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It happened, Twitter laid off half of its staff today. Employees were informed by email whether they could stay or not. Twitter needs to save to generate more cash urgently.
It was an exciting day for Twitter employees. At 9 a.m. (5 p.m. Belgian time for those working at headquarters in Silicon Valley, or a few hours earlier for those working in Europe) the mailbox was watched with great impatience. They were informed by email if they could stay with Twitter and therefore if they were expected in the office next week. Those who were terminated received an email in their personal inbox. Those who are allowed to stay will receive a confirmation in their corporate email account.
Now they don’t have to go to the headquarters in Silicon Valley, which they can’t do anyway, because all access badges are disabled. The company made this known in an email to staff yesterday.
The social networking company, owned by tech entrepreneur Elon Musk since last week, planned a massive layoff today. 3,700, or about half of Twitter’s 7,000 employees, were told they could seek alternative employment. Not everyone seems upset about this. On the various channels where employees can anonymously express their frustration, we can read that many hope for a dismissal with a good severance package, to be able to escape the “nightmare that has become Twitter” and work elsewhere.
ruthless manager
Many Twitter users are also expressing fear of Elon Musk’s relentless management style. Tesla, of which Musk is also CEO, is best known for its high employee turnover rate. Musk is extremely demanding of his staff and does not hesitate to fire people in the slightest. The folks at Twitter got a taste of Musk’s demand last week when he asked programmers to develop a new payment system in days that would require Twitter users to pay $8 a month with a tick.
Yet they don’t want to just let Musk do whatever he wants. Twitter employees also went to court today to file a complaint. In the United States, there is also something like the Belgian-Renault law, the Worker Adjustment and Retraining Notification Act, which requires employees to be notified 60 days in advance if a major layoff is imminent.
The mass layoff fits the typical style of sturm-und-drang Musk uses when things threaten to go wrong at one of his companies. Musk paid way too much for Twitter at $44 billion – something he himself admitted. 13 billion of this 44 billion dollars was paid in the form of loans, with annual interest already exceeding 1 billion dollars. Twitter – which only makes $5 billion in revenue and is barely profitable – needs to generate more cash just for that.
Musk is using a two-pronged approach: sharply reducing costs and increasing revenue through a payment system. 90% of that revenue still comes from ads and a much smaller portion from a paid subscription, Twitter Blue. Musk expects Twitter’s revenue to quadruple in five years to $26.4 billion. He expects the number of Twitter Blue subscribers to reach 69 million and 159 million by 2028.
Advertisers
Whether Musk can get so many people to pay for a fairly simple tool on social media is highly questionable. For example, Netflix, with a very wide range of series, tops out at 220 million paying subscribers. But you should never rule anything out with Musk. In Tesla’s early years, few expected the company to sell millions of cars today. In the meantime, Musk remains very dependent on advertisers to maintain Twitter’s financial position. They watch Twitter’s evolution with suspicion: Are many users swapping Twitter for another platform and will it become even more of a reprimand barracks? These are arguments for doing less advertising on Twitter, which costs the company money.
