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Elon Musk knows how to run a business. We've looked closely at what's going on with everyone’s favorite social media site to see what his strategy really is. And the chaos among Twitter’s employees isn't nearly as chaotic as it seems. Here's why 🧵👇

2/ As soon as Musk took over Twitter, he purged the C-suite. Then he turned his eyes to the rank and file. “Print out 50 pages of code you’ve done in the last 30 days,” an internal message read. Engineers were told their work would be reviewed by senior Tesla staff.
3/ Most just laughed at the idea of engineers poring over thousands of pages of printed code just to find out the cream of the crop. But others wondered what would happen to the people who hadn’t submitted any code in the last 30 days. And that was precisely the point.
4/ Obviously, Musk never had the intention of reading all the code. Sure enough, the engineers were soon asked to shred everything they’d printed. But Musk had made his intentions clear. You only stay at Twitter if you can prove you add something to the company.
5/ This week, Alphabet announced that it was looking to “ease out” 10,000 employees. Rapid-growth tech stocks are getting battered by high interest rates and a potentially recessionary environment. Here’s the problem.
6/ Twitter, Alphabet, and the rest of the tech sector overhired. Money was cheap, and investors celebrated any increase in headcount as a sign of growth. Engineers were employed to work out projects that had no clearly defined benefit to the company.
7/ Now, Alphabet must be watching jealously as Musk effortlessly culls Twitter’s headcount. He doesn’t have to please any shareholders, and reports of employee dissatisfaction seem to be overblown. After all, what engineer wouldn’t want to work for the genius behind Tesla?
8/ Just this morning, journalists rediscovered a 2018 memo written by Musk for Tesla. It contained advice like: 👉 Get rid of large meetings 👉 Only hold frequent meetings if working on an urgent matter 👉 Drop off a call as soon as you’re no longer adding value
9/ Middle managers everywhere were horrified. How dare Musk suggest that employees' time be used efficiently and not wasted on endless meetings? It seems that these are exactly the same people who are upset about Musk’s cull at Twitter.
10/ The median salary at Twitter is $75,542, and Musk has already cut headcount by 5,000. That means roughly $350 million saved / year. And you can trust that Musk has kept the best of the best to work on Twitter’s most important projects.
11/ Musk wants an efficient team to run the company according to his vision. No part of his plan involves a bloated headcount. He wants to keep exactly the sort of people who are willing - perhaps even excited - to print out their code and talk about why it’s important.
12/ And what is Musk’s vision for Twitter? Perhaps (as some Tesla investors fear), he’s just bored and wanted a new challenge. Maybe, like when Jeff Bezos bought the Washington Post, Musk wants the power of owning a media company.
13/ Possibly he’s just going to turn it around and IPO when markets recover, netting a tidy profit for himself and his backers. One thing’s for sure though. Whatever his plan, maintaining a bloated headcount of inefficient employees through recession plays no part in it.
14/ Twitter may look chaotic as Musk seeks drastic change. But we could all learn something from his decisiveness.
15/ Want more? Subscribe to GRIT 👇 The #1 FREE Finance newsletter on Substack! gritcapital.substack.com
Genevieve Roch-Decter, CFA
Former $100MM+ Money Manager • Seen on Bloomberg, FOX & VICE • CEO @grit_capital • Write #1 Finance newsletter on Substack
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