Elon Musk’s first week at the helm of Twitter
Posted November 5, 2022, 9:15 amUpdated November 5, 2022 at 9:19 am.
Layoffs, risky subscription offers, hasty decisions questioned in real time on Twitter… Elon Musk has wasted no time in making his mark on the social network since taking power at the end of October.
Elon Musk fired “about half” of his Twitter staff on Friday, November 4th. The company, which had 7,500 employees until last week, will now have fewer than 4,000 employees. Employees of the social network were informed by e-mail in the second half of the day on November 3 that if they are fired, a letter will be sent to their personal addresses, and if they still have a job, to their professional addresses.
In fact, many employees discovered they had been terminated on Thursday evening, trying in vain to connect to their professional accounts. According to The New York Times, some employees even learned of the news because they were out of touch while attending a meeting with co-workers.
“I want to throw up”
“Well, that sounds promising. I can’t access my emails. My Mac won’t turn on. Thank goodness it happens at three in the morning. I appreciate the finesse of the timers,” commented one of the workers on the platform sarcastically.
The workers who kept their jobs – for now – were no happier. “I got an email … I still have work,” one of them announced Friday morning. “But I’ve spent the night watching talented, caring, hard-working people disappear from the system one after another, and I don’t know what to say. »
He quotes one colleague more succinctly: “They didn’t fire me. But I still want to throw up. In addition to the sadness of seeing their colleagues go, Twitter employees who haven’t yet been fired face the risk of being fired later “for malfeasance,” meaning they’re not eligible for severance.
The price is very high
Elon Musk acquired Twitter on October 28. It agreed to buy it back in April for $54.20 per share, or $44 billion in total. That price is considered too high, if not too high, by experts amid a slowdown in the tech sector.
The CEO of Tesla and SpaceX then tried to avoid his obligations, which led to Twitter’s management teams suing him. Two weeks before the start of this legal procedure, which he is almost certain to lose, the billionaire has finally decided to buy the social network at an agreed price.
13 billion debt
In order to make this purchase, the billionaire borrowed 13 billion dollars with a consortium of banks. The problem is that Twitter’s revenues are limited and profits are often non-existent. The social network has been public for ten years, but has only turned a profit for two years, in 2018 and 2019. In the last two years, the platform has turned red again.
Before being bought by Elon Musk, the company had relatively little debt. The debt burden was about $50 million a year. But after this purchase, the social network will have to pay a billion dollars in annual taxes to its creditors. That’s well ahead of the $633 million generated by Twitter operations last year.
The boss of Tesla and SpaceX has no choice. If it wants to pay back its creditors, Twitter is forced to cut costs and increase revenue. He started it in a chaotic atmosphere from the first week.
One of its first steps to increase revenue was to ask users whose profiles were “verified” by Twitter – be they journalists, academics, artists or politicians – to pay a subscription fee to maintain that distinction. After several back-and-forths, he chose to set the price of this subscription at eight dollars a month.
However, this verification procedure was invented for the purpose of moderation, so that Twitter users can recognize real accounts from fake accounts. The system envisioned by Elon Musk, a priori, will not allow to distinguish between a famous person and a fraud.
Elon Musk’s strategy to make Twitter profitable included laying off half of its employees. Content moderation teams were also affected. The problem is that a chaotic or non-existent moderation policy scares away advertisers, likely affecting their revenue.
“Removing ads from Twitter is a quick and painless decision for large groups because the platform is not essential to their media strategy,” notes eMarketers analyst Jasmine Enberg. “Advertisers need the mask more than they need it. »
For now, many groups, including Volkswagen, General Mills, Pfizer, Mondelez International and General Motors, have suspended ad buys. But they could decide to leave the platform for good… which would put 90% of Twitter’s revenue at risk.
Elon Musk tried to reassure advertisers again on Thursday. According to Yoel Roth, who leads Twitter’s “trust and safety” team responsible for moderation, only 15% of the employees on his team were fired. “Our moderation capabilities remain essentially in place,” the platform said.
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