At Twitter's San Francisco headquarters last month, a "war room" was established where Elon Musk's trusted team reviewed a list of employees and their associated costs to the company. Steve Davis, who is in charge of Musk's Boring Company, led the billionaire owner's "transition team" in making phone calls to staff. Some were asked to justify their roles, while others were asked to recommend which colleagues should be retained. These discussions informed Musk's decision to make further layoffs at Twitter in February. The aim was to improve the company's financial situation and deal with issues such as advertiser exodus and debt servicing bills. Over 200 staff were let go in these latest cuts, which were deeper and broader than expected. This move followed an earlier layoff of half of Twitter's workforce after Musk's acquisition of the company in October. As a result, significant portions of its business development and product teams were eliminated, leaving Twitter a leaner but potentially more unstable company.
The following description of the billionaire's ongoing attempts to bring Twitter's finances under control with the help of his inner circle is based on interviews with current and former employees of Twitter, individuals knowledgeable about Musk's perspective, and his public statements on Twitter and to investors. Despite a request for comment, neither Musk, Twitter, nor most members of the transition team have provided a response.
The transition team was established in November and has frequently opted to delay payments to Twitter's vendors, landlords, and partners in order to limit expenses. This strategy has occasionally led to tension with clients and resulted in strained relationships.
The following description of the billionaire's ongoing attempts to bring Twitter's finances under control with the help of his inner circle is based on interviews with current and former employees of Twitter, individuals knowledgeable about Musk's perspective, and his public statements on Twitter and to investors. Despite a request for comment, neither Musk, Twitter, nor most members of the transition team have provided a response.
The transition team was established in November and has frequently opted to delay payments to Twitter's vendors, landlords, and partners in order to limit expenses. This strategy has occasionally led to tension with clients and resulted in strained relationships.
According to two sources familiar with the matter, Twitter is set to introduce fresh equity compensation packages for its employees at the end of March. To determine the value of staff stock options for tax purposes, Twitter is currently calculating a new valuation to price the common equity in the company. The sources suggest that this valuation is expected to be considerably lower than the $44bn price paid for the acquisition.
During an investor conference organized by Morgan Stanley last week, Musk revealed that he had managed to reduce non-debt expenses to $1.5bn, down from the projected $4.5bn in 2023. He also expressed optimism that Twitter could achieve positive cash flow by Q2.
During an investor conference organized by Morgan Stanley last week, Musk revealed that he had managed to reduce non-debt expenses to $1.5bn, down from the projected $4.5bn in 2023. He also expressed optimism that Twitter could achieve positive cash flow by Q2.
Despite efforts to streamline operations, some current and former employees of Twitter are puzzled by the scattergun approach taken by Musk's team. They fear that the company's actions may lead to costly legal and regulatory challenges in the future. Additionally, the platform has experienced a surge in technical problems and glitches.
According to one former senior employee who was let go in the recent round of layoffs, Musk frequently repeated the phrase "Let them sue," demonstrating a short-term focus that may not be sustainable.
Sources familiar with Musk's thinking suggest that his decision to bring in a rotating roster of leaders from his other business ventures to run "Twitter 2.0" is rooted in a deep mistrust of the previous leadership and a fear of sabotage from disgruntled employees.
According to one former senior employee who was let go in the recent round of layoffs, Musk frequently repeated the phrase "Let them sue," demonstrating a short-term focus that may not be sustainable.
Sources familiar with Musk's thinking suggest that his decision to bring in a rotating roster of leaders from his other business ventures to run "Twitter 2.0" is rooted in a deep mistrust of the previous leadership and a fear of sabotage from disgruntled employees.
Many Twitter employees, as well as some in the banking industry, now anticipate that Musk will eventually choose a new CEO and leadership team from his group of advisors. However, several insiders have expressed concerns about their lack of experience in social media and consumer apps.
Insiders suggest that Davis, an expert in aerospace and a close ally of Musk, has assumed a role resembling that of a Chief Operating Officer. Along with James Musk, Elon's cousin who is now responsible for engineering work on the social media platform, and Jared Birchall, who oversees Musk's family office, Davis was involved in deciding how to distribute the job cuts.
As part of the recent layoffs at Twitter, more than 200 employees were let go, including founders of start-ups that Twitter had previously acquired, who are now entitled to substantial compensation packages. These individuals include Esther Crawford, former director of product management who was leading Musk's payment vision for the platform, Martijn de Kuijper, formerly senior product manager, and Icelandic entrepreneur Haraldur Thorleifsson.
Aside from overseeing the job cuts, Davis has reportedly been focused on reducing the company's day-to-day expenses. According to several insiders, he has been reviewing data licensing agreements and policies at Twitter. Additionally, Davis led the recent decision to charge third parties for access to Twitter's developer tools, according to one source.
According to one source familiar with the situation, Davis displayed his dedication to Twitter by staying on-site at the company's headquarters with his family after the acquisition, a move first reported by The Information. The former senior staffer described Davis as a "majority house whip" whose job is to push and push to reduce the company's day-to-day costs.
In addition, Musk is seeking input from his own equity investors in the acquisition. Five sources familiar with the situation reported that Pablo Mendoza, a managing director at Dubai-based Vy Capital, which provided $700 million to the $44 billion takeover, and Silicon Valley entrepreneur Suril Kantaria, founder of health insurance tech platform Savvy, are assessing what to do with existing vendors.
