
Wall Street Is Giving Up On Twitter - petethomas
https://www.bloomberg.com/gadfly/articles/2017-02-10/wall-street-is-giving-up-on-revenue-challenged-twitter
======
the_economist
Twitter is so powerful. When Paul Graham wants to say something, he takes to
Twitter to do it. Not Facebook. Not Hacker News. Not reddit.

The same goes for many of the most influential people in the world.

Twitter has incredible utility for powerful people but very limited utility
for average people. Maybe the exact opposite of facebook. On Facebook, my
friends interact with me. On twitter, I speak into the void.

~~~
mtw
It's interesting to see how the power and reach of every word on Twitter by
politicians or journalists, yet Twitter is unable to profit from it. On the
other hand, nobody cares about the power of a Facebook posting or an
instagram, yet Facebook makes so much money of the frivolity.

~~~
danjoc
>yet Twitter is unable to profit from it.

Twitter could front run wall street on Donald Trump tweets.

~~~
jessriedel
It does seem like having early access to all tweets would be immensely
valuable, even if it was only a second of lead time. (Sure, Trump tweets are
valuable on their own, but market info has to be encoded into coarse-grained
info about individually useless tweets as well.) Unless they have an explicit
policy against it, Twitter must be selling this, right?

~~~
aetherson
New business model: For $1M per tweet, you can have a 50ms head-start on
tweets from Trump. Just Trump, just one tier of headstart/pricing. You prepay
for the next N tweets. You can set time-ranges (like, "when the markets are
open") for when you want to pay for the headstart.

I bet they could get a few tens of millions of revenue there. Probably HFT
firms would at least experiment with it, right?

Might get them into some serious regulatory crosshairs.

~~~
jessriedel
What regulation? Insider trading requires actual insiders; non-insiders are
generally allowed to trade on non-public information.

~~~
wtvanhest
A non insider that posseses material, nonpublic info is not allowed to trade
on it until it becomes public.

~~~
jessriedel
The sources I can find say there is only a violation when the person trading
is an insider or is purposefully tipped off by an insider.

[http://www.sandstormgold.com/_resources/policies/SSL_Stock_T...](http://www.sandstormgold.com/_resources/policies/SSL_Stock_Trading_Policy.pdf)

[https://www.sec.gov/answers/insider.htm](https://www.sec.gov/answers/insider.htm)

[https://en.wikipedia.org/wiki/Insider_trading#Definition_of_...](https://en.wikipedia.org/wiki/Insider_trading#Definition_of_.22insider.22)

The most direct version is here:

> In 1983, Switzer was sued by the U.S. Securities and Exchange Commission
> (SEC) for an alleged civil violation of the laws prohibiting "insider
> trading" of securities. He defended himself as having innocently overheard
> the information while lounging on the bleacher behind some corporate
> insiders—at a stadium where Switzer was watching his elder son compete in a
> track meet. The case was tried in Oklahoma City United States District Court
> (before a special U.S. District Judge appointed from Kansas). The case was
> dismissed at the conclusion of the Government's case for its failure to
> demonstrate that there had been any purposeful disclosure to Switzer.

[https://en.wikipedia.org/wiki/Barry_Switzer#After_coaching](https://en.wikipedia.org/wiki/Barry_Switzer#After_coaching)

[https://www.sec.gov/news/speech/1986/062086grundfest.pdf#pag...](https://www.sec.gov/news/speech/1986/062086grundfest.pdf#page=09)

Do you have a source that says otherwise?

The situation is even more clear for Twitter. If I'm a marine biologist making
the world's most detailed measurements of the ocean, I can clearly use this
info to buy or sell stock in a fishing company, even if I don't release that
info publicly. Likewise, I can sell that info to someone else who makes the
trades.

~~~
wtvanhest
After reviewing the info you provided, I beleive you are mainly right. The
only exception i can think of would be a situation where trump possesed inside
information due to his position, then shared it via twitter early. That would
be a violation, but it gets complex, and im having trouble formulating the
exact line.

~~~
jessriedel
Thanks for your response!

------
hizanberg
I've never seen a company in such an advantageous market position as Twitter,
do so little with so many employees. They benefit from so much free
advertising through self-promotion where people proudly display their twitter
handle on TV or at the end of news stories and articles yet they're still
unable to achieve any growth or noticeably improve their product.

From the outside it looks like they're at a virtual feature freeze and stand-
still meanwhile all other Tech giants are firing on all cylinders with a
continuous stream of new features and products.

Meanwhile Twitter struggles at implementing the most requested feature for
many years - to edit Tweets. They're also in a prime position to benefit from
Live video which they still can't capitalize on, there's no discovery and you
can't even subscribe or get any notifications to the shows you're interested
in, instead all you see is a tiny animated gif in the corner that's easily
ignored as an Ad to show you what's playing.

I don't see how Twitter can continue as an independent company, the best thing
that can happen to them is to get acquired and get some new blood in charge of
product development, unfortunately there's so many trolls and hate speech on
Twitter that no-one wants to touch them - another area they continue to
flounder on.

