Jack Dorsey: “I grew the company size too quickly”

https://www.bbc.com/news/technology-63527893

by macleginn • 4 years ago

47 126 4 years ago

bbc.com

theduder99• 4 years ago

wow, losing $4 million a day.

blinkingled• 4 years ago

Is that in addition to the 1B in interest each year?

StayTrue• 4 years ago

Last year Twitter lost $221M so, yes, much of the $4M daily loss is due to Musk’s leveraged buyout.

belter• 4 years ago

And sold to some dude by $44 Billion... ;-)

ispo• 4 years ago

Smart lawyer wrote a nice piece of a contract.

yumraj2• 4 years ago

must be a really smart businessman with deep pockets.

jurassic2• 4 years ago

Twitter was not in a financial nosedive until Elon saddled the company with $13B in loans (used to acquire the company) while also tanking revenues by scaring off all the big advertisers who think the platform won't be brand safe in the free speech future. He did that himself. He also gutted engineering teams at Twitter, so their ability to execute quickly on whatever his new vision is seems in jeopardy. I predict Twitter is going to $0 and probably a lot sooner than you might expect.

donsupreme• 4 years ago

Jack: I was too good

seibelj2• 4 years ago

They fired half their employees and I just checked the Twitter app and it loaded fine. I guess it still works!

seydor3• 4 years ago

It's on Autopilot

seibelj2• 4 years ago

I guess the legendary amount of innovation Twitter has been known for will be reduced

yumraj2• 4 years ago

oh so that's what the Tesla engineers were doing there. Migrating Twitter to run on Autopilot. Makes sense.

No wonder 50% of innocent pedestrians are being trampled.

admax88qqq• 4 years ago

...

I too test the happy path once and assume there's no problems.

Wowfunhappy2• 4 years ago

I'm honestly curious whether the site will manage to stay running over the next few weeks / months.

anony23• 4 years ago

I doubt Twitter takes 3500 infra engineers to keep online.

this_user• 4 years ago

Reddit has a similar number of MAU and 1/10 the number of staff Twitter had. And I don't think their tech stack is all that spectacular, probably worse than Twitter's. Yet, their site runs just fine.

tptacek7• 4 years ago

The fact that Twitter just raptured away 50%+ of their workforce and things are still running mostly the way they did before indicates, to me at least, that Twitter must have been one of the better-run engineering orgs on the planet.

edgyquant2• 4 years ago

I would hope that their production deployments are fairly stable. If the app was crashing and riddled with known bugs at this point they’d be one of the worst run.

nmeofthestate• 4 years ago

I wonder how many redundancies are for technical roles and how many are for non technical roles (the "political/editorial wing" of the company such as the "curation team", the "human rights" team).

systemicdanna7• 4 years ago

Did you expect it to crash the second people were let go? It’s not like they power Twitter servers with power-generating bicycles.

icedchai2• 4 years ago

I assume he was smart enough to keep the operations staff (SREs, etc.)

acdha2• 4 years ago

This Musk, never make assumptions like that:

https://twitter.com/jredmond/status/1588675418064039937

A couple of former Twitter people I know have made similar comments hearing that plenty of good ops people were cut. That sounds like the usual PE death cycle getting started: they’re not critical to daily operations so things are fine and you can say “look, I’m a smart manager” until something breaks. After a while, customers get tired of declining service and the process accelerates.

Apocryphon• 4 years ago

The thing is, isn't this an universal phenomenon across the entire tech industry over the past 2-3 years? After the initial pandemic onset panic, company valuations skyrocketed and so did the demand to increase headcount.

Isn't everyone at risk, except for those at companies that have already had layoffs?

danielmarkbruce• 4 years ago

Not just the past 2-3 years. Many people at google semi-half-joked-not-joked that they could cut half the staff without a single dollar of revenue disappearing back in 2014-2015 time period.

sjburt• 4 years ago

That was almost a bragging point for quite a while. It was definitely not hip to work on ads or even search.

eqmvii• 4 years ago

Common at many companies. Revenue comes in and managers build their little empires, justifying it as they go.

adam_arthur• 4 years ago

Yes, it was.

