Twitter Reportedly Stiffs Vendors, Cuts Employee Benefits As Musk Tries To Cut Costs
In the ongoing saga of Elon Musk's adventures on Twitter, we've seen a variety of business strategies. He's issued ultimatums. He's made commitments to bold new moderation strategies that never materialized. He's even staged open polls on the future of the platform. At the risk of stepping on the man's own joke, he's throwing the kitchen sink at his problems.
Entering Twitter HQ â€" let that sink in! pic.twitter.com/D68z4K2wq7
— Elon Musk (@elonmusk) October 26, 2022
As of November 22, Musk is trying a truly remarkable new strategy: he's just not going to pay what he owes.
As the New York Times reports, Musk has been desperate to cut costs as his employees have bailed en masse and he struggles to keep the lights on. Sources inside Twitter have reported that Musk is now flat-out refusing to pay vendors for outstanding debts, to the point of instructing them to duck calls from collectors. Those sources also indicate that a major target of Musk's fixation on cutting costs may be the benefits of Twitter employees.
Fine line between genius and fraud
We and the Times agree that Musk will probably pay what he owes. He's likely just playing negotiation hardball, seeking a favorable settlement by dangling the possibility of nonpayment. Twitter is under massive debt pressure: the Times reports $13 billion in debt from the acquisition alone. Musk is likely, and understandably, frustrated over having to service debts from before his tenure, many of them incurred by people who no longer work for him.
A bigger problem might be Musk's desire to cut employee benefits. Per multiple sources, Musk brought in long-term allies Steve Davis, Jared Birchell, who heads Musk's family office, and Antonio Gracias, a friend, and former director of Tesla tasking them to slash expenses and target benefits. Everything from expense accounts and corporate credit cards to food quality in the cafeterias has suffered since.
Musk is playing with fire. Twitter has already shown serious problems with employee retention during Musk's tenure. Making Twitter a less pleasant place to work won't help. Moreover, refusing to pay contractually obligated expenses is "take your company away from you and sell it for scrap"-level illegal. Having already been on the wrong side of the SEC and with a possible FTC investigation looming, Elon Musk has shown a worrying willingness to play chicken with law enforcement. For stakeholders seriously committed to Twitter as a digital public square, antics like this threaten the value of the platform and discourage potential collaborators.