Philippa Kaur

Elon musk’s takeover of Twitter raises questions of policy: is it right for the world’s richest man to own such an important forum for public debate? It raises issues of law: is his decision to get rid of so many workers within days of completing the acquisition above board? And it raises questions of strategy: can Twitter make money by moving from a business model based on advertising to one based on subscription? But it is also an extremely public test of a particular style of management. In the way he thinks about work, decision-making and the role of the CEO, Mr Musk is swimming against the tide. His attitude to employees is an obvious example of his counter-cultural approach. For a futurist, Mr Musk is a very old-fashioned boss. He doesn’t like remote work: earlier this year he sent an email to employees at Tesla demanding that they come to the office for at least 40 hours a week. Anyone who thought this was antiquated could “pretend to work somewhere else”, he tweeted. Whatever the legality of his decision to fire so many Twitter workers, his methods are brutal: people locked out of corporate IT accounts, careers ended with an impersonal email, half the workforce gone at a stroke. It’s as if Thanos had decided to try his hand at business. For those who remain, hard graft is the expectation; insiders say that one of Mr Musk’s first acts at the firm was to cancel monthly firm-wide “days of rest”. The template for the modern manager tends to be a low-ego, compassionate boss who gives people autonomy. Someone didn’t get the memo. His critics have to accept that the my-way-or-the-highway approach has worked before. At his other firms, like Tesla and SpaceX, Mr Musk may not have offered empathy but has provided a planet-sized sense of purpose, from popularising electric vehicles to colonising Mars. Whether this can work for him at Twitter is less clear. His vision for the product as a “digital town square” where free speech flourishes is a typically grand one. This time, however, he is not taking on lumbering incumbents, but fixing an existing business where judgment and politics matter as much as engineering. The way that Mr Musk takes decisions also cuts across consensus. Comparatively little research has been done on how CEOs make their choices, but a Harvard Business School working paper published in 2020 had a bash by asking 262 of the school’s own alumni how they went about making strategy. The authors of the paper did discover a wide range of approaches, with some managers going on gut instinct and others using very formalised processes. But the researchers found that bosses who use more structured processes tend to lead bigger and faster-growing firms (which way causality runs is not clear). They also tend to make decisions more slowly. Mr Musk and his acolytes are in a different camp: fast, informal and aggressive. Reports are already surfacing of fired Twitter workers being asked to come back.He is unorthodox in another way, too. Peter Drucker, a doyen among management thinkers, described the CEO as being the person in the organisation who bridges the outside world and the inner workings of the company. No one else in the firm is in a position to combine these perspectives, Mr Drucker wrote. Mr Musk is not so much bridging this gap as making the distinction between the inside and outside of the company irrelevant. His personal brand and wealth are inextricably linked with the other firms he runs. At Twitter he is going even further, tossing out product ideas on his own Twitter feed, polling the audience for their views and offering real-time commentary on how things are going. And Twitter itself is a platform on which everyone—users, ex-employees, the people who founded the firm, policymakers and pundits—weighs in publicly to say how things are going. There is not much of an inside to talk of. You might object that Mr Musk is a one-off, and so is this deal. When he first made his offer to buy Twitter, he explicitly said that it was not because of an economic rationale. He later tried to wriggle out of the transaction entirely. The story of a billionaire owner of a social-media platform has little in common with the challenges that preoccupy the salaried executives of most public firms. Maybe so, but if Mr Musk makes another success of his latest venture by being brutal to his workforce, skipping the PowerPoint sessions and managing through memes, the MBA will still need a bit of an update. ■Read more from Bartleby, our columnist on management and work:How to think about gamification (Nov 3rd)The archaeology of the office (Oct 27th)When bosses walk in employees’ shoes (Oct 20th)To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

