Elon Musk’s bumpy first week at the helm of Twitter

Posted on Nov 5, 2022, 9:15 AMUpdated on Nov. 5, 2022, 9:19 am

Chaotic dismissals, risky subscription offers, rash decisions questioned in real time on Twitter… Elon Musk has wasted no time in making his mark on the social network since he took power at the end of October.

Elon Musk fired, Friday, November 4, “almost half” of Twitter’s employees. The company, which had 7,500 employees until last week, will now have fewer than 4,000. Employees of the social network were informed by email on November 3 in the late afternoon that they would receive an email to their personal address if they were fired, and to their professional address if they still had a job.

In fact, many employees discovered they had been fired on Thursday night, trying, in vain, to connect to their professional accounts. Some employees even learned of the news because they were disconnected while attending a meeting with their co-workers, according to The New York Times.

“I want to throw up”

“Well, that looks promising. I can’t access my emails. My Mac won’t turn on. Thank goodness it happened at three in the morning. I appreciate the delicacy of the timing guys,” commented, ironically, one of the employees on the platform.

Employees who stayed in their jobs – for now – weren’t any happier. “I got the 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. »

She quotes one of her colleagues, even more concisely: “I was never fired. But I still want to throw up. In addition to the sadness of seeing their colleagues leave, Twitter employees who haven’t yet been fired run the risk of being fired later “for misconduct”, which means they don’t deserve their deletion

The price is too high

Elon Musk acquired Twitter on October 28. He agreed to buy it back in April, at a price of 54.20 dollars per share, or 44 billion dollars in total. This price is considered very high, if not too high by experts, amid the slowdown in the technology sector.

The Tesla and SpaceX boss then sought to escape his obligations, leading Twitter’s management teams to sue him. Two weeks before the start of this legal procedure, which he was almost sure to lose, the billionaire finally decided to buy the social network at the agreed price.

13 billion debt

To carry out this acquisition, the billionaire went into debt in the amount of 13 billion dollars to a consortium of banks. The problem is that Twitter’s revenues are limited, and its profits are often nonexistent. The social network has been public for ten years, but it has only been profitable for two years, in 2018 and 2019. In the last two years, the platform has been in the red again.

Before its acquisition by Elon Musk, the company had relatively little debt. The debt burden is about $50 million a year. But after this acquisition, the social network had to pay an annual recognition of one billion dollars to its creditors. This greatly exceeds the $633 million generated by Twitter’s operations last year.

$8 subscription

The boss of Tesla and SpaceX therefore has no choice. If he wants to pay his creditors, he is forced to reduce Twitter’s expenses and increase his income. He got it from the first week, in a chaotic environment.

One of its first steps to increase revenue is to ask users whose profile is “verified” by Twitter – be they journalists, academics, artists or politicians – to pay a subscription to maintain the distinction this. After some back and forth, he chose to set this subscription price at eight dollars per month.

But this verification method was invented for moderation purposes, so that Twitter users can distinguish real accounts from fake accounts. The system imagined by Elon Musk will not, a priori, be possible to distinguish between a famous person and an impostor.

Leaked advertising?

Elon Musk’s strategy to make Twitter profitable also involved laying off half the employees. Content moderation teams were also affected. The problem is that a messy or non-existent moderation policy will likely affect its revenue, scaring off advertisers.

“Removing ads from Twitter is a quick and painless decision for large groups, because the platform is not essential to their media strategy,” said Jasmine Enberg, analyst at eMarketers. “Advertisers need Musk more than they need him. »

So far, several groups, including Volkswagen, General Mills, Pfizer, Mondelez International and General Motors, have paused their ad buying. But they could decide to leave the platform for good… which would put 90% of Twitter’s revenue at risk.

Elon Musk again sought to reassure advertisers on Friday night. According to Yoel Roth, who leads the “trust and safety” team responsible for Twitter moderation, only 15% of the employees on his team were dismissed. “Our moderation capabilities essentially remain in place,” he promised the platform.

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