Before Elon Musk acquired Twitter last month, the social media service planned to cover hundreds of thousands of dollars of travel invoices.
Former and current Twitter employees said Musk refused to reimburse travel vendors once he took over the company. The company’s former management authorized the services, not Musk, according to Musk’s staff. Travel vendors have been avoided by his staff since then, they said.
Since acquiring Twitter for $44 billion, Musk has embarked on an extensive cost-cutting campaign. It appears he has thus far fired workers, slashed half of the 7,500-strong workforce and continued with layoffs currently. Several people familiar with the matter said he has also been reviewing, renegotiating, and in some cases, not paying Twitter’s outside vendors at all.
In addition to Twitter’s computing costs, Musk and his advisers have aimed their sights at travel expenses, software services, real estate and even the company’s normally lavish in-office cafeteria food. In spite of Twitter’s decreased spending, some vendors owe millions of dollars in back payments, and they have complained.
Twitter is under financial pressure, which is reflected in Musk’s actions. For his purchase of the social network, the company borrowed $13 billion. Over $1 billion is paid in interest on that debt every year. As a result, Twitter has long struggled with financial difficulties, often losing money and falling behind competitors like Facebook and Google. Several advertisers have paused spending on Twitter as they evaluate Musk’s ownership.
According to Musk, 51, Twitter might face bankruptcy in the near future due to the “dreadful economic picture.”
I contacted him but did not receive any response.
Through different strategies, Twitter’s past leaders have tried to get the company profitable, from live video to audio. In Musk’s plan, austerity was the watchword. As part of his review of Twitter’s books, he brought in allies from his other companies — Antonio Gracias, the former director of Tesla; Jared Birchall, Musk’s family office’s head; and Steve Davis, the head of Musk’s Boring Co.
Cut, cut, cut was their directive.
This contributed to Twitter’s mass layoffs this month. Expenses are not off the table behind the scenes.
Twitter’s finance department, which has been drastically reduced, has been instructed to review employee expense reports and company expenses “line by line,” people with knowledge of the matter said. They have requested that they ensure that employees and their expenses are for “real people and real expenses,” they stated.
Moreover, Musk ordered the slowing or, in some cases, the halting of payments to Twitter’s vendors and contract service providers. Three people said Birchall must approve expenditures for services. It has since been reported that Musk has declined to reimburse the former Twitter executives for the travel expenses they incurred.
Three people said he is also considering renegotiating or opting out of the company’s lease agreements for office space. Despite Twitter’s office space leases throughout the world, the layoffs have reduced the need for much of that real estate.
Also, Twitter’s partnerships team was instructed to renegotiate its multiyear content agreements with major sports entities, including one with the NFL, where the social media company pays the league to produce exclusive audio and video content for its platform, according to two people familiar with the plans. Other media companies, such as Condé Nast, the NBA and Fox Sports Network, have also entered into similar agreements with Twitter.
There was no immediate comment from an NFL spokesperson.
The people said that Davis, the president of the Boring Co., has also instructed Twitter employees to renegotiate its deals with computing and tech services providers such as Amazon and Oracle. According to the people, Musk’s employees were instructed to suggest to those companies that they would not work with Musk’s firms in the future if they refused to be renegotiated.
The company that had given Twitter a discount voids the discount after Twitter’s contract with one software vendor expired under Musk’s ownership, an engineering manager said.
Requests for comment from Amazon and Oracle were not responded to. We did not receive a response to our email to the Boring Company.
An individual familiar with the matter said Musk’s team has ended Twitter’s relationship with some outside law firms that represented the company’s former management in the $44 billion buyout lawsuit. After Musk attempted to withdraw from his agreement to purchase Twitter earlier this year, Twitter sued him.
In response to a request for comment, Spiro did not respond.
The social projects of Twitter have also begun to fall by the wayside. A number of employees have left Twitter for Good, the company’s charitable division, and checks promised to some nonprofit organizations have not yet been received, two people have said. Twitter’s philanthropy issues were previously discussed in the San Francisco Standard.
One employee wrote on Twitter’s internal Slack messaging system this month that Elon’s only concern is recouping the losses he is incurring due to failing to get out of the binding agreement to purchase Twitter.
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