• On day 1, Elon probably talked privately with some of the head engineers at Twitter. He told them he wanted to trim the fat, and asked them how much could be cut while basically keeping the lights on and the website up (accepting some risk of temporary outages).
• I'd bet money that some of them told him something like 80-90% of the staff could be cut. I think that's true of a lot of large companies.
• Then Elon had the balls to actually move in that direction. Rather than make arbitrary cuts, he's letting people self-select. Obviously the company will lose some really good engineers as collateral damage, but for the most part, the dead weight will reveal themselves through silly shenanigans like this. Elon knows it's silly, but there's no graceful way to make such drastic moves.
He's painting with broad strokes to clear the canvas and re-imagine Twitter as a startup. And I think it's brilliant.
If you think he's out of his mind (as many commenters appear to think), show me your billions of dollars and multiple successful companies as proof that you know more about success than he does.