In the latest chapter of Twitter's chaotic developments, a Thursday deadline imposed by Musk to stay or resign from the company was met with hundreds of resignations. In an email sent early Wednesday, titled "A Fork in the Road" Musk offered three months severance to employees that didn't want to stay "to build a breakthrough Twitter 2.0.”
“We will need to be extremely hardcore. This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade,” Musk wrote.
“If you are sure you want to be part of the new Twitter, please click yes on the link below,” Musk added. “Anyone who has not done so by 5pm ET tomorrow (Thursday) will receive three months of severance.”
In retrospect, this was likely not a good decision. According to various media reports, hundreds of employees called his bluff and resigned en masse. Several news outlets reported that critical teams of employees quit, and the news led to an over-the-top funeral of sorts from people on the platform itself.
Musk has mismanaged various parts of his takeover of Twitter, but his ultimatum email seems like a particularly egregious miscalculation. Employees were faced with two options: Work harder, longer hours for an erratic boss who just fired half of their colleagues for the same pay and with a deeply hollowed out staff or accept three months of severance pay and move on with their lives. Musk's calculation is dumber, still, when you consider that many of the most senior employees (and many Twitter employees, in general), just received a large lump sum of cash courtesy of Musk buying the company at a wildly inflated valuation and taking it private.
For years, Twitter has paid Silicon Valley's typically large salaries (most engineers make more than $200,000 per year, according to data submitted to the U.S. government and previously reported by Insider.) Like many other Silicon Valley companies, Twitter has inflated many employees' overall compensation with equity in the company in the form of stock and stock options. A 2016 article in The Week noted that, "Inevitably, buying Twitter is going to involve compensating all the people who own those shares. Which will cost the buyer a pretty penny." The article also noted that, historically, Twitter has issued additional shares to employees when its stock price went down: " Since the total value of the shares held by Twitter's workers has fallen, the company created more shares and gave them to employees to bring their total stock value back up, and to coax them into staying rather than leaving to work at competing firms."
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Musk purchased Twitter for $44 billion, or $54.20 per share, which is more than the shares were trading for on the stock market. That $44 billion is essentially given, in the form of money, to Twitter's shareholders, many of whom are the Twitter employees Musk is now asking to work "extremely hardcore."
This means that, quite literally, many of Twitter's employees are likely sitting on more money right now than they ever have in their lives, and many of them are likely able to take the financial risk associated with leaving the company, even in an uncertain economy and a difficult job market for tech workers (this calculus does not apply to workers who are on certain types of visas or contractors).
It is worth noting that Musk may have promised to provide three months' severance, but is currently being sued by previously laid-off Twitter employees who were promised a range of severance benefits (including three months severance) but only received one month base pay. Musk also reportedly fired top executives at Twitter for “just cause” in an attempt to avoid paying out severance packages worth well over $100 million. Those still at Twitter were told their vested shares would be paid out in the coming days, but Tesla has fired employees before just ahead of scheduled vesting of shares. On top of all this, every single member of Twitter’s entire payroll team has appeared to have resigned so it’s not clear who will actually, well, pay anyone anything.
Still, it makes some sense that scores of employees have decided to call Musk’s bluff and quit. Each move has added uncertainty to what will remain, if anything, of Twitter in the midst of this transition to “Twitter 2.0.” Every core team and service has either been gutted or showing cracks ranging from content moderation to two-factor authentication. Employees were already paid out for shares they held in the company when Musk took the firm private, severance packages have been paid out in some instances—why risk a tumultuous tenure at an increasingly dysfunctional workplace where a capricious and paranoid boss fires anyone who criticizes him or calls out his mistakes? Why stay around to see a product you worked on for years get gutted and restructured to meet the onerous $1 billion debt interest your new boss must pay each year (Twitter barely posts $200 million in profit).
Core users are fleeing, advertisers are freezing their campaigns, Congress and the FTC are circling, the infrastructure is failing. Better the devil you know (money) than the devil you don’t (the richest man-child on Earth).
The latest rounds of resignations come after thousands of employees were laid off shortly after Musk's acquisition and thousands of contractors were fired weeks later. In the hours before the deadline, Musk and his inner circle begged senior employees "critical" to the company to stay, only for some of those workers to hang up on their former boss. At the same time, he softened his hardline position that workers would need to be in the office working weekends and long nights to build a “hardcore” (not before a lawsuit was filed, however). Shortly thereafter, he warned managers they would be fired if they let employees work remotely.
All this is sure to make for an interesting next few days and weeks as the World Cup begins, a time when Twitter’s traffic typically increases. This time, however, employee badge access has been revoked for the weekend to Twitter’s office and a giant question mark looms over how many employees will come into the building on Monday.
As Jessica Lessin, head of business publication The Information tweeted, Musk’s takeover of Twitter will be taught in business schools as a case study for years to come—just not in the way she and other Musk fans thought.