Is Elon Nuts? – How To Flush Billions In Equity

Transcript:

Welcome to the B2B Marketing Mindset, where every Thursday at 11 o’clock here on LinkedIn, we help small businesses get bigger, and medium sized businesses get bigger. I’m Pete Monfre, and today, my co host, Bill Lowell is on vacation. Word has it, he’s luxuriating in Mukwonago, Wisconsin in a large vat of cheese, so we’ll have to ask him about that next time. You know, there’s a lot of opinions out there (And you know what they say about opinions right?) about our buddy, Elon Musk, abruptly changing the name of Twitter, one of the most recognized brands in the world, to an unintelligible symbol. Prince is probably rolling over in his grave based on how well that worked out for him, right? But, the thing I’m not seeing much discussion about is the negative impact of the seemingly impulsive move, on the multibillion dollar loss in brand equity. I have seen a couple of articles about it, but by and large, it seems to be ignored by the media. I think it’s actually the biggest part of the story, and it’s also a lesson in why you don’t do stuff like this. 

 But let me give a disclaimer really quickly. Elon has a lot more money than I. He’s got a company that routinely travels to space, he founded Tesla before it was cool to be electric. And like 99.9999% of people who criticize Mr. Musk, I’d have no business standing in the same room as this guy in terms of vision. So I’m gonna give him the benefit of the doubt, but I just can’t understand this move. 

 Let’s talk about the value of the brand. We’ll do some amateur psychoanalysis of the brilliant, billionaire stoner we all know and love. Is this the end of Twitter: the company, or just the brand? Is a tweet now called an 𝕏-cretion? These are the deep questions that we seek to answer here on the B2B Marketing Mindset. 

So analysts are saying that Elon Musk wiped out billions in brand equity by swapping the ubiquitous bird out with an 𝕏. Maybe he’s playing Fifth Level chess, I don’t know… A brand is basically the sum of perception, so it’s kind of a huge thing. It’s what you stand for. It’s your values, it’s how you answer the phone, it’s the shoes of your salespeople, and how polished they are, it’s everything. It’s the sum total of perception. We’re talking about the Twitter logo, everybody’s talking about the brand, but it’s actually the logo that’s being changed, and the name of the company. The logo is actually just a symbol for all of that other perception of those attributes, and all the stuff that makes up your brand. 

But brands at that scale are worth billions by themselves. Basically, there’s a separate category of equity, separate from revenue. Let’s say that Twitter had (or 𝕏 I don’t know what to call it), let’s say that they weren’t a very well known company, but they did a lot of revenue. And they were their equity was X amount higher than that value, their market cap. But you add in the brand, and it’s sort of ubiquitous around the world. It’s a huge, huge brand. It is really a value center by itself. So that’s where these brands are absolutely worth billions. 

It’s the 438th most valuable brand, or it was. It’ll be interesting to see how far down the list it drops. My intrepid podcast producer said, “Hey, maybe he’s just doing this for publicity. And he’s just going to turn around and replace the bird and everyone’s going to be happy.” And I think no, that’s going to look like a boondoggle on the level of New Coke, that was a disaster. Big companies can make mistakes. The market cap for Twitter was at last look for Brand Finance was about $41 billion. Now that’s down a lot from from 202, which had a high of over $60 billion. So even before he decided that it was going to be called 𝕏. He was really losing equity fast overall. Vanderbilt University estimates that the Twitter brand is worth $15 billion to $20 billion, that’s comparable to Snapchat. According to Brand Finance media, their brand value fell 32% to $3.9 billion in June, but that was before this change was announced. So I don’t know if this could be a bloodbath that we’re going to witness, or Musk has outsmarted us again. I remember laughing at the rocket thing, I’m like “ha rockets to the moon, look at this guy.” 

The value of brands is hard to measure. And if we’re talking about it being the sum total, or perception of a product or business, it gets to be very, very expansive in what it could mean. 

