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Kylie Robison (Tech reporter for @FortuneMagazine): What I’m hearing from Twitter employees; It looks like roughly 75% of the remaining 3,700ish Twitter employe

Kylie Robison (Tech reporter for @FortuneMagazine): What I’m hearing from Twitter employees; It looks like roughly 75% of the remaining 3,700ish Twitter employees have not opted to stay after the “hardcore” email. https://twitter.com/kyliebytes/status/1593391167718113280 https://twitter.com/kyliebytes/status/1593391167718113280

toss1 4y ago
That brings it down to under 1000 employees So Elon paid $44B for a company now with 900-odd employees. For a 10-year ROI, that's $4.4B per year profit, or $440 million/per employee For contrast, Netflix has the highest revenue per employee at $2.63 million/person, and Apple is second at $2.38 million, and Alphabet & Meta next at $1.64, and eBay at $0.9 million per employee. So, he'll need to get 200x the profitability per employee, just to get a total profit equal to his investment in 10 years. To get a company valuation back to his purchase price, at a 20X multiple, he needs to make those employees as profitable per employee as Apple. In a business that has never been consistently profitable, has not much of a moat, and in which he'd panicked almost all of his advertisers, the primary customers. Good luck with that
- randomsearch 4y ago
  If he needs more than 900 employees, he can just hire more. He is not fixed at "900 employees", so the premise of this argument is invalid.
- noelsusman 4y ago
  There's a reason he tried to get out of this deal. He's going to lose billions of dollars on this, the only question at this point is how many billions.
  - Zigurd 4y ago
    This is an under-explored part of how we got here. Elon did not want to buy Twitter. He bought it only because he thought he could flip it and lose less than what settling would cost (plus what damage depositions would do). Right up to a few days before the deal closed, Elon was hoping he would not have to actually run Twitter. And that's the second part that is under-explored: Elon could not find a CEO. And he never will until he admits all of his and the coinvestors' equity stakes are now worth zero, and he takes a down round that reshapes the cap table and enables a sane incentive package for a CEO.
    - detaro 4y ago
      Neither wanting to flip it nor not wanting to run it explain what he has done once he actually owned though, more the opposite in fact. You don't prepare a company for flipping it by whatever this mess is, nor does it make being its CEO a more attractive job, nor did he have to run in as directly as he does. (Well, unless you don't care about the flipping price. Verizon managed to sell Tumblr after all ;))
      - Casteil 4y ago
        Perhaps he thought it'd be easier than it really is after SpaceX's wild success in reusing orbital rocket boosters.
- hairofadog 4y ago
  The ones who stay are going to work nights and weekends, though.
- fasthands9 4y ago
  It seems like ad spending is only going to get more difficult since there are way more options, spending is down in general, and Twitter is not video centric. That being said if you think those things are true then the absolute right move is to scale back operations and stop trying to be a growth innovator - and instead just be a really great forum. Reddit has 700 employees. Twitter can probably survive with 1000. It probably wont work out but maybe if revenue grows 10% per year and they can get paid features up to 1 or 2B per year it works out.
  - toss1 4y ago
    Yup, and to do that, he'll have to go right back to the mainstream moderation he loathes, as advertisers won't pay for even uncertainty (nevermind a hellscape), and the right-wing market won't pay and already has several sunken or underwater competitors.
  - everforward 4y ago
