Elon Musk fired 80% of Twitter, and Silicon Valley companies adopted the practice, finds report

Elon Musk's acquisition of Twitter for $44 billion led to a massive 80% workforce cut, causing chaos and shock. Despite facing challenges like increased hate speech and functionality problems, the app has endured and his radical downsizing set a new standard for job cuts in the tech industry.

Livemint, Written By Jocelyn Fernandes
First Published13 Jun 2024, 10:01 AM IST
Elon Musk's 'radical downsizing' of Twitter workforce was met with forecasts of tough times ahead, but the app has endured and soon other Silicon Valley giants also slashed scores of jobs.
Elon Musk’s ’radical downsizing’ of Twitter workforce was met with forecasts of tough times ahead, but the app has endured and soon other Silicon Valley giants also slashed scores of jobs.(AFP)

After billionaire Elon Musk bought Twitter for $44 billion in 2022, he sent in loyalists, including ex-boring company exec Steve Davis and cousin James Musk, to “examine whether existing employees were value for money,” according to a report by The Telegraph. He soon slashed 6,000 workers, or 80 per cent of then-Twitter, now X, in a move that shocked the industry.

The report said that employees were asked to justify their roles and state which colleagues should be retained. The diversity and inclusion departments and product and design teams suffered the most. Even Twitter's content moderation team was reduced.

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“It was clearly pretty bloated. You had to right-size the organisation. However, Musk went further than anyone predicted. When he cuts a team, he cuts the whole team, and that creates significant chaos," one source told The Telegraph.

“Musk had been hoping to rebuild the business with a challenger mindset and a clean slate. But lopping off whole divisions without a clear strategy left too many gaps to plug, and talent had plenty of opportunities at fast-growing start-ups like OpenAI rather than struggling Twitter,” the source added.

Large Layoffs Blueprint Aped By Other Silicon Valley Giants

Musk's “radical downsizing” of the Silicon Valley tech major's workforce was met with forecasts of tough times ahead. With whole teams lopped off, some key personnel fired overnight, new "free speech" policies that saw suspended accounts reinstated (i.e. Donald Trump), and warning of “hardcore, high intensity” work hours for retained staff, many had written off Musk-led X.

But, despite user complaints of increased hate speech, white supremacy conspiracies gaining footing on the platform, and lags and problems with functionality, the app has endured nonetheless.

Also Read | Elon Musk reveals changes to ‘likes’ privacy policy on X; netizens say ’pointless update’

David Freidberg, a technology investor, told the paper that Musk’s layoffs “set a new standard” regarding the scale of job cuts.

In a turn of events, within weeks, other Silicon Valley giants, from Meta to Google, Microsoft, and Amazon, combined have slashed scores of jobs — 165,269 in 2022, 263,180 in 2023, and 96,551 in 2024 (so far), according to data on layoffs. The bulk of the chop-offs has been “middle managers” or, in Mark Zuckerberg's words, “managers managing managers, managing managers, managing managers, managing people who are doing the work.”

Valuation Drops, Investors Take Hit

The biggest hit from Musk's perspective is the company's valuation — now at $14 billion, way below the $44 billion he paid.

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A source told the paper that investors hope to participate in Musk’s next ventures as compensation for their sunk cost in the Twitter acquisition.

“Most people involved have accepted that a large part of that money is gone. The hope is for most investors who lit their money on fire that hopefully when he has another very successful project, like SpaceX, they will get a ride on that Musk rocketship," the source told The Telegraph.

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First Published:13 Jun 2024, 10:01 AM IST
HomeCompaniesNewsElon Musk fired 80% of Twitter, and Silicon Valley companies adopted the practice, finds report

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