The Washington Post has obtained interviews and documents indicating that Twitter's workforce is likely to undergo massive reductions in the coming months, regardless of who owns the company. This will have a significant impact on Twitter's ability to control harmful content and prevent data security crises.

Elon Musk informed prospective investors in his offer to acquire Twitter that he planned to eliminate nearly 75% of the company's 7500 employees, reducing the workforce to just over 2000.

Even if Musk's Twitter deal falls through - and there's currently little indication that it will - massive layoffs are expected: Twitter's current management planned to reduce the company's payroll by about US$800 million (NZ$1.4 billion) by the end of next year, according to corporate documents and interviews with people familiar with the company's deliberations. The company also intended to make significant cuts to its infrastructure, including the data centers that keep the website operational for more than 200 million daily users.

The extent of the cuts, which had not been previously reported, helps explain why Twitter officials were so eager to sell to Musk: Musk's hostile US$44 billion bid is a golden ticket for the struggling company, potentially allowing its leadership to avoid painful announcements that would have demoralized the staff and weakened the service's ability to combat misinformation, hate speech, and spam.

Edwin Chen, a data scientist formerly in charge of Twitter's spam and health metrics and now CEO of the content-moderation startup Surge AI, stated that while he believed Twitter was overstaffed, Musk's proposed layoffs were "unimaginable" and would put Twitter's users at risk of hacks and exposure to offensive content such as child pornography.

"It would have a cascading effect," he said, "with services declining and the remaining staff lacking the institutional knowledge to bring them back up, as well as being completely demoralized and desiring to leave".

Twitter's top attorney, Sean Edgett, sent a note to all employees on Thursday evening (local time) stating that the company had no confirmation from Musk regarding his plans.

Twitter's own, smaller-scale "cost savings discussions" were put on hold after the merger agreement was signed, according to an email viewed by The Post. In internal Slack groups, Twitter employees reacted to the news with anger and resignation, supporting each other and making jokes about the turmoil of the past few months.

After months of legal battles, Twitter and Musk are expected to close the deal by next Friday, according to people familiar with the negotiations who spoke on condition of anonymity to discuss internal deliberations. If the deal closes, Musk would become Twitter's new owner immediately.

Twitter did not respond to a request for comment immediately.

It will be a Herculean task to turn this around, according to Dan Ives, a financial analyst at Wedbush Securities. "The easy part for Musk was buying Twitter, and the difficult part is fixing it."

Nell Minow, a corporate governance expert and vice chair of ValueEdge Advisors, opined that Musk was likely pitching ambitious plans to potential investors, but that implementing his proposals would be difficult.

"He must be able to demonstrate, if he makes these cuts, what happens next?

" She asked, "What will he replace it with, AI?"

"

During town hall meetings, company executives have repeatedly assured employees that there are no immediate plans for layoffs. During the one town hall meeting Musk attended in June, he was asked directly about layoffs and responded that there was no reason for low performers to remain employed.

But the new details, which reflect conversations over the past few months, highlight the extreme nature of Musk's planned transformation of Twitter amid the challenge of making the long-struggling company more profitable. Twitter has never achieved the profit margins or size of other social sites such as Meta or Snap, and Musk's plan to take the company private - freeing it from having to please Wall Street - was a major reason former CEO and co-founder Jack Dorsey resigned.

The representatives of Elon Musk did not respond to requests for comment.

The months-long roller coaster ride of Musk's on-again, off-again bid for ownership, coupled with a tense legal battle, has left Twitter battered and bruised. The company faces significant worker attrition, slowed hiring, halted projects, and a volatile stock price.

Andrea Walne, a general partner at Manhattan Venture Partners, a firm that has invested in the deal, recently told Business Insider that she believes Twitter is only worth US$10 billion to US$12 billion and that other partners are trying to get out. Elon Musk stated that he and his investors were "obviously overpaying" for the website during Tesla's earnings call on Wednesday (local time).

Musk has indicated he will relax content moderation standards and favors restoring the account of former president Donald Trump (on Tuesday he posted a meme of himself, Kanye West, and Trump each holding a sword for the social media company he owns or is in the process of purchasing).

Musk has informed investors that he intends to double revenue in three years and triple the number of daily users who can view ads in the same time frame, but he has provided few specifics on how he intends to achieve these goals.

