While many of Musk’s actions seem somewhat childish, the long-term impact on the company is still up for debate.
After Elon Musk’s very public, very confusing and convoluted takeover of Twitter, he came in fast and aggressive, making huge changes in staffing and headcount that can have significant reverberations across the company that he may not have fully considered.
On late Thursday, Nov. 3, 2022, newly-minted CEO Musk sent an email notifying employees of the plan to cut jobs the very next day, with a subject line reading, “Your role at Twitter.” Layoffs were expected to affect all areas of the company, including sales, marketing, product, engineering and legal.
Musk’s email to employees, signed by Twitter not Musk, which was obtained by The Washington Post, follows:
In an effort to place Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday. We recognize that this will impact a number of individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company’s success moving forward.
Given the nature of our distributed workforce and our desire to inform impacted individuals as quickly as possible, communications for this process will take place via email. By 9AM PST on Friday Nov. 4th, everyone will receive an individual email with the subject line: Your Role at Twitter. Please check your email, including your spam folder.
If your employment is not impacted, you will receive a notification via your Twitter email.
If your employment is impacted, you will receive a notification with next steps via your personal email.
To help ensure the safety of each employee as well as Twitter systems and customer data, our offices will be temporarily closed and all badge access will be suspended. If you are in an office or on your way to an office, please return home.
We acknowledge this is an incredibly challenging experience to go through, whether or not you are impacted. Thank you for continuing to adhere to Twitter policies that prohibit you from discussing confidential company information on social media, with the press or elsewhere.
We are grateful for your contributions to Twitter and for your patience as we move through this process.
One has to wonder reading this email — how well thought out was this process, how much time went into it considering the skills, talents and institutional knowledge being let go, and what will the fallout be from a day-to-day, operational point of view? It seems like Elon is shooting from the hip here. In fact, the layoffs were done after a single week-long assessment by Musk and his deputy team, which included his lawyer, a single investor and the guy who manages Musk’s family office. Seems like a well-qualified group to make such momentous decisions, no?
The next day as expected was pretty hairy and confusing. Workers in droves, even ones pulled into special teams by Musk personally, started losing their jobs. Some employees were shut out of their systems before being let go, so they just assumed they were gone. Lucky employees who sat in panic on Thursday got emails on Friday telling them they were not laid off. Even more confusing, some employees who were fired got an email telling them they would remain technically employed by Twitter, with pay and benefits for another two months, but would not be working for the company during that time. Sounds like a severance package, I guess.
As part of the initial layoff process, Musk fired the CEO, CFO and general counsel. Soon after, managers started asking workers to suggest ways to find $500 million in annual cuts across the company, including data centers, software infrastructure, contractors and content moderation.
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Due Diligence Before Twitter Acquisition and Staffing Culls?
It seems like a pattern of poorly thought-out moves regarding Twitter. First, Musk made a $44 billion offer on Twitter and then tried to get out of it once he took the process a bit more seriously — and after being threatened with a lawsuit, he finally finalized the deal the day before the trial was to begin. Analysts have valued Twitter at about half of what Musk paid for it, at only $25 billion. Musk took out a loan of $12 billion to fund the purchase, which has a $1 billion per year interest payment.
By Elon Musk’s third week at Twitter, the cull continued unabated. At this point he had laid off 50% of the company’s 7,500 workers, while pushing remaining employees to become more “hard core” for the business to survive Musk’s overpriced acquisition. Also let go around this time were many contractors who work on content moderation and data scientists. All were let go without notice. Internal people reported that Musk plans to eliminate middle managers to save more.
At this point things started getting personal, with Musk appearing a bit snow flakey when he fired two dozen employees for pushing back on his plans, mocking them publicly on Twitter. He then went further in his purge. Musk’s team was instructed to comb through Twitter’s internal chat platform and make a list of employees who were ‘insubordinate.’ All who were labeled as insubordinate were immediately fired.
In his usual childish manner, Musk mocked these employees publicly.
“I would like to apologize for firing these geniuses,” Musk tweeted. “Their immense talent will no doubt be of great use elsewhere.”
Taking things one step further, some employees believe they may not get out of pocket expenses paid back by the company, with Musk potentially stiffing them on what they paid out of their own pockets for the company.
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In Defense of Musk
While Musk’s layoffs and cuts seem excessive and poorly thought-out, the reality is Twitter was planning on broad layoffs to begin with, in which they aimed on letting go up to 25% of the staff. It was reported that the company’s board was planning on making $700 million in savings for labor costs. It is clear Twitter was overstaffed and had not achieved the streamlined operations it needed to move forward profitably.
But the fact that Musk paid almost double what the company was actually worth puts his employees in an untenable position, they simply do not have the ability to save the company $500 million dollars, no matter how much they are threatened, mocked and fired.
It wasn’t all threats and bluster from Elon. He sent a message to employees around this time which informed them an “exceptional amount of stock would be awarded for exceptional performance.” Good to know, but the issue is if the company goes bankrupt, as Musk said it might, the stock would be worthless.
Twitter Advertisers Run for the Hills
On Friday as the layoff notices went out, Musk complained that advertisers were dropping out due to pressure on advertisers from activist groups.
Since then, many big advertisers are either pausing or pulling out of Twitter altogether. Macy’s has paused its spending on the platform, Balenciaga deleted their Twitter account and Omnicom Media Group, who represents clients like PepsiCo and McDonald’s, urged their clients to halt their activity on Twitter.
Most advertisers are putting Twitter on hold as they wait and see about what changes Musk rolls out to content moderation among other things.
What’s Next For Twitter?
The last publicly-available email from Elon to his remaining employees was one of bluster and threat. On Nov. 16, 2022, Elon Musk sent a companywide email to warn employees that they should plan on working “long hours at high intensity” or they will get “three months’ severance” and be let go.
Elon Musk’s staffing and management style seems to be a shoot-first-think-later kind of guy. He overpaid on a business deal, and now is putting it on the staff to fix the mistake he made. No matter how much you bully and insult your staff, you can’t make them find for you the $20 billion you overpaid the company for.
On Dec. 5, 2022, it was reported that Elon Musk had bedrooms installed at Twitter, so people could work and sleep there, violating San Francisco building codes. According to an anonymous staffer, “It’s not a good look,” they said. “It’s yet another unspoken sign of disrespect. There is no discussion. Just like, beds showed up.”
Then on Dec. 8, 2022, some women who were fired from Twitter launched a class-action lawsuit against Musk alleging he discharged far more women than men.
“Women at Twitter never had a decent shot at being treated fairly once Elon Musk decided to buy the company,” the representing attorney, Shannon Liss-Riordan, said in a press statement. “Instead, they had targets on their backs and regardless of their talent and contributions, they were at greater risk of losing their jobs than men.”
What’s Ahead in 2023 for Twitter and Musk?
It seems the purchase of Twitter, and its subsequent cuts and layoffs were poorly thought-out, at best. To take only one week to decide what thousands of employees do and what the company can do without is not a reasonable timeframe, even for a group of qualified people. The team of four people that Musk put together to make these staffing cuts had no such background.
So far the worst that was expected has not come to pass, namely that with such a huge staff reduction, Twitter engineers could not keep the site up and running. These fears seem to be unwarranted, as this Twitter user can confirm Twitter is up and running just fine.
Only time will tell how Elon Musk’s Twitter acquisition will play out and whether the staffing he let go has a significant negative effect on the company. Since none of it was really planned out, no one is sure of what the results will be.