This article was originally published in SmartCompany.
Early hardships are almost like social currency in the successful start-up world — 20-hour days, sleeping in the office, subsisting on instant coffee and packets of ramen. These tales often become romanticised, worn as badges of honour to legitimise and inspire. To show others that hard work, hustle and sacrifice can lead to greatness.
Over the weekend Elon Musk invoked this start-up hustle mindset, tweeting pictures of himself and employees working from Twitter’s San Francisco headquarters at 1.30am.
These images acted almost like a full stop, punctuating weeks of employment turmoil that included mass layoffs, resignations and demands that most staff be in office full time. And that’s before you even get into diversity issues.
Masquerading as a start-up
In an email to staff last week Musk asserted that they would need to be “hardcore” to last at the company. Employees were asked to sign a “pledge” or be let go with three months of severance pay.
In the aforementioned classic startup narrative, the founders generally sit alongside their tiny teams in the metaphorical trenches. Often they have risked their livelihoods, personal lives and perhaps even relationships to make their dream a reality.
It’s hard, often impossible. That’s why most start-ups fail.
For those that don’t, early employees tend to be rewarded for their dedication, lack of sleep and lost years. Equity is often on the table, even if it’s on a vesting schedule to encourage retention.
It’s highly unlikely that any of the employees in Musk’s 1.30am weekend photos will reap these kinds of rewards. What they do get are tweets of praise from their new overlord and his fans for their work ethic and commitment to the cause — a platform that has been around for more than 15 years.
This ignores a couple of things. Firstly, not everyone is in a position to quit if they don’t like their new working conditions. Further to that, many US Twitter employees are at the mercy of “at will” employment. This means they can be let go at any time — admittedly with severance in this case — regardless of how many new changes, expectations and demands are made.
Similarly, some employees are on visas meaning that quitting will result in deportation.
So sure, some might call 1.30am weekend work dedication. Others might call it desperation. Especially at a time when big tech companies such as Meta and Amazon are letting go of staff en masse.
Elon Musk didn’t want to buy Twitter
But let’s talk about dedication since we’re here. The weeks following Musk’s acquisition of Twitter have been turbulent, to say the least. There appear to be new changes, priorities, backflips and general shitposting from Musk himself every few hours.
It’s certainly been one way to market the platform, offering digital bread and circuses for the online masses.
Despite what anyone may think of him, Musk is certainly working on the platform and was absolutely in at the office in the middle of the night.
But it’s important to look at the potential motives.
For start-up founders, it often comes down to belief. They push themselves to succeed because they believe in their vision, product and team.
Comparatively, Musk didn’t really want to buy Twitter. In fact, his road to acquisition was almost as tumultuous as his reign over the platform.
It began back in March when Musk became the largest stakeholder in the company at 9.2%. A month later it was announced he will join Twitter’s board of directors, but Musk reneged on this just five days later.
The real drama kicked off over the subsequent 10 days when Musk offered to buy the company at US$54.20 a share, which was a 38% premium and left Twitter valued at around US$44 billion.
Twitter tried to prevent this by allowing extra shares to be bought at a discounted rate, thus watering down Musk’s shares and driving up the sale price.
Still, Musk committed to buying the company and all was quiet until mid-May when the billionaire tweeted that the deal was “temporarily on hold”. But just two hours later he tweeted again, asserting that he was still committed to the deal.
In the end, Twitter sued Musk to force him to go through with the acquisition, which he did for US$44 billion (plus $2.5 billion extra in closing costs) just one day before the court case was due to start.
Since then, he has been openly cutthroat about cost cutting.
“Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4M/day,” Musk tweeted on November 5.
What’s not said here is that his buyout of the platform included some of his own personal cash, as well as US$13 billion of debt funding from multiple US banks, including US$6.5 billion of leveraged loans. It also means that the company is being saddled with US$1 billion in annual debt repayment.
And this is happening amid worldwide economic turmoil where the lenders are stuck holding the debt until early next year at the least.
According to NPR, the fresh stack of debt is seven times larger than Twitter’s 2022 projected earnings. Even Musk admitted that bankruptcy could be a possibility.
“Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” Musk said in an email to employees earlier this month.
So no, Musk isn’t asking more of his remaining employees simply to improve the platform or make up for past financial woes. And it’s certainly not about overcoming the odds to build something together to change the world, which is oftentimes the north star of young start-ups.
These employees are being asked, and in some cases coerced due to lack of options, to dedicate their lives to pay off a billionaire’s offensively large debt on a vanity project he didn’t even want.
That is not start-up culture.
