You don't need reliability engineers until you NEED reliability engineers.
There is no technical reason why links have to be shortened (for SMS users back in the day, the shortening should've happened at the SMS gateway level, with actual Twitter content always using the real links).
You don't need (as many) reliability engineers if you don't add unnecessary moving parts into the system in the first place.
That aside, in his shoes I would have slashed non-essential roles, but been a bit less heavy-handed among the engineers. I do feel that Twitter's popularity is orthogonal to the cost-cutting.