Elon Musk warns employees of Twitter bankruptcy risk
As usual, Elon Musk does not usually leave the world of technology without offering some content to be broadcast. This time it's his first meeting with some Twitter employees. At the time, the new owner of the social network says that a possible twitter bankruptcy is not out of the question, as executives who worked for the bluebird began to resign.
Musk's 1st face-to-face contact with Twitter
Last Thursday (10th) Elon Musk called employees to an impromptu general meeting at Twitter's headquarters in San Francisco, giving workers one hour's notice. This came after Musk earlier that morning sent an email to the Twitter team, his first company-wide communication since taking office nearly two weeks ago. In that note, he ended remote work and warned employees that the “economic picture ahead is dire.”
Most of the questions during the meeting related to his email and the recent string of layoffs of company leaders following last week's mass layoffs, including those leading the security, privacy and compliance of internal systems. An example is for Yoel Roth, Twitter's head of trust and security, who left the company that same Thursday.
An employee asked why Musk stopped working from home, and the billionaire looked “visibly annoyed” and was quite curt and blunt in saying that’s how the company will operate going forward, according to a person who was present at the meeting.
Another employee asked Musk how he plans to handle Twitter attrition.
I don't know how to answer that, but I can tell you it's about being stronger. A small number of exceptional people who are highly motivated may do better than a smaller group of high achievers with moderate motivations. If you can't get a stronger performance then Twitter isn't for you.
A meeting participant's account of the question asked and Elon Musk's answer
Musk does not rule out network bankruptcy
Musk mentioned the idea of bankruptcy after being asked by another employee what would happen if his plans to increase the company's revenue, now based largely on building a subscription business, didn't pan out. One person who was present at the meeting said that the other employees did not expect any such response.
Bankruptcy is typically seen as a last-ditch effort by companies, but it could turn out to be beneficial for Twitter as Musk loaded it with debt to fund its leveraged buyout of US $ 44 billion🇧🇷 Twitter now has more than $10 billion in debt🇧🇷 Interest payments can be so high that the company may struggle to meet these obligations, especially if advertisers are pulling back during a weak economy.
After Elon Musk took over the reins of the social network, many advertisers broke free. Extremely well-known names, with a lot of influence and possibly high financial capacity, have already withdrawn, as Audi, Disney, General Motors, Haagen-Dazs, Oreo, Pfizer, Volkswagen and many others. Even before the deal, Twitter was already struggling to turn a profit.
A bankruptcy would give Musk a chance to cut that debt load and cut interest payments. The punishment for such a move would be that Twitter's creditors and bondholders would likely have a large stake in the company, in exchange for giving up their right to receive the interest and principal owed to them. The result, in theory, would mean that Musk and other investors in his business would have a lot less Twitter, but he could still retain control.
The CEO has not shied away from the idea of bankruptcy in the past. In June, Musk said he was concerned about keeping Tesla out of bankruptcy amid supply chain problems.
In an effort to put Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday. We recognize that this will affect many individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company's success in the future.
Excerpt from the resignation letter to Twitter employees
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And if you don't understand what happened, here we explain! Check it out in the following link: Elon Musk lays off 3.700 Twitter employees at once.