Times have changed though, the smart ones are getting with the program. The others will have their share price obliterated

pyb• 4 years ago

The question is : why did these companies hire massively in the pandemic era ? It was clear that cautiousness was the best policy. Not in hindsight, but even at the time. Did tech CEOs suffer from a kind of mass hallucination?

jurassic2• 4 years ago

I don't think that's clear at all. Social media is a competitive game and if all your competitors are staffing up, you're going to get left in the dust if you don't do the same. Cheap money was helicoptering from the sky in those days, so why not?

sf4lifer4• 4 years ago

In the last decade, the (stock and private) markets rewarded growth (not profitability). Operators were not compensated on efficiency or revenue per employee. There was no expectations of dividends or profit. As a matter of fact massive spend for growth drove stock prices higher so that's what everyone did. Jack was complicit in this ultimately bearing responsibility however this was the status quo in the growth at all costs era of tech.

ChildOfChaos• 4 years ago

Sadly seems to be the way of the world in general.

Growth at all costs.

Heck even if you grow at a smaller percentage of what you grew by the year before the markets get spooked and the headlines of doom begin, even for companies doing insane numbers.

philshem• 4 years ago

“Growth for the sake of growth is the ideology of the cancer cell.” —- Edward Abbey

rogers65• 4 years ago

Not the way of the world, but the way of the world in a zero interest rate environment.

Every tech company hires aggressively in a low interest rate environment for two reasons.

1. Money is cheap 2. Bonds return negative yields so all the money flows into risk assets that grow aggressively. Profits don't matter in this environment.

Those that weren't in the workforce prior to 2008 will now learn the importance of profit as interest rates rise to rates we haven't seen in decades.

beebmam• 4 years ago

Should we expect H-1B visas to stop being renewed?

Simon_O_Rourke• 4 years ago

If you look at it dispassionately, it would seem that a lot of colleages would be rightly worried about this happening.

thisarticle• 4 years ago

Why would we continue to renew H-1B visas if citizens need those jobs?

sf4lifer4• 4 years ago

I doubt the Govt would legislate anything unless there is a sustained multi-year depression. They won't be able to react with new laws in a short time (at least under Biden and democratic congress). Whether companies will opt to hire H-1Bs or citizens is likely a cost decision. Existing employed H-1B renewals is totally dependent on company/individual performance.

sf4lifer4• 4 years ago

Also, Jack deserves credit for roping in Elon and selling Twitter at $44B at peak market. Every employee (with stock options) got some of that upside. Assuming the $4M per day loss is accurate, any CEO would be forced to make cuts in this economic environment. I credit Elon for doing it all at once rather than doing a cascading series of layoffs. That said, I feel for everyone who lost their job...

jdlshore• 4 years ago

rather than doing a cascading series of layoffs

That has yet to be seen...

SilverBirch• 4 years ago

The rumour is that a significant part of the losses is that Elon spooked advertisers, so their ad spend dropped off a cliff. So what was a marginal advertising platform last years is a massive mess now.

Oh and Musk used something >$10Bn worth of loans to buy twitter, so they immediately have a new $1bn/year interest payment to make. That's 3 mil a day alone (check my maths).

pfisch2• 4 years ago

https://www.nytimes.com/2022/04/28/technology/twitter-first-...

Twitter was profitable before this happened, even with the increased headcount. It seems like all the loans Elon took out put a noose around Twitter for no benefit to the platform at all.

sf4lifer4• 4 years ago

Yah. Buying a platform for 4X it's worth in a leveraged buy-out, antagonizing it's primary revenue source while firing half it's staff to roll-out a monetization strategy that 80%+ of 1M+ respondents said they don't want isn't exactly an inspiring start.

ergocoder9• 4 years ago

"I regret hiring most of you." basically.

Not the best wording.

He should have said he failed to grow revenue and the macro-economy wasn't as expected.

ALittleLight3• 4 years ago

I think he should've said whatever he believes is the truth. I have no idea if he did or didn't do that though.

ergocoder9• 4 years ago

I think he should've said whatever he believes is the truth.