I want to draw a distinction, because most of the media you hear when you hear about business or hear about the economy, or whatever. They’re really talking about business-to-consumers, you’ll hear about the consumer price index, right? They’re always thinking about consumer, consumer, consumer and b2b. A lot of the things that they’re talking about don’t apply that well to b2b. So what about branding, though? Okay, is your brand important in b2b? Sure, it absolutely is, should you spend a whole ton of money on branding activities? I don’t think so. In my experience, unless you’re huge, let’s say McKinsey, you probably have a very valuable brand that warrants investment in that brand in an ongoing way. But most b2b companies, the brand, as long as you understand what your attributes are, what you stand for, what are the values for your company, and that you’re executing in a consistent way and, and it looks professional and it’s a system of communications, not just a logo slapped on a bunch of things… Beyond that, I don’t think I would invest a lot for a b2b company. I think that the way you solve problems, the types of problems you solve, and for whom, is what counts a lot more than your brand. 

Now, if you own a social media platform, a totally different story, your brand is worth a lot. Look at how Facebook’s brand has just become tarnished over the last few years, just because of Zucker-bot, and some of the things that have come out in terms of how they handle user data. It’s pretty stunning, and it’s taken a big hit. The other thing is, I read that their ad sales are down and the US; ad sales are down 59%. Again, that was before the change. Now that’s just the controversy of Elon Musk. I mean, one thing I do respect about him, he does have a genuine respect for free speech, and he put his money where his mouth is and you gotta respect that but you know, it’s kind of funny, there’s a whole group of people that just loved Elon Musk because he was saving the planet, man. And then as soon as he took Twitter over, now they hate Elon Musk. So I don’t get it. I don’t have any ill will toward Elon, I don’t actually know him, actually. But if you want to call me just give me a call.

I don’t have a dog of that race either way, but it’s interesting to see how it affects what the company’s worth, and the way people perceive the company. You could even drill this all the way down to the perception of value, right? I could start a Twitter knock off tomorrow. Would it be worth as much for having exactly the same functionality? I could even have the same number of users, let’s say in four years. But if it wasn’t a known brand, how would that affect the value of my company, or even the value of the offerings that I’m selling? Right? The brand adds to that whole equation. So we’re talking billions and billions of dollars in terms of a company of this size, and notoriety.  

By the way, the 𝕏 is a Unicode character, a mathematical symbol. And the way you create the logo as you just hit the key, it’s a character in a particular font used for mathematics, and I think it’s public domain, and that’s going to cause some problems and trademarking. 

I’ve also read that meta and Google own trademarks on the letter X, although this is a stylized letter X. This move could be the social media equivalent of Kodak saying “digital photos? Pffft.  What are you kidding? That resolution is not as good as film! There’ll never be mass adoption of these digital cameras. My goodness, look how terrible the quality is!” poor Kodak… 

 I have to wonder if a company can recover from something like this. This is assuming that there isn’t a very sophisticated strategy in play. (Or that Elon has a time machine, I mean if anyone had one, it’d be him, right?) But from my three decades of experience, it just feels and looks like a blunder. The other thing I was thinking about is: Elon is great with creating really larger than life visions. He’s an executor, right? He can execute on those ideas. And it’s kind of hard to say what he might build from the ashes of Twitter. Then I think, why build from the ashes, right? Screw the ashes, build on the success. You don’t decide overnight, after smoking a blunt or something, to ditch one of the most valuable brands in the world, for a Unicode stylized X that can’t be trademarked. I just don’t see how that works. And, you know, this gazillionaire (I think that’s the actual amount of his worth is a gazillion) spent $7.80 on Fiverr to get an 𝕏 logo that’s basically a mathematical font. The issue isn’t how much you spend, but $0 equals zero thought, and I can’t see how such a massively valuable brand gets changed in this way. And it has nothing to do with the aesthetics of the 𝕏. I think it looks pretty cool actually. Like the way it sounds. Although in Chinese I think it sounds different. 

Companies this size have infrastructure, they have layers of people that make these mistakes… unless he’s let them all go. We don’t know that either, maybe all the creatives have been out the door. But I guarantee you they have a major agency who’s probably really pissed off right now. Not to mention their shareholders might be a tad upset about this, because he did literally just suck billions of dollars of value out of the company almost overnight. But the idea that such a massive change can be made unilaterally, not just massive in terms of culturally, but in terms of the logistics of changing the Twitter logo. All of us that have owned companies and at some point had to change our names, or change our logos, we’re always surprised at how many places that logo appears, and we’re tiny, right? If you’re Twitter, that logo appears everywhere. In fact, can I buy underwear with a Twitter logo on it? I’m just gonna check on that. So if you can buy your logo on underpants sold on Amazon, that might give you pause. And if you want to change how people perceive the brand, and this is just assuming that your brand is already super established, it’s going to be hugely expensive to change it. I mean, think about the expense of changing it, right? So, when you have something so strong, you want to build on the success of it. And when it comes to what you stand for, that can be shifted over time. 

