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‘Economic Picture Ahead Is Dire,’ Elon Musk Tells Twitter Employees ‘Economic Picture Ahead Is Dire,’ Elon Musk Tells Twitter Employees
(about 1 hour later)
SAN FRANCISCO — Two weeks after closing a $44 billion deal to buy Twitter, Elon Musk painted a bleak financial picture for the social media company and outlined a series of changes for employees in his first companywide emails and a meeting with staff. SAN FRANCISCO — Two weeks after closing a $44 billion deal to buy Twitter, Elon Musk painted an increasingly bleak financial picture for the social media company and outlined a series of changes for employees in a meeting with staff on Thursday and in his first companywide emails, amid a continuing exodus of executives.
In two emails sent to workers late on Wednesday, Mr. Musk said the economy was challenging. He added that he planned to end Twitter’s remote work policy and wanted employees to renew their focus on generating revenue and fighting spam. At the meeting on Thursday, Mr. Musk warned employees that Twitter did not have the necessary cash to survive, said seven people familiar with the meeting who spoke on the condition of anonymity. The social media company was running a negative cash flow of several billion dollars, Mr. Musk added, without specifying if that was an annual figure. He mentioned bankruptcy.
“Sorry that this is my first email to the company, but there is no way to sugarcoat the message,” Mr. Musk, 51, wrote in one email. “The economic picture ahead is dire.” Twitter is too heavily dependent on advertising and vulnerable to pullbacks in brand spending, he added, and will need to bolster the revenue it gets from subscriptions. Mr. Musk added that he had recently sold Tesla stock to “save” Twitter. He has sold nearly $4 billion in Tesla shares recently, according to regulatory filings this week.
In another note to employees, he wrote that “the absolute top priority is finding and suspending any verified bots/trolls/spam.” Even so, Mr. Musk said Twitter remained over-staffed after mass layoffs of half of the company’s 7,500 employees last week. Remaining workers needed to be more “hard core,” Mr. Musk said.
Mr. Musk also held a meeting with employees on Thursday, telling them that Twitter remained over-staffed and needed to be more “hard core,” said four people familiar with the discussion who spoke on condition of anonymity. His statements echoed messages he shared in two emails sent to workers late on Wednesday. In those notes, Mr. Musk said “the economic picture ahead is dire.” He added that he planned to end Twitter’s remote work policy and wanted employees to renew their focus on generating revenue and fighting spam.
Twitter was running a negative cash flow of several billion dollars, Mr. Musk said at the meeting, without specifying if that was an annual figure, and said that it needed to move very quickly to survive. He added that he had recently sold Tesla stock to “save” Twitter and mentioned bankruptcy. Twitter was too heavily dependent on advertising and vulnerable to pullbacks in brand spending, he added, and will need to bolster the revenue it gets from subscriptions. In another note to employees, he wrote that “the absolute top priority is finding and suspending any verified bots/trolls/spam.”
Mr. Musk’s statements added to the changes that are roiling Twitter. Last week, he cut about 50 percent of the company’s 7,500 employees, and he has been pushing for product changes that would help Twitter make more money, including promoting a subscription product. He previously said the company was losing $4 million a day. Mr. Musk has roiled Twitter since taking over the company in the technology industry’s largest-ever leveraged buyout last month. The billionaire, who also runs the electric-car maker Tesla and the rocket company SpaceX, is under pressure to make the deal work, having paid $44 billion for Twitter.
But Twitter had lost money for eight of the past 10 years and its revenue growth has not been as robust as competitors. Mr. Musk also loaded the company with $13 billion in debt for the buyout, and it is now on the hook to pay $1 billion in interest payments annually. Mr. Musk has previously said the company is losing $4 million a day.
Twitter, whose communication department has been laid off, did not respond to a request for comment. Bloomberg earlier reported Mr. Musk’s emails.Twitter, whose communication department has been laid off, did not respond to a request for comment. Bloomberg earlier reported Mr. Musk’s emails.
On Wednesday, three top Twitter executives responsible for security, privacy and compliance also resigned, according to two people familiar with the matter and internal documents seen by The New York Times. On Thursday, more Twitter executives resigned. They included Kathleen Pacini, a human resources leader; Yoel Roth, the head of trust and safety; and Robin Wheeler, an advertising executive, according to four people familiar with the matter.
The departing executives were Lea Kissner, the chief information security officer; Damien Kieran, the chief privacy officer; and Marianne Fogarty, the chief compliance officer. They resigned a day before a deadline for Twitter to submit a compliance report to the Federal Trade Commission, which is overseeing privacy practices at the company as part of a 2011 settlement. That followed the resignations of three top Twitter executives responsible for security, privacy and compliance on Wednesday, according to two people familiar with the matter and internal documents seen by The New York Times.
