I’ve heard this Twitter example bandied about tons of times, but I’m always confused. To be clear, I’m generally sympathetic to the view that there is tons of bloat at tech companies and big companies in general.
But I’m confused by Twitter being an example because:
1. Twitter went private so we don’t really know how well or poorly the business did after making the massive cuts
2. The little information we do have indicates that advertising revenue significantly declined after the acquisition
Since Twitter financials are private we can only speculate, but my best guess would be that Elon took a bloated, unprofitable business and turned into a lean, unprofitable business, which doesn’t seem all that impressive to me.
What about this story warrants it being dragged out into every conversation about businesses cutting bloat, I cannot understand. People seemed genuinely amazed that Twitter was able to keep the site online without ever acknowledging what an absurdly low bar this is. Like I can light money on fire and keep a site online too; it’s the making money part that is the tricky bit.
Just to clarify, I didn't trot it out initially because it's amazing (though at the size of Twitter I personally am kind of amazed; I thought it would be hard to keep it as stable as it's been with that much of a headcount reduction, but you're right about the opaqueness of the financials, although, really, not completely opaque re Fidelity write downs; it's been... not great).
That said, the trotting out was just to point out the coincident timing between when Elon started the cuts, and how aggressively he cut, and when other mega cap tech started slowing or even laying off workers. You might say "but none of those other companies clipped 80% of their folks," but that would be somewhat suicidal to do as a public company. But a high-profile trigger like that influences folks to take a harder look at how and why they're deploying personnel.
Last comment, when you heard what Elon was doing were you just like "wow, that's a lot of layoffs" and then went about your day? Or did it reinforce your view that "there is tons of bloat at tech companies..."? Do you really think the leaders at these companies are ignorant about that reality and that your opinion is unique? No offense, but I don't. They knew they were bloated. To steal another commenter's metaphor, there's all this overstaffing in the air, a combustible vapor of sorts. And Elon's reduction at Twitter lit a match.
Maybe it was a catalyst, I buy that because CEOs and thought leaders are still talking about it.
I just don’t understand why it would be. It’s an example you can’t learn anything from (since the company is private). But even if Twitter were still public, all the variables are confounded with the fact that the CEO is also a chaos agent, political operator, and potentially insane.
Sorry if my comment came off as attacking your post. I think your observation of the effect the Twitter cuts had on others is probably right. I am more criticizing the unscientific thinking of the people that claim to have taken a lesson from Elon’s management of Twitter.
No need to apologize. I thought your reply was thought-provoking and I think that’s why we’re all here—to share and learn from each other.
People were very skeptical that the site could even be maintained with that drastic a headcount reduction. Seems to me like the outcome was:
- site stays up and has sufficient ability to recover from outages
- can still deploy features in the frontend
- can't deploy features in the backend (look closely; mind you, Old Twitter absolutely sucked at product innovation too)
- moderation deliberately cut down
- due to some combination of increased unpleasantness, boycotts, and the personal brand toxicity of Elon, the advertising revenue is down
- site was levered into an unofficial US cabinet position (!), we have yet to see how lucrative that is. Maybe it includes a free jet.
The part missing is that Musk massively over payed for the bloated unprofitable business.
I would think Twitter is profitable with the cuts that were made it is just not nearly profitable enough to justify the investment.
Non-negative cash flow from operations but lighting money on fire when you add on the debt that was used to purchase the company.