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Elon Musk and Jason Calacanis messaged about how return-to-office mandates could be used as a ‘gentlemen’s layoff’ to get workers to voluntarily quit

October 6, 2022, 9:37 PM UTC
Elon Musk
Tesla CEO Elon Musk.
Carina Johansen—NTB/AFP via Getty Images

Elon Musk’s Twitter acquisition saga may be exhausting, but it has revealed how some business leaders are thinking privately about return-to-office mandates.

In messages released as part of his court battle with the social media company, Musk and Jason Calacanis, a self-described “serial entrepreneur [and] angel investor,” discussed an ulterior motive for return-to-work mandates.

Calacanis said in an exchange with Musk in April that a return-to-office mandate at Twitter—a reversal from the company’s current remote-work policy—could lead to 20% of Twitter’s staff voluntarily quitting. He described it as a new type of “gentlemen’s layoff” that has become common in the post-pandemic era, as companies tighten their belts and look to cut jobs without paying employees severance.

Many major corporations, and particularly tech companies, offer lucrative exit packages for workers who have been laid off.

In September, Twilio, for example, offered the roughly 800 employees it had laid off 12 weeks of severance pay, plus an additional week of pay for every year worked at the company.

But now, with interest rates rising and recession fears mounting, many companies are hoping to slash costs as they downsize their businesses. And according to Calacanis, they’re using return-to-office mandates to do so.

That’s not exactly surprising, given that some 64% of Americans would consider finding a new job if they were required to return to the office full-time, according to an April survey by the ADP Research Institute.

The Musk-Calacanis direct messages

Calacanis was quick to reach out to Musk after the news of his $44 billion Twitter acquisition offer first broke.

The angel investor, an early shareholder in tech companies Uber and Robinhood, tried to drum up financing to help Musk with the acquisition, offered advice, and even lobbied to become Twitter’s CEO.

“Board member, advisor, whatever…you have my sword,” Calacanis wrote. “Put me in the game coach! Twitter CEO is my dream job.”

Calacanis went on to argue that Twitter could meet the standards of its Big Tech peers, at least in terms of revenue per employee, if it dramatically cut staff.

In a “back of the envelope” calculation, he said Twitter’s revenue per employee was just $625,000 in 2021, compared to $1.9 million per employee for Google and $2.37 million per employee for Apple—but if Musk were to cut 5,000 of Twitter’s 8,000 workers, he could increase Twitter’s revenue per employee to a “more industry standard” $1.66 million.

“Insane potential for improvement,” Musk responded after emphasizing Calacanis’s text. 

Then Calacanis proposed using a return-to-office mandate to get rid of some of Twitter’s staff without having to pay the typical exit packages. Twitter’s previous CEO, Jack Dorsey, implemented a “forever” remote-work policy in 2020 that allows Twitter employees to work wherever they are most productive.

“2 day a week office requirement = 20% voluntary departures,” Calacanis wrote. “Day zero…sharpen your blades boys.” 

The two then decided maybe it wasn’t the best idea to discuss slashing Twitter’s staff using Twitter direct messages.

“Maybe we don’t talk Twitter on Twitter,” Calacanis wrote.

Was just thinking that haha,” Musk replied, adding that “nothing said there so far is anything different from what I said publicly.”

Whatever the case, many CEOs have argued that employees should return to the office after the pandemic because they say it improves productivity and team building. JPMorgan CEO Jamie Dimon has repeatedly argued that working from home hurts company culture, and asked for his employees to return to the office, with mixed success.

And Rich Handler, the CEO of the investment bank Jefferies, told Fortune that office interactions can help an individual progress in their career. “If you are in the office, you get pulled into a lot of interesting ‘real-time’ situations because physical presence matters,” he said.

Apple CEO Tim Cook also discussed the importance of in-person collaboration in March after announcing his plans to implement a hybrid work schedule.

On Friday, Calacanis elaborated on his “gentlemen’s layoff” idea in an episode of the All-In Podcast, with tech investor Chamath Palihapitiya, venture capitalist David Sacks, and fellow entrepreneur David Friedberg. 

In a discussion about the recent return-to-office mandates at Apple, Calacanis said:

“As I’ve mentioned on previous episodes, they’ve kinda done a gentlemen’s layoff. Similar to Meta, I think Apple said you have to be back in the office three days a week; a bunch of people quit, so you don’t have to pay them huge packages when they quit that way.”

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