The 7 Biggest Challenges Twitter’s New CEO Faces

9 minute read

Twitter’s new CEO Linda Yaccarino took over the helm at the company from owner Elon Musk this week. The media executive inherits a slew of challenges as she begins leading the company.

In the roughly seven months since Musk bought and began running the social media company, it has faced various challenges—including figuring out how to monetize its blue-check offering, and an exodus of advertisers amid concerns about hate speech on the site—all while Musk slashed staff numbers.

“It’s been a cascading set of events that have really put her behind the eight ball in terms of favorable conditions,” says Brian Uzzi, a professor of leadership at Northwestern University.

Yaccarino, who has spent nearly 12 years as an advertising executive at NBCUniversal, is faced with the task of rehabilitating Twitter in more ways than one—most notably repairing the company’s reputation with advertisers and bringing it to profitability.

Here are some of the biggest challenges Yaccarino faces as Twitter’s new CEO.

Managing under Musk

Musk has said that he will transition into the role of executive chairman and chief technology officer, which experts say could lead to problems for Yaccarino, given his unpredictable nature.

“I think handling Elon Musk is going to be her biggest hurdle,” says Jasmine Enberg, principal analyst at Insider Intelligence. Publicly, the two have a good relationship—Yaccarino interviewed Musk at an advertising conference in April and implored advertisers to “give the guy a minute,” when they began retreating after his October takeover of the company.

But that doesn’t guarantee their relationship will be smooth sailing, Enberg says. “He is mercurial, he is unpredictable, and there’s no way that they aren’t going to clash to some degree.”

Yaccarino will have to build back the company’s reputation, to lure back skittish advertisers, which may be challenging with an owner who could at any moment use the platform to pick fights publicly with anyone from journalists to ex-employees.

It’s a process that can’t be rushed, Uzzi says, but will have to be balanced with the quick wins Musk might expect to see. “Once you’ve tarnished the reputation of a company, you’ve got to do an awful lot to bring it back,” he says. “Will Musk give her the time?”

Getting the company to profit

Long before Musk took the helm, Twitter struggled to emulate the levels of profitability achieved by its peers like Meta and TikTok. The company last reported a profit in 2019, and saw a loss of $344 million in the last quarterly earnings report the company released publicly before Musk’s $44 billion acquisition.

In April, Musk said he hoped to get the company to a valuation of $250 billion by the end of the first quarter, a number that rivals big banks. This could be tough, as social media company valuations have come under pressure, says Dan Salmon, internet researcher at New Street Research.

“As the market has shown, other social media companies have declined in terms of their relative valuation since [Musk acquired Twitter], so we can presume that if it were to be valued publicly again, it would still be a far ways off of that target for him,” says Salmon. “But Rome wasn’t built in a day.”

Musk told The Wall Street Journal last month that Twitter was not profitable but could become cash-flow positive in June.

Bringing back advertisers

About 90% of Twitter’s revenue comes from advertising, but the company has struggled to bring in ad revenues compared to its rivals. “Twitter lags its peers in digital advertising,” says Salmon. “That was the number one priority for the company before Elon bought it, [and] it’s likely still the number one priority insofar as generating more revenue goes.”

The problem only worsened under Musk, when advertisers flocked in the wake of Musk’s acquisition, unwilling to associate themselves with a brand that was making headlines for the wrong reasons. A rise in hate speech and pornography on the platform has also reportedly sparked concerns.

From September to October of last year, Twitter’s top 10 advertisers dropped spending 89% from $71 million to $7.6 million, according to estimates from research firm Sensor Tower. Twitter’s ad revenue from April 1 to the first week of May was down 59% from the year before, the New York Times reported.

“Ultimately, the goal [is] trying to convince the CMOs [chief marketing officers] that it’s worthy to have Twitter within their mix and that they won’t be stuck waking up to a negative headline the next day,” Salmon says.

