What’s the (business) plan, Elon?

Hey all, it’s Kurt in Denver. X needs a new business plan. But first...Three things you need to know today: Nvidia’s results suggest no end [View in browser]( [Bloomberg]( Hey all, it’s Kurt in Denver. X needs a new business plan. But first... Three things you need to know today: - Nvidia’s results suggest no end in sight [for the AI boom]( - Microsoft will use Intel to make [home-grown processors]( - Roblox game developers earned [$741 million in 2023]( Missing a super opportunity A few weeks ago, during Super Bowl weekend, it seemed pretty notable to me that [several major advertisers]( were suddenly spending money for ads on X. It’s been a wild ride for X’s business since Elon Musk took over what was then Twitter in late 2022. Many advertisers have stayed away for fear of associating their brand with Musk and his pledge to defeat the “woke mind virus.” His tendency to post whatever pops into his head, including crude jokes and memes, has scared many brand-conscious marketers away. (I [chronicled the origin of this problem]( in my new book out this week, called Battle for the Bird.) The Super Bowl, though, was like a weird magic eraser that quickly wiped those fears away. I saw major brands like Frito Lay, Oreo, DraftKings and BetMGM running ads for several days in a row. Perhaps, I thought, this was the beginning of a turnaround. But Musk had other ideas. On Super Bowl Sunday, X’s most important ad day of the year, Musk posted enthusiastically about women’s bodies and made a crude joke featuring an image of the Disney logo. Just this week he sent another [post mocking the idea]( of content moderation. A few days after the Super Bowl, my ads on X were back to the new normal – small brands I’ve never heard of pumping conferences, obscure newsletters and even gold! The major brands that resurfaced for the Super Bowl are now nowhere to be found. Some of this is by design, as X has been actively courting small business advertisers in hopes of decreasing its reliance on the big name marketers. “X is an entirely new company, and in 2023 alone X had hundreds of thousands of SMBs actively advertising,” Joe Benarroch, head of business operations at X, wrote in an email, referring to those small businesses. Still, sixteen months after taking over the company, it sometimes feels like Musk is single-handedly pushing advertisers away. There’s a reason X’s revenue in 2023 was [down almost 50%]( from two years prior. Unfortunately for X, there is only one Super Bowl per year, and I’m no longer convinced the social media platform can survive on an advertising business alone. At least not while Musk is still in charge. The company is in need of a new business, and quickly. The question then becomes: What comes next? The most logical idea would be to sell subscriptions, which X has been trying without success. It’s possible that X could license its data hose to some aspiring artificial intelligence company, but Musk is [already doing that on his own]( with xAI. Musk has talked about getting into payments, but that would require changing the user behavior for the entire platform. No one buys things on X now, and it’s unclear if they’ll start. I truly don’t know what the best business model is for X anymore, but it seems urgent that the company find one. Ads have historically made up 90% of company revenue, and now that number is closer to 75%. (The other 25% comes from data licensing and subs.) With major debt payments due every quarter, you’d think something has to materialize soon. As Benarroch said, X is a new company now. That new company may need a new business. Whatever it is, it can’t only be ads.—[Kurt Wagner](mailto:kwagner71@bloomberg.net) The big story Inside Andreessen Horowitz's Washington charm offensive. Breaking with industry custom, the VC firm is lobbying in the nation’s capital to [help the defense-focused startups it bankrolls](. The firm is aiming to boost startups intended to “support the national interest” — including companies like Elon Musk's SpaceX, Palmer Luckey's Anduril and aerospace upstart Shield AI. And although crypto has faded from the limelight in the wake of scandals and bankruptcies in the industry, the firm still has significant investments in the sector and supports pro-crypto policies and politicians. Andreessen Horowitz donated $20 million to the pro-digital asset Fairshake super PAC, and its crypto managing partner has contributed to a dozen crypto-friendly members of Congress. As elections ramp up this year, it's safe to assume more contributions are coming. One to watch [Watch Bloomberg Technology’s interview with Forethought Chief Executive Officer Deon Nicholas.]( Get fully charged Apple is upgrading its iMessage app’s security to prevent [quantum computing attacks.]( Sequoia Capital was pulled into a dispute involving the board and co-founders at [fintech Klarna]( The US Commerce chief said the country will need continued investments in semiconductor manufacturing to regain worldwide leadership and [meet AI demands.]( Google is introducing Gemma, a new open large language model that will [only handle text.]( Musk almost violated a federal privacy order when he took over Twitter in 2022, but [Twitter staff stopped him.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Tech Daily newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](