How Twitter Can Work With Only 50 People (Elon’s Layoffs)

Using Cold Hard Math To Solve Business Problems

Using Cold Hard Math To Solve Business Problems

When Elon bought Twitter they had 7500 employees.

He fired 50% of their workforce.

Another 1200 left after he told them he was going to make Twitter “Extremely Hardcore”.

Less than 2900 remain.

How can 2900 do the same job as 7500?

Price’s Law

Derek Price, a British physicist, historian and scientist discovered something interesting about his peers.

There were always a handful of people who dominated the publications within a certain subject.

Being a scientist, he investigated.

He found out the following:

50% of the work is done by the square root of the total number of people who participate in the work.

He tested it across different groups and audiences and it almost universally applied.

Especially in business.

The square root of the number of people in a company do 50% of the work.

In a company of 10 employees, 3 of them do 50% the work.

Remaining 50% of the work is done by the other 7 people.

This scales too.

Competence grows linearly.

Incompetence grows exponentially.

• 10 employees, 3 of them do 50% of the work

• 100 employees, 10 of them do 50% of the work, the other 90 do the other 50%

• 10,000 employees 100 of them do 50% of the work, the other 9,900 do the other 50%

Now before you all lose your shit (because you all did on LinkedIn).

There are exceptions. (h/t Fredrick Omeniho)

Price law assumes the following:

1. The nature of the work is without specialties meaning if A, B, C, …,Z are all workers then they can do the work of each other.

2. There is no division of labour or work delegation.

Exceptions:

1. Football has division in duties; a goalkeeper can not become a midfielder etc.

2. IT Team; there is a division of work; frontend, backend, database, full stack, platform, etc.

Now let’s look at an example of how to apply Price’s Law to a very large team with complex structures and divisions of duties.

IT Team: Although IT Teams seem to be an exception to the law (like Twitter), a very large IT team, with careful cutoffs, you can archive Price’s Law.

You will only apply price law to the various subunits.

Your success will only depend on how granular you go in deciding what size and specialty you choose as a unit.

TL;DR: Price law only has exceptions when the team size is small and there is a division of labor or job post.

The survival of any business requires the execs to figure out who the most competent and necessary people are in the organization and keep them happy and keep them around.

If they don’t, Price’s law will kill their business.

Elon just has to hope he chose the right people (and the ones that chose to leave of their own free will weren’t the ones that contributed the most).