Money

Law Professor Pinpoints Elon Musk's Latest Problem: Cash

Wu-Tang said it best: cash rules everything around me.

By  
on
TIME Person of the Year Elon Musk

(Photo by Theo Wargo/Getty Images for TIME)

Columbia Law School professor Eric Talley spoke with Yahoo Finance about Elon Musk’s takeover of Twitter, finalized last week. Of course, the most notable change for users has been the spike in hate speech since Musk took the reins. But Talley’s comments focused on the specific challenges Musk faces if he’s actually going to make this work

Well, he’s got a cash flow problem he eventually has to solve. His probably first challenge is sort of a big meet and greet. Remember, he spent six months being sort of an adversary to everyone at Twitter, sometimes scaring away employees. And a lot of the employees right now are pretty unsure whether they’re even going to have a job next week. So I think that’s probably the first mission of damage control or mitigation. But ultimately, he’s got to turn this company into a little bit more of a revenue generating entity.

Cue Musk’s plan to charge verified Twitter users $19.99 a month to keep that cute like blue check mark and let clout chasers pay for the status. Of course, that half-baked idea could easily starve the platform of its best content.

Sponsored

Talley also chatted about another option for Musk to get the cash a-flowin’ — staff cuts. And while that may already be underway, it could prove challenging to just make mass cuts:

[T]he employees at Twitter, just like many of his senior executives, have some of their compensation in terms of stock and bonuses and options and so forth. There is that coming payment for many of the employees that’s coming next week. And some have speculated– and I’m relatively confident, at least it’s a conversation on the table, as to whether if there’s going to be a reduction in staff, it would predate the date of which that payment has to be made.

It’s a little perilous, however, because while the courts in California will let you let go of at-will employees, if you do so merely to avoid having to pay them compensation for services already rendered, that can be a problem. So there is a little bit of a legal sticking point here, as well as a morale sticking point. You don’t necessarily want to hand the pink slips to a bunch of your employees while simultaneously stiffing them. That’s not going to leave behind a lot of happy campers.

Making the social media giant truly profitable will be an uphill battle for Musk. Perhaps something he should have thought about a little harder before sinking $44 billion into the project.

Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

Sponsored

Topics

, , , ,