Not really. If your words would hurt other feelings with no upside, it's better left unsaid.

In this case, his words can be interpreted in a bad way easily. The bar for good and unambiguous communication for a 7000-company CEO is very high.

googlryas2• 4 years ago

Saying he didn't have a good plan for their labor doesn't mean they're not worthwhile or bad employees.

ergocoder9• 4 years ago

Your interpretation could be valid too.

The other equally valid interpretation: It would have been better for twitter and him if he didn't hire those employees.

sytelus3• 4 years ago

These consequences-free "I take responsibility" among C-suits is becoming too common. if he really felt responsible for screwing up as CEO, he should be splitting the millions he had received in compensation with people who are laid off. Show some action instead of just making appearances.

concordDance• 4 years ago

They're already getting three months severance.

sytelus3• 4 years ago

In this market 3 month severance is not much. Much of the value of these big tech jobs is in unvested stocks that these people will lose entirely (i.e. rewards for most of the work they did during almost half decade) while CEO who screwed up in overhiring walks away with golden parachutes and full vesting. Every big and small tech has now hiring freeze. Many of these people moved to expensive SF area with their entire family.

rowanG0772• 4 years ago

It's been like this forever. High ranks (be it politically or in business) have little to no real responsibility/accountability.

ergocoder9• 4 years ago

It's because the employment contract specifies it that way.

If the employment contract says "If you fail, you will need to return all of your compensations", then nobody would agree to work for you.

Now they agree to work for you under the assumption that they will not return what they've earned... then we want to reverse that retrospectively. The contract was signed years ago, but well we are going to change it now. Please return every penny we paid you. That's kinda fucked up to be honest.

ergocoder9• 4 years ago

I hope this doesn't become the norm of employment agreement.

I don't want to return money when I fail at my job. It could easily bankrupt me.

Imagine if you are fired and have to return all the salaries and stock you've ever earned.

Godel_unicode3• 4 years ago

There are employment agreements doing this already, just time-boxed with signing bonuses and RSUs.

sytelus3• 4 years ago

C-Suits are different than ground workers. They get golden parachutes, you don't. They get full vesting at firing, you don't. C-suits get paid for company performance, while you get paid for the task done. Ton of C-Suits simply get paid for growing fast (aka hypergrowth aka overhiring). They pose this as performance and take home millions. These millions should be returned when they admit that the growth they claimed was simply overhiring.

daniel-thompson• 4 years ago

Exactly. Absent any consequences that affect him to the same degree that losing their jobs affects the laid off employees, this is just a meaningless attempt at virtue signalling.

mjfl• 4 years ago

if it became normal to sue for this type of money, then they would simply stop saying sorry.

digianarchist2• 4 years ago

Jack actually rolled his shares into the Musk deal. [0]

[0] https://www.ft.com/content/f65414c4-f3e4-4bff-9af0-4960f922c...

seydor3• 4 years ago

CEOs are the new politicians

yakubin• 4 years ago

It's funny how BBC annotated American/Oxford spellings with "[sic]".

tptacek7• 4 years ago

I mean, I'm sure there's an element of truth to that, but I also wonder whether post-Musk Twitter is just on a different footing and trajectory than public Twitter. Public Twitter had to concern itself with Twitter's competitive position among the other tech media giants. It made sense for them to be doing a bunch of research projects, AI, AI ethics, moonshot platform projects, and product launches that might not pay off for 4+ years but also served as competitive hedges against, I don't know, TikTok or Substack or whatever.

Post-Musk Twitter can't really afford to do any of that stuff, at least not on spec. They're running (I think by necessity?) a classic private equity playbook here: figure out the core revenue drivers and strip out everything that isn't directly associated with them. Bring costs sharply down, wait for revenue to stabilize, pay off the loans, and then figure out what to do with a much more "efficient" company?

All this just to say: I'm sure they probably did grow Twitter too big. But even accounting for that, private Twitter just has different needs than public Twitter, right?

(The layoffs appear to have been done cruelly and capriciously.)

