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Elon Musk spoke of possible Twitter job cuts with bankers

Other ideas include paying ‘influencers’ like TikTok does to attract more eyeballs

Elon Musk. (Al Drago/Bloomberg News)
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Elon Musk has focused on free speech when talking about his planned acquisition of Twitter, but in discussions with bankers in gaining financing for the deal, he was full of ideas about how to reinvigorate Twitter’s business.

Musk talked with bankers about creating “efficiencies” at Twitter, which could include job cuts, according to people with knowledge of the discussions who spoke on the condition of anonymity to discuss sensitive matters.

Musk also brought up several ideas to boost revenue for the company, such as paying “influencers” to create content, following a business model that helped make TikTok a powerhouse social media app, the people said. He also brought up the idea of subscription services that the company could sell.

The ideas came up in “working groups” with bankers as he sought to secure financing for the deal, according to the people. The talks indicate the Tesla CEO isn’t just thinking about First Amendment issues when it comes to running Twitter, which he agreed to purchase for $44 billion this week. He wants to make money, too.

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The private conversations offer some of the only clues about Musk’s business strategy for taking over Twitter. While Musk has made minor public suggestions such as adding an “edit” button for tweets, he has not spoken publicly about his broader strategy and has instead focused on the content moderation decisions the company has made. He has spoken publicly about free speech on the platform, which he called the de facto town square.

Musk previously said the financials were not his concern.

“I don’t care about the economics at all,” he said.

Still, the private conversations with bankers demonstrate some of the business savvy that has made Musk so successful at running his companies electric car manufacturer Tesla and rocket ship company SpaceX.

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Twitter and Musk did not immediately respond to a request for comment.

Twitter reported earnings Thursday, saying its number of daily active users — which has grown slowly — had grown to 229 million. First-quarter revenue climbed to $1.20 billion, which fell short of analysts’ estimates, according to a Bloomberg compilation.

Bloomberg News first reported that Musk spoke to bankers about job cuts.

Musk’s acquisition of Twitter is unusual in many ways, including just how quickly it came together. When he first made an offer to buy Twitter for $54.20 per share, he had not disclosed how he would finance the deal. While Musk is the world’s richest person, much of his wealth is tied up in stocks he is hesitant to sell. Musk began approaching banks over Easter weekend and a few days later came away with agreements from banks to loan him more than half the $44 billion needed to complete the deal.

On Tuesday and Wednesday, Musk sold about $4 billion worth of Tesla shares, presumably for the purpose of the acquisition, according to securities filings made public Thursday evening. Tesla’s stock was down 2.6 percent in after-hours trading. Musk tweeted Thursday night that he does not plan to sell more Tesla stock.

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Twitter’s board, which had initially rejected the offer, immediately began negotiating with Musk once he had secured financing and the deal was reached early this week.

Musk’s ideas about how to reinvigorate Twitter were not part of a formal plan, these people said, and the loans he used to finance the deal were not contingent on any belief that Musk could make the social network more financially successful. In the working groups, Musk was critical of the way Twitter has been run, both financially and from a product standpoint.

Twitter accepted a $44 billion takeover offer from Elon Musk on April 25. Why did he want to buy the social media giant? (Video: Hadley Green, Julie Yoon/The Washington Post)

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These people said the deal came together so quickly, especially considering the dollar amount, mainly because Musk has such valuable assets that there is virtually no chance that he will default on the loans. Twitter’s business prospects, these people said, were not a significant factor.

Because Musk’s offer to buy Twitter was hostile, bankers were unable to see anything beyond public financial information about Twitter’s business health.

While Musk is known for his focus on technology and once considered getting a PhD in physics, according to books and biographies, he is also a keen financial operator capable of recognizing opportunities to quickly turn a profit.

Rachel Lerman and Faiz Siddiqui contributed reporting.

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