With billionaire Elon Musk taking over at the helm of Twitter, the social media platform’s employees are in fear of what changes he might be bringing.
But while they might fear the change in culture and practices that Musk will bring to Twitter, they should be in greater fear of simply losing their jobs as he moves to cut costs.
Musk has made numerous comments about allowing more speech on the platform and making its algorithms open source in order to increase trust.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement on April 25 after his deal to buy the company was announced.
“I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans,” he added.
But not everyone is happy about those moves.
“Many Twitter employees feel personally invested in the company’s effort to encourage healthy conversation — even if they do not directly work on content moderation — and have pressed executives to crack down further on hate speech and misinformation, six employees said. They see Mr. Musk’s proposal to revert to Twitter’s early, lax approach as a rebuke of their work,” The New York Times reported last month.
However, if those employees think that complaining or even quitting will curb Musk, they are going to have to think again.
While he seems to genuinely want to change public discourse, he is running a multibillion-dollar company, and having disgruntled employees leave is not necessarily going to be a big concern.
Do you think many Twitter employees will quit?
Musk’s main concern now that he owns Twitter is to make money and keep the share value of the company up.
When putting together the financing for the $44 billion deal to buy the social media giant, the Tesla and SpaceX CEO pledged to slash jobs and executive pay in order to cut operating costs at Twitter, Bloomberg reported.
He has to cut costs where he can because he secured the money for the deal through loans and debt financing.
To push through the deal, Musk got $13 billion in loans secured against Twitter and a $12.5 billion margin loan tied to his Tesla stock. The remainder of the $44 billion he paid with his own money, Reuters reported.
To secure that kind of financing, he had to convince banks that he would slash costs at the social media company and make it more profitable.
As the deal is currently underway, it won’t be long until Musk will have to start paying on those loans.
If Twitter employees choose to leave over the company’s new owner, they will find they are replaceable.
“He’s going to have some very big monthly debt payments to make on this little thing that he just bought called Twitter,” Aron Solomon, the head of strategy and chief legal analyst for Esquire Digital, told The Western Journal. “He can’t afford to dramatically jeopardize its stock value.
“Does that mean that he can’t afford to alienate Twitter employees and have them leave and be replaced by other people? Of course he can.”
“So people who are saying, ‘Oh my gosh, if people leave Twitter, that’s going to affect the share value.’ No it won’t,” Solomon said.
Musk is a businessman, which means he has costs and profitability on his mind, not just employee satisfaction or even just the principles of free speech.
Even before the deal went through, he was announcing ideas he had to save money operating Twitter — including cutting board members’ salaries completely.
Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there
— Elon Musk (@elonmusk) April 18, 2022
Musk could also reduce costs by cutting the multimillion-dollar compensation of some Twitter executives.
Twitter CEO Parag Agrawal, for instance, made about $30 million last year, Forbes reported.
Compared with other Big Tech chief executives, Agrawal’s salary is enormous.
Snap CEO Evan Spiegel made roughly $3.3 million in total compensation for 2021. Sundar Pichai, CEO of Google parent company Alphabet, made about $6.3 million. Facebook co-founder and Meta CEO Mark Zuckerberg made about $27 million in total compensation last year.
Aside from cutting costs, Musk also will seek to increase the stock value of Twitter.
“What Elon Musk is banking on is at least one or two spikes in share value that can then be maintained at a higher plateau than the Twitter public board has been able to do over the past decade,” Solomon said.
This is one reason Musk is taking the publicly traded company private, at least to start with.
He wrote in his letter announcing his offer that the social media giant needed to become private “to go through the changes that need to be made.”
After a few years of making the necessary changes to boost Twitter, Musk could return the social media company to public ownership once again, he told investors, according to The Wall Street Journal.
According to the report, he might stage an initial public offering of Twitter in as little as three years.
So in the bigger picture of things, Musk is juggling massive decisions for Twitter’s future, not micromanaging its employees.
While Twitter employees might not like changes and could threaten to quit, with an IPO, share value and billions in loans to worry about, that’s going to be a pretty small blip on Musk’s radar.
At the end of the day, it’s important to remember that Musk is a businessman. While he may have ideals and big plans for change, he is not going to jeopardize the value of a company into which he is sinking billions of dollars.
He is going to cut costs and prioritize profitability.
