There is much attention in the media at present about the purchase of Twitter by Elon Musk, the world’s richest man. Upon taking over Twitter he quickly made staff redundant and offered 3 month’s severance pay to anyone remaining who wanted to leave. Such were the rapidity and perceived brutality of Musk’s cuts at Twitter, The Economist Magazine (07 Nov, 2022) suggested MBA HR subjects would need to be rewritten if Musk proves successful.
Principally, the media interpreted the cuts as necessary to stem financial haemorrhaging, that became exacerbated by major advertisers walking away from the social media platform. Prior to the purchase, Musk tweeted (07 MY, 2022) that Twitter’s focus would change to being ‘super focused on hardcore engineering, design, infosec & server hardware.” This is far different to being the moderator of elite sentiment that Twitter had become.
But what has Musk’s purchase of Twitter got to do with what I learned about hiring from Warren Buffett? Quite a lot really, other than both men having shared the title of the ‘world’s richest person.’ In arguably the best biography written about Buffett, its author, Alice Schroeder, notes that Buffett’s Berkshire Hathaway company doesn’t employ lawyers. Why? According to Buffett, if he employed lawyers they’d want to do what they do, and that is litigating. For Buffett, investing profitably, and not litigating, is his singular objective. It’s worthy of mention, however, that Buffett’s long-term partner at Berkshire Hathaway, Charlie Munger, is a qualified attorney.
Similarly, Musk has made it clear that computer engineering will be the primary objective of Twitter. With intentions to extend the technical reach of Twitter, Elon Musk has made it clear that he will expand into the reaches of Google and Apple should they ban the Twitter app from their platforms. Incidentally, Berkshire Hathaway is Apple’s second largest investor, and this is where Musk and Buffett depart company on how to run a business. Buffett is the antithesis of new product innovation. Musk is at its forefront. Buffett has a passive approach to management involvement in the companies Berkshire Hathaway is invested. Musk is hands on in every sense.
Where Buffett and Musk align is focus. They don’t employ people outside the remit of the businesses they control. It is for this reason, they cannot be compared with the corporate raiders of the 1970s and 80s, like Carl Icahn and Kirk Kerkorian, who unleashed billions of dollars by sacking management and unbundling corporations that had grown outside their primary focus. What Buffett did was turn an ailing textile maker, Berkshire Hathaway, into the world’s most successful investment company of its time. I suspect Musk has similar ambitions in the technical space for a financially ailing Twitter.
Whether Musk’s industrial-age model of ‘everyone at work’ can survive a new cadre of workers demanding workplace flexibility is yet to be seen. That is another story.
About the Author
Michael Hargreaves is a successful entrepreneur and author with specific interest in the economics of industrial organisation. His latest venture, www.workerstohire.com.au flips the industrial-age recruitment model to favour candidates seeking greater career and post-career flexibility at a time of worker shortages.
Author, Principals, Producers, & Planners.