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Comment by _jal | Hacker News Reader

3500*300000=1050000000

I have no idea what average salary was there, but it looks to me like the layoffs don't even cover that.

you can't cut deep enough to cover $1B in interest paymets, maybe now people will figure out that Musk is the wealthiest man in the world by taking tax dollars as subsidies for all his businesses.

Wonder if he's going to use money from his other companies for interest payments for twitter, and then claim tax deductions for those companies because these were interest payments.

FWIW I have no idea how finances work, just can imagine Elon getting into weird loopholes.

He's proven that you can do pretty much anything if wealthy enough and face almost no consequences.

I suspect this is only true if the wealthy people protecting you keep making money.

He can only do that if he owned Tesla and SpaceX outright. But, Tesla is a publicly-traded company with tens of thousands of shareholders that’ll sue him into oblivion if he tries that.

SpaceX is privately-held, but has raised billions of dollars from dozens of investors, so that won’t fly neither.

Going into a sector with lots of incentives is good business. It's not like he lobbied congress for those subsidies and they were tailored so that basically only he could qualify. Everyone had access to all of those subsidies, Musk was a nobody before Tesla and SpaceX.

Why didn't Ford and Boeing, companies with a much better footing than Musk, simply move into those sectors (EVs and re-usable rockets, respectively) and mop up all those subsidies for themselves?

https://www.opensecrets.org/orgs/tesla-inc/lobbying?id=D0000...

Tesla did lobby, quite a bit. They've also been angry about the subsidies that require cars to be union made.

The Roadster was released in 2008. Barely any money was spent on lobbying until after the Model S was already released (2012), the Powerwall announced (2015) and the Model X was released (2015). That's also post-IPO (2010).

Tesla was already a successful, innovative electric car company before it started lobbying like a regular car company.

All of the risk that paid off (what makes a businessman a good businessman) was done in the early days when he invested 6.5 million that he turned into billions.

Yeah, and Musk only became the CEO in 2008.

He didn't create the company, and he didn't create the Roadster.

He invested 6.5m of the 7.5m that was raised in funding. Without that investment, Tesla probably dies on the vine. He didn't "create" the Roadster but he did believe in the electric car and backed it up with a significant investment that allowed the people who were hired to create it to stay employed.

He deserves credit for believing in the David and turning it into Goliath (of EVs), even if government subsidies helped.

I support the government subsidizing clean energy, electric cars and cheaper access to space and I think it's hypocritical to turn around and shit on the companies that take advantage of those subsidies and do exactly the thing that they are meant to encourage.

Large established companies would be legally cautious on things like fake battery swap stations (couldn't operate with real road wear, just taken from the battery install tooling in the factiry) to claim hundreds of millions in subsidies, or using NASA money to buy junk bonds in another company he had interest in (SolarCity), then giving a presentation with faked shingles to bail out the company through a merger and prevent the bonds backed by NASA money from failing and the repercussions from that. Then use SpaceX to create Boring Company without giving them a stake while Musk got 90% (later reversed in a quiet settlement giving SpaceX around 6%).

You really shoehorned that one in there. An established company wouldn't have to do all that, they could have just made and electric car and/or re-usable rockets.

>you can't cut deep enough to cover $1B in interest paymets

Why not, when twitter's operational costs are ~5.5 billion and you are reportedly laying off 50-75% of staff?

You need to do it in a way that does not make the remaining core hugely dysfunctional. And it would be miracle if Musk could.

And trolling does not help either. The sink thing was trolling and between that and layouts, the remaining people will be dysfunctional for quite a long time.

Just for some context, Twitter has around $4.5B in revenue per year. Clearly, you can't cut all spending. It looks like the "cost of revenue" is around half that ($2B) and you probably can't cut that. Do you cut sales and marketing? Well, then your revenue probably ends up declining. Do you cut R&D? Well, eventually others are going to eat your lunch. You have $1.6B in R&D costs and $1.2B in sales and marketing and $700M in admin costs (like Human Resources).