In the past few years Guo Guangchang, chairman of Fosun, a Chinese conglomerate, has watched as the Communist Party has taken down his rivals. Two executives at hna, an indebted airline that once held a big stake in Deutsche Bank, have been arrested. The founder of Anbang, an acquisitive insurer, has received a lengthy prison sentence for financial crimes. So has the founder of Tomorrow Group, a banking-and-insurance empire.Mr Guo does not appear in imminent danger of sharing their fate. But his company is in trouble. On October 25th Moody’s, a ratings agency, downgraded Fosun’s debt deeper into junk territory. Chinese banks have been asking the firm to provide more collateral for loans. To meet its obligations Fosun has already divested $5bn-worth of assets this year, according to data from Refinitiv, a research firm. By 2023 it could shed $11bn-worth. That is quite the reversal for the asset-hungry group. It also marks the end of a freewheeling era in Chinese business, which is turning inwards under President Xi Jinping. Fosun has sought to offer Chinese people a three-pronged lifestyle experience that targeted their “happiness, wealth and health”. Customers could look to it to manage their money, plan their holidays and sell them medicines. To that end, it amassed, among other assets, a listed drugmaking division; financial-services firms in Europe; a large portfolio of fashion brands (such as St John Knits, an American women’s label, and Sergio Rossi, an Italian cobbler); a 20% stake in Cirque Du Soleil, a Canadian circus; and controlling stakes in Club Med, a French resort chain, and Wolverhampton Wanderers, an English football club. The perceived success of this strategy has led admirers in Chinese business circles to liken Mr Guo to Warren Buffett, America’s revered asset-accumulator. The reality of this success is debatable. In 2015 Mr Guo vanished for a few weeks amid a police probe, only to emerge pledging to buy fewer assets and focus on managing the ones he already has. Over the next two years Fosun divested assets worth around $9bn. The discipline did not last; in 2017 it splurged nearly $7bn on new investments. Soon afterwards some of its bets began to sour. In 2019 Thomas Cook, a British travel company part-owned by Fosun, filed for bankruptcy. The following year its 20% stake in Cirque Du Soleil was wiped out under similar circumstances. Throughout, debt has loomed large. In annual investor meetings Fosun executives have routinely pledged to bring leverage down. To little effect, it seems. And things may have got dicier of late, as the company has tapped more short-term debt, which now makes up 53% of its total borrowings of $16bn, up from 46% in 2021. Rolling it over has become harder in the past year, as many Chinese property developers have defaulted on offshore bonds, which has cooled investors’ enthusiasm for Chinese firms’ debt more broadly.An even bigger problem than its debt may be Fosun’s business model. It was based on a vision of the future where both China’s businesses and its people travelled and spent freely around the globe. But China’s zero-covid policy has trapped most Chinese at home for nearly three years and dented consumer confidence. And under the increasingly authoritarian Mr Xi, Chinese companies are viewed with growing caginess in the West. In this new world, Fosun looks like a relic of a happier time. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

The MoPei phone-swing device is ingeniously depressing. It is a cradle for smartphones that rocks back and forth when it is plugged in, and it is designed to cheat fitness apps into believing that you are on the move. If you have a step counter, this phone shaker can gull it into thinking you have taken 8,700 paces in an hour. “Ideal for those people who don’t have the time or energy to get your recommended steps in,” boasts the product blurb. Listen to this story. Enjoy more audio and podcasts on More

Elon Musk plans to charge Twitter users $8 a month for a “verified” account, and to adjust the fee based on “purchasing-power parity”. How might that work? Think about what $8 can buy in America. Then imagine how much similar items would cost in, say, India—roughly 187 rupees on average, according to the imf. That is what Twitter might charge in that country. Converted at market exchange rates, 187 rupees is less than $2.40, making verification look relatively cheap in India. Compared with India’s income per person, however, it still looks relatively dear.■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Twitter is no longer a public company, but it is being run in a more public way than ever before. Elon Musk, who took the social network private on October 27th at a cost of $44bn and immediately installed himself as its temporary chief executive, has been developing his plans for the firm through the medium of tweets at all times of day and night.Mr Musk, who said he was buying Twitter to protect free speech in “the de facto public town square”, tweeted on his first full day in charge that the company would set up a “content moderation council”. Outsourcing moderation dilemmas to an independent board, as Facebook has since 2020, would be no bad thing. One of the chief concerns about Mr Musk’s ownership of Twitter is that the platform could be leant on by anyone with leverage over his other, larger businesses. Tesla, Mr Musk’s carmaker (and main