Although Twitter spokespeople deny it as a rumor they refuse to comment on, Recode reports that the company will face big layoffs this week, with a heavy emphasis on streamlining its engineering department.
“Those close to the company have argued for years that Twitter has become too bloated,” writes Recode. “It reported roughly 4,100 employees last quarter, more than double the roughly 2,000 employees it had in Q2 2013 just before the IPO. Twitter’s user base has grown less than 50 percent in that time. Of course, some of the growth has come via acquisitions — Twitter has made plenty over the past two years. But still, the feeling from those close to the company is that Twitter’s engineering team is much larger than it needs to be.”
Company co-founder Jack Dorsey, recently installed as CEO, has promised “big changes” for Twitter, and “has been vocal about the need to shake things up at the company, as user growth and engagement has stalled and the company’s stock has been battered,” according to Business Insider.
Dorsey described the company’s flagging performance as “unacceptable” and promised to “ensure more disciplined execution” in a June conference call.
BI notes that Twitter advertising executive Glenn Brown amicably parted ways with the company only days after major new features of the video ad program he spearheaded, Twitter Amplify, made their debut. Brown explained his departure by professing to be a longtime admirer of his new employer, consumer-media investment company Betaworks, and its CEO, John Borthwick.
The New York Times anticipates that Dorsey will also cut costs by canceling plans to expand the company’s San Francisco headquarters.
The Times describes Twitter as “a company in crisis,” due to falling stock prices, stagnant user growth, intense competition from other social media platforms, and soaring expenses – up 37 percent from the previous year, to a whopping $633 million. Stock prices rose after Dorsey was named CEO, but then slipped when rumors of big layoffs began circulating.
An interesting analysis at Business Insider suggests that Twitter is becoming a broadcast system for other social media platforms, particularly Instagram, which now has substantially more users. Many Tweets are duplicates of posts made on Instagram, which has tools for sharing posts instantly to Twitter, as many other platforms do.
The flow of users and traffic appears to be shifting in Instagram’s favor, which could become a crisis for Twitter if users begin deciding that it’s too much trouble to maintain a presence on many different platforms. The problem facing Twitter management is that adding more tools to enhance its audiovisual capabilities, making it a full-featured platform that would compete with other services in every dimension, could also ruin the simplicity and brevity that made Twitter famous in the first place.
Dorsey is still serving as the CEO of another company, a mobile payments service called Square, which happens to be headquartered across the street from Twitter – the canceled office expansion plans would have added Twitter office space in Square’s building. Last week, tech pioneer Elon Musk – himself the CEO of two companies, Tesla and SpaceX, and a workaholic noted for putting in 100-hour weeks – advised Dorsey not to try running Square and Twitter at the same time, warning that it would decrease his “freedom” too much.