In cost cutting at Twitter, some bills not being paid

Under heavy financial pressure, Musk enacting drastic measures

SAN FRANCISCO — Before Elon Musk bought Twitter last month, the company’s executives had racked up hundreds of thousands of dollars in travel invoices that the social media service planned to pay.

But once Musk took over the company, he refused to reimburse travel vendors for those bills, current and former Twitter employees said. Musk’s staff said the services were authorized by the company’s former management and not by him. His staff have since avoided the calls of the travel vendors, the people said.

Musk has embarked on an enormous cost-cutting campaign since closing his

$44 billion acquisition of Twitter. He initially slashed half of the company’s 7,500person workforce, fired workers and continued with layoffs as recently as Monday. But he has also conducted a sweeping examination of all types of other costs at the company, instructing staff to review, renegotiate and in some cases not pay Twitter’s outside vendors at all, eight people with knowledge of the matter said.

Musk and his advisers have trained their sights on computing costs that support Twitter’s underlying infrastructure, travel expenses, software services, real estate and even the company’s normally lavish in-office cafeteria food. Twitter’s spending has dropped, but the moves have spurred complaints from insiders — as well as from some vendors who are owed millions of dollars in back payments.

Musk’s actions reflect the financial pressure that Twitter is under. The company took on $13 billion in loans for his buyout of the social network. The interest payments for that debt total more than $1 billion annually. And Twitter has long faced financial difficulties, often losing money and struggling to keep up with rivals like Facebook and Google that effectively monetized their advertising products. Some advertisers have paused spending on Twitter as they evaluate Musk’s ownership.

Musk, 51, has told Twitter employees that “the economic picture ahead is dire” and that bankruptcy might be in the cards for the company. He brought in allies from his other companies to pore over Twitter’s books. Their directive was simple: Cut, cut, cut.

That helped lead to the mass layoffs at Twitter this month. And behind the scenes, no expenses are off the table.

Twitter’s finance team, which has been drastically reduced, has been instructed to comb through company expenses and employee expense reports “line by line,” people with knowledge of the matter said. They have been asked to specifically make sure that employees and their expenses are for “real people and real expenses,” they said.

Musk also issued an order to slow or in some cases halt transfers of funds to Twitter’s vendors and contract services, the people said. Any expenditures for services need to be approved by Jared Birchall, the head of Musk’s family office, three people said. Musk has since declined to pay for the travel services incurred by the former Twitter executives, the people said.