Musk tells investors he will lay off 75% of Twitter employees after purchase – 10/21/2022

Billionaire Elon Musk has told investors he plans to lay off 75% of Twitter’s employees if he completes the purchase of the social network next week. The cuts would drain the company from the current 7,500 people to around 2,000, according to a report in the American newspaper. Washington Postwho had access to confidential company documents.

The layoffs would be to improve the efficiency of Twitter, which the billionaire considers a “bloated company”, says the Post. In Musk’s view, after firing the lowest performing employees, his management would double the company’s revenue in three years and triple the number of monetizable daily active users (MDAUs) on the social network in the same period. No details were provided on how these goals would be achieved.

O post also states that even if the deal fails, Twitter must undergo major changes. Before Elon Musk got involved with the deal last April, the company planned to make a series of cuts at the company – the company’s 2021 personnel expenditure was $1.5 billion and, according to internal documents, it was planned to be downsized to $800 million by 2023.

The downsizing could include employees working in the data center, which would make the social network unstable and harm its usability for the more than 200 million users who use it daily.

“It’s going to be a ripple effect,” Edwin Chen, a former data scientist at Twitter and now executive chairman of content moderation firm Surge AI, told the Post. “There are going to be services going down and people without the institutional knowledge to put them on the air again, being totally demoralized and wanting to leave the company themselves.”

In recent months, Twitter has created an individual performance evaluation system, against employees. In response, the company stated that other technology companies have the same practice.

With the eventual acquisition of the social network by Musk, company employees feared that layoffs could occur. The company’s leadership, including the current executive chairman, Parag Agrawal, denied that there could be any cuts.

To postTwitter did not respond to requests for comment.

Difficulty finding investors

The presentations made by Musk seem not to have convinced all the investors sought by the billionaire.

Investment managers T. Rowe Price, TPG and Warbug Pincus, who command $1.4 trillion in capital, have decided not to invest in Twitter if Musk takes over the firm. Silicon Valley heavyweights also responded negatively, such as Reid Hoffmann (founder of LinkedIn) and Peter Thiel (a billionaire involved with the Republican Party).

Currently, few names are involved in the deal, such as Larry Ellison (Oracle co-founder), Doug Leone (Sequoia fund partner) and Kenneth Griffin.

For analyst Dan Ives, from the US consultancy Wedbush Securities, Musk’s challenge in making Twitter profitable is immense. “The easy part was buying Twitter, while the hard part is fixing it. It’s going to be a Herculean task to turn it around.”

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