This is a very short term idea to change it to 𝕏. Now, for all we know there could be a larger strategy, I think I did read something about a much larger social media platform vision, that is all under this heading of “𝕏”, but still doesn’t make sense to me. The right way to do this would be to preserve the brand equity, and then make changes and remember, the public forgets things practically overnight. And so I would say within 12 to 18 months, you could completely shift perception, especially if you have the money and the resources Twitter has and Musk has, you could shift the public perception of the brand. Unless it’s just too far gone, then you gotta just bail, but I don’t think Twitter was. I think it was at the center of a lot of controversy. Musk kind of added to that controversy when he bought it. But I think that’s sort of irrelevant. I think that people don’t like change. But it just seems so ill advised, and I’d love to hear what you think about it. 

Have we found those underwear yet? Not yet? Okay. I was just checking.

And I was mentioning a company like Twitter, one of the big questions is: How much should you invest in a logo? And there are designers who get $5 Fiverr, Get a logo on Fiverr. You could use a font and make that your logo, I suppose Unicode. But why do companies spend hundreds of thousands, millions of dollars on logos. Coca Cola, for example. When they changed their logo. Think about what it costs to change the logo. The amount that you invest in a logo, or a brand, or a trademark, if you’re changing it, you have to take into account the risk associated with the amount of money that you spend. You might spend a million dollars changing everywhere that that logo appears, right? Let’s say you have packaging, let’s say you have signage, wayfinding for these large companies.

It goes on and on like this. So there’s going to be a huge cost to change the logo. In that case, you’d want to be extra careful in how you do it. Coca Cola is another great example. If you look at their logo over time, you will see it change quite a bit. But if you were in those times, they almost didn’t even notice the changes. It was really an evolution of the mark. To me, that makes more sense. I think to shareholders, it makes more sense. I think to your target audience, it makes more sense because you’re gonna lose a lot of people. 

Could it be a publicity stunt? It’s a hell of a risky publicity stunt. And you could come out and be like, “April Fool’s”. And then, I think most people are gonna think that it was a huge blunder. And huge blunders, they’re not good things for big-time famous CEOs. Although they do make them all the time. I mean, I think Richard Branson is sort of a blunder machine. (But hey, Richard,  give me a call, we can work that out.) But seriously, I wonder what you have to think. And hope you’ll put it down in the comments, I hope you’ll share the episode. By the way, the B2B Marketing Mindset, we talk about all kinds of marketing issues, we really share ways to solve problems in your business that you can implement the very pragmatic advice that we give on this program, we share everything we know about marketing, we even share our tools with you. We give it all away here because we think you can do this. It’s not a big mysterious black box. Marketing is actually pretty simple once you understand how the process works. And then you have some tools that you use, the tools have definitely gotten more complex, but the ideas are still very simple. And we talk about it every Thursday, 11 o’clock, on LinkedIn, and YouTube. And also, you can subscribe to the program on Spotify, iTunes, Amazon, I Heart Radio, and Pandora. B2bmarketingmindset.com, you can get subscribed there too. If you subscribe there, There’s a lot of special things that you get as a subscriber that those idiots over on Spotify don’t get, only the cool people get them if you go to b2bmarketingmindset.com. 

I hope you’ll join us next week. Usually I do have a co host Bill Lowell of Business Development Directives. He’s in Wisconsin, I tease him endlessly. I don’t think he’s actually sitting in a vat of cheese. But I don’t know, because that’s the thing in Wisconsin. I know because I lived there, they’re nuts for cheese there. So thanks for joining us. Think about what is a brand worth, and how do you make decisions in your company? People think a lot about the decisions, but they don’t think about the way that they make decisions. And this is a great example, in my opinion, of a way not to make decisions in your business.

Until next week: I’m Pete Monfre, Thank you.