    I can't find an exact breakdown, but the sources I can find say that ads are still a majority of Reddit's revenue. Reddit also has some structural advantages. Building around communities allows Reddit to ban advertiser unfriendly communities, and to threaten to ban others to force them to toe the line. It also gives them rough controls over what other users see (e.g. hiding NSFW content, quarantining subreddits so they don't show up on the not-logged-in front page). They've also managed to convince their users to moderate each other for free, which gives them a really lean head count. I think Twitter would need to substantially redefine their product to compete in that arena. Reddit also only made ~$350M in revenue last year. I don't think competing with Reddit is likely to justify the purchase price of Twitter over the timespan either is likely to survive.
- sigil 4y ago
  > So Elon paid $44B for a company now with 900-odd employees. For a 10-year ROI, that's $4.4B per year profit, or $440 million/per employee. Your math is off. $4.4B per year profit / 1000 employees = $4.4M per year profit per employee.
  - whateveracct 4y ago
    So still higher than some of the highest benchmarks. 2x instead of 20x. Still tough.
    - sigil 4y ago
      Yeah, still tough. More like 5X - 10X. Definitely not the 200X disparity claimed by parent though. Apple had $1M profit per employee in 2021. What’s an achievable PPE for a business like New Twitter? If you say $500K, and if you subscribe to The Headcount Method of Valuation, that implies Musk will need to 10X headcount from this low point to break even in 10 years. (I question the premise though — I don’t think the plan is “extract $44B in cash by 2032.”)
    - rsynnott 4y ago
      Worse than that; the Netflix figure is for _revenue_, not profit.
- dragontamer 4y ago
  Don't forget the $1.3 Billion in interest payments from the loans they took on. ($13 Billion in debt signed on the deal, assuming 10% rate of CCC bonds from April 2022).
- lamontcg 4y ago
  I can't wait to see the GDPR lawsuits from the EU.
- joeevans1000 4y ago
  What I've wondered through all this is whether he intends to bring in different contractors than than were there before to replace everyone he is firing or causing to quit. Contractors are more disposable and often cheaper.
P_I_Staker 4y ago
To be honest, I wonder if they could band together and challenge this in court. While companies get tons of leeway, you might be surprised that there's sometimes protection. Even if legal, what Musk is doing is incredibly sleazy. The employees agreed to work on certain terms. Then he demands they agree to different terms. Seems sketchy, but I think I know what they'd argue. It's just a really creepy thing. I don't think I've really seen or heard of it elsewhere. You work for me, so sign here for different terms, or you lose your job. I do know that it's probably legal in most jurisdictions for CEOs to just dictate new work conditions, after hiring (though it shouldn't). However, it doesn't normally come in the form of a button you must push to agree with him, "or else". Usually you have a meeting where you explain the plans moving forward... it seems companies that are scared of being sued do this. I can't imagine this is a legally prudent move. We should enact laws that specifically target CEOs that act like cartoon characters. Of course, that would just let them be more secretive or quiet.
- Demotioo 4y ago
  It's the USA why wouldn't he be able to just fire people? He gives them 3 month should be plenty enough
  - Pengy7 4y ago
    I think contracts aren't enforceable unless both sides get something.
    - seunosewa 4y ago
      3 months pay sounds like something.
  - P_I_Staker 4y ago
    You might be surprised. It's really complicated. Based on my experience with companies such as twitter, they are so finicky about not doing stuff like this. It's not just altruism or for employee moral. It's clear some of the companies are simply deciding to not rock the boat by firing people. This can be more legally complicated than it seems. Anyway, I'm not really saying one way or another, but it seems to follow that if others are taking measures, there might be good reasons for them. I would be surprised if the Elon / twitter don't get sued by this; multiple times.

