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There are few better ways to signal corporate distress than a rebrand. Last year, Elon Musk spent $44bn buying Twitter, a midsized social media company. Jettisoning its globally recognised brand does nothing to address the lossmaking company’s problems. But as new names go, X is better than most. It is short, arresting and unmistakable.
Name pivots are common across early stage US tech companies. Amazon began life as Cadabra, Snapchat started out as Picaboo and Instagram’s prototype was called Burbn. Twitter, which was born out of a company called Odeo, was once spelled Twttr.
But rebrands in later corporate life are different. From tobacco seller Philip Morris to Facebook, they tend to highlight problems they are designed to cover. They risk annoying and confusing customers. The direct financial cost, including domain name purchases, can be high.
The public may also ignore the new name. Weight Watchers switched to WW, in a bid to shed connotations of harmful dieting. But the change has not been widely embraced.
In an ideal world, a rebrand would show the direction a company was headed. Musk envisages X as an “everything app” offering payments and job listings alongside social media. This echoes Google’s 2015 decision to become Alphabet, putting more focus on side bets such as driverless cars
Likewise, Snapchat became Snap to prove that it was more than an ad-led social media company. Yet both Alphabet and Snap still rely on digital advertising for the majority of sales. Cosmetic changes do not automatically create new lines of revenue. The X rebrand will not reverse the 50 per cent decline in Twitter’s ads sales and could worsen it.
Facebook’s switch to Meta was ostensibly done to show that its future lay in the metaverse. But this unit contributed just 1 per cent of group revenue in the last quarter and nothing to net income. The real trigger was the repeated accusation that Facebook was a conduit for lies damaging to democracy.
Meta’s new name demonstrated chief executive Mark Zuckerberg’s power. Twitter’s rebrand does the same for Musk.
Bankers will privately shake their heads over the abandonment of a brand worth a substantial part of Twitter’s purchase price in any conventional valuation. The name change is final confirmation — if any was needed — that Musk will follow his own maverick instincts.
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