Elon Musk’s $8 Per Month Problem is a Brilliant Case Study for 1-Man Consultants
In truth, all of us have the same $8 per month problem. Agree?
I find it hilarious watching the world’s richest man running around asking people to pay $8 per month for a blue tick. I almost died laughing.
Now, that is not to say Twitter’s financial problems are fudged. The opposite is true.
Twitter is besieged by financial cancer. No one before Elon exposed it to the public. He tweeted it openly.
And it led to a string of hilarious tweets trumpeting the need for users to pay $8 per month. And this is the same person who paid $44 billion to take Twitter private.
From $44 billion to $8 per month?
That is desperately wickedly funny.
Everyone, Not Just Elon, Has an $8 Per Month Problem
Why is there a desperate obsession to charge $8 per month?
Twitter, as with all social media platforms, is free for use, am I right?
Yes, that is true. However, all social media platforms are products created by companies. And companies must manage their cash inflow and outflow.
Today’s chirpy bluebird is bleeding money.
It is evident from Elon’s tweet.
Hemorrhaging $4 million per day is no laughing matter. That number swells up to $1.46 billion in a year.
How would you feel if your company incurred losses of up to $4 million per day? One thing is for sure. You will feel sh*tty.
I guess that is why Elon’s Twitter profile (today) shows his current location as hell.
And so, focusing on viable paths ahead matters even more than ever before. Anyone running a 1-Man consulting practice will know this.
There are, in principle, 3 options to take our business forward.
- Sell it
- Fold it
- Grow it
Selling our venture to a battle-tested entrepreneur can be good for the business. They survived difficult times and would know how to bring a business out of its current crisis.
This option may not exist if you are (currently) running your business at high operating losses. Entrepreneurs and investors with a discerning eye will say no to you.
It is not surprising to me.
Of course, it surprised me when Elon decided to acquire Twitter. I assume he has done his due diligence on Twitter’s financial position.
Therefore, I can draw 2 conclusions from his acquisition decision.
- He believes in the business
- He has the confidence to turn it around
Turning the business around would prevent the company from collapsing and extend the runway for him to sell to a future buyer when Twitter is in a better financial state. Maybe.
And so far, he has done 3 things since bringing a sink to Twitter’s headquarters in San Francisco.
- Tweeting about $8 per month per user for a blue tick
- Communicating daily on Twitter’s operational losses
- Downsizing the workforce by 50%
Truth be told, I don’t envy his current position as the Number 1 man in the company. Elon must take and make decisions that prevent the company from folding.
Remember. Elon paid $44 billion for the company. That chirpy bluebird must continue tweeting.
Comparing $4 Million Per Day Versus $8 Per User Per Month
I have always embraced this perspective as an owner of a 1-Man consulting practice.
We do not have a cost problem. We have revenue problems.
I repeat.
We do not have a cost problem. We have revenue problems.
Think about it. Elon need not worry about $4 million in cost if Twitter generates $4.01 million in revenue daily.
And that is the best lesson on business we can learn from, consultant or not.
- Focus on generating and then scaling our revenue as a priority
- Grow our portfolio of clients for revenue diversification
- Keep operating costs down to a minimum necessity
What we choose to do during the growing stages of our 1-Man consulting practice adds up. Our result slip is the line that reads Net Profit After Tax in our Profit & Loss statement.
Profits, not revenue, are the ultimate test of our entrepreneurial acumen.
It is important to highlight what Jack Dorsey said at this juncture.
Dorsey apologized in his tweet for causing the recent retrenchment wave on Twitter in a recent interview. This is what he said.
And that brings me to the next point.
Every entrepreneur dream of scaling their business. I do, too. But… we must embrace clarity.
Scaling the company’s operations is different from supersizing the company’s ability to earn. We do not need a spacious office or thousands of employees to project scale.
Because business is an ultimate dynamic equation of balance.
There is a price to pay when we scale our operations to a point where we can no longer afford it. That leads the company in the opposite direction.
People and their families suffer when they are asked to leave.
Of course, we will (then) see billionaires running around asking customers to pay $8 per month to save their company.
Parting Keynotes
All 1-Man consultants have a revenue problem.
We want our business, business on the side, and ventures to grow so we can fire our bosses one day. It is a dream for many.
We must exercise financial prudence so to reach that point.
What is the point of growing a company at a loss? It will simply become a financial black hole that traps us longer in our cubicles.
We use our employment income to finance our entrepreneurial dream. It will be expensive in terms of time and dollars.
And maybe, it is smarter for us to start charging $8 per month per user today before we start bleeding $4 million per day in the future.
This is one benefit of doing this.
We would not appear as desperate as Elon, running around asking people to pay for what was free originally.
As a content contributor, I write my observations from daily life and my business exposure. Because our life experience is the bedrock of our unique perspectives.
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