source of wealth), has a factory in Shanghai and last year made a quarter of its revenue in China, whose public squares are hardly free.Yet the focus of Mr Musk’s first week in charge was not moderation but money. His acquisition was funded with about $13bn of debt. Interest rates are rising and the ad market, which provides nearly all of Twitter’s revenue, is falling. Some advertisers are especially nervous of the new Musk-owned Twitter: ipg Mediabrands, a giant media buyer, recommended on October 31st that clients pause their spending on Twitter while the dust settled.To cut costs Mr Musk appears to have started a round of lay-offs, which is probably overdue. Last year Twitter had 1.5 employees for every $1m in revenue, compared with 0.6 at Meta, Facebook’s owner. At the same time he hopes to bring in more users with features including the resurrection of Vine, a decade-old app that beat TikTok to the short-video craze but which Twitter allowed to wither.The most radical plan, though, is to boost revenues by weaning Twitter partially off ads and onto subscriptions. Users will be able to pay $8 a month (or another amount depending on their whereabouts, see chart) to see half as many ads, post long audio and video clips and get priority for their own tweets in other people’s replies and search results.Mr Musk characterised this as a democratic alternative to the “lords & peasants system”, in which Twitter awards blue badges verifying the identity of “notable” tweeters. Increasing the number of verified users may help reduce spam. But prioritising tweets that are paid for, over ones that are good, may worsen the user experience. And charging audiences risks driving them to other social platforms that are free. As Stephen King, a blue-badged novelist, tweeted in an exchange with Mr Musk: “Fuck that, they should pay me.”Subscriptions may kick off another argument. Among users who subscribe via the Twitter app, a cut of ongoing monthly fees will go to the app store in question: 15% in the case of Google and up to 30% in the case of Apple. Companies that rely on subscriptions, like Spotify, or in-app purchases, like Epic Games, have long complained about this app-store tax. In Mr Musk, Apple and Google face another opponent—one who is armed with the world’s loudest megaphone.■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Conglomerates could hardly be less fashionable. The diversified industrial empires of old are taught as case-studies in underperformance, misaligned management incentives and poor capital allocation. Bosses fear that a “conglomerate discount”—the difference between the market value of a firm and the hypothetical value of its constituent parts—will invite activist investors to agitate for divestments. Focus is now the idée fixe of industrial organisation.Listen to this story. Enjoy more audio and podcasts on More

Rarely in recent years has a routine inaugural trip of a head of government been watched with such keen interest at home and abroad. When Germany’s Social Democrat chancellor, Olaf Scholz, travels to Beijing for a one-day visit on November 3rd, he will be the first Western leader to do so since the start of the covid-19 pandemic. Emmanuel Macron, France’s president, was keen to travel together with Mr Scholz, though preferably not right after the country’s paramount leader, Xi Jinping, got himself anointed as president for life. Mr Scholz said nein. He is instead bringing along 12 CEOs of German blue-chip firms, including the bosses of Merck, a drug company, Siemens, an engineering behemoth, and Volkswagen, Europe’s biggest carmaker.Over the past two decades the interests of German business have shaped Germany’s China policy to the exclusion of other concerns. Mr Scholz’s corporate retinue suggests that this is still the case, despite Russia’s invasion of Ukraine, which starkly illustrated the dangers of economic dependence (in Germany’s case for Russian fossil fuels) on an autocracy driven by an aggressive ideology. The new consensus in European capitals is that Europe must rethink its business ties to China. Many Germans accept this, too. “The Chinese political system has changed massively in recent years and thus our China policy must also change,” declared Annalena Baerbock, Mr Scholz’s foreign minister from the coalition Greens, on November 1st during a trip to central Asia. Deutschland ag, though, is reluctant to open its eyes to the new reality.The deep commercial links between the two countries certainly complicate matters. Last year China was Germany’s top trading partner for the sixth consecutive year, with combined exports and imports of more than €245bn ($255bn). That is five times the figure in 2005. Germany relies on China for the import of solar panels, computer chips, rare earths and other critical minerals. Sino-German trade also supports more than 1m German jobs directly; millions more are indirectly connected to it. Sino-dependency is not a uniquely German affliction. America, too, trades a lot with its main geopolitical rival. One important difference