[mdasen]

Just for some context, Twitter has around $4.5B in revenue per year. Clearly, you can't cut all spending. It looks like the "cost of revenue" is around half that ($2B) and you probably can't cut that. Do you cut sales and marketing? Well, then your revenue probably ends up declining. Do you cut R&D? Well, eventually others are going to eat your lunch. You have $1.6B in R&D costs and $1.2B in sales and marketing and $700M in admin costs (like Human Resources).

As you note, it's really hard to cut deep enough to cover $1B in interest payments without cutting stuff that ends up hurting your revenue. As Twitter cuts their R&D, they're leaving themselves open to missing out on the future. Should Twitter have continued to invest in Vine? Well, the benefit of hindsight says "yes" given TikTok's success. As much as everyone is making fun of Meta's metaverse plans, it's certainly possible it'll be important in the future. We really just don't know. I remember everyone saying the iPhone was a silly toy and people would want to keep their Blackberries and Windows Mobile devices with keyboards. We can literally see the future and say, "nah, that'll never happen."

If Musk cuts engineering too much, does the service just become mediocre?

As you say, it's hard to cut deep enough to come up with $1B.