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Comment by crazygringo | Hacker News Reader

Just for actual reference, here's how expenses broke down for '22 Q2 [1]:

  Three Months Ended June 30, 2022 - In thousands
  -----------------------------------------------
  Cost of revenue            -   $540.676
  Research and development   -   $454,859
  Sales and marketing        -   $308,301
  General and administrative -   $216,586
  ---------------------------------------
  Total costs and expenses   - $1,520,422

So just running Twitter is 35%, R&D is another 30%, sales/marketing is 20%, while general/administrative is 14%.

If running Twitter includes a lot of server/infrastructure costs on top of headcount, and general/administrative includes a lot of rent and overhead, then maybe by totally cutting R&D and sales and marketing you could cut 75% of employees but Twitter would still run?

[1] https://s22.q4cdn.com/826641620/files/doc_financials/2022/q2...

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If you're buying Twitter to maximize value as soon as possible then reducing cost to the bone and maximizing earnings would make sense. It's how many private equity funds would maximize value to sell it at the earliest point.

Musk is different. He wants to maximize value by innovation. It's very risky. I would say that Marketing and Sales are probably the most important right now. R&D is next, since Musk wants to change its course. Reducing them to the bone will probably backfire.

Reducing head count is probably imperative since it reduces cost plus new hires will have a different mindset that's in line with what Musk wants to accomplish. He'll probably replace most top management ASAP. I suspect that we'll be hearing a lot of bad news from Twitter from people that get laid off and feel it was unfair.

He'll also try to fully automate (thru AI) as he tried with robotics in Tesla - but backfired. Full automation is hard there are just too many variables. He'll see that and reverse course. I expect there will be a lot of drama coming from the company but ultimately Twitter will change course. It will be interesting.

He's making sure he has total control over the company so what ever he decides to do will be done without opposition.

People that think he will ruin the company are wrong. It will take time but the investors will get a very good return on their investment.

Or Musk had a search run on all the tweets posted by each employee and wants to sack the twitter staff who said mean things about him.

I seriously doubt that 75% of twitter employees even use twitter, let alone for posting "mean things" about Elon.

Mostly given that twitter "only" has 40mil mDAU in the US[0]. Of course twitter employees probably have higher rates of twitter usage than an average person in the US. But I still find it unlikely (but not impossible) to be anywhere even close to 75% for usage, and, out of those, much less for posting about Musk.

0. https://investor.twitterinc.com/financial-information/financ...

> It will take time but the investors will get a very good return on their investment.

I think you're underestimating how much money he's paying for Twitter. Just for comparison, Snap's current Market Cap is $12.5B. He's buying Twitter for $44B. Both companies make about the same annual revenue with Twitter losing less money but still losing money.

The thought that a company like twitter, that has about 5 features anybody cares about (and pretty much had them for years) spends ONE BILLION PER QUARTER on "R&D" and operations boggles my mind. I mean, 250 people or something, I would understand (but only if there is no major outsourcing involved). But THOUSANDS of developers? How? Why?

There certainly was some effort involved to make Twitter performant if someone with 100m followers posted a tweet. But that seems to have been solved for quite some while and since the number of active users is quite stagnant, I don't see any order of magnitude changes coming which would require a lot of "R&D" on that end.

There are tax incentives for doing R&D so everything that could remotely fall in that category is classified as such. There are even consultants that specialize in turning course-of-business development into R&D

You're right, it's a lot. But you're also missing something important (like most people here who compare it to products like Cragislist). You're thinking about it as a service that needs to be run. But Twitter is not an open source project. Twitter is a public company where they need to make share holders happy. That means they HAVE to grow Revenue year over year. At that point you start hiring people just for that reason. Most employees were not hired to run the business. (for example, if Twitter wants to grow its current revenue by 20%, next year they need to roughly make $1B more than what they did this year).

BTW, under Musk the pressure to grow revenue is going to be even higher, despite his plans to take the company private. He has plans to triple revenue in like 3 years. Good luck to whoever stays there...

I'd be curious to learn how they spend half a billion dollars in 3 months on r&d.

His plan (and I am not joking), is to try and run the company using AI.

My man here is doing EVERYTHING he can to shake the collar, but he's going to wear it.

It's already a bunch of bots.

Also, at the rate his politics are changing, he's definitely going to replatform people at a prime level

Very interesting information as context, thanks for that.

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