is that powerful German industries are unusually exposed to the Chinese market. Of Germany’s ten most valuable listed companies, nine derive at least one-tenth of their revenues from China, according to The Economist’s rough estimates, compared with just two of America’s ten biggest companies. In 2021 two in five cars sold globally by Volkswagen Group were bought by Chinese motorists. Many of these rolled off the German carmaker’s Chinese production lines. This is Germany’s second unique circumstance: it has ploughed plenty of money into Chinese factories. Whereas new American foreign direct investments in China accounted for only 2% of America’s total in 2021, for Germany the figure was 14%. Four firms—three carmakers, bmw, Mercedes-Benz and Volkswagen, and basf, a chemicals giant—accounted for one-third of all eu investments in China in the past four years, according to the Rhodium Group, a research firm. And German firms are doubling down: in the first half of this year German companies invested €10bn in China, more than ever before. basf is in the process of investing $10bn in its Chinese operations.Worries about undermining those business relationship have led to some controversial policy choices at home. In late October Mr Scholz decided to ignore the warnings of six of his ministers, as well as the heads of the domestic and foreign intelligence agencies, and let Cosco, a Chinese state-run shipping company, buy a stake in one of four container terminals in the port of Hamburg. Like his predecessor, Angela Merkel, he has also refused to take sides in the debate over whether Huawei, a Chinese telecoms giant, should be allowed to bid for contracts to build Germany’s 5g networks, perhaps heeding the threat by the Chinese ambassador to Germany in 2019 of “consequences” for German carmakers if Huawei were excluded from the auctions.This kid-glove approach to China is out of step with his Western counterparts. In America China-bashing is a rare bipartisan pursuit. President Joe Biden, a Democrat, has been expanding the scope of restrictions on the export of advanced technologies to China introduced by his Republican predecessor and potential future rival, Donald Trump, most recently last month. America also bans Huawei. So do several of Germany’s fellow eu members. As the geopolitical rift between China and the West widens, many Western firms are trying to reduce their exposure to Chinese supply chains and consumers. Apple is shifting some production from China to India and Vietnam, for example. Germany, by contrast, is going “full steam ahead in the wrong direction”, as Jürgen Matthes of the German Economic Institute, a think-tank, puts it.The long halloSome German business leaders publicly pooh-pooh such talk. Martin Brudermüller, chief executive of basf and another of Mr Scholz’s travel companions this week, recently bemoaned all the “China-bashing”. Deep down, though, they must know better. Any lingering hope of “change through trade”, the characteristically German belief that closer commercial ties with liberal democracies will spur political transformation in China just as they did to a degree in the Soviet bloc, has died with Vladimir Putin’s invasion of Ukraine and Mr Xi’s authoritarian turn. Indeed, many German companies tacitly acknowledge the heightened China risk by maintaining two independent production systems—one on the Chinese mainland, the other in the rest of the world. That is not enough. Expecting geopolitical tensions between the West and China to go away is naive at best. So is expecting an autocrat like Mr Xi, who makes no bones about wanting to indigenise Chinese industry, to respect all commercial commitments to foreigners. Not cutting all business ties with China is understandable, and perfectly sensible. Deepening them looks reckless. ■ More

Rarely in recent years has a routine inaugural trip of a head of government been watched with such keen interest at home and abroad. When Germany’s Social Democrat chancellor, Olaf Scholz, travels to Beijing for a one-day visit on November 3rd, he will be the first Western leader to do so since the start of the covid-19 pandemic. Emmanuel Macron, France’s president, was keen to travel together with Mr Scholz, though preferably not right after China’s leader, Xi Jinping, got himself anointed as Communist Party chief for a norm-busting third term. Mr Scholz said nein. He is instead taking along 12 CEOs of German blue-chip firms, including the bosses of Merck, a drug company, Siemens, an engineering behemoth, and Volkswagen, Europe’s biggest carmaker.Over the past two decades the interests of German business have shaped Germany’s China policy to the exclusion of other concerns. Mr Scholz’s corporate retinue suggests that this is still the case, despite Russia’s invasion of Ukraine, which starkly illustrated the dangers of economic dependence (in Germany’s case for Russian fossil fuels) on an autocracy driven by an aggressive ideology. A new consensus in European capitals is that Europe must rethink its business ties to China. Many Germans