Kylie Robison (Tech reporter for @FortuneMagazine): What I’m hearing from Twitter employees; It looks like roughly 75% of the remaining 3,700ish Twitter employees have not opted to stay after the “hardcore” email.
Even if legal, what Musk is doing is incredibly sleazy. The employees agreed to work on certain terms. Then he demands they agree to different terms. Seems sketchy, but I think I know what they'd argue.
It's just a really creepy thing. I don't think I've really seen or heard of it elsewhere. You work for me, so sign here for different terms, or you lose your job.
I do know that it's probably legal in most jurisdictions for CEOs to just dictate new work conditions, after hiring (though it shouldn't). However, it doesn't normally come in the form of a button you must push to agree with him, "or else". Usually you have a meeting where you explain the plans moving forward... it seems companies that are scared of being sued do this.
I can't imagine this is a legally prudent move. We should enact laws that specifically target CEOs that act like cartoon characters. Of course, that would just let them be more secretive or quiet.
It's not just altruism or for employee moral. It's clear some of the companies are simply deciding to not rock the boat by firing people. This can be more legally complicated than it seems.
Anyway, I'm not really saying one way or another, but it seems to follow that if others are taking measures, there might be good reasons for them. I would be surprised if the Elon / twitter don't get sued by this; multiple times.
So Elon paid $44B for a company now with 900-odd employees. For a 10-year ROI, that's $4.4B per year profit, or $440 million/per employee
For contrast, Netflix has the highest revenue per employee at $2.63 million/person, and Apple is second at $2.38 million, and Alphabet & Meta next at $1.64, and eBay at $0.9 million per employee.
So, he'll need to get 200x the profitability per employee, just to get a total profit equal to his investment in 10 years.
To get a company valuation back to his purchase price, at a 20X multiple, he needs to make those employees as profitable per employee as Apple. In a business that has never been consistently profitable, has not much of a moat, and in which he'd panicked almost all of his advertisers, the primary customers.
Good luck with that
Reddit also has some structural advantages. Building around communities allows Reddit to ban advertiser unfriendly communities, and to threaten to ban others to force them to toe the line. It also gives them rough controls over what other users see (e.g. hiding NSFW content, quarantining subreddits so they don't show up on the not-logged-in front page).
They've also managed to convince their users to moderate each other for free, which gives them a really lean head count.
I think Twitter would need to substantially redefine their product to compete in that arena.
Reddit also only made ~$350M in revenue last year. I don't think competing with Reddit is likely to justify the purchase price of Twitter over the timespan either is likely to survive.
Right up to a few days before the deal closed, Elon was hoping he would not have to actually run Twitter. And that's the second part that is under-explored: Elon could not find a CEO. And he never will until he admits all of his and the coinvestors' equity stakes are now worth zero, and he takes a down round that reshapes the cap table and enables a sane incentive package for a CEO.
Your math is off. $4.4B per year profit / 1000 employees = $4.4M per year profit per employee.
Apple had $1M profit per employee in 2021.
What’s an achievable PPE for a business like New Twitter? If you say $500K, and if you subscribe to The Headcount Method of Valuation, that implies Musk will need to 10X headcount from this low point to break even in 10 years.
(I question the premise though — I don’t think the plan is “extract $44B in cash by 2032.”)