Y_Y• 4 years ago

Has Musk left already‽

Godel_unicode3• 4 years ago

I assume they meant post Musk acquisition

mathlover2• 4 years ago

I agree with one point of exception:

Saying post-Musk Twitter is using the private equity playbook assumes that Twitter is being handled according to a playbook rather than being done by an incompetent narcissistic sociopath who hyped his way to being a very overvalued) billionaire, bought a company on impulse, and is now has to make more money off Twitter than is likely even possible in order to pay back said loans.

tptacek7• 4 years ago

I don't like him either, but I don't subscribe to the Musk model where he's simply a chaos agent with no regard to consequences of any sort. He didn't want Twitter and got locked into buying it after losing a game of chicken, and now he's scrambling to make some sense of what he's got.

hyperbole• 4 years ago

Musk bought Twitter with the same results a redneck buys a jacuzzi at the county faire - it was an expensive impulse purchase and the moment after buying it all your left with is regret

kjksf• 4 years ago

So much baseless confabulation about Musk's supposed "strip and sell" strategy for Twitter.

Here's the reality: Musk has big plans for Twitter. Much bigger that Dorsey's or Parag's plans.

He got multiple billion invested by third party because he convinced them that he's capable of multiplying the value of Twitter.

Here's a NYT story from May detailing Musk plans for Twitter based on leaked deck he presented to would be investors.

Here are things Musk pitched to investors, in May:

- Quintuple revenue to $26.4 billion by 2028

- Cut Twitter’s reliance on advertising to less than 50 percent of revenue

- Produce $15 million in revenue from a payments business

- Increase average revenue per user by $5.39

- Reach 931 million users by 2028

- Have 104 million subscribers for a mysterious X by 2028

- Hire 3,600 employees — after shedding hundreds. By 2025, Mr. Musk anticipates Twitter will have 11,072 employees

https://www.nytimes.com/2022/05/06/technology/elon-musk-twit...

The layoffs are necessary but temporary. He plans to grow head count to 11k.

He has a plan. It's not a whimsical or egoistical purchase.

He started executing on that plan the day the deal closed. In 2 weeks Twitter will have shipped a major feature ($8/mo subscription). For context: edit feature took Parag more than a year.

The NYT story and numerous hints Musk dropped about his plans for Twitter directly contradict your "private equity playbook" confabulations.

yladiz• 4 years ago

Well, if he had a plan for right after purchase, he does seem to be executing on that plan extremely poorly. He has seemingly no revenue plan except charging his verified users $8 per month (down from the original $20), and it’s not even going to cover the interest rates of the loans he took out. So he has some real catching up to you to really make some money.

pfisch2• 4 years ago

The most brilliant part of his plan is how he is needlessly antagonizing his own advertisers and threatening to send his crazed followers after them.

That is how you grow a business. I'm sure the advertisers will come running to make deals with a man who may or may not lash out at them publicly and send his followers to attack them in the future over any disagreements.

tptacek7• 4 years ago

Sure. And he's going to take Tesla private and he's going to run SpaceX from his new HQ on Mars. What did you think he was going to say to investors? "This is a disaster and we're all going to lose our shirts"?

syntaxing• 4 years ago

TikTok is projected to have a net revenue of 18B in 2023 (23B in 2024)…and that’s mainly from ads. Mastercard revenue is around 18B. If you think Twitter can hit 26B revenue in 6 years, I have a bridge I would like to sell you.

kweingar• 4 years ago

Musk also said we’ll have people on Mars by 2022.

Forgive me if I don’t take his plans for twitter at face value.

nostrademons• 4 years ago

Are the assumptions in this plan really realistic, though? A cornerstone to these numbers seems to be the $12B in subscription revenue from the mysterious Product X with 104M users, hinted to be the ad-free "Twitter Blue" that just launched. (Pricing is pretty consistent as well - $12B in revenue with 104M users implies ~$120/month = ~$10/month.)

Subscription-based social networking has been tried before: that was the revenue model for LiveJournal/DeadJournal/uJournal/SomethingAwful/Flickr/Del.icio.us 20 years ago. People do pay for it - but only a couple percent of people will pay for it, and that was for companies that charged more like $10/year rather than $10/month. Worse, social networking is a network-driven business where the utility of the product increases the more people that are on it, so if a subscription-based business model results in fewer total users, you end up losing out to a free ad-supported model. This was exactly how MySpace and Facebook totally took over from LiveJournal & Flickr.