toss1 4y ago

That brings it down to under 1000 employees So Elon paid $44B for a company now with 900-odd employees. For a 10-year ROI, that's $4.4B per year profit, or $440 million/per employee For contrast, Netflix has the highest revenue per employee at $2.63 million/person, and Apple is second at $2.38 million, and Alphabet & Meta next at $1.64, and eBay at $0.9 million per employee. So, he'll need to get 200x the profitability per employee, just to get a total profit equal to his investment in 10 years. To get a company valuation back to his purchase price, at a 20X multiple, he needs to make those employees as profitable per employee as Apple. In a business that has never been consistently profitable, has not much of a moat, and in which he'd panicked almost all of his advertisers, the primary customers. Good luck with that

randomsearch 4y ago
If he needs more than 900 employees, he can just hire more. He is not fixed at "900 employees", so the premise of this argument is invalid.
noelsusman 4y ago
There's a reason he tried to get out of this deal. He's going to lose billions of dollars on this, the only question at this point is how many billions.
- Zigurd 4y ago
  This is an under-explored part of how we got here. Elon did not want to buy Twitter. He bought it only because he thought he could flip it and lose less than what settling would cost (plus what damage depositions would do). Right up to a few days before the deal closed, Elon was hoping he would not have to actually run Twitter. And that's the second part that is under-explored: Elon could not find a CEO. And he never will until he admits all of his and the coinvestors' equity stakes are now worth zero, and he takes a down round that reshapes the cap table and enables a sane incentive package for a CEO.
  - detaro 4y ago
    Neither wanting to flip it nor not wanting to run it explain what he has done once he actually owned though, more the opposite in fact. You don't prepare a company for flipping it by whatever this mess is, nor does it make being its CEO a more attractive job, nor did he have to run in as directly as he does. (Well, unless you don't care about the flipping price. Verizon managed to sell Tumblr after all ;))
    - Casteil 4y ago
      Perhaps he thought it'd be easier than it really is after SpaceX's wild success in reusing orbital rocket boosters.
hairofadog 4y ago
The ones who stay are going to work nights and weekends, though.
fasthands9 4y ago
It seems like ad spending is only going to get more difficult since there are way more options, spending is down in general, and Twitter is not video centric. That being said if you think those things are true then the absolute right move is to scale back operations and stop trying to be a growth innovator - and instead just be a really great forum. Reddit has 700 employees. Twitter can probably survive with 1000. It probably wont work out but maybe if revenue grows 10% per year and they can get paid features up to 1 or 2B per year it works out.
- toss1 4y ago
  Yup, and to do that, he'll have to go right back to the mainstream moderation he loathes, as advertisers won't pay for even uncertainty (nevermind a hellscape), and the right-wing market won't pay and already has several sunken or underwater competitors.
- everforward 4y ago
  I can't find an exact breakdown, but the sources I can find say that ads are still a majority of Reddit's revenue. Reddit also has some structural advantages. Building around communities allows Reddit to ban advertiser unfriendly communities, and to threaten to ban others to force them to toe the line. It also gives them rough controls over what other users see (e.g. hiding NSFW content, quarantining subreddits so they don't show up on the not-logged-in front page). They've also managed to convince their users to moderate each other for free, which gives them a really lean head count. I think Twitter would need to substantially redefine their product to compete in that arena. Reddit also only made ~$350M in revenue last year. I don't think competing with Reddit is likely to justify the purchase price of Twitter over the timespan either is likely to survive.
sigil 4y ago
> So Elon paid $44B for a company now with 900-odd employees. For a 10-year ROI, that's $4.4B per year profit, or $440 million/per employee. Your math is off. $4.4B per year profit / 1000 employees = $4.4M per year profit per employee.
- whateveracct 4y ago
  So still higher than some of the highest benchmarks. 2x instead of 20x. Still tough.
  - sigil 4y ago
    Yeah, still tough. More like 5X - 10X. Definitely not the 200X disparity claimed by parent though. Apple had $1M profit per employee in 2021. What’s an achievable PPE for a business like New Twitter? If you say $500K, and if you subscribe to The Headcount Method of Valuation, that implies Musk will need to 10X headcount from this low point to break even in 10 years. (I question the premise though — I don’t think the plan is “extract $44B in cash by 2032.”)
  - rsynnott 4y ago
    Worse than that; the Netflix figure is for _revenue_, not profit.
dragontamer 4y ago
Don't forget the $1.3 Billion in interest payments from the loans they took on. ($13 Billion in debt signed on the deal, assuming 10% rate of CCC bonds from April 2022).
lamontcg 4y ago
I can't wait to see the GDPR lawsuits from the EU.
joeevans1000 4y ago
What I've wondered through all this is whether he intends to bring in different contractors than than were there before to replace everyone he is firing or causing to quit. Contractors are more disposable and often cheaper.

P_I_Staker 4y ago

To be honest, I wonder if they could band together and challenge this in court. While companies get tons of leeway, you might be surprised that there's sometimes protection. Even if legal, what Musk is doing is incredibly sleazy. The employees agreed to work on certain terms. Then he demands they agree to different terms. Seems sketchy, but I think I know what they'd argue. It's just a really creepy thing. I don't think I've really seen or heard of it elsewhere. You work for me, so sign here for different terms, or you lose your job. I do know that it's probably legal in most jurisdictions for CEOs to just dictate new work conditions, after hiring (though it shouldn't). However, it doesn't normally come in the form of a button you must push to agree with him, "or else". Usually you have a meeting where you explain the plans moving forward... it seems companies that are scared of being sued do this. I can't imagine this is a legally prudent move. We should enact laws that specifically target CEOs that act like cartoon characters. Of course, that would just let them be more secretive or quiet.

Demotioo 4y ago
It's the USA why wouldn't he be able to just fire people? He gives them 3 month should be plenty enough
- Pengy7 4y ago
  I think contracts aren't enforceable unless both sides get something.
  - seunosewa 4y ago
    3 months pay sounds like something.
- P_I_Staker 4y ago
  You might be surprised. It's really complicated. Based on my experience with companies such as twitter, they are so finicky about not doing stuff like this. It's not just altruism or for employee moral. It's clear some of the companies are simply deciding to not rock the boat by firing people. This can be more legally complicated than it seems. Anyway, I'm not really saying one way or another, but it seems to follow that if others are taking measures, there might be good reasons for them. I would be surprised if the Elon / twitter don't get sued by this; multiple times.