Inspired by the recent actions of new Twitter owner and chief executive Elon Musk, more business leaders in California’s Silicon Valley are dismissing surplus employees.
The startup and venture capital industries appeared to take note as Musk acquired the social media company and dismissed two-thirds of employees with no apparent impact on the platform’s operations. According to the billionaire entrepreneur, the number of new Twitter users and the amount of time users spend on the site have increased under his leadership.
“The fact that Twitter is running well with headcount down significantly really matters,” Atreides Management Chief Investment Officer Gavin Baker remarked, adding that many Silicon Valley executives begrudgingly admire Musk. He cited an email from a venture-funded manager dismissing employees and explaining that only top performers would be permitted to keep their posts, recalling language used by Musk as he downsized Twitter in recent weeks.
“We will start to hear ‘lighter is faster’ and references to small teams being superior to large teams,” Baker continued. He noted that “strong CEOs cut early” when the odds of the company’s success are higher, and employees have better prospects on the job market, while “weak CEOs cut late and thereby put everyone at risk.”
“Nature is healing,” Musk replied, appearing to reference Silicon Valley’s former culture of scrappy founders stretching every dollar and focusing narrowly on business outcomes.
Beyond the dismissals, Musk told remaining employees that they should expect “extremely hardcore” working hours if they desire to stay at the company. He added that the firm would become “much more engineering-driven,” implying a pivot away from “design and product management” emphases.
In the wake of the dismissals at Twitter, executives have faced pressure from investors to reduce bloated payrolls. Companies such as Meta, HP, Lyft, DoorDash, and Amazon have announced layoffs or paused new hires, citing macroeconomic pressures and excess growth in their staff following the demand surge that accompanied the rollback of lockdown measures.
Commentators have drawn attention to a reckoning in the technology sector’s job market as social media videos of employees enjoying company amenities while appearing to do little work have gained traction. One 23-year-old product manager at Meta, for instance, recorded a “day in the life” video complete with workouts and free meals rather than staff meetings or work calendars. A similar video from an employee at Twitter featured wine on tap, foosball, a meditation room, and smoothies.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Altimeter Capital Management CEO Brad Gerstner wrote in a recent letter to Meta CEO Mark Zuckerberg. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”
Baker likewise contrasted “summer” and “winter” executives, noting that more are transitioning to the latter category after the actions taken by Musk, constituting a boon for venture funds. “They are going to drive margins and do more with less,” he said. “Their companies will be more likely to succeed and their employees will do better.”