Since Tesla CEO Elon Musk took over Twitter, the company’s delinquent accounts to suppliers have “pile up,” a report citing a former senior Twitter employee said. Elon Musk has repeatedly said, “Let them (suppliers) sue.”
According to foreign media reports, after Elon Musk spent $44 billion to acquire Twitter, he formed a “transition team” composed of his trusted deputies in November last year to cut operating costs. In order to reduce the company’s operating costs, the team often refused to pay Twitter suppliers, landlords, and partners, which annoyed many cooperative companies.
“Elon Musk always said, ‘Send them off,’ which is a line he always says,” said a former senior Twitter employee. “It’s so short-sighted.”
It is reported that the Twitter transition team is led by The Boring Company CEO Steve Davis (Steve Davis), and its main job is to reduce Twitter’s daily operating costs. Davis reportedly slashed nearly $1 billion in costs at Elon Musk’s behest.
Davis is investigating Twitter’s data licensing agreements and policies, the people added. He also recently decided to charge third parties for the use of Twitter’s developer tools, a person familiar with the matter said.
Davis, an aerospace expert and longtime Elon Musk ally, once played a role akin to chief operating officer, industry sources said. Davis is also working with Elon Musk’s cousin, James Musk, and Jared Birchall, who runs the Musk family office, on how to split Twitter’s layoff quota. James Musk currently oversees engineering for the Twitter platform.
In addition, Elon Musk also transferred Omead Afshar, who was in charge of the Texas Gigafactory, from Tesla. After Afshar joined Twitter late last year, he quickly earned the nickname “Elon Whisperer” among the company’s employees. Afshar is now helping Twitter solve “the company’s biggest, toughest problems,” including cutting infrastructure costs, the employees said. He was recently involved in price negotiations for large cloud-spending contracts between Twitter and Amazon and Google, two people familiar with the matter said. Cloud computing spending is now down 40%, Musk said at the investor conference.
It is said that Elon Musk is also working with investors to study how to deal with existing supplier accounts.
Among Twitter’s suppliers are not only companies like Salesforce, Adobe, and Slack, but also landlords, insurance providers, and providers of security services, limousine services, and fertility services.
Pablo Mendoza, managing director of Vy Capital, invested $700 million in Elon Musk’s acquisition of Twitter. According to reports, he even helped to cut some bills by 90% in negotiations with suppliers. Mendoza sometimes played emotional games with suppliers, telling them that if they didn’t lower their bills, they might lose their jobs.
Twitter did not immediately respond to a request for comment.
Elon Musk has repeatedly claimed that he must “save Twitter from bankruptcy.” Since taking over the company, he has been desperate to cut operating costs, including laying off more than half of Twitter’s workforce.
In addition, Elon Musk also refused to pay Twitter office rent, auctioned off company items such as office furniture, and canceled employee benefits such as free lunches.
Elon Musk has previously said that Twitter’s non-debt expenses will reach $4.5 billion in 2023. At an investor conference last week hosted by Morgan Stanley, Elon Musk said he had cut Twitter’s non-debt spending to $1.5 billion. He also added that Twitter could turn cash flow negative into positive in the second quarter of this year.
In February, it was reported that at least nine lawsuits have been filed against Twitter for unpaid wages or unpaid accounts to employees, with a total claim amount of more than $14 million.
One of the ad companies, Canary LLC, is suing Twitter for nearly $400,000 for goods and services it has not paid for.
“These are blindfolds,” said a former senior Twitter employee. “(Elon Musk) did this to delay the eventual costs from surfacing so he could go around the field and celebrate.”
