75,536 to $173,659 per year. Not paying some of these higher salaries meant that Elon could save a lot of money on employee costs.

Paying high salaries is even more difficult for startups. After all, even with funding, there is no guarantee that you will be making consistent profits. Thus, a lapse may force you to lay off your highly skilled and highly paid employees.

3. If you lay off your employees you will have to face public backlash.

Layoff is not an easy decision. This can be a difficult choice, but it is often necessary for the long-term health of a company. If you lay off employees the public will react negatively to your decision. If you fire employees without finding fault with their work or work ethic, the reaction could be worse.

The backlash came in the form of lawsuits and threats of ad boycotts, for Elon and his new empire, on Twitter. According to an NPR news report, Free Press CEO Jessica Gonzalez was quoted as saying, “Twitter was a hellscape even before Musk took office. His actions over the past week will only make it worse.”

The report further details how employees are preparing to file a lawsuit against Elon and the overall response it is receiving from the general public.

You can’t expect to fire your employees in a big way and get no response. Thus, before you hire your employees or start paying salaries that you cannot afford, think things through.

4. It’s hard to survive in the tech industry.

The tech industry is notoriously competitive. It’s hard to survive in this field because the competition is fierce, and many people want the same job as you. You must be able to prove that you are capable of doing what they ask of you, as well as show them that you can grow and improve in your field.

Any sign of failure means you are vulnerable to others. Only then can many people try to take over your business, just like Elon Musk did when he realized Twitter was struggling financially.

Elon isn’t leaving Twitter anytime soon. As you follow him on his new journey, you’ll learn more from this acquisition as a young up-and-coming entrepreneur.

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