Among the vendors that have been affected by Musk's cost-cutting strategy are landlords, software-as-a-service providers like Salesforce, Adobe, and Slack, insurance companies, security firms, limousine services, and even fertility providers, according to two sources.
Pablo Mendoza, a managing director at Vy Capital, and Suril Kantaria, the founder of Savvy, have been tasked with assessing the situation and deciding what to do with existing vendors, according to five insiders. They have renegotiated some mandatory contracts and terminated others outright.
According to one insider, Mendoza has had to plead with vendors and remind them that his job is on the line when informing them that the company is not planning on paying them. Nonetheless, he has had some success, reducing some bills by between 50 and 90 percent in certain instances. Mendoza declined to comment on the matter.
Kantaria and James Musk collaborated to close down one of Twitter's data centers, which Musk celebrated as a triumph at the Morgan Stanley investor conference. However, critics argue that this move may contribute to technical instability on the platform.
Another member of Musk's inner circle is Omead Afshar, who previously worked as a Tesla executive in Texas. He earned the nickname "the Elon whisperer" among Twitter employees because of his ability to understand Musk's thinking. Afshar is now helping to address major issues at Twitter, such as reducing infrastructure costs. He has been involved in tense negotiations with Amazon and Google over large cloud spending contracts, which have reportedly decreased by 40% according to Musk.
Despite these cost-cutting measures, including refusing to pay some bills, there are concerns that Twitter may face legal challenges, regulatory scrutiny, or delayed costs in the future. For instance, Twitter is already facing a lawsuit from its San Francisco landlord for failing to pay rent and potential class action lawsuits for allegedly not adhering to full severance packages during the recent mass layoffs.
According to one former senior staffer, Musk's approach is merely a temporary fix that defers future costs and allows him to take a victory lap.
Insiders suggest that Davis, an expert in aerospace and a close ally of Musk, has assumed a role resembling that of a Chief Operating Officer. Along with James Musk, Elon's cousin who is now responsible for engineering work on the social media platform, and Jared Birchall, who oversees Musk's family office, Davis was involved in deciding how to distribute the job cuts.
As part of the recent layoffs at Twitter, more than 200 employees were let go, including founders of start-ups that Twitter had previously acquired, who are now entitled to substantial compensation packages. These individuals include Esther Crawford, former director of product management who was leading Musk's payment vision for the platform, Martijn de Kuijper, formerly senior product manager, and Icelandic entrepreneur Haraldur Thorleifsson.
Aside from overseeing the job cuts, Davis has reportedly been focused on reducing the company's day-to-day expenses. According to several insiders, he has been reviewing data licensing agreements and policies at Twitter. Additionally, Davis led the recent decision to charge third parties for access to Twitter's developer tools, according to one source.
According to one source familiar with the situation, Davis displayed his dedication to Twitter by staying on-site at the company's headquarters with his family after the acquisition, a move first reported by The Information. The former senior staffer described Davis as a "majority house whip" whose job is to push and push to reduce the company's day-to-day costs.
In addition, Musk is seeking input from his own equity investors in the acquisition. Five sources familiar with the situation reported that Pablo Mendoza, a managing director at Dubai-based Vy Capital, which provided $700 million to the $44 billion takeover, and Silicon Valley entrepreneur Suril Kantaria, founder of health insurance tech platform Savvy, are assessing what to do with existing vendors.
Among the vendors that have been affected by Musk's cost-cutting strategy are landlords, software-as-a-service providers like Salesforce, Adobe, and Slack, insurance companies, security firms, limousine services, and even fertility providers, according to two sources.
Pablo Mendoza, a managing director at Vy Capital, and Suril Kantaria, the founder of Savvy, have been tasked with assessing the situation and deciding what to do with existing vendors, according to five insiders. They have renegotiated some mandatory contracts and terminated others outright.
According to one insider, Mendoza has had to plead with vendors and remind them that his job is on the line when informing them that the company is not planning on paying them. Nonetheless, he has had some success, reducing some bills by between 50 and 90 percent in certain instances. Mendoza declined to comment on the matter.
Kantaria and James Musk collaborated to close down one of Twitter's data centers, which Musk celebrated as a triumph at the Morgan Stanley investor conference. However, critics argue that this move may contribute to technical instability on the platform.
Another member of Musk's inner circle is Omead Afshar, who previously worked as a Tesla executive in Texas. He earned the nickname "the Elon whisperer" among Twitter employees because of his ability to understand Musk's thinking. Afshar is now helping to address major issues at Twitter, such as reducing infrastructure costs. He has been involved in tense negotiations with Amazon and Google over large cloud spending contracts, which have reportedly decreased by 40% according to Musk.
Despite these cost-cutting measures, including refusing to pay some bills, there are concerns that Twitter may face legal challenges, regulatory scrutiny, or delayed costs in the future. For instance, Twitter is already facing a lawsuit from its San Francisco landlord for failing to pay rent and potential class action lawsuits for allegedly not adhering to full severance packages during the recent mass layoffs.
According to one former senior staffer, Musk's approach is merely a temporary fix that defers future costs and allows him to take a victory lap.