Linda Yaccarino, Elon Musk, and the most difficult CEO job on earth

Kali Hays and Lara O'Reilly - Aug 28, 2023, 11:00 AM UTC+2

    - Linda Yaccarino is tasked with fixing a product that Elon Musk seems to have intentionally broken.

    - With Musk meddling, the CEO has limited power to influence the way X operates or where it's headed.
   
    - Ad industry execs have great respect for Yaccarino, but worry X has already become a lost cause.

Around midnight on a Saturday this summer, Elon Musk announced he was scrapping the western world's most iconic social-media brand.

"And soon we shall bid adieu to the twitter brand and, gradually, all the birds," he tweeted for the last time, and quickly ordered Twitter offices in San Francisco, New York and LA be stripped of everything blue and bird themed.

The service became X, wiping away 17 years of brand equity, infuriating millions of users, and worrying advertisers for the umpteenth time since Musk bought the company in 2022. Employees were shocked. While Musk had talked about an "everything app," this abrupt news was not expected.

To outside observers, the actual CEO of the company was nowhere to be seen. Linda Yaccarino had been on the job for only about a month when Musk dropped the weekend X bomb. She didn't address the change publicly until late the following night, about 24 hours after Musk told the world.

Talk inside X is that Yaccarino pleaded with Musk to hold off announcing the big change because she needed more time to prepare big advertisers.

"He did it anyway," a person familiar with the matter said. "Musk completely undermines her."

Welcome to the world's hardest CEO job

Insider interviewed more than a dozen current and former X employees, ad industry executives, and people familiar with the company and its business to find out how Yaccarino has performed in her first few months. Many of the tales are harrowing for a widely respected advertising executive who rolled the dice to lead a troubled company owned by the most volatile tech billionaire alive.

She's tasked with fixing a product that Musk seems to have intentionally broken, while having limited power to really influence the way X operates or where it's headed, according to these sources, most of whom asked not to be identified discussing sensitive matters.

Some X employees said they see Yaccarino as a CEO in name only. "Elon is in charge," one current staffer said.

Already, some ad industry observers are concerned that Yaccarino's proximity to Musk and his chaotic X reign is tarnishing the solid reputation she spent decades cultivating among some of the world's most influential companies and their top executives.

"Even if she is trying to do the right thing, she has an owner who makes the decisions," a former senior Twitter executive said. "She can't win."

"It must be very difficult to make sure she appeases Elon's demands and needs and expectations matched up also with what advertisers are asking for," said Matt Navarra, a social-media consultant.

Insider requested an interview with Yaccarino and asked Musk and X for comment. They didn't respond.

A precedent for success

While Musk can't stop meddling and has replaced several Tesla CEOs over the years, there is a precedent for success.

Gwynne Shotwell, president and COO of SpaceX, has shown that Musk is capable of ceding some power and letting a trusted ally get on with things. She has to do Musk-damage control, fire employees who dare speak out against him, and remember to never say no. But it's possible for someone other than Musk to run a Musk-owned company.

Yaccarino has certainly been busy in her first few months. She uses X sanely and daily. She's fixed deals with major vendors that Musk previously decided weren't worth paying. She resolved an issue related to commissions that hadn't been paid to the sales team. (Reducing the "chaos," is how Navarra puts it.)

The CEO is working on getting reliable live video on the platform. And while Yaccarino has urged X employees back to the office, she's done so without threatening to fire them and has taken a more upbeat and media-trained tone than Musk in public and with employees.

"Elon needs to move away from management," one ad industry exec said. "If she fails, it will probably be because Elon interfered with her or didn't give her the space."

The Monday after Musk's weekend rebrand, Yaccarino explained to employees in an email that the name change was part of the platform's mission to "impress the world all over again." And in a more-recent TV interview, the CEO described "eight incredibly supportive weeks" with Musk and insisted she has "autonomy."

Plunging ad revenue and negative cash flow

The former NBCUniversal executive has also been meeting with marketing industry leaders. She recently reformed a "client council" of major brand advertisers and agency execs who will convene on September 20 in New York City to hear about X's roadmap and provide feedback.

This is where Yaccarino has barely scratched the surface of a titanic problem, though. In the first half of 2023, major companies such as Progressive, The Coca-Cola Co., General Motors, and AT&T cut ad spending on Twitter by 90% to 100%, according to data from MediaRadar. Other companies chopped their marketing on the platform by between 30% and 70%. Musk said in July that advertising had dropped 50% and that X had negative cashflow.

