SAN FRANCISCO — Before Elon Musk bought Twitter last month, the company’s executives had accumulated hundreds of thousands of dollars in travel bills the social media service was planning to pay.
But when Musk took over the company, he refused to reimburse travel vendors for these invoices, current and former Twitter employees said. Mr Musk’s staff said the services were authorized by the company’s former management, not by him. People have since said that their staff have avoided calls from travel vendors.
Since Mr Musk finalized his $44 billion acquisition of Twitter, he’s launched a massive cost-cutting campaign. It initially cut half of the company’s 7,500-strong workforce, fired workers, and more recently continued layoffs through Monday. However, it has instructed staff to review, renegotiate and, in some cases, not pay Twitter’s outside vendors at all, by thoroughly examining all other costs at the company, eight people with knowledge of the matter said.
Mr. Musk and his advisers have trained their eyes on the computing costs that underpin Twitter’s core infrastructure, travel costs, software services, real estate, and even the company’s normally ostentatious in-office dining room meals. Twitter’s spending fell, but these moves led to complaints from insiders, as well as some vendors with millions of dollars in past payment debt.
Mr. Musk’s actions reflect the financial pressure that Twitter is under. The company took out a $13 billion loan to acquire the social network. Interest payments on this debt amount to more than $1 billion per year. And Twitter has long faced financial difficulties, often losing money and struggling to keep up with competitors like Facebook and Google, which effectively monetize their advertising products. Some advertisers have stopped spending on Twitter while considering ownership of Mr. Musk.
Mr. Musk, 51, told Twitter employees that the “economic picture ahead was dire” and that the company could be facing bankruptcy.
He did not respond to a request for comment.
Twitter’s former leaders have tried to make the company profitable through different strategies, from broadcasting live video to a series of audio offers. Mr. Musk’s plan was more drastic. He brought in allies from his other companies – Antonio Gracias, his long-time confidant and former head of electric car maker Tesla; Jared Birchall, head of Mr. Musk’s family office; and Steve Davis, who leads Mr. Musk’s tunneling project The Boring Company, to review Twitter’s books.
His guidelines were simple: cut, cut, cut.
This led to mass layoffs on Twitter this month. And behind the scenes, there is no expense outside the table.
Twitter’s drastically reduced finance team has been instructed to scan company expenses and employee expense reports “line by line”, people familiar with the matter said. They said they are specifically asked to make sure employees and their expenses are for “natural persons and real expenses”.
Changes to Elon Musk’s Twitter account
A quick revision. After Elon Musk completed his $44 billion acquisition of the social media company in October, he moved quickly to revamp Twitter, warning of a bleak financial picture and the need for new products. Let’s take a look at some of the changes made so far:
go private As part of his Twitter acquisition, Mr. Musk is delisting shares of the company and taking it away from public shareholders. Making Twitter a private company gives Mr. Musk some advantages, including not having to make quarterly financial statements. Private companies are also subject to less regulatory scrutiny.
layoffs Just a week after closing the deal, Mr. Musk laid off nearly half of Twitter’s workforce, or about 3,700 people. The layoffs affected many divisions across the company, including engineering and machine learning units, teams managing content control, and the sales and advertising departments.
Verification subscriptions. Twitter has begun charging its customers $7.99 per month to get a coveted verification checkmark on their profile. But the subscription service was paused after some users exploited it to wreak havoc on the platform by pretending to be high-profile brands and sending offensive tweets.
Content moderation. Shortly after closing the deal to buy Twitter, Mr. Musk said the company would set up a content moderation council to decide what types of posts should be followed and what should be removed. But advertisers have halted their spending on Twitter, fearing that Mr. Musk will loosen content rules on the platform.
Other possible changes. Musk and his advisers are said to be discussing adding paid direct messages that would allow users to send private messages to high-profile users as they look for ways to generate more revenue at the company. The company has also filed registration paperwork to clear the way for it to process payments.
Sources said Mr. Musk also gave an order to Twitter’s vendors and contracted services to slow or, in some cases, stop money transfers. Three people said that all expenses for services must be approved by Mr Birchall. People said Mr. Musk has since refused to pay for travel services made by former Twitter executives.
Three people said the company was also looking at office space leases, stopped paying, and hoped to renegotiate or waive some commitments altogether. Twitter leases office space around the world, but layoffs have reduced the need for much of that real estate.
Twitter’s partnerships team has also been instructed to renegotiate multi-year content deals with major sports organizations, as it did with the NFL, where the social media company pays the league to produce custom audio and video content for its platform; There are two people familiar with the plans. Twitter has made similar deals with other media companies, including Condé Nast, the NBA, and Fox Sports Network.
An NFL spokesperson did not immediately comment.
Davis, the head of the Boring Company, directed Twitter employees to renegotiate the company’s deals with companies that provide computing and technology services, such as Amazon and Oracle, according to sources. People have been told to suggest employees to these companies that Mr. Musk won’t work with them in the future if their firm refuses to renegotiate.
An engineering executive said that after Twitter’s contract with a software vendor owned by Mr. Musk expired, that company voided the discount it had given Twitter.
Amazon and Oracle representatives did not respond to requests for comment. An email sent to Boring Company was not immediately returned.
More About Elon Musk’s Twitter Takeover
- Trump’s Account Restored: Elon Musk has brought former President Donald Trump back to the platform. Mr Trump was banned after the January 6 riot.
- Targeting Critics:After laying off nearly half of the company, Mr. Musk continued to reduce Twitter’s workforce by firing employees who criticized him.
- At the border: Mr. Musk has given employees a deadline to decide whether or not to stay with the company. Hundreds have resigned, leading users to question whether the site will survive.
- Tweet Madness:Musk, who has been under tremendous scrutiny since acquiring Twitter, has been using the platform to rebuff, argue and justify his actions.
Three people said corporate credit cards were also shut down for Twitter employees. One worker said she tried to buy her colleagues a farewell drink after mass layoffs, but her corporate credit card was declined at the bar.
When Mr. Musk called Twitter employees to return to the company’s San Francisco offices to meet with him last week, some employees said they were worried about booking travel with personal credit cards and feared not getting a refund. Four current and former employees said Twitter, under Mr. Musk’s ownership, delayed payment or rejected expense reports submitted for approval.
Mr. Musk has ended other long-running perks on Twitter. He cut down on free lunches, which he said cost the company more than $400 “per lunch served.” (An employee of the company’s lunch program disputed Mr. Musk’s math.) At Twitter’s New York office Monday, the cafeteria, which once housed items like grilled shrimp, served two types of macaroni and cheese along with its salad bar. said one person.
Other benefits, such as subsidized gym passes, cell phone and internet bills, and childcare salaries, were also cut, the two said.
Musk’s team, including his personal attorney Alex Spiro, has ended Twitter ties with several outside law firms that worked with the company’s former management in a lawsuit related to the $44 billion acquisition, according to a person familiar with the move. Earlier this year, Twitter sued Mr Musk after he tried to back out of the deal to buy the company.
Mr Spiro did not respond to a request for comment.
Some of Twitter’s social projects began to be shelved. Two people said Twitter for Good, the company’s philanthropy division, lost many employees, and that checks promised to some nonprofit groups were not received. The San Francisco Standard had previously reported on Twitter’s philanthropy issues.
“Elon has shown that he only cares about compensating for losses incurred as a result of his failure to escape his binding obligation to buy Twitter,” wrote an employee at Twitter’s internal Slack messaging system this month.