It's possible that 20 years makes a difference, and the userbase now is fundamentally different from it was 20 years ago. But I wouldn't bet on it - if anything, the masses are less willing to pay for entertainment than they were 20 years ago, because they have less money. I'd chalk this one up to a businessman with lots of money and experience in other businesses entering a business that he knows nothing about and assuming his experience is transferrable.

systemicdanna7• 4 years ago

In 2 weeks Twitter will have shipped a major feature ($8/mo subscription).

Do you mean that he is planning to increase the subscription price for an existing feature called Twitter Blue? Why do so many Musk’s fans have the urge to constantly exaggerate his impact?

jtthe13• 4 years ago

Cut Twitter’s reliance on advertising to less than 50 percent of revenue

He’s definitely reducing reliance on advertising considering how poorly ad sales are going. So we’ll soon be able to mark that one as a « win » I guess. /s

seydor3• 4 years ago

what AI? what platform, they crippled it and shat on developers. The best thing to come out of twitter was Bootstrap

I think Musk plans to change the nature of twitter. He could build a substack and onlyfans clone for starters, but i think his ultimate goal is to make it the Wechat of the US

tptacek7• 4 years ago

I think a lot of people are going to jump in here making this same point, so just to clear it up: what I'm saying isn't incompatible with any grand design Musk might have on Twitter.

I personally think Musk ended up with Twitter because he lost a game of chicken with Parag Agrawal, for whom there should be a marble statue erected in Bowling Green commemorating him as a hero of shareholder value. You can think otherwise. You're wrong, but it doesn't matter! We can arrive at the same analysis.

Whatever Musk's grand strategy is, his first order of business is to strip Twitter down to some efficient core. He'll want to put his own big plans in place, not Parag's. Even if you think Musk really wanted Twitter, he certainly didn't want it because he thought there was a lot of value locked up in Twitter's internal plans.

The point is just: Twitter was bound to get a bunch smaller in the near term because the first order of business here is to do a reset, and to shake off all the long-term bets Twitter was making. Public Twitter had to make those bets; otherwise, the only way to value it would be on the ad revenue it was already bringing in.

znpy• 4 years ago

Post-Musk Twitter can't really afford to do any of that stuff

What if it doesn’t need to?

Chances are 99% of the users use the basic functions, and are just happy with the average twitter experience.

And I’ll tell you what there are even public people that post ok twitter against their will (I’m thinking of journalists and authors that post on twitter because their employer/editor requires them to do so).

Most likely the true value of twitter is the network effect and its critical mass, not much the fancy ai stuff or whatever.

tptacek7• 4 years ago

It might not need to! I'm mostly not making a value judgement. There's just a narrative about how the layoffs and cost cuts are shedding "bloat". Some of it probably is bloat: Twitter was not regarded as especially well-managed. But a lot of it is stuff that public Twitter probably had to be doing, to satisfy the market, but post-Musk Twitter doesn't need to do.

llimos2• 4 years ago

Side-question: Is it normal to write [sic] after an alternative but not wrong spelling of a word? Jack is American, and uses American English, which I guess is against the BBC's style guide, but "I realize [sic]" seems to be going too far?

Calvin02• 4 years ago

I’d imagine that they have some pedantic readers who’d get upset with the misspelling.

LordOfWatford2• 4 years ago

I reckon the pendants would number less than those who think it unnecessary and verging on xenophobic.

foxhill• 4 years ago

it's to indicate that the text quote is as-written (which may not necessarily be a _mistake_), and from the perspective of the BBC, "realize" isn't alternative, it's just wrong :)

unsupp0rted• 4 years ago

I suppose it means "we know you're going to notice this isn't how you'd spell it, and rest assured it's intentional".

pvg• 4 years ago

Yes it is normal. It doesn't necessarily imply the wrongness. It's an unusual spelling in British English and the annotation tells you the spelling is reproduced verbatim rather than someone at BBC mistyping it.

