From my experience (I've build and sold 2 companies) there are 2 factors increasing headcount in larger organisations: 1. Layers of management and organization

From my experience (I've build and sold 2 companies) there are 2 factors increasing headcount in larger organisations: 1. Layers of management and organizational dynamics push up the number of people. There is a correlation between the number a manager manages and his status in the company. The larger the team - the larger your budgets are - the more important you are. Internal goals (to rise in the organization) override external goals (sell and generate profits). When owners are leaving the company or have already cashed out, their motivation to keep financial discipline is lowered and management quality decreases. Owners differ from the hired managers because they prioritize external goals (sales, profit, long-term company health) not their own personal employee goals. 2. There is a strange fallacy that when you get your VC capital you need to increase your headcount to be perceived as a "serious" company. If you are 10 people working remotely you won't be able to ask for the same valuation in your second or third round as a "looks like a big company" startup with an office and 100 employees. Investors would push (sometimes inadvertenly) founders to grow personel at higher rate, because investors sell the company to other investors. They package the company to exit, they don't care that much about sales and profitability except as a baseline numbers for the next round valuation. I've seen this several times. The contrapoint is that Instagram had 13 people when it was sold to Facebook and Whatsapp had around 40 people. Twitter has 7500 employees. There's got to be a lot of layers of management, processes that can be removed from the company. For Elon, fixing cashflow now is more important that keeping everything working smoothly. It works smoothly to generate loss every quarter. It's easier to cut the losses than generate revenue. It makes perfect sense.