- In the years prior to Elon Musk's takeover, Twitter's per-employee revenue plummeted by 60%.
- According to investors and executives, this measure of efficiency is now back in fashion in tech.
- This figure could explain Musk's decision not to create thousands of new jobs.
Twitter's revenue from each employee plummeted in the years leading up to Elon Musk’s $44 Billion buyout. This shed light on why Musk planned to fire half of his staff once he took over.
According to Insider analysis of SEC filings, Twitter's revenue per worker plummeted by nearly 60% between 2018 and 2022 prior to Musk's purchase of the social media company.
The simple measure of efficiency, revenue per employee, is one that has been in fashion since the 2008 financial crisis. This allows companies to measure how productive each employee is at work by simply dividing their revenue by their payroll. Investors and tech leaders are increasingly urging tech companies to re-prioritize this metric, as they have become too dependent on over-hiring.
Twitter's revenue per employee has fallen dramatically since 2018. This is a result of Twitter's ongoing struggles to make a profit. It fell from $776 112 in 2018 down to $317,333 by 2022.
Twitter nearly doubled its workforce from 3,920 people in 2018 to 7,500 in 2018.
Musk has fired thousands of employees since taking control. He also made it clear that he is concentrating on a small group of key engineers and publicly criticized those who do less than necessary. Kali Hays, an Insider reporter, reported last month that Musk is still very focused on cost cutting -- sometimes at the expense Twitter's functionality.
Musk posted that he couldn't make a choice because the company was losing $4M per day when he made his first round of Twitter cuts in November. People who remained were told that they should expect a "extremely hardcore working culture."
The firm is under severe revenue pressure due to the high interest payments on Musk's $13 billion debt. According to the FT, the company made its first payment to lenders by January 31st.
Musk's layoffs and mixed success with Twitter have been closely monitored and copied across tech. In the name of efficiency, Meta, Alphabet and Amazon have all axed thousands more roles. According to Layoffs.fyi, more than 157,000 workers have lost work since January of this year.
Keith Rabois, an investor and PayPal Mafia member, said that he expects revenue per employee to increase as companies prioritise profitability in a virtual fireside chat this month.
Rabois and other hawkish executives have applauded layoffs. They claimed that most of the jobs being eliminated revolved around fake work, which was enabled by companies looking for headcount as vanity metrics.
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By: hchowdhury@insider.com (Hasan Chowdhury)
Title: CHART: Twitter's revenue per employee crashed 60% in the years leading up to Musk's drastic firings
Sourced From: www.businessinsider.com/twitter-revenue-per-employee-collapsed-before-musk-takeover-2023-4
Published Date: Mon, 03 Apr 2023 13:38:54 +0000
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