RaoulP• 4 years ago

Same for "apologize [sic]", in the same paragraph. That's a bizarre decision by the journalist or editor. Will they [sic] every ou vs. o and s vs z?

I'd either ignore it, or just change the quote to British English, I assume that's not going too far.

edit: apparently it is going too far. Quoting across the Atlantic is a common issue faced by writers, and it seems the consensus is that you always just quote letter-for-letter.

spuz• 4 years ago

It's not mentioned in the style guide whether to use [sic] when quoting American text so I guess it's up to the individual writers.

googlryas2• 4 years ago

How would the BBC handle it if Jack [sic]'ed it himself?

If he tweets "I realize [sic] this is a silly question", how would they quote it?

Wowfunhappy2• 4 years ago

They'd probably say in the sentence after the quote that the "sic" had been included.

loevborg• 4 years ago

Wow, you weren't kidding. That's more than a bit crazy that they would do that. Maybe they want to stave off letters to the editor?

llimos2• 4 years ago

you weren't kidding [sic]

You mean "you weren't joking"

LordOfWatford2• 4 years ago

I do not know if it's normal or not. Certainly I don't think I've ever seen 'sic' being used on American spelling like that ever before. It stood out to me as strange, and I even remarked to the wife, 'Have you ever seen the BBC add "sic" to American spelling before?'

Brits are completely aware that Americans spell things differently, personally I don't feel it needs pointing out. Makes it look like the writer thinks Jack is wrong!

Googling "BBC using sic for American spelling" brought me to your comment, and looking at the other results it doesn't look like they do it all the time. Seems silly to have done it at all!

I wager it get's edited away before the end of the day.

ddmma2• 4 years ago

We got traction but will figure out the profit for later time. That is Twitter’s legacy that is going to change from the foundation. Jack is an idealist

systemicdanna7• 4 years ago

This strategy did not start with Twitter and won’t end with this acquisition. Tech startups will keep betting on capturing the market first and getting to profit later. Not sure this specific fact makes Jack an idealist.

ddmma2• 4 years ago

The fact that this was prolonged for a decade seemed like unfinished puzzle. Every founder should have a vision, idealist in good sense, numbers don’t matter sometimes.

davesque• 4 years ago

I feel like the whole Musk buyout debacle has shown us once again how lacking all of our emperors are in the wardrobe department. So tell me again why we have to make headlines out of their shower thoughts.

lob_it• 4 years ago

The linked article has an interesting "out" for WARN protocols using an "unforeseeable business circumstances" exception, such as the "free get out liability" ace twitter/musk received with advertisers pressing pause.

If the irony of that just dawned on someone, you're welcome :)

A simple analysis of day 1 to day 3 operations makes that a quick thinking decision.

"https://www.fisherphillips.com/news-insights/fair-warning-co...

moomin• 4 years ago

This is just the “weird nerds” meme with a very rich weird nerd.

cma• 4 years ago

Wasn't the company a wild success? They sold out at peak bubble pricing. With a slower growing company could they have dumped it off on someone for as much? The large number of employees even made it more enticing for an acquirer with bad timing who figured he could cut his way to profitability.

systemicdanna7• 4 years ago

This situation for Twitter is closer to winning a lottery than to being a wild success. The fact that they locked in the offer at that price point and then the market crashed is pure luck (with a ton of work from smart lawyers), but it’s not the result of some brilliant long term strategy.

dadoge• 4 years ago

Hot take: Jack is just trying to help Elon not get in any legal trouble by saying this. This very much absolves Elon of wrongdoing in any legal arena

Jack has not been the CEO for about a year now, a 50% reduction is hardly due to his choices to expand over a year ago.

voisin• 4 years ago

Honest question: why does anyone care what Jack Dorsey says anymore?

flashgordon• 4 years ago

Oh hey look everybody Jack took responsibility and apologized. We can all get closure and move on now.

How is this cloying ownership and rounds of apologies still a thing? Gaaaaaah this is so infuriating!

Jack Dorsey: “I grew the company size too quickly”

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