Yaccarino has tried to paint a rosier picture of X's advertising business. In a CNBC interview that aired from X's New York office earlier this month she said the company was close to breakeven and touted new brand safety tools.

"She was clearly on message with talking points that built a case for reappraisal," said a longtime ad industry executive. Still, he added that the CEO's arguments were "hard to reconcile with what I am observing on the platform, particularly in the area of trust and safety."

"Device user seconds usage" and "Chadolf Rizzler"

Advertising executives want to give Yaccarino the benefit of the doubt, given years of goodwill she built up with the industry as one of the most high-profile names in ad sales. But inconsistencies with the numbers Musk and now Yaccarino cite publicly, and what advertisers are themselves witnessing on the platform, are beginning to mount.

Through reposts and likes, Yaccarino has supported Musk in promoting newly invented metrics like "device user seconds usage." Advertisers prefer to measure reach and success through more traditional metrics such as daily active users, monthly active users, and click through rates. The CEO did repost a Musk tweet of an unmarked and undated graph purportedly showing monthly users of more than 541 million. According to Apptopia data, though, X monthly users at the end of July stood at around 396 million.

One of Yaccarino's most common refrains since coming on as CEO is that "99%" of the content on X is "healthy." That apparently stems from a case study by Sprinklr of 500,000 tweets between January and February. It found 15% of those tweets contained one of 300 English slurs from a list provided by Twitter. Nowhere does the study say that 99% of the content on the platform is healthy.

Several advertisers have found their ads showing up alongside pro-Hitler content from accounts verified under X's Blue subscription product. On August 22 and August 23, Insider observed ads for the likes of Sharpie, the PGA Tour, and New York City's DOT, running on a Blue verified account named "Chadolf Rizzler," an apparent nod to Adolf Hitler, which posts racist and other toxic content.

Stale beer at tea time

With X weighed down by billions of dollars in debt, Yaccarino has limited resources to tackle these problems and turn around the company's fortunes.

A couple of weeks into her official start as CEO in June, Yaccarino knew worker morale was low so she organized "tea time" gatherings in the New York office and at headquarters in San Francisco. It was the first time employees had been invited to do anything besides work at all hours since Musk took over.

At the San Francisco gathering, Yaccarino tried to motivate staff by talking about working as a team and building the future of X together, a person at the gathering in San Francisco recalled. A few dozen employees chatted among themselves, and occasionally with their CEO, in a second floor cafe as tea and other beverages were offered around.

It was a rare, casual moment of relaxation during a work day at a Musk-owned company. But one element left a nasty taste. All the free beer being served was "way past the expiration date," the person said.

"Linda says nothing"

Yaccarino has also struggled to rally X employees in other ways. Musk's current schedule is to focus on Tesla and SpaceX in the first half of the week, and move on to X during the back half, including all weekend, a person familiar with the situation said. "His important announcements come on Friday or Saturday," this person noted.

Meetings at the weekend can often be held as late as 11 pm, said a former staffer who is still in touch with current employees.

"He likes to punish employees by doing this stuff over a holiday," one of the employees said. "The cruelty is the point. Linda says nothing."

Other staffers said they've seen little to no impact from Yaccarino's arrival at X, particularly among those who don't work in ad sales or on ads products.

"Really, her title should be CMO," said one former employee, who is still in close touch with current X workers. "Most people are not being told anything in their day-to-day by Linda."

Two current X employees agreed, saying they have received little to no direction from their new CEO since she assumed the role about three months ago. When Twitter in mid-May officially announced internally that Yaccarino was joining the company, it did so in a weekly email that only went to ads and sales teams, leaving out all of engineering and tech, which make up the majority of the work force, the employees noted.

A lost cause?

For the foreseeable future, though, Yaccarino will be mostly judged by the health of X's ad business, which still generates the vast majority of the company's revenue. Even if Musk lets the CEO lead, generating significant ad sales growth could be incredibly hard.

The brutal fact is that there are a wealth of other larger, better-performing digital options for advertisers to spend their money on, such as Google, YouTube, Instagram, Facebook, and TikTok.

One ad agency executive said he's always heard nothing but good things about Yaccarino, from her ability to lead, to her relationships with the biggest advertisers. Yet, the industry is starting to see X as a lost cause.

"She's great, but this won't work because Twitter is too big of a mess for anyone to clean up," the agency exec said.

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