accept this, too. “The Chinese political system has changed massively in recent years and thus our China policy must also change,” declared Annalena Baerbock, Mr Scholz’s foreign minister from the Greens party, on November 1st, during a trip to central Asia. Deutschland ag, though, is reluctant to open its eyes to the new reality.The deep commercial links between the two countries certainly complicate matters. Last year China was Germany’s top trading partner for the sixth consecutive year, with combined exports and imports of more than €245bn ($255bn). That is five times the figure in 2005. Germany relies on China for the import of solar panels, computer chips, rare earths and other critical minerals. Sino-German trade also supports more than 1m German jobs directly; millions more are indirectly connected to it. Sino-dependency is not a uniquely German affliction. America, too, trades a lot with its geopolitical rival. One important difference is that powerful German industries are unusually exposed to the Chinese market. Of Germany’s ten most valuable listed companies, nine derive at least one-tenth of their revenues from China, according to The Economist’s rough estimates, compared with two of America’s ten biggest firms. In 2021 two in five cars sold globally by Volkswagen Group were bought by Chinese motorists. Many of these rolled off the German carmaker’s Chinese production lines. This is Germany’s second unique circumstance: it has ploughed plenty of money into Chinese factories. Whereas new American foreign direct investments in China accounted for only 2% of America’s total in 2021, for Germany the figure was 14%. Four firms—three carmakers, bmw, Mercedes-Benz and Volkswagen, and basf, a chemicals giant—accounted for one-third of all eu investments in China in the past four years, according to the Rhodium Group, a research firm. And German firms are doubling down: in the first half of this year they invested €10bn in China, more than ever before. basf is in the process of putting another $10bn into its Chinese operations.Worries about undermining those business relationship have led to some controversial policy choices at home. In late October Mr Scholz decided to ignore the warnings of six of his ministers, as well as the heads of the domestic and foreign intelligence agencies, and let Cosco, a Chinese state-run shipping company, buy a stake in one of four container terminals in the port of Hamburg. Like his predecessor, Angela Merkel, he has also refused to take sides in the debate over whether Huawei, a Chinese telecoms giant, should be allowed to bid for contracts to build Germany’s 5g networks, perhaps heeding the threat by the Chinese ambassador to Germany in 2019 of “consequences” for German carmakers if Huawei were excluded from the auctions.This kid-glove approach to China is out of step with his Western counterparts. In America China-bashing is a rare bipartisan pursuit. President Joe Biden, a Democrat, has been expanding the scope of restrictions on the export of advanced technologies to China introduced by his Republican predecessor and potential future rival, Donald Trump, most recently last month. America also bans Huawei. So do several of Germany’s fellow eu members. As the geopolitical rift between China and the West widens, many Western firms are trying to reduce their exposure to Chinese supply chains and consumers. Apple is shifting some production from China to India and Vietnam, for example. Germany, by contrast, is going “full steam ahead in the wrong direction”, as Jürgen Matthes of the German Economic Institute, a think-tank, puts it.The long guten TagSome German business leaders publicly pooh-pooh such talk. Martin Brudermüller, chief executive of basf and another of Mr Scholz’s travel companions this week, recently bemoaned all the “China-bashing”. Deep down, though, they must know better. Any lingering hope of “change through trade”, the characteristically German belief that closer commercial ties with liberal democracies will spur political transformation in China just as they did to a degree in the Soviet bloc, has died with Vladimir Putin’s invasion of Ukraine and Mr Xi’s authoritarian turn. Indeed, many German companies tacitly acknowledge the heightened China risk by maintaining two independent production systems—one on the Chinese mainland, the other in the rest of the world. That is not enough. Expecting geopolitical tensions between the West and China to go away is naive at best. So is expecting an autocrat like Mr Xi, who makes no bones about wanting to indigenise Chinese industry, to respect all commercial commitments to foreigners. Not cutting all business ties with China is understandable, and perfectly sensible. Deepening them looks reckless. ■Read more from Schumpeter, our columnist on global business:The reluctant rise of the diplomat CEO (Oct 27th)Despite Ukraine, these aren’t boom times for American armsmakers (Oct 20th)Will Elon Musk-owned Twitter end up as a “deal from hell”? (Oct 13th)To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More