Elon Musk is Not Familiar With Play-Doh Toys.
Many of us had Play-Doh toys as kids, and I’ve used them to explain the basic rules of business. Here’s how it works:
· First, you put Play-Doh into the toy- that’s the capital (cash, equipment, and other assets) that you invest in a business.
· Next, you turn the crank, which represents the labor, material, and overhead costs incurred to create a product or to deliver a service.
· The result? The Play-Doh machine creates a shape- maybe a triangle or star. For our purposes, that’s the finished product that’s delivered to a customer.
So I’m confused by Musk’s comments that he’s going to cut 75% of Twitter’s workforce. Now I get it- the company has struggled and costs must be reduced. But how will the user experience be with a remaining “skeleton crew” of 25% of the existing staff?
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Netflix, on the other hand, announced far higher new net subscribers in the 3rd quarter. Why? Because they’re committed to making a better product- more great content.
Musk is telling us that Twitter, once he owns it, will be a less attractive company. Seems like terrible timing.
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