Why Elon Musk's SpaceX Fired Hundreds Of Employees In 'Purge'-Like Method

Elon Musk's company SpaceX has just fired about 10 percent of its workforce of over 7,000 employees.

On Friday, Jan. 11, hundreds of SpaceX employees were likely shocked when they received a notice that they were could be getting fired in a manner that some workers had described as similar to a corporate "Hunger Games" or a "purge." All the employees of the company, regardless of whether or not they were a new or veteran one, were apparently told to leave work early that day and wait for an email, which would notify them if they still had a job, to arrive within 24 hours.

SpaceX COO and President Gwynne Shotwell said via CNBC that the move was necessary due to "extraordinarily difficult challenges ahead" and that the company would not have let go of the employees unless necessary.

“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," Shotwell said. "Either of these developments, even when attempted separately, have bankrupted other organizations. This means we must part ways with some talented and hardworking members of our team.”

SpaceX confirmed that the company still had over 6,400 employees and that layoffs were spread across all teams and departments.

Teslarati pointed out that even though letting go of workers was often "necessary" for underperforming companies and those in particularly competitive industries, SpaceX did not seem to fit the bill, which makes the layoffs even more shocking. The privately-held company is currently one of the most valuable startups in the U.S., and it has even raised $500 million to $750 million within the last six months alone.

Eric Berger wrote on Twitter that this was a "classic Silicon Valley move to cull the weak." Another Twitter user said that layoffs are more likely to happen when the person's or department's skills are no longer needed or when they show bad performance. It could also be because of company politics.

Interestingly, SpaceX may have fired 10 percent of its workforce due to the terms of its fundraising rounds. As confirmed by SEC filings showing about $270 million of $500 million raised, SpaceX has been in discussions with investors and banks to raise funds.

SpaceX may have fired about 700 to 800 employees in order to cut operational costs by $80 million to $100 million per year. While this amount would not be enough to fund any of Musk's ambitious plans like the Big Falcon Rocket (BFR) and Starlink, Teslarati noted that this could be intended only to sway investors to bet on the high-risk launch company.