What’s Gone at Twitter? A Data Center, Janitors,
Some Toilet Paper.
Elon Musk has reduced the company to a bare-bones
operation, and employees are under a “zero-based budgeting” mandate to justify
any spending.
By Kate
Conger, Ryan Mac and Mike Isaac
Kate
Conger, Ryan Mac and Mike Isaac have reported on Elon Musk and Twitter since
early this year.
Dec. 29,
2022
Elon Musk’s
orders were clear: Close the data center.
Early on
Christmas Eve, members of the billionaire’s staff flew to Sacramento — the site
of one of Twitter’s three main computing storage facilities — to disconnect
servers that had kept the social network running smoothly. Some employees were
worried that losing those servers could cause problems, but saving money was
the priority, according to two people who were familiar with the move but not
authorized to talk about it.
The data
center shutdown was one of many drastic steps Mr. Musk has undertaken to
stabilize Twitter’s finances. Over the past few weeks, Twitter had stopped
paying millions of dollars in rent and services, and Mr. Musk had told his
subordinates to renegotiate those agreements or simply end them. The company
has stopped paying rent at its Seattle office, leading it to face eviction, two
people familiar with the matter said. Janitorial and security services have
been cut, and in some cases employees have resorted to bringing their own
toilet paper to the office.
Mr. Musk
bought the social network for $44 billion in late October, saddling it with
debt that will require him to pay about $1 billion in interest annually.
Speaking on a live forum on Twitter last week, Mr. Musk compared the company to
a “plane that is headed towards the ground at high speed with the engines on
fire and the controls don’t work.” Twitter was on track to have a “negative
cash flow situation” of about $3 billion in 2023, he said, citing a depressed
advertising environment and increased costs, like the debt payments.
“That’s why
I spent the last five weeks cutting costs like crazy,” he said.
Those cuts
may be yielding consequences. On Wednesday, users around the world reported
service interruptions with Twitter. Some were logged out, while others
encountered error messages while visiting the website. Twitter has not
explained what caused the temporary outage. Three people familiar with the
company’s infrastructure said that if the Sacramento facility had still been
operating, it could have helped alleviate the problem by providing backup
computing capacity when other data centers failed.
Twitter,
which has eliminated its communications department, and Mr. Musk did not
respond to a request for comment.
Although he
has said he will appoint a new chief executive at Twitter, Mr. Musk remains
closely involved at the social networking firm even as problems crop up at his
electric vehicle company, Tesla. And his tight control of the daily management
of Twitter calls into question just how much power he would cede to a new
chief, who would inherit a bare-bones business that he still owns.
Since early
November, Mr. Musk has sought to save about $500 million in nonlabor costs,
according to an internal document seen by The New York Times. He has also laid
off or fired nearly 75 percent of the company’s work force since completing the
purchase.
During the
live forum on Twitter last week, Mr. Musk said Twitter had “a little over 2,000
people.” The discussion occurred shortly after he laid off about 50 people,
mainly from the company’s infrastructure division. Last week, he cut half of
the public policy team’s 30 employees.
Cost-cutting
has been overseen by Steve Davis, the head of Mr. Musk’s tunneling start-up,
the Boring Company, and Jared Birchall, the head of the billionaire’s family
office. Twitter managers who didn’t lose their jobs in mass layoffs last month
have been told to approach their spending with a tactic known as “zero-based
budgeting,” or operating under the assumption that spending should start at
nothing and teams should justify individual costs, according to the
costs-savings document.
Mr. Davis
has directed Twitter employees to delay paying various contractors or vendors
and try to negotiate those bills to smaller amounts, according to two people
familiar with his instructions. The cost of one of the company’s largest
contracts, with the consulting megafirm Deloitte, has been a point of
particular concern for Twitter’s leadership, which wants to reduce the fees the
company pays for security, tax preparation and other services, the two people
said. The company has skipped payments to KPMG, an accounting and consulting
firm that had been working on matters related to compliance with the Federal
Trade Commission, they said.
