Mark Zuckerberg Commends Elon Musk’s Approach of Streamlining Companies

Since acquiring Twitter for $44 billion in October last year, Elon Musk has laid off thousands of employees and eliminated numerous middle-management positions. According to TechCrunch, Twitter’s workforce has decreased from approximately 7,500 employees to fewer than 2,000 as of February this year.

Speaking on the Lex Fridman podcast, Zuckerberg expressed his support for Musk’s approach. He interpreted Musk’s actions as an effort to make the company more “technical” by reducing the gap between engineers and himself and by minimizing the layers of management.

Zuckerberg reflected on Musk’s influence, stating, “His actions make me and, I think, a lot of other people in the industry think, hey, should we be doing more of this? Can we improve our companies by pushing some of the same principles?”

He believes that many others share similar thoughts, but executives from other companies may choose to implement such changes more discreetly.

Meta, the parent company of Facebook and Instagram, has undergone its own restructuring. After cutting 11,000 positions in November last year, the company announced in March that it would lay off an additional 10,000 employees and freeze the hiring of 5,000 positions. Zuckerberg stated that these measures are part of his “Year of Efficiency” plan, aiming to flatten the organization by removing multiple layers of management.

While the morale of Meta employees may have been affected by the efficiency-driven changes, Wall Street responded positively, with Meta’s stock price rising approximately 112% year-to-date.

Other major tech companies, including Salesforce, Microsoft, and Amazon, have also downsized their workforce this year. According to a recent report by Challenger, Gray & Christmas, layoffs in the tech industry in 2023 reached the highest level since the dot-com bubble due to overhiring.

Stewart Butterfield, former CEO of Slack, discussed the issue of overhiring in tech companies during a Bloomberg podcast. He explained that without genuine constraints on the number of personnel, the tendency is to hire more people, with each new hire wanting to hire others.

Butterfield attributed this behavior to human nature, stating, “The more people you have reporting to you, the higher your prestige, the more power you have in the organization… the processes are all set up to be like, ‘I need to hire more people’… That’s what I think the root of overhiring is.”

Zuckerberg acknowledged that it is difficult to determine whether Musk has laid off too many or too few employees from an external perspective. However, he believes that the trend Musk initiated is beneficial for the industry, aiming to make all these companies more productive in the future.

It is worth noting that Musk himself admitted in May that not all the employees who were let go were necessarily redundant. He stated in an interview with CNBC, “In a crisis situation, you have to be fairly ruthless, and there’s no question that some people were fired who shouldn’t have been. But if we didn’t immediately reduce costs at the time, Twitter would have gone bankrupt. If the whole ship sinks, then nobody has a job.”

In contrast to Musk’s situation, Zuckerberg did not face the same financial urgency at Meta. He explained that his decision was driven by cultural and strategic considerations, wanting Meta to become a stronger tech company. He aimed to empower engineers and the people building things within the organization.

Part of his vision is to ensure that these employees are not the lowest nodes in the organizational hierarchy. He expressed his desire to avoid having an eight-layer management structure where the actual work is being done at the bottom.

Mark Zuckerberg praised Elon Musk’s approach to streamlining companies, specifically referring to Musk’s actions at Twitter. Zuckerberg sees Musk’s influence as a positive trend and believes that similar principles can improve other companies. Meta itself has implemented significant restructuring efforts as part of its efficiency-focused strategy. The tech industry as a whole has been experiencing layoffs due to overhiring in recent years, and Musk’s approach highlights the need for more streamlined organizations.