I've been seeing people parrot Elon's claim that he was forced to gut Twitter bc it was losing $4mln/day so wanted to provide some clarity. Elon bought Twitter in a leveraged buyout (LBO) where the $13bn he took in loans from banks to buy Twitter was transferred onto Twitter's balance sheet. Private equity does LBOs all the time. The interest payments to service that $13bn of debt is estimated to be over $1bn/yr which would translate to over $2.7m/day. If Twitter goes bankrupt, the $13bn is not Elon's problem.
🤡
I wonder why he’s allowed to do that. Is it because he owns 100% of the company (does he?)? The concept that the business takes on debt that came from its buyer is confusing to me - shouldn’t those be kept separate?
He doesn't own 100% - his co-investors include Binance, Square founder Jack Dorsey, a16z, and ARK (Cathie Wood). Back in May, Larry Ellison, Sequoia, and many others were also reported as having agreed to be co-investors. Idk if they actually ended up sticking around for the deal though. https://www.cnbc.com/2022/05/05/larry-ellison-sequoia-and-binance-to-help-musk-to-pay-for-twitter.html
Jack founded another more relevant company too...
This only tells me one thing. At some point the money printer will go brrr again, stock market back to ATH and inflation will continue to be >5%. Why? Because the table always win. The table in this case are billionaires and people in DC. I don't know when, but I'm sure the blood bath is not over yet. Blood bath is necessary to rekt everyone but billionaires and those with enough cash reserves to survive.
Have we been watching the same country? The table would be voters who’ve realized they can vote themselves free money after the stimulus checks first came through. Billionaires will be fine of course. The people screwed are the ones not getting the insane amounts of transfer income from the government and then squeezed on taxes, assets etc while still in the accumulation phase
Where’s my stimulus check?
People are clueless, they think the layoffs are because of fundamentals when they're because Elon has destroyed the balance sheets by making Twitter pay for his acquisition of Twitter
I wouldn’t say that Elon has destroyed the balance sheets in such a short amount of time, but I would say he is in danger of killing our main revenue source (ads) by simultaneously pushing for a subscription service with fewer ads and not successfully convincing advertisers that their ad won’t be next to the n-word or that lighter enforcement makes the UX worse and drives away users. Twitter was never perfectly safe, but it was already a somewhat hard sell to advertisers, and now the impression is that it is less safe for brands to advertise than before, in a place where maybe Elon will cut advertisers out of the picture if he starts to get momentum on blue.
We were pretty bloated, but the speed of the layoffs was staggering (for the record, I was one of the purged). Already some people are being asked to come BACK less than 24 hours after they were given notice. The whole thing was pretty crazy. We learned about the layoffs from seeing accidentally-public slack channels actively discussing it and the whole thing seemed kind of cavalier. VPs took a first run at lists, generally, and then Elon’s crew took a second pass and made some pretty uniformed-sounding decisions based on tenuous assumptions of how our tech stack or logistics work 🤷♂️
Are some of the details about how the layoffs occurred correct? I saw in a few news reports that the layoffs were based on how many lines of code engineers were able to create in a stack ranking approach. Not necessarily based on the complexity of the code that was being addressed. Also very sorry for your layoff
Thanks, iyks40. That’s very likely true from shared conversations with VPs but not 100% confirmed. All we know for certain was that David Sacks, his right hand man in the deal engineered the layoffs and VPs had the chance to provide input. We’ll be okay eventually, but I have to admit I’m avoiding Blind more recently (a lot of people are overly jubilant at seeing nearly 4,000 people lose their jobs).
Twitter was never a great business model. But that’s not why. Having a mountain of debt payments on the horizon is the reason why.
Did anyone tell OP, they are genius.
You guys need to stick with coding challenges. Elon has fiduciary responsibility as well as his own personal dollars invested in the leveraged buyout of Twitter. If Twitter goes bankrupt, it is ALSO Elon’s problem but his % of investment isn’t as high as others (he used cash from selling Tesla shares) and borrowed the rest. No wonder student loan debt is a trillion dollar problem - people out here thinking they can borrow 13Bn and not pay it back - y’all are morons
Genius! /s which basement did you climb out of?