As Elon Musk Cuts Costs on Twitter, Some Bills Go Unpaid

SAN FRANCISCO — Before Elon Musk bought Twitter last month, company executives racked up hundreds of thousands of dollars in travel bills that the social media service planned to pay.

But once Mr. Musk took over the business, he refused to reimburse travel suppliers for those bills, current and former Twitter employees said. Mr. Musk’s staff said the services were authorized by the company’s former management and not by him. Its staff have since avoided calls from travel salespeople, the people said.

Mr. Musk has embarked on a massive cost-cutting drive since closing his $44 billion acquisition of Twitter. He first cut half of the company’s 7,500 employees, laid off workers and continued layoffs as recently as Monday. But he also conducted a thorough review of all kinds of other company costs, asking staff to review, renegotiate and, in some cases, not pay Twitter’s outside vendors at all, said eight people knowledgeable about the subject.

Mr. Musk and his advisers focused on IT costs that support Twitter’s underlying infrastructure, travel expenses, software services, real estate and even the normally sumptuous cafeteria food at the office. the company. Twitter’s spending has plummeted, but the moves have drawn complaints from insiders, as well as some vendors who are owed millions of dollars in back payments.

Mr. Musk’s actions reflect the financial pressure that Twitter is under. The company took out $13 billion in loans for its takeover of the social network. Interest payments on this debt amount to more than $1 billion a year. And Twitter has long struggled financially, often losing money and struggling to keep up with rivals like Facebook and Google that are effectively monetizing their ad products. Some advertisers suspended spending on Twitter while they assessed Mr Musk’s property.

Mr Musk, 51, told Twitter employees that “the economic situation ahead is dire” and that bankruptcy could be in the cards for the company.

He did not respond to a request for comment.

Former Twitter executives attempted to make the company profitable through different strategies, ranging from promoting live video to a series of audio offerings. Mr Musk’s plan was more austere. He brought in allies from his other companies — including Antonio Gracias, a longtime confidant and former head of electric car maker Tesla; Jared Birchall, the head of Mr. Musk’s family office; and Steve Davis, who runs Mr. Musk’s tunnel project, The Boring Company, to lean into the Twitter books.

Their directive was simple: Cut, cut, cut.

This contributed to mass layoffs on Twitter this month. And behind the scenes, no expense is on the table.

Twitter’s significantly reduced finance staff have been instructed to comb through company expenses and employee expense reports “line by line”, people with knowledge of the matter said. They were asked to specifically ensure that employees and their expenses are for “real people and real expenses,” they said.

Mr. Musk also issued an order to slow or, in some cases, stop transfers of funds to Twitter’s vendors and contracted services, the people said. All expenses for services must be approved by Mr Birchall, three people said. Mr. Musk has since refused to pay for travel services hired by former Twitter executives, the sources said.

It is also reviewing the company’s leases for office space, three people said, refusing to make payments and hoping to renegotiate or withdraw some commitments altogether. Twitter leases offices around the world, but layoffs have reduced the need for much of that real estate.

Twitter’s partnerships team has also been tasked with renegotiating its multi-year content deals with major sports entities, such as the one it struck with the NFL in which the social media company pays the league to produce audio content and exclusive video for its platform, two people familiar with the plans said. Twitter has similar deals with other media companies, including Condé Nast, the NBA, and Fox Sports Network.

An NFL spokesperson did not immediately comment.

Mr. Davis, the chairman of the Boring Company, also asked Twitter employees to renegotiate agreements the company has with companies such as Amazon and Oracle, which provide IT and technology services, the people said. Employees were asked to suggest to these companies that Mr. Musk’s companies would not work with them in the future if they refused to renegotiate, the people said.

After Twitter’s contract with a software vendor owned by Mr. Musk expired, that company reversed a discount it had given Twitter, an engineering official said.

Representatives for Amazon and Oracle did not respond to requests for comment. An email to the Boring Company was not immediately returned.

Twitter employees’ corporate credit cards were also closed, three of the people said. A worker said she tried to buy farewell drinks for her colleagues after the mass layoffs, but her company credit card was declined at the bar.

When Mr. Musk called on Twitter employees to return to the company’s offices in San Francisco last week to meet him, some workers said they were worried about booking the trip with their personal credit cards and worried about not be reimbursed. Under Mr. Musk’s ownership, Twitter delayed payment or denied expense reports that were submitted for approval, four current and former employees said.

Mr. Musk has ended other longstanding benefits on Twitter. He cut free lunches, which he said was costing the company over $400 “per lunch served.” (An employee who worked on the company’s lunch program challenged Mr. Musk’s math.) On Monday at Twitter’s New York offices, the cafeteria, which once offered dishes like grilled shrimp, was serving two types of mac and cheese, as well as a salad bar, one person said.

Other benefits, such as subsidized gym passes, cellphone and internet bills, and childcare allowances, have also been cut, two people said.

Mr Musk’s team, including his personal lawyer Alex Spiro, have ended Twitter’s ties to some outside law firms that worked with the company’s former management in a lawsuit over the takeover $44 billion, said a person familiar with the matter. Earlier this year, Twitter sued Mr Musk after he tried to renege on his deal to buy the company.

Mr. Spiro did not respond to a request for comment.

Some of Twitter’s social projects also began to be abandoned. The company’s philanthropic division, Twitter for Good, has lost many employees and checks promised to some nonprofit groups have not been received, two people said. The San Francisco Standard previously reported on Twitter’s philanthropy issues.

“Elon has shown that he only cares about recouping the losses he incurred as a result of breaching his binding obligation to buy Twitter,” an employee wrote on Twitter’s internal Slack messaging system this month. -this.

Leave a Reply

%d bloggers like this: