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Firing 80% of X's employees, how does Elon Musk want to apply this model to the US government?
In 2022, Elon Musk acquired Twitter for $44 billion and quickly restructured the company with a tough management style. Within just 6 months, he reduced the number of employees from 7,500 to 1,500, equivalent to an 80% reduction. This significant change has been implemented through large-scale layoffs and voluntary leave packages for employees. Musk sent an email titled "A Fork in the Road" (A Fork in the Road) asking employees to choose between accepting an "extremely harsh" work culture or leaving the company. Notably, this title also appeared in an email sent to 2.3 million US government employees as part of Musk's campaign to reduce the federal workforce by 10%. Initially, the downsizing of the workforce led X to face a severe financial crisis. The company's advertising revenue in 2023 decreased by over 45%, to only about 2.5 billion USD, causing investors to devalue the company to 9 billion USD, only 1/5 of the amount Musk had spent to buy it back. However, X subsequently adjusted its business model, focusing on subscription fee services and content recommendation algorithms, similar to TikTok. By the end of 2023, the value of X increased to $13 billion and some major advertisers, such as Amazon, returned to the platform. According to Bloomberg, in 2024, X achieved $1.2 billion in adjusted profit, nearly on par with the $1.4 billion in 2021, when Twitter was still a public company. The decision to cut 6,000 Musk employees has led to a lot of legal disputes. More than 2,000 former employees have sued X for not receiving the promised severance pay. Some lawsuits have been dismissed, but there are still cases being prosecuted. Shannon Liss-Riordan, the lawyer representing former X employees, criticized Musk for using the same strategy as the US government. "He didn't even come up with a new email subject," she said, referring to Musk using the subject line "Fork in the road" when sending the email to reduce federal staffing. Although X is on the path to financial recovery, the company still faces many troubles related to Musk. In 2023, major corporations such as Disney and Apple withdrew their advertising from the platform after Musk shared a conspiracy theory related to Judaism. The loosening of content control by X also raises concerns for many brands. However, the banks that financed Musk's acquisition of Twitter have begun selling X's $5.5 billion debt at a more favorable price, indicating growing confidence in the company's recovery. How does Musk want to apply this model to the US government? Musk is pushing for a plan to cut 10% of the US government's workforce, equivalent to 230,000 people, including all 10,000 employees of the US International Development Agency USAID (USAID). While businesses may measure effectiveness by profits, government agencies do not have similar evaluation criteria. However, Musk believes that the streamlined model he applies at Tesla can improve government efficiency. For example, in 2023, Tesla had only 141,000 employees but achieved a profit of $10.9 billion, higher than General Motors' $10.5 billion and Ford's $8.1 billion, even though these traditional car companies have more employees. Musk believes that the government can learn from this model.