The Harvard Business School Professor Who Isn’t Counting Elon Musk Out

Andy Wu makes the case that Twitter was in trouble long before the new CEO came aboard.

Wu: I will say, on the upside, what Musk has accomplished so far at Tesla and SpaceX is really unbelievable and impressive and really special, as far as his generation of business leaders in terms of the amount of scale and resources needed to mass-produce electric cars and build commercial spaceships. It’s unfathomable, and he actually got there. The challenge now is that Musk has never been held to a benchmark of actually being profitable.

Nyce: Isn’t profitability pretty important if you’re a business executive?

Wu: We think about growth and profitability separately. When you’re in the growth phase of the business, investors value you on growth, and you can justify growing without thinking about profitability. At some point, inevitably, any business has to shift to thinking about profitability. And we don’t know yet if that’s within Musk’s skill set.

As one illustrative example, for at least a 20-year window, Amazon was given a free pass by Wall Street to not think about profitability, and that has actually allowed Amazon to do a lot of amazing things. But as you can see, in recent years, profitability is definitely more on the minds of executives at Amazon.

Twitter is certainly an incumbent, established business. And given the financial structure of Twitter—and its debt situation—I imagine profitability is certainly on Musk’s mind.

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