The PayPal co-founder predicts that Elon Musk has started a great reckoning
As the cheap money era draws to a close, perhaps no industry has been worse affected than the tech sector. Last year, there were nearly 100,000 job cuts — an astonishing 649% increase from the nearly 13,000 tech jobs that were cut in 2021. And this year the picture doesn’t look much rosier: from Apple to Amazon (which cut a further 18,000 employees this week), job cuts are happening across the board.
So where does this leave Twitter’s new chief, Elon Musk? Like other tech CEOs, the entrepreneur has announced a significant reduction to his new workforce, with reports suggesting that as much as 75% of employees are leaving. But astonishing as this figure may seem, Twitter has actually grown in activity and downloads under its new leadership. What could explain this?
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To find out what was really going on in the room at Twitter, UnHerd’s Freddie Sayers spoke with a key confidante and friend of Musk’s: David Sacks. Sacks has been a vocal supporter of Musk since the Tesla chief took over Twitter in October. He views these job cuts as not only necessary, but desirable: “The reality is Twitter, like a lot of companies in Silicon Valley, was very bloated and overstaffed. It was possible to cut three quarters of the employees and actually improve the performance, because you didn’t have a bunch of people working at cross-purposes getting in each other’s way.”
But this bloat is not unique to Twitter. Sacks observes that Silicon Valley is rife with government-enabled inefficiency: “The level of excess and entitlement that grew in these tech companies over the last several years was fuelled, I think, by Fed policy, by zero interest rates and free money.”
Those workers who have coasted on a wave of diversity hiring, excess capital and rapid growth are now being asked to prove their worth. For Silicon Valley’s elites, Sacks argues, this is a brutal shock to the system: “One of the reasons why there’s been so much hysteria about what Elon is doing at Twitter is he’s really cut to the core of the insecurity that a lot of these surplus elites feel. Elon is saying, ‘Listen, your job here at this company is not based on what your politics are. It’s based on what your contribution is.'”
Musk’s decision to uphold the bans on rapper Kanye West for anti-Semitism and, most recently, an account tracking his private jet have called into question his practical commitment to free speech. Sacks says that this is taking attention away from the real culprits of censorship, the legacy media: “They were cheering on the de-platforming of a sitting president, for example, the de-platforming of thousands of people they disagreed with. And now, whenever Elon makes any content moderation decision, they basically are up in arms acting like they’re free speech absolutists. I think that’s where the real hypocrisy is.”
So what next for Silicon Valley? The PayPal co-founder prescribes an overhaul of bloated corporations, but not a total anarchic revolution. The success of a digital public square requires clear moderation policies: “In my view, free speech never meant that anything goes. […] I think it would be good for social networks to ground their content moderation policies, to the extent they’re able, in First Amendment case law. And I think you can do that to create a little bit of a neutral authority.”
Whether Musk is the man for the job remains to be seen, but Sacks is optimistic that he is capable of starting a domino effect in the wider tech industry: “I think the product will be far better than it is. Two years is a long time, at the pace that Elon is moving. Look at what he’s done in the last two months. So I think the product will be different. And I’d say radically better.”
Thanks as ever to David for his time.