Elon Musk Panics, Emailing Twitter Staff Economic Picture is ‘Dire’ and App May Not Survive Downturn
EANGELA WEISS/AFP via Getty Images
Elon Musk, still the world’s richest man despite a quickly decreasing net worth, emailed his remaining Twitter employees early in the morning on Thursday and appeared to hit the panic button as to the company’s financial viability.
In his first email to his new employees, half of whom he unceremoniously laid off this month, Musk warned that the company he just purchased for $44 billion may not survive the economic downturn unless subscription revenue increases dramatically.
Musk wrote, “the economic picture ahead is dire especially for a company like ours that is so dependent on advertising in a challenging economic climate. Moreover, 70% of our advertising is brand, rather than specific performance, which makes us doubly vulnerable!”
Musk “also told employees that he wants to see subscriptions account for half of Twitter’s revenue,” reported Bloomberg, citing the email. The email came just a day after Twitter launched its new $8 charge for the Twitter Blue subscription, which comes with a verification badge.
Musk noted that while advertisers are balking at his new direction for the social media platform, “he still anticipates Twitter will generate significant revenue from advertisers,” CNBC noted.
Musk’s pricey takeover of Twitter has been a major topic of discussion in the media in recent months with many business analysts noting Musk both overpaid for the company and saddled it with an unmanageable amount of debt.
“To finance his Twitter deal, he loaded the company with $13 billion in debt, putting it on the hook to pay more than $1 billion annually in interest alone,” reported the New York Times last week, adding:
But last year Twitter had less than $1 billion in cash flow, partly because of a one-time charge, meaning it generated less money than what it now owes its lenders annually. The company was also unprofitable for eight of the last 10 years. So, to make ends meet, Mr. Musk must boost Twitter’s revenue or cut costs — or do both.
Musk’s net worth has dropped some $100 billion so far this year as Tesla’s stock price has dipped amid economic uncertainty and concerns over his erratic behavior.
Read Musk’s full email to employees below, from CNBC:
From: Elon Musk [email removed]
Date: Nov 9, 2022 [time stamp removed]
To: Team
Sorry that this is my first email to the whole company but there is no way to sugarcoat the message.
Frankly, the economic picture ahead is dire especially for a company like ours that is so dependent on advertising in a challenging economic climate. Moreover, 70% of our advertising is brand, rather than specific performance, which makes us doubly vulnerable!
That is why the priority over the past ten days has been to develop and launch Twitter Blue Verified subscriptions (huge props to the team!).
Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn. We need roughly half of our revenue to be subscription.
Of course, we will still then be significantly reliant on advertising, so I am spending time with our sales & partnerships teams to ensure that Twitter continues to be appealing to advertisers.
This is the Spaces discussion that Robin, Yoel and I hosted today: [Link to Elon Q&A: Advertising & the Future removed]
The road ahead is arduous and will require intense work to succeed. We are also changing Twitter policy such that remote work is no longer allowed unless you have a specific exception. Managers will send the exception lists to me for review and approval.
Starting tomorrow (Thursday), everyone is required to be in the office for a minimum of 40 hours per week. Obviously, if you are physically unable to travel to an office or have a critical personal obligation, then your absence is understandable.
I look forward to working with you to take Twitter to a whole new level. The potential is truly incredible!
Thanks,
Elon
