You may ask yourself why I am telling you how to destroy a business. Well…the longer you spend in the job board and recruitment marketing sectors, the more likely it is that you will be tempted to acquire another business. Perhaps you’re doing so to expand into a new niche, or to grow your existing client base. Maybe you see a poorly-run company that would flourish under new leadership. Or maybe the acquisition just makes financial and strategic sense.
I can promise one thing – having gone through many acquisitions over the years: acquiring a business and succeeding is much harder than it might look. So rather than trying to list the many things you must do to succeed in an acquisition, I’m going to walk us through a real-life acquisition gone bad. This is an acquisition that I am almost positive you know about: Elon Musk’s purchase of Twitter. Let’s take a look at how he has decided to destroy a business.
- Pay too much: Mr. Musk, for whatever reason, paid way too much for Twitter. How much? Forty-four billion for a company that had only recently begun showing a miniscule profit. Why is paying too much a bad thing? Because it puts the purchaser immediately in an uncomfortable financial position: trying to make enough money to pay off his creditors and still manage to show a profit. Does that seem impossible? Well, yes. Nevertheless, Mr. Musk immediately followed up this mistake with another one, namely…
- Fire employees in an indiscriminate and excessive manner: To wit: Mr. Musk fired almost 50% of Twitter’s workforce after acquiring the company (and eventually grew that number to 80%). Were performance issues involved? Crimes against the company? Well, actually…Mr. Musk said that Twitter was losing $4 million per day. One added benefit – from his perspective, at least – was that the manner in which he fired these employees led to additional departures from other employees who felt betrayed by their new boss. The problem with this action? The firings were not strategic or carefully thought-out – and thus resulted in key departments finding themselves understaffed. Did a lack of salespeople, tech support, customer service, and other employees help the company make more money? In a word – no.
- Change from a well-known company name to a little-known one: Imagine if you had decided to buy Indeed – but after purchasing the company, you changed its name to ‘WellBut’. Not smart, eh? Yet Mr. Musk took a company with a name known throughout the social media world and gave it a new one: X. Why did he do such a thing? Apparently, ever since his PayPal days he had wanted to have a company named X. I guess he has one now! His next challenge: convincing millions of current and past users to call it X.
- Destroy a key feature of the business: For years, the ‘verified’ blue check next to a Twitter account was the equivalent of the Good Housekeeping seal of approval in the social media world. You, the user, could trust that the verified source was in fact who or what it said it was. Mr. Musk was not satisfied. He changed ‘verified’ into something that anyone could purchase for $8 per month, no questions asked. If the JobBoardDoctor wanted to become the ‘verified’ user “Taylor Swift”, well…he could! You can imagine how thrilled (not) the average Twitter user was with this change – almost overnight, you could not trust any source – especially if it was ‘verified’. Up was down. Night was day.
The cumulative effect of these four changes (plus many others too numerous to detail)? Twitter – ahem, I mean X – is shrinking. Specifically, the site’s traffic has dropped month after month, and as of September 2023, has lost 600 million users from the previous month. A few hundred million here, a few hundred million there, and pretty soon Mr. Musk won’t have a business.
My advice: let Mr. Musk make these mistakes. But you should avoid these actions that can destroy a business – particularly one that you’ve acquired![Want to get Job Board Doctor posts via email? Subscribe here.]. [Check out the JobBoardGeek podcast archive!]