As you note, it's really hard to cut deep enough to cover $1B in interest payments without cutting stuff that ends up hurting your revenue. As Twitter cuts their R&D, they're leaving themselves open to missing out on the future. Should Twitter have continued to invest in Vine? Well, the benefit of hindsight says "yes" given TikTok's success. As much as everyone is making fun of Meta's metaverse plans, it's certainly possible it'll be important in the future. We really just don't know. I remember everyone saying the iPhone was a silly toy and people would want to keep their Blackberries and Windows Mobile devices with keyboards. We can literally see the future and say, "nah, that'll never happen."

If Musk cuts engineering too much, does the service just become mediocre?

As you say, it's hard to cut deep enough to come up with $1B.

There is no way the average salary of all the employees cut would be $300k. I'd be surprised if the average was higher than $100k.

At least one source I found says the average salary of Twitter employees is $97k. (US only total compensation is closer to $300k with an average of $270k. But a lot of that is probably stock options which now must be paid in cash).

So I would imagine the total savings are closer to $250m compared to when Twitter was public but maybe a lot more in savings vs what Twitter would have bled considering the stock options portion of the compensation would have had to have been cash.

Yeah, total comp is the number the business cares about in this situation. Salary is only a part of that.

> a lot of that is probably stock options which now must be paid in cash

I won't say that's not a big deal, but it's a one-time cost. Paying $500k today to save $300k / year is an excellent move for Twitter - assuming, of course, that Musk is correct in his estimation that the employees cut were not contributing to the company's revenue.

Level.fyi suggests much higher than 97k https://www.levels.fyi/companies/twitter/salaries

Although level.fyi is probably biased to high earners who post their salaries and has less data for non-engineers.

My guess is that the majority of employees at Twitter are not in fact engineers.

There's little chance average salary even for engineers comes to 300k in cash. Even Senior Staff SWE is ~270k base per levels.fyi, and that's got to be a 1-3% position, and that's just engineering, which is probably not the majority of these layoffs.

You do need to take all the support costs for staff into account. Buildings, network capacity, hr staff, managers, software licenses, hardware, benefits, fica/etc. It's not unreasonable to assume 30% extra for every head than their salary.

Also most of those folks on levels also get compensated with stock or equity, so it's more than base. Going private means that goes away and their comp also gets slashed. Is he going to take it back public, what beyond base does twitter offer as comp.

Yeah as a reference - I do a lot of this type of planning for non-equity employees and our number is 37% right now (site costs + US payroll taxes & benefits + hardware + incidentals).

Thanks for the reference. I've heard numbers thrown out but never anything asserted as an actual researched number.

Yeah the org I work with has an interesting setup where the employees are employed by the parent organization and then we have dozens of projects as legal entities but no staff on their books. So to calibrate the passthrough cost that we charge those projects, we do a big analysis every quarter of all of our expenses for tax, 401k matching, 'staff development', non-capital hardware purchases, health/dental/vision, life insurance, etc. etc. So it's a pretty robust number. For highly paid employees over ~$200k, it's probably more like 34% since a bunch of that stuff doesn't scale with salary, but lower employees are closer to 40% so the blended rate covers a "typical" company.

Ah, fair, good point. 30% is what I've heard as well, but I did forget about that when commenting. I do still think that 300k is pretty generous even for engineers, which won't be the entirety of the cuts and so the average would be lower.

While you're right that it's unlikely, I think you're half right and half not.

Half right: Cash comp is unlikely to be that high, and that's the GP's point. They could only very optimistically cut payroll to cover $1-2 billion.

Half wrong: Cash comp isn't the whole story, you have to use total comp as equity the acquisition of Twitter also included employee equity plans, so as they vest the company will owe employees a cash value. I'm not sure if Twitter RSUs are dollar denominated (fixed cost, $X/quarter) or share denominated (e.g.: Y shares/quarter). The latter will be more costly because Musk paid a premium.

Half again as wrong: total comp is not the all-in cost of an FTE. Benefits and other associated costs, I don't know enough about payroll to even begin to estimate that.

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