While
missed payments to those firms have now been paid, according to a person
familiar with the expenditures, it’s unclear if the company will retain their
services beyond this year. Representatives for Deloitte and KPMG did not
respond to requests for comment.
The company
missed payments to and then renegotiated its contract with Carrot, a benefits
provider for fertility services including egg and sperm freezing and in vitro
fertilization, according to two people close to the company. On Thursday,
Carrot notified Twitter employees that the fertility benefit amount would be
halved in the new year. A representative for Carrot did not respond to requests
for comment.
Last week,
Twitter got rid of the cleaning staff at its New York offices and 10 people
from corporate security, signaling that it may close one of its two buildings
there, said two people familiar with the move.
At
Twitter’s San Francisco headquarters, where the company has missed rent
payments, Mr. Musk has done the same, consolidating workers onto two floors and
closing four. He also canceled janitorial services this month, after those
workers went on strike for better wages.
That has
left the office in disarray. With people packed into more confined spaces, the
smell of leftover takeout food and body odor has lingered on the floors,
according to four current and former employees. Bathrooms have grown dirty,
these people said. And because janitorial services have largely been ended,
some workers have resorted to bringing their own rolls of toilet paper from
home.
Mr. Musk’s
erratic and hands-on style has thrown off a number of workers, as he often
interrupts meetings seemingly at random, talking for long stretches and asking
some top leaders to be sounding boards for his ideas, two people familiar with
his management of Twitter said.
He has also
asked some leaders to snuff out the sources of leaks to the press and anonymous
posts on social media sites, three people said, and is focused on eliminating
people inside the company he believes are opposed to him.
Workers
expect more layoffs. Because the sales staff was cut less than other teams in
earlier rounds of dismissals, some people anticipate further cuts to the
division. U.S. revenue numbers continue to flag, with advertising revenue down
significantly over the first week of December compared with where it was one
year ago, two people said.
Despite the
steep cuts, Mr. Musk has continued to spend in some areas. Twitter has hired
several new employees in recent weeks, replacing workers who were terminated
during mass layoffs in November.
But the
training process for new employees has been significantly reduced, cutting to
90 minutes what was once three days of orientation that included information on
compliance with privacy and security agreements with global regulators, three
people said. In one case, a new hire contacted a former employee on LinkedIn to
get an understanding of how services worked at the company, according to the
former worker.
Mr. Musk
has also brought in dozens of engineers from his other companies, including
Tesla and SpaceX, to work at Twitter. While Tesla engineers are not on
Twitter’s payroll, the automaker has billed the social media firm for some of
their services as if they were contractors, according to documents seen by a
former Twitter manager.
Those who
have been brought in recently, according to a document seen by The Times,
include Omead Afshar, one of Mr. Musk’s right-hand men, who previously oversaw
the construction of Tesla’s factory in Austin, Texas, and is now, Bloomberg
reported, a vice president at SpaceX. Mr. Afshar did not respond to a request
for comment.
Some human
resources and other employees have agreements to stay until January or February
to help the transition to Mr. Musk’s ownership before leaving, two people
familiar with the department said.
The
shutdown of the Sacramento data center, known as SMF1, set off alarm bells at
Twitter, with employees being summoned to work on Christmas Eve as internal
systems went down, according to Slack messages viewed by The Times. While users
did not experience any immediate disruptions to the social network, three
people who used to work on the company’s infrastructure called Mr. Musk’s moves
reckless, potentially leading to the loss of internal data and about 30 percent
of the company’s computing power that could be needed in times of high site
traffic.
Mr. Musk
tweeted that Twitter remained online, “even after I disconnected one of the
more sensitive server racks.” That evening, the system Twitter uses to triage
reports of illegal and harmful content went offline briefly, according to an
internal message written by Ella Irwin, the company’s head of trust and safety.
“All agent
tools are down,” she said of the system.
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