- Elon Musk is set to own Twitter by the end of next week but has done little toward the transition.
- Reports vary of what he intends to do with the business, but large cuts are expected.
- “No one knows who or how this thing is running post-close,” one person familiar with the deal said.
As the billionaire Elon Musk gets closer to becoming Twitter’s owner, one of the few things people inside the company and close to the deal seem to agree on is that his rule will be chaotic.
Musk’s $44 billion deal is headed toward a close at the end of next week, likely on Friday, two people familiar with the situation told Insider. Beyond that, the company’s trajectory is murky, though Twitter will almost certainly see steep cuts to staff, including CEO Parag Agrawal and other top executives, people familiar with the deal said. These people spoke on condition of anonymity because they’re not authorized to speak to press.
Officials in the Biden administration have discussed a security investigation into some of Musk’s dealings, including his acquisition of Twitter, Bloomberg reported, but this is not seen as a genuine threat to the deal since there is no active investigation and one does not seem to be forthcoming, a person familiar with the deal said. A bigger problem could be that Musk had done “absolutely no” transitional work for his impending takeover, this person added.
Even with no transitional work accomplished by Musk yet, he is expected to make “huge cuts” to Twitter’s staff, this person said. Top executives like Agrawal are likely to be fired “almost immediately,” they added.
“No one knows who or how this thing is running post-close,” another person familiar with the company and transaction said.
Twitter declined to comment. Musk’s representatives did not respond to a request for comment.
The Washington Post Thursday reported Musk told prospective coinvestors in the deal that he intended to reduce the number of Twitter employees by up to 75%, which would leave it with roughly 2,000 people.
Twitter reported last year that it had grown to 7,500 people, but it continued hiring earlier this year and swelled to about 8,200 people in June, Insider previously reported. Hefty cuts have been expected for months, and Musk told employees during his one and only meeting with them, in June, that they could expect layoffs to get the company “healthy.”
“I do not take actions which are disruptive to the health of the company,” Musk said during the meeting. Workers started to leave the company in droves after Musk’s comments, Insider previously reported.
While Musk likely needs some executives to stay, members of the C-suite have little incentive to do so. Several are entitled to massive payouts with “change-in-control” provisions in their contracts: Agrawal is poised to receive $38.7 million if Musk fires him; Ned Segal, Twitter’s chief financial officer, is set to get $25.4 million; Vijaya Gadde, the chief legal officer, can leave with $12.5 million; and Sarah Personette, the chief customer officer, can cash out for $11.2 million.
Should Musk go ahead and decimate Twitter’s head count, staffers said it would cause “just chaos” and be “insane.” Another employee said that while “you could run Twitter with about 2,000 people,” no one at the company would like it.
“You certainly wouldn’t innovate with that, but you’d be able to run it,” the person added. “At its core, this thing hasn’t changed since it was built.”
Another staffer estimated the combined salaries of that many employees could roughly equal the $1.5 billion in Twitter debt Musk will need to service sometime next year.
A few months back, before Musk tried to back out of buying Twitter altogether, The New York Times reported the deck Musk shared with prospective investors and banks detailed an increase in head count by almost 50% from where it is today over the course of about three years.
Since then, Musk has said his renewed commitment to acquiring Twitter was part of his plan to make X, his “app for everything.” He mentioned China’s hugely popular “superapp” WeChat as an example. To bring so many new features to Twitter, Musk would likely need more than 2,000 people.
In comparison, WeChat, which has more than 1 billion daily active users, has roughly 3,000 people working for it, a person with knowledge of WeChat’s business said.
Known to be mercurial and prone to changing his mind, Musk may have done just that in telling investors how many people Twitter needs to operate. More likely, Musk is eager for as many people to quit the company as possible, instead of having to deal with layoffs and any severance considerations that may be in employment contracts, two people familiar with the deal said.
Musk may get his way. The next equity event at Twitter, when shares of employee stock vest, is on November 1. Under the terms of the Musk agreement, employee shares will now translate to cash upon vesting, instead of new grants of company stock, Insider previously reported. Three current employees said many colleagues planned to leave on or immediately after November 1, as many did after the last equity event, at the start of August.
Are you a Twitter employee or someone with insight to share? Contact Kali Hays at [email protected], on the secure-messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a nonwork device.