Enberg predicts Musk will stand back and let Yaccarino leverage the contacts she has from decades in the industry. “That is one area where I don’t think Musk is going to stand as much in Yaccarino’s way because by appointing her CEO, he is acknowledging without actually saying the words that Twitter’s ad business is in a dismal state and he is just not the right person to fix it.”

Balancing free speech

To placate advertisers, experts say that Yaccarino will likely have to strike a balance between Musk’s vision for free speech and the internal regulation that advertisers would hope to see. Musk, who once referred to himself as a “free speech absolutist” has made decisions that have prompted questions about his commitment to free speech, such as complying with requests from authoritarian ruling parties in Turkey and India to censor posts

Salmon says Yaccarino will have to “think about finding a balance between what Musk sees as the opportunity to create a more open type of platform with what we know large marketers care about, which is things like brand safety.”

Yaccarino has spent the past decade arguing to advertisers that social media’s unpredictable nature is far more risky than network television. Just last year, she called network TV, “the only place that consumers can actually completely trust” according to Semafor.

“Yaccarino has been really vocal about the dangers of social media and now she’s faced with trying to convince advertisers that her concerns were overblown,” says Enberg. “She is going to have to really not only backtrack on what she’s said before, but also give real evidence that Twitter is a safe platform.”

“One of the things that makes brands worried about being on Twitter is being associated with what they see as offensive content,” Uzzi says. One way of tackling this is to use technology that filters content to ensure ads are placed next to appropriate content, Salmon says.

Staffing and morale

In April, Musk told the BBC that the company went from a staff of almost 8,000 last October down to just 1,500 employees. Business Insider reported last month that the numbers were even more dismal than Musk has said publicly, and that Twitter is operating with only 10% of the staff it had before his October takeover.

Musk previously said that workers would need to be “extremely hardcore,” logging “long hours at high intensity” and that the cuts, which spanned teams ranging from content moderation to engineering, resulted in “some of the people who were let go probably shouldn’t have been” he told CNBC in May.

Musk said that he and Yaccarino would be looking to grow the company again. “We absolutely need to hire people,” Musk told CNBC. “And if they’re not too mad at us probably rehire some of the people that were let go.”

Whether Yaccarino will be able to staff up again remains uncertain, especially given that the company is not yet breaking even. “Twitter as an organization is not positioned to hire new people. What you read in the media is that it can’t even pay the bills it has now. How is it going to hire new people?” says Uzzi.

The competitive landscape

Experts say that, as Twitter deals with its growing pains, competing services might try to move in while the company is struggling. A range of competitors, from Twitter co-founder Jack Dorsey’s Bluesky to Instagram’s text-based app expected to launch this summer, are looking to populate the market.

“Rival companies smell blood in the water,” Uzzi says. “They’re going to be pushing hard to try to gain success while Twitter’s been weakened.”

Twitter has also become less relevant, Enberg says. “Even before Musk, Twitter’s cultural relevance was declining. Its user base is already tiny compared to Facebook, Instagram and TikTok and smaller now that Musk has taken over,” Enberg adds.

Media ambitions

In recent months, Enberg says that Musk has made decisions that suggest he might be angling Twitter towards a new life as a broader media company. Hiring Yaccarino, who has a background in streaming and TV could help him to achieve this. But some moves Musk has made with Twitter, such as hosting Florida governor Ron DeSantis’s presidential candidacy announcement on Twitter Spaces, and allowing Tucker Carlson to launch a show on the platform following his ouster from Fox News, are could cause problems for Yaccarino.

“Musk is clearly amplifying far-right voices as well as controversial content,” says Enberg. “It’s going to impact Twitter’s ability to be able to generate ad revenues in the future.

Enberg adds that Yaccarino and Musk might be most successful if they both focus on their respective strengths. “In this partnership, if [Musk] can now focus on what he does best, which is product development… and empower Yaccarino to handle the business side of things, I do think this could be a really fruitful relationship and a win for Twitter, which is something that it hasn’t had in a long time.”

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