United Airlines has suspended its Twitter ad spend. That’s not surprising, it’s the most woke of the major carriers in an industry that’s simultaneously one of the most carbon-intensive and most virtue-signaling.
Most of the companies pulling their ad spend are spinning it as caution in the face of uncertainty over what the platform will look like under Elon Musk’s ownership (little has actually changed so far other than a vibe shift), and major corporations are certainly risk-averse, but at the same time how much of it is really just a pullback in ad spend more generally in the face of broader risk to the economy? For United, though, that explanation seems less likely as at least outward statements by travel executives have remained so bullish (in my view overly so).
I certainly feel badly for the half of Twitter employees who were laid off. Several thoughts,
- Twitter has been a money-losing enterprise. Twitter needs to generate a billion dollars a year just to cover interest on debt used to finance Musk’s acquisition. Cost cuts are as much part of the equation as revenue generation to make this possible.
- Twitter’s workforce seems to have been mind-boggingly bloated, with programmers who did little programming and staff doing this other than creating value for the business.
- For all of the talk about how sudden it was, and all the talk about lawsuits, Twitter employees let go are being given more severance than required and not being required to work. It’s hardly the generous tone struck by Stripe but Stripe is profitable.
The layoff email from Twitter is the first email in history that should have been a meeting.
— Chris Bakke (@ChrisJBakke) November 4, 2022
- However doing these layoffs so quickly may have been a huge mistake, this many this quickly almost certainly means making many mistakes and losing some of the best talent in the process. Maybe ‘shock and awe’ is part of the turnaround strategy but would waiting a few weeks to figure out whom to fire and not just that to fire have been worse?
Twitter’s cost cuts won’t help if revenue dries up, but ad spend is likely drying up in social media anyway. Facebook’s problems seem just as great as Twitter’s, though Facebook starts from a base of far more revenue. Remember that Twitter was troubled and underperforming when Musk took over!
And while the consensus seems to be that Musk’s approach has been haphazard, and ‘destroying’ the platform he just spend $44 billion to buy, everybody has been talking about Twitter. It’s managed to capture a large piece of the national conversation even in the days leading up to midterm elections, during war in Ukraine, and as the economy teeters amidst inflation and higher interest rates. Musk makes Twitter focal, so I’m not sure he’s doing quite as badly as most people imagine.
Ironically given Musk’s public statements in advance of buying Twitter, one of the least-touched groups of employees (led by one of the most anti-Trump executives at the company) is.. content moderation. Could they be necessary for a pivot to porn?
Yesterday’s reduction in force affected approximately 15% of our Trust & Safety organization (as opposed to approximately 50% cuts company-wide), with our front-line moderation staff experiencing the least impact.
— Yoel Roth (@yoyoel) November 4, 2022
I have no idea what the future holds for Twitter. It was a bloated laggard under CEO Parag Agrawal and before. Musk is blowing things up, and that will either go very well or very badly. But it will be more interesting and more focal for awhile in either case. It seems like a mistake to walk away rather than to be a part of it, at least a little bit even if you’re hedging your bets elsewhere int he meantime.