In the third and fourth quarters of 2022, there was a wave of mass layoffs in the tech sector. Employees from Amazon, Carvana, Doordash, Meta, Peloton, and Snapchat, among many others, have been laid off. While the tech sector in general appears to be struggling in the current economy, there is one particular company that we wanted to take a closer look at: Twitter.
A Timeline of Twitter’s Layoffs
On October 27, 2022, Elon Musk officially closed his deal to purchase Twitter. However, the previous day (before the purchase was official), Musk famously carried a sink into the Twitter offices and promised not to fire 75% of the staff, despite telling investors he would do just that.
On November 4, 2022, Musk kept his promise in a way because he didn’t fire 75% of the staff. Instead, he laid off 50% of the team, blaming a massive drop in revenue. This was only the beginning. On November 12, he then fired 80% of Twitter’s contractors without any formal notice, and ironically, some contractors only learned about it via Twitter. A couple of days later, on November 15, Musk fired some more employees because they expressed negative opinions of him in the company’s Slack channels.
The chaos continued the next day, when Musk told employees to either commit to the new “extremely hardcore” Twitter or to take severance. Unsurprisingly, many of the remaining employees rejected his “extremely hardcore” model, and left when the ultimatum expired on November 18.
As of November 21, Twitter was left with approximately 2,700 of the 7,500 employees that worked there prior to Musk’s takeover. Somehow, he also managed to ban remote work during this chaotic time. Unsurprisingly, some former Twitter employees are now suing their former employer.
Reactions to the Twitter Chaos
Public reaction to all of the Twitter chaos has been mixed. Former Twitter employees expressed sadness and dismay about the drastic changes, and worried about their former teammates still at the company. Current employees worried about whether they would be able to cope with the changes, and increased workload.
Some pundits worried whether Twitter would survive these cuts and began counting down to the company’s demise and migrating to other platforms. Others seemed to take glee in all of the chaos, insisting that Musk was playing four-dimensional chess, executing on some grand plan that only he was enough of a visionary to see.
However, there were two particularly absurd reactions that we wanted to focus on:
- Twitter was full of bloat and excess, and Musk was just eliminating all of that.
- All of the layoffs and firings resulted in a streamlined and “extremely hardcore” Twitter that is poised to take off.
Let’s take these arguments one at a time.
The Bloat and Excess Reasoning is Offensive
Were there employees at Twitter that were under performers? Of course. Just like there are at pretty much any company. However, the very idea that a publicly-traded company was so bloated and full of excesses and luxuries that you can layoff two-thirds of the staff without any consequences on the product is simply absurd.
Supporters of this argument pointed to the fact that Twitter was still up and running as proof that those fired employees weren’t actually doing anything productive for the company. This line of reasoning demonstrates an extremely poor knowledge of how tech companies function, because in actuality, the exact opposite of this is true. That Twitter was able to continue functioning after so many people were fired or laid off shows how resilient and durable the things they built were. It shows that their code was solid, their testing automation and protocols were sound, and their infrastructure and deployment teams were all on point. As a multi-billion dollar company, it’s pretty safe to assume that Twitter had a world-class engineering team.
However, if you’re still inclined to believe that Twitter isn’t missing a step without all of those employees, consider the Public Works Department of your city. If they let go of two-thirds of their staff, you’d certainly be able to drive around on the roads the next day. You’d even be able to drive on those roads three months from now. But you’d likely also begin to notice that there were more potholes and repairs were taking longer. Not to mention, the bridge they started building before the layoffs seems to have stalled completely, and resident requests are now going unanswered.
Similar things are likely happening at Twitter now. It’s likely that a lot of their research and development efforts, new product efforts, and bug backlog are either slowed or stalled altogether. There’s already evidence that Twitter’s notification system has been having some issues. We’re not privy to Twitter’s road map, but the pace of development is necessarily slowed by the resource constraint. This is to say nothing of the content moderation issues that Twitter is now experiencing because of the layoffs.
Additionally, as far as technology companies are concerned, Twitter, founded in 2006, is relatively old. This likely means that there are some legacy issues and decisions in their technology stack that are best understood by long-time employees. That institutional memory is important to quickly address issues, and ensure that new development doesn’t create any problems with the legacy systems. When these employees leave, they take that institutional memory with them, and it becomes more difficult to quickly iterate on the product.
If you still don’t believe that the bloat reasoning is nonsense, Twitter has now started hiring. Frankly, the idea that all of those employees were simply bloat is offensive.
Chaos is Bad for Employee Engagement
People have also argued that Musk was able to get rid of all of the malcontents and ineffective employees, leaving him with a team of all-stars ready to implement his “extremely hardcore” vision for the new Twitter. This line of reasoning is as naive as it is nonsensical.
First, there’s no real evidence that Musk only got rid of the malcontents and ineffective employees. Sure, firing employees that expressed negative opinions of him may remove some people that were unhappy with him, but the best managers also know how important it is to have a variety of opinions on the team, rather than a group of fawning sycophants. Moreover, when you give people the option to either commit to some vague “extremely hardcore” vision or to leave, some of the people that choose to leave are going to be extremely talented. That’s just how math works. In fact, given Musk’s behavior and ultimatum, it stands to reason that the only employees left are those that idolize Musk or those that have no other choice because of personal circumstances.
Next, all of the chaos created by Musk is doing a number on all facets of employee engagement. As we’ve discussed before happy employees are productive employees. Some of the factors that affect employee happiness are:
His “extremely hardcore” vision demands employees commit their entire life to Twitter, while offering nothing in return. By converting some of Twitter’s office space into bedrooms, he’s made it clear that he’s not interested in work-life balance.
Company’s Financial Stability
Musk famously overpaid for Twitter, taking on a lot of debt. Advertisers have also fled the platform since his takeover, putting the financial viability of the company at risk. Musk himself has warned of potential bankruptcy.
Given the round of layoffs and seemingly indiscriminate firings, the remaining employees cannot possibly feel certain about their job security at Twitter. We’ve already discussed the chaotic timeline above, and Musk’s own worries about bankruptcy.
Good Relationships With Colleagues
This is related to the previous point. With all of the people that have left the company, and the uncertainty of those remaining, it’s difficult to form and forge relationships. Previously good relationships can even begin to sour and strain as employees start to fend for themselves given the tremendous uncertainty.
Mission-driven employees are more engaged and productive. However, apart from being “extremely hardcore” and being a “free speech absolutist”, it’s unclear what Twitter’s values are now under Musk’s leadership. The platform, which to be sure, had it’s flaws, attempted to provide an arena for users to share and learn. Now, it appears to be the playground for one man’s ego.
The best companies view their employees as their most valuable resource. Keeping employees happy and engaged helps to ensure that they perform well. It also minimizes turnover and the high costs associated with it.
Some day in the future, Musk’s takeover of Twitter is going to make for a fascinating case study at some business school. From an outsider’s perspective, Musk’s actions appear to be the result of an out-of-control ego left completely unchecked. But real lives and livelihoods are being affected. He somehow managed to layoff or fire two-thirds of his staff, malign them as not dedicated enough, and destroy the culture of the company. Those are just the results we can see. Given how all of this may affect employee engagement and happiness, we believe that there are much deeper and more long-term effects that have yet to manifest. With a much more limited and likely disengaged staff, it’s very likely that the actual product, it’s quality, and it’s future prospects will suffer tremendously.
It would have been extremely fascinating to measure employee engagement via something like the Employee Net Promoter Score (eNPS) at Twitter before and after the Musk acquisition. Assuming that Elon Musk wouldn’t have immediately fired all of the Detractors, of course.