SAN FRANCISCO — Before Elon Musk bought Twitter last month, the company’s executives had racked up hundreds of thousands of dollars in travel bills that the social media service planned to pay.
But once Mr. Musk took over the company, he refused to reimburse travel vendors for those bills, current and former Twitter employees said. Mr Musk’s staff said the services were authorized by the company’s former management, not him. His staff have since avoided calls from the travel vendors, the people said.
Mr. Musk has embarked on a massive cost-cutting campaign since closing his $44 billion acquisition of Twitter. He initially cut half of the company’s 7,500 employees, laid off employees, and did not resume layoffs until Monday. But he also conducted a thorough investigation into all types of other costs at the company, directing staff to review, renegotiate and in some cases not pay Twitter’s third-party suppliers at all, eight people with knowledge of the matter said. matter.
Mr. Musk and his advisers have set their sights on computing costs that support Twitter’s underlying infrastructure, travel expenses, software services, real estate, and even the normally lavish food in the company’s cafeteria. Twitter’s spending has fallen, but the moves have sparked complaints from insiders, as well as some merchants owed millions of dollars in delinquent payments.
Mr. Musk’s actions reflect the financial strain Twitter is under. The company took on $13 billion in loans for its buyout of the social network. Interest payments on that debt total more than $1 billion a year. And Twitter has long struggled financially, often losing money and struggling to keep up with rivals like Facebook and Google who effectively made money from their ad products. Some advertisers have paused spending on Twitter as they evaluate Mr. Musk’s property.
Mr Musk, 51, has told Twitter employees that “the economic picture ahead is dire” and that the company may face bankruptcy.
He did not respond to a request for comment.
Twitter’s former leaders tried to make the company profitable through a variety of strategies, from pushing live video to a wave of audio offerings. Mr. Musk’s plan was more austere. He enlisted allies from his other companies, including Antonio Gracias, a longtime confidant and former president of the electric car maker Tesla; Jared Birchall, the head of the family office of Mr. Musk; and Steve Davis, who created Mr. Musk leads, The Boring Company, to study Twitter’s books.
Their guideline was simple: cut, cut, cut.
That led to the massive layoffs at Twitter this month. And behind the scenes, no costs are off the table.
Twitter’s finance staff, which has been drastically downsized, has been instructed to sift through operating expenses and expense reports line by line, people in the know said. They have been asked to specifically ensure that employees and their expenses are for “real people and real expenses,” they said.
Changes to Elon Musk’s Twitter
A quick revision. Elon Musk has moved quickly to revamp Twitter since completing his $44 billion buyout of the social media company in October, warning of a bleak financial picture and a need for new products. Here’s a look at some of the changes so far:
Musk also issued an order to slow down or, in some cases, stop transfers of funds to Twitter vendors and contract services, the people said. All expenditure on services must be approved by Mr Birchall, three people said. Mr Musk has since refused to pay for the travel services of the former Twitter executives, the people said.
He’s also looking at the company’s leases for office space, three people said, who were having trouble making payments and hoping to renegotiate or waive some commitments. Twitter rents office space around the world, but the layoffs have reduced the need for much of that real estate.
Twitter’s partner team was also tasked with renegotiating its multi-year content deals with major sports entities, such as one it struck with the NFL in which the social media company pays the league to produce exclusive audio and video content for its platform, two people those familiar with the plans said. Twitter has made similar deals with other media companies, including Condé Nast, the NBA, and Fox Sports Network.
An NFL spokesperson was not immediately available for comment.
Mr. Davis, the president of the Boring Company, has also directed Twitter employees to renegotiate the deals the company has with companies such as Amazon and Oracle, which provide computer and technical services, the people said. The employees were told to suggest to those companies that Mr Musk’s firms would not work with them in the future if they refused to renegotiate, the people said.
After Twitter’s contract with a software vendor under Mr. Musk’s ownership expired, that company voided a rebate it had given to Twitter, a tech executive said.
Representatives from Amazon and Oracle did not respond to requests for comment. An email to The Boring Company was not immediately returned.
More on Elon Musk’s Twitter takeover
Business credit cards for Twitter employees have also been cut off, three of the people said. One employee said she tried to buy farewell drinks for colleagues after the mass layoffs, but her business credit card was declined at the bar.
When Mr Musk called on Twitter employees last week to return to the company’s San Francisco offices to meet with him, some employees said they were concerned about booking the trip with their personal credit cards and feared that they would receive no compensation. Under Mr. Musk’s ownership, Twitter has delayed payment or denied expense reports submitted for approval, four current and former employees said.
mr. Musk has ended other long-standing benefits on Twitter. He cut back on free lunches, which he says cost the company over $400 “served per lunch.” (An employee who worked on the company’s lunch program challenged Mr. Musk’s math.) In Twitter’s New York office on Monday, the cafeteria, which once had items such as grilled shrimp, served two kinds of macaroni and cheese, along with a salad bar, one person said.
Other benefits, such as subsidized gym passes, cell phone and internet bills, as well as childcare allowances, have also been cut, two people said.
Musk’s team, including his personal attorney Alex Spiro, has severed Twitter’s ties with some outside law firms that collaborated with the company’s former management in a lawsuit over the $44 billion buyout, a person known with the move. Earlier this year, Twitter sued Mr. Musk after trying to pull out of his agreement to buy the company.
Mr. Spiro did not respond to a request for comment.
Some of Twitter’s social projects are also starting to fall by the wayside. The company’s philanthropic arm, Twitter for Good, has lost many employees and checks promised to some nonprofits have not been received, two people said. The San Francisco Standard previously reported on Twitter’s philanthropic issues.
“Elon has shown that he only cares about recouping the losses he incurs as a result of failing to fulfill his binding obligation to buy Twitter,” an employee wrote on Twitter’s internal Slack messaging system this month.