Twitter estimates that its monetizable daily active users (Mdau), defined as the number of users eligible to see advertisements, is 237.8 million, up 16.6% from the same quarter last year. However, documents that have emerged in Twitter's court battle with Musk point to much lower numbers, with Musk's side claiming, using Twitter's data, that fewer than 16 million users see the vast majority of advertisements.

Moreover, according to the interviews, the amount of time these users spend browsing Twitter decreased by 10% throughout 2021 and only partially recovered in the first quarter of 2022.

According to interviews and documents, one of Musk's primary goals is to eliminate and then rehire selected employees. Musk has previously indicated he would be open to cutting staff - legal filings indicate he agreed with a friend over text that the company's headcount did not justify its revenue when compared to other tech companies - but he has not provided specific numbers.

In presentations prepared for investors and other interested parties, Musk's optimistic business projections were fueled in part by steep job cuts across what was described as a "bloated" organization. One prospective investor, who spoke on the condition of anonymity to describe Musk's proposals candidly, compared them to leveraged buyouts, where companies are made profitable through devastating cuts to labor and operations.

Musk has told associates that he believes radically reducing the size of the company is the first step in executing a turnaround strategy, which would then involve bringing in more effective workers and profitable innovations. These include expanding on new services that he claims could generate more revenue, such as a subscription business where people pay to subscribe to exclusive content from influential figures and powerful figures (Twitter is currently experimenting with such a model, called Twitter Blue).

According to the interviews, Twitter's data indicates that subscriptions may not bring in significant new revenue. This is because the users who view the most ads - roughly the top 1 percent of users in the United States - are also the ones most likely to join a subscription service.

Last year, Twitter spent approximately US$1.5 billion on headcount, which included many highly compensated ad salespeople and several thousand engineers. The company also spends hundreds of millions on contracting firms that pay people to review reports of hate speech, child sexual abuse, and other objectionable and rule-breaking content on the internet. Twitter's median compensation is approximately US$240,000 for all employees and US$308,000 for engineers.

The company is implementing a performance review system called stack ranking that requires managers to grade employees on a numerical curve, so that a set percentage of workers will always be marked as low performers, according to one of the company documents obtained by The Post. The move has been protested by employees, but Twitter claims that other tech companies have similar practices.

Human resources staff at Twitter have assured employees that mass layoffs are not planned, but documents reveal that extensive plans to push out staff and reduce infrastructure costs were already in place before Musk offered to buy the company. Musk would have built on those plans by first targeting low performers - those whose performance ratings were "not on track" or below a 3 out of 5 - before moving on to other phases.

Musk and his attorney Alex Spiro pitched a who's who crowd of elite investors in Silicon Valley and Wall Street on a deal that was billed as an opportunity to not only transform underperforming Twitter but also work with the celebrated Musk. However, not all potential investors received the same information from Musk's team.

Oracle co-founder Larry Ellison and Sequoia partner Doug Leone were Trump supporters and self-proclaimed believers in the type of free speech ideology Musk promised to bring back to the platform. (Leone is no longer a Trump supporter but is said to hold an expansive view of free speech.) Hedge fund manager Kenneth Griffin, a Trump supporter and the second largest GOP donor in the current midterm cycle, was also a partner in the deal.

However, many potential prominent funders declined.

After being approached by Musk's representatives, private equity titans T. Rowe Price, TPG, and Warburg Pincus, who collectively control more than US$1.4 trillion, decided not to invest, according to people familiar with the situation.

LinkedIn founder Reid Hoffman helped connect Musk with Microsoft CEO Satya Nadella as part of the money-raising process, but did not invest himself, according to people with knowledge of the situation. Hoffman is a major Democratic donor, and Musk was already talking about restoring Trump.

Thiel first worked with Musk in 2000 when the two merged their companies to form PayPal, and Thiel's associates have stated that he is a fan of Musk running Twitter.

It is unclear whether these parties did not believe Musk's grandiose prediction or did not wish to be politically involved.

Some time passed after the company's finances and Musk's situation began to appear less favorable.

One person who lost interest told The Post that he was alarmed when the market downturn and the cost of the deal began impacting Musk's finances and Tesla, the crown jewel of his portfolio.

Musk's unrelenting attacks on Twitter and its leadership after announcing his takeover have hurt the company's stock price and added to the sense of chaos.

"It's like buying a new car, deciding you don't want it, and then crashing it," the person explained. "Then you say, 'I'll keep it.'"