As we await word on how swift and widespread layoffs may be at Twitter, Chief Twit Elon Musk is making moves and hinting at others — and still acting like a child with a new toy he may break any second.
If anyone doubts the seriousness of the reports that Musk is planning layoffs at Twitter, the New York Times does some basic number-crunching this morning and concludes that yes, Musk will have to make some decisions about significant costs on the company's balance sheet in order to service the $13 billion in debt that he just took on. But, at the same time, he can't murder the sources of revenue the company currently has — by, say, alienating major advertisers or firing all the ad-sales staff who have relationships with them. And, Twitter needs some financial wiggle room to innovate and grow the product.
As Drew Pascarella, a senior lecturer of finance at Cornell University, says to the Times, "Technology companies should be left with enough flexibility to pay for new research and development and new levels of innovation." Musk's buyout deal, Pascarella says, "completely eliminates flexibility."
Still, Musk put up a poll of Twitter users on his personal account asking whether he should bring back Vine — the six-second looping video platform that Twitter acquired in 2013 only to kill it off four years later, presumably because it wasn't worth keeping alive. As KRON4 reports, Vine was quickly overshadowed by Snapchat and Instagram Stories, but do we actually think Musk has thought all this through or figured out how much it would cost to revive Vine? Of course not.
Bring back Vine?— Elon Musk (@elonmusk) October 31, 2022
In a more definitive move, Musk is pushing to make Twitter's existing Twitter Blue subscription service more expensive — raising the price from $4.99/month to $19.99/month. As The Verge reports, the internal plan is to make all those verified-user blue checkmarks contingent on the new subscription price, and to take away the blue checkmarks within 90 days if users opt not to pay.
Allegedly, employees working on the project have been given one week, until November 7, to roll this out or else they'll be fired.
Also being fired, likely soon, are middle managers and engineers who have not recently contributed to the code base of Twitter, The Verge reports. Musk has reportedly brought Tesla engineers in as advisors to build the layoff list.
Tomorrow, November 1, is a date when some swath of Twitter employees will see more of their stock options vest — and the Times reported Saturday that Musk was planning layoffs before that occurred, in order to save the company some money. Under the merger agreement Musk signed, employees are supposed to be paid out in cash for their existing stock packages, but likely only what has vested.
Musk's devoted fans — especially the ones who are also devoted fans of Twitter — seem to believe that he can swiftly turn around Twitter's financial fortunes and profitability, which have been lackluster for much of its existence. As the Times notes, it has only been profitable in two of the last ten years — and its debt-servicing expense is going up to $1 billion per year now, from $50 million per year.
While Musk has said that he didn't buy Twitter in order to make money, he at least has to make it break even or turn a small profit, and therein lies the challenge now. Otherwise, as University of Virginia Business School Professor and author of Deals From Hell Robert Bruner tells the Times, failing to cover the debt burden will "slowly erode the company’s equity" and scare off future investors, until "Slowly, Twitter implodes."
Meanwhile, Musk retweeted a gross conspiracy theory — as a joke? — about Paul Pelosi being attacked by a sex worker he brought home from a gay bar, and then deleted it after enough people yelled at him. How did he apologize? He didn't. He instead pulled a Trump and tweeted out a headline about the incident from the Times, accusing the Times of being a regular purveyor of fake news.
This is fake – I did *not* tweet out a link to The New York Times! pic.twitter.com/d6V6m5ATW2— Elon Musk (@elonmusk) October 31, 2022
A classy move for someone who has just taken over the "global town square" of the internet and pledged not to let it become a "free-for-all hellscape" of, you know, ugly conspiracies, rampant homophobia, and racism.
Also, Musk hinted Sunday that he is going to take someone back to court about internal metrics at Twitter — about bots? — posting some sort of exchange between employees that he claims the Twitter board "deliberately hid" as evidence from the Court of Chancery in Delaware.
Photo: Brett Jordan