Twitter generated $5 billion revenue in 2021, a 35% increase on 2020 figures and a significant improvement on the 8% and 13% increase the two years before.
Cut backs were needed, as advertising revenue would have been significantly down this year, given the economic down turn. However, there was no need to gut the company to make it profitable.
https://i.imgur.com/Gea8HRr.png
clearly Twitter was way, way too fat when it managed to lose US$1B with record revenue
which I'm not saying it means you should just close down core branches of the service, of course
perhaps Musk wasn't ready for the amounts of money Twitter required to be made profitable under a reasonable timeline
Twitter could have easily be turned into a profitable business by cutting 15%, rather than 50% of staff.
The GP misspelt “bought” as “bough.” I thought a pun would be a fun way to point that out. I was wrong.
FYI: I chuckled a after reading your follow-up comment.
I mean, you are both claiming cuts were needed and they’re too much. So how much was right? How do you know? You’d do a better job than the people who have access to the numbers? That’s a fairly arrogant position
Twitter seems to have a serious cultural problem at the moment, and that is generally a lot harder to fix than to rehire when the growth curve inverses.
I am sure Musk had to cut by 50%, if only because Twitter's interest payments are now significant. However, that does bring significant challenges.
There was a need and it was going to happen anyway. Clearly slashing headcount earlier even without Elon, would have easily made it even more profitable.
Their mistake was that they didn't do it earlier enough. It just took Elon to do it for them. 7K headcount wasn't sustainable regardless and a 50% - 60% cut in staff makes sense for Twitter.
In any case, from my perspective Twitter didn't really make serious mistakes. They got $44B for the company despite its issues.
The value in Twitter is its network effect, social inertia and integrations in hundreds of thousands of websites, blogs, apps and APIs with 220M+ daily active users still using it every day.
Recreating that from scratch makes absolutely no sense. There is no serious alternative to Twitter and it is better to buy it instead of building it all over again.
> In any case, from my perspective Twitter didn't really make serious mistakes.
Twitter clearly over-hired like the rest of the tech companies and was wasting millions a day. It is either the mounting costs would get them in the end or someone else would reverse that downward trend to insolvency.
Drastic action was the appropriate method to stem the losses.
Twitter has only made a profit in 2 out of the last 11 years
https://www.wolframalpha.com/input?i=twitter+profits+per+yea...
Musk has been very upfront that Twitter is bleeding money (hence why he is firing so many people), it's not simply that a healthy profit margin is being reinvested.
That means that Elon Musk's Twitter Buyout costs $1.3 Billion/year _ON TOP_ of all the other costs of Twitter.
If Twitter was "barely profitable" in 2021, they're now $Billion+ short / year. That has nothing to do with "old Twitter" decisions, and 100% to do with how Elon Musk structured the buyout.
Presumably, you're supposed to assume that Musk knows what he's doing and that he has a plan to make $1.3 Billion in profits (to break even on the loan) and then go beyond (to make profit on his $44 Billion investment). But... I'm honestly not seeing it.
The downturn in early 2022 hit them badly. They were losing money again when Elon bought them (one of the reasons he tried to pull out of the deal)
Admittedly the way he structured his buy out made it worse by adding more debt.
You are also 100% correct. As revenues fell at snap just like twitter, and easy money has dried up at all VCs creating a completely different market environment. Just look at stocks of small cap tech companies too, which Twitter was.
The only extra nuance to add is that without fines Twitter was actually profitable before musk bought it, but in the current market environment it certainly wouldn’t be even without musks leadership.
But of course blaming musk is what gets upvotes.
[1] https://www.consultantsmind.com/2018/03/04/choosing-stocks/
Twitter is unique in that it was acquired for US$ 44B when it was a business that lost huge amounts of money consistently for years, and the owner intended it to have it run old school style, as in making a profit, but also doing so in such short notice that he dismantled entire branches of the company wholesale.
Obviously for people relying on pre-existing services and rates from Twitter, it sucks.
But the root problem is that Twitter had not been a sustainable business for a long, long time. One has to wonder how did they even subsist for so long and how much institutional money, not just VC/investor money, and who knows what sort of government/agencies pay-to-play deals made it even possible because the sort of money they cashed in during the only few years they've even been profitable seems absurdly high and they have never replicated that under normal circumstances.
With the ad model struggling and institutional ads sort of in retreat, the entire sector is struggling.