PAs billionaire tech entrepreneur Elon Musk moves closer to finalizing his takeover of Twitter, ... [+]
As billionaire tech entrepreneur Elon Musk moves closer to finalizing his takeover of Twitter, there have been reports that the micro-blogging platform could face mass layoffs, with as many as 1,000 of the company's 7,500 employees getting the boot.
In the short term at least, the company could become leaner.
Yet, Musk also announced plans to increase Twitter's overall employee count by 2025 to more than 11,000. That wouldn't be the first significant wave of new hires.
According to data from Statista.com, Twitter had just eight employees in January 2008, and that number increased to 29 a year later, followed by a massive bump to 130 in early 2010, and then more than doubled to 350 employees in January 2011. By December 2013, there were 2,712 employees, and Twitter saw the numbers steadily increase – with a few dips – over the past decade.
It went from 5,500 employees at the end of December 2020 to the current 7,500 as of last December.
Despite its steady growth, Twitter is far smaller than Facebook, which had 71,970 full-time employees as of December 2021, up from just 150 people in 2006; and it has just a fraction of the workforce employed at Amazon, which currently has 1,608,000 full- and part-time employees.
Musk currently has around 70,000 employees at Tesla, so Twitter would still be a fairly "boutique" operation when all things are put in perspective.
Cuts Coming?
It isn't unusual for a new owner, especially one taking a public company private, to attempt some streamlining. Musk is just being a bit more candid it seems.
"It is generally poor form to announce a layoff before you do your due diligence largely because, until that is done, you have no idea what you have and thus can't yet determine if you are under or overstaffed for what needs to be done," suggested technology industry analyst Rob Enderle of the Enderle Group.
"An announcement like this puts your top performers on notice that their jobs are at risk, and given the current job market, they may now leave preemptively before you can put them under a retention plan," Enderle added. "Musk may have just further crippled the company he purchased making it even less likely his effort to turn the company around will be successful. This move shows a surprising level of inexperience when it comes to doing a company acquisition."
What Does Everyone Do?
While Twitter has seen massive user growth since it was founded in 2004, it really hasn't changed its business model all that much, even as the company's employee count has increased exponentially. That is very much par for the course in the tech world, yet a question could still be asked, what do all those 7,500 employees do exactly – and how would layoffs following hiring additional people make the company run better?
"We probably don't yet know the specifics of any changes, much less layoffs, at Twitter based on the acquisition. There is a lot of messaging back and forth intended to scaremonger, soothe or just plain obfuscate what might really be going on. So I take with a grain of salt any assertions about big layoffs there," explained Jim Purtilo, associate professor of computer science at the University of Maryland.
"I don't know that 7,500 employees is entirely out of line for Twitter. To be clear, there are darned few companies like it to use as basis for comparison," Purtilo continued. "Twitter is sort of in a class by itself. This number might well encompass the army of people helping tailor content moderation, handling sales and much more. Is that big or small? We mostly don't know."
Musk has suggested that he aims to increase Twitter's annual revenue to $26.4 billion by 2028, up from $5 billion last year. However, advertising, which currently accounts for about 90 percent of the platforms revenue, would fall to 45 percent – yet still generate about $12 billion. Subscriptions are expected to pull in another $10 billion.
"The discussion about employee base comes in when discussing net profits, and in this the company probably has lagged behind the other top tier tech firms," said Purtilo.
"They make money but not in the same league as Google and Amazon. Why? Whatever jobs they're doing, there hasn't been much corporate shake up to keep operations lean," Purtilo added. "Maybe some bloat will have set in, which keeps it comfortable instead of aggressive? Will some changes juice up their profitability? This is what we will watch. Most of the media look at this through political lenses, but I think ultimately change will be driven by the bottom line."
