Did Twitter have too many employees?

Hello,

The news of mass layoffs at Twitter have shocked many on the internet.

The layoffs were expected after Elon Musk took over, but a 50% reduction in staff is quite extreme.

Even if layoffs were necessary to save the company, I personally think the management could, and should have handled things better.

But the question remains,

Did Twitter have too many employees?

This is an easy question to ask but not an easy question to answer.

Especially, outside-in, without any internal data and assessments.

But we can make an attempt.

A simple metric using publicly available data that we can use is Revenue per employee.

Its imperfect, but comparing the metric over time, and benchmarking Twitter against its ad-tech/social media peers can give us some idea.

The choice of companies is driven by whose data is publicly available (so I couldn’t use companies like Linkedin, TikTok and Reddit).

Meta and Google are quite large and more diversified than Twitter – however, I included them, as they still make most of their money from Ad-tech.

I wanted to use latest quarterly revenue and employee count, but could only found employee figures in the annual report (the latest being 2021).

I also debated using net income (i.e. profit) per employee but Twitter hasn’t been consistently profitable to make a meaningful comparison.

The result is the chart below. Very interesting. What do you think?

I’m starting a new section from this week, showcasing newsletters and websites I find interesting. Hope you do too!

📢 Shoutouts

  • OpenLampTech is an awesome, free, newsletter sharing curated and original content for developers focused on the PHP and SQL ecosystem. Check it out!
  • Z’s 3-in-3 is a short, sharp newsletter where Zvonimir shares 3 entertaining & helpful things with readers every week, on a wide variety of topics. Give it a go!

That’s all for this week. Thanks for reading! 👋

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