The departing security executives were Lea Kissner, the chief information security officer; Damien Kieran, the chief privacy officer; and Marianne Fogarty, the chief compliance officer. They resigned a day before a deadline for Twitter to submit a compliance report to the Federal Trade Commission, which is overseeing privacy practices at the company as part of a 2011 settlement.
Twitter has typically reviewed its products for privacy problems before rolling them out to users, to avoid additional fines from the F.T.C. and remain in compliance with the settlement. But because of a rapid pace of product development under Mr. Musk, engineers could be forced to “self-certify” so that their projects meet privacy requirements, one employee wrote in an internal message seen by The Times.Twitter has typically reviewed its products for privacy problems before rolling them out to users, to avoid additional fines from the F.T.C. and remain in compliance with the settlement. But because of a rapid pace of product development under Mr. Musk, engineers could be forced to “self-certify” so that their projects meet privacy requirements, one employee wrote in an internal message seen by The Times.
“Elon has shown that he cares only about recouping the losses he’s incurring as a result of failing to get out of his binding obligation to buy Twitter,” the employee wrote. The changes to Twitter’s F.T.C. reviews could result in heavy fines and put people working for the company at risk, the person warned.“Elon has shown that he cares only about recouping the losses he’s incurring as a result of failing to get out of his binding obligation to buy Twitter,” the employee wrote. The changes to Twitter’s F.T.C. reviews could result in heavy fines and put people working for the company at risk, the person warned.
“This will put huge amount of personal, professional and legal risk onto engineers: I anticipate that all of you will be pressured by management into pushing out changes that will likely lead to major incidents,” the employee wrote.“This will put huge amount of personal, professional and legal risk onto engineers: I anticipate that all of you will be pressured by management into pushing out changes that will likely lead to major incidents,” the employee wrote.
“We are tracking recent developments at Twitter with deep concern,” Douglas Farrar, a spokesman for the F.T.C., said in a statement. “No C.E.O. or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them.”“We are tracking recent developments at Twitter with deep concern,” Douglas Farrar, a spokesman for the F.T.C., said in a statement. “No C.E.O. or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them.”
Twitter faces pressure to earn money. To fund the buyout, Mr. Musk took out $13 billion in debt, which will require Twitter to pay more than $1 billion annually in interest alone. Twitter earns about 90 percent of its revenue from advertisers, some of whom have shied away from the platform in recent days because of uncertainties over Mr. Musk’s commitment to removing toxic content from Twitter. He has responded by threatening a “thermonuclear name & shame” of advertisers who choose to halt their spending.
The company earns about 90 percent of its revenue from advertisers, some of whom have shied away from the platform in recent days because of uncertainties over Mr. Musk’s commitment to removing toxic content from Twitter. He has responded by threatening a “thermonuclear name & shame” of advertisers who choose to halt their spending.
Mr. Musk has also raced to find new subscription revenue. One of his first projects was to revamp a subscription service, Twitter Blue. He raised the price to $8 a month and said subscribers would receive a verification check mark, which Twitter has typically given to prominent users like celebrities and politicians.Mr. Musk has also raced to find new subscription revenue. One of his first projects was to revamp a subscription service, Twitter Blue. He raised the price to $8 a month and said subscribers would receive a verification check mark, which Twitter has typically given to prominent users like celebrities and politicians.
In one of his emails to staff on Wednesday, Mr. Musk said subscriptions should eventually account for about half the company’s revenue. “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” he wrote.In one of his emails to staff on Wednesday, Mr. Musk said subscriptions should eventually account for about half the company’s revenue. “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” he wrote.
Mr. Musk also told employees that they must return to the office on Thursday and work from there for a minimum of 40 hours a week. Twitter’s work force had been remote since early in the pandemic, and in recent years, its employees have been allowed to choose where they want to live rather than remaining in cities where the company has offices.Mr. Musk also told employees that they must return to the office on Thursday and work from there for a minimum of 40 hours a week. Twitter’s work force had been remote since early in the pandemic, and in recent years, its employees have been allowed to choose where they want to live rather than remaining in cities where the company has offices.
At some of Mr. Musk’s other companies, including the electric carmaker Tesla and the rocket maker SpaceX, he has also said employees must go into the office to work 40 hours a week. At some of Mr. Musk’s other companies, including Tesla and SpaceX, he has also said employees must go into the office to work 40 hours a week.
On Twitter’s Slack during Mr. Musk’s meeting with employees on Thursday, people discussed the merits of resigning or being laid off. “Don’t resign, be fired,” one worker wrote in a companywide channel, in a message viewed by The Times.
“Resignation is cheap and easy for the employer,” the employee wrote. “If you have a better plan lined up, go for it. If you are intimidated into considering resignation, don’t.”
David McCabe contributed reporting from Washington.David McCabe contributed reporting from Washington.