They would be profitable in an instant if they'd get rid of half their employees? Im not sure why they need SO many people for Twitter. I believe they have over 4000, they could easily get by with 1000
Twitter is easily overstaffed by looking at what they have produced over the years. Even if you shaved the bottom 25% of employees they could still be operational and extremely profitable. They are a public company, growth is stagnant, and expenses are extraordinary. It's not rocket science even for someone with sheer arrogance and zero experience running a large corporation.
According to my Wikipedia research, they had ~2.5 billion in revenue last year and ~450 million in net losses
If they shaved the bottom 25%, to reach ramen profitability they'd need a savings of $450,000 per employee cut, and do that without having any negative impact on the productivity of the org as a whole (be it through hours worked or employee morale or additional churn)
Corporations are giant container ships moving in one direction, you can't just snap your fingers and turn 90 degrees
Soundcloud just had a similar shock happen, and after all the people they had to fire, I would not be surprised if that will kill the company in the mid-term, even with their new investment. If you have no ability to innovate due to missing staff, there is a good chance that your competitors will eat you alive.
Essentially, SC tried to pivot to Spotify, pissed off free users, and let it's actual paying user base stagnate for 2 years.
Then all that capital investment had no return and they're stuck in big contracts with hefty guaranteed payouts.
I do find it curious that WhatsApp was operating at a much larger scale in terms of users and messages processed when they were sold to Facebook. And they had 55 employees.
So obviously you don't need 4,000 employees for the technology at this scale. I'm not sure what in the world the other 3,945 employees are doing though.
I don't know anything about Twitter's business, but just in general, I agree with your parent commenter that this entire thread of conversation (which happens every single time) is embarrassingly arrogant.
Let me put it this way: I think it's arrogant that management consulting companies think they can send in a couple recent ivy league grads to learn about a company for a few weeks and then suggest a bunch of changes. This is like that, but without even bothering to go in and learn about the company at all.
https://en.wikipedia.org/wiki/Reddit https://stackoverflow.com/company/team
I'm guessing you would have called people arrogant for questioning Equifax's security practices. After all, it's an enormous company with thousands of skilled employees (interestingly, only about 2x as many employees as Twitter and an arguably much more complex tech stack) and security experts checking and consulting. How could they possibly be wrong!?!
I recommend you search around HN before you make sweeping generalizations, there are numerous threads that explain how or why WhatsApp were capable of doing what they were. From a technical perspective, as a "core product", Twitter's business has more abstractions
To get you started[0]
Anybody who has done better than that should feel free to give tips, in my view.
Idea: redirect Twitter.com to a Geocities page with ads for fidget spinners and fire everyone. I predict record profits.
Twitter is bloated.
Their headcount has expanded quite a lot over the last few years - and for what? Their service has remained the same and 'scale' beyond a certain point does not matter.
What is 'labour intensive' - sales? Sure. Maybe some support staff? I doubt they're full time, more likely in Phillipenes off the books.
I don't doubt for a second that they didn't need all those staff members - I've worked enough 'fast growth' places to see how 'hiring for the sake of hiring' happens, it's a political orientation, not really an economic one.
I've often wondered how Twitter ended up with so many people as well. I'd love to see a breakdown of what they are all doing.
Suppose they cut back to just keeping the lights on in engineering, along with obviously-profitable sales staff to sell advertisements and make business deals. Twitter is instantly profitable, but the net present value of those cash flows is something like a third to a tenth of their current valuation.
This is what happens when you over-fund a business at too high of a valuation. They do what they can to try to "grow into" the valuation, because otherwise management's junior equity positions and stock options are worthless.
In 2016, they spent $957M on marketing (which is the area I often hear people saying they should reduce), most of which was personnel expense, according to their 10K filing. I suppose it's easy to look at it and just say "cut it in half" (which would nearly make up the $457M profit deficit from 2016), but is that truly realistic? What affect would that have on top line revenue?
Given that, if you're selling something like Github or container management services, you can imagine that the person who's selling in the Pacific West Coast region might be having an easier time of things than the guy who has the mid-west. This isn't universally true for all products, but sales people will complain about leads being bad in any industry (see: Glengarry Glen Ross).
All of that is to say is that empirically, usually there are a few outperformers on any sales team that are crushing quota, and a bunch of others who are skating by at fractions of quota until they get canned. As some evidence, there's a lot of churn in sales teams and for the average sales person, which is partially because of the above, and also because good sales people will kill it as a company is getting a lot of adoption, and then jump ship when a better opportunity arises.
So maybe there's been a study on this stuff, but you could talk to any number of people who work in sales orgs and hear similar stories without the study.
Oh, and yes, when companies get 'serious' about sales, you'll see sales quickly expand to encompass a third or half the total company size. I won't make any guesses as to whether that actually makes sense and how many people are being productive, but large sales orgs are common in my understanding.
Likely this is true for engineering as well. 25% of the team pulling the weight of the department.
They could have probably done both, given what Facebook managed to accomplish financially. FB was profitable at $500-$600 million in sales and around 200 million monthly active users. At that same size Twitter was losing an immense amount of money. At the $2.5 billion sales level that Twitter hit in fiscal 2016, Facebook had around $750-$900 million in net income.
Good sales people bring in enough revenue for a company to be profitable. But I have no idea how many sales people Twitter has, I think even if they had 100 it'd be plenty.
Remember that Twitter works in multiple countries and in different languages. Then there is a lot of face to face meetings required, so add offices and service staff as well.
1-1,5K would sound reasonable for global sales and customer services.
I would assume that it is the lack of products/top commitment that causes poor sales.