~~~
eliben
> Meanwhile Twitter struggles at implementing the most requested feature for
> many years - to edit Tweets

I thought that the immutability of tweets is a feature, to be honest.

~~~
justifier
git style version control would be ideal: retain the old but allow for minds
to change; goog's cloud office suite already does it

personally i find the editing almost as important as the content(o)

seeing what people change and when can illuminate context that would be hidden
from a first thought best thought adherence

(o)
[http://whitmanarchive.org/manuscripts/figures/yal.00049.001_...](http://whitmanarchive.org/manuscripts/figures/yal.00049.001_large.jpg)

~~~
differentView
When a tweet is reported on the TV news, people only see a screenshot. People
aren't going to know if it was edited, when it was edited, or what was edited.

Many would also be pissed if after they retweet something, the original tweet
changes in a meaningful way.

~~~
justifier
yeah, you'd have to have a visual cue.. even an option for displaying a commit
message alongside the message

allow respeak an immutable quality, keep the respeak as is and have a flag
signaling the original underwent an edit

the interest is in more clarity and transparency

------
imron
1) Open up to third party developers.

2) Charge developers for API access based on usage.

3) Incorporate some sort of single payment solution to facilitate ease of
charging users for payment without users needing to give credit card details
to developers (e.g. like Apple does with the AppStore).

4) Let third party developers worry about how to get users to pay by providing
things of value (for various definitions of value).

You're welcome.

~~~
dxhdr
I think this could actually work in a few years. Developers will have long
forgotten about the last time Twitter crushed everyone relying on their API.
Then, once their revenue is up the power will go to their heads and they can
repeat the cycle all over again.

------
pmcollins
Twitter's operating expenses are on par with Tesla's. Not to diminish how hard
it is to manage Twitter's load but their spending is way out of proportion.
And their revenue is on the order of 2 bn/year; there's no fundamental reason
they can't be profitable.

------
curiousfiddler
<rant>

I really like(d) Twitter. I feel it has played a huge role in democratizing
public opinion, so that I don't just create my opinion based on what media
houses throw at me. For me, it narrowed the gap between so called
"celebrities" and normal people. It made possible for me to interact with and
get insights from people whose work I care about.

I feel so bad about the poor execution on their product side. They get free
marketing - they are all over the tv, news websites etc. So many popular
people use Twitter to share information. What more can they ask for?

There are so many things that Twitter could've done first just because it was
in a position to like no-one else:

1\. Media sharing: absolutely ridiculous experience to the point that people
share images/video on some other platform and end up posting the links in
tweets. Even then, for an consuming user, the browsing experience is shit. WTF
twitter?

2\. Content sharing: twitter as a platform has way more relevant content
(URI's, first person messages etc) than any other news/media platform. What do
they do with it? They do nothing. Twitter can learn so much about my interests
from so many signals that I (used to!) give them - they do nothing to help me
read content that interests me.

3\. Live: there is no better place than twitter to potentially learn about
what's happening right now. How do they facilitate live content sharing? By
having a completely different app for video (periscope) which creates a
fragmented user experience.

4\. Fun: they had vine - they kept it as a separate app (again creating
fragmentation) and eventually killed it. How are you going to attract young
users if you don't keep on trying new, fun, cool stuff?

5\. Spam: for all the attention that fake news is getting right now, Twitter
has been in a unique position to innovate in this area. Unfortunately, afaik,
it has done nothing.

</rant>

~~~
vthallam
> How are you going to attract young users if you don't keep on trying new,
> fun, cool stuff?

This is definitely true. They don't at all try to get the young demographic
while FB always makes small changes to keep it fun(video profile pics,
reactions etc).

------
s_dev
| Om Malik is the most recent of many people to ask why Twitter is such a big
deal.

| The reason is that it's a new messaging protocol, where you don't specify
the recipients. New protocols are rare. Or more precisely, new protocols that
take off are. There are only a handful of commonly used ones: TCP/IP (the
Internet), SMTP (email), HTTP (the web), and so on. So any new protocol is a
big deal. But Twitter is a protocol owned by a private company. That's even
rarer.

| Curiously, the fact that the founders of Twitter have been slow to monetize
it may in the long run prove to be an advantage. Because they haven't tried to
control it too much, Twitter feels to everyone like previous protocols. One
forgets it's owned by a private company. That must have made it easier for
Twitter to spread.

\- paul graham 09'

~~~
theoh
Has anyone explored the design space that Twitter is a member of? It seems
like it's just a cut-down version of publish-subscribe with a couple of
eponymous channels (write, read) per user (and then the complexities of
message threading).

The invention of hashtags was an attempt to add adhoc pub-sub channel support
(not, as they are seemingly sometimes assumed to be, a metadata/folksonomy
thing or an opportunity for a pithy closing phrase.)

All this is easy to duplicate. Is any of it even patented by Twitter?

~~~
rrdharan
[http://blog.app.net/2017/01/12/app-net-is-shutting-
down/](http://blog.app.net/2017/01/12/app-net-is-shutting-down/)

------
adventured
What Twitter should do is extraordinarily obvious.

They should get very lean. Their platform has real value, which is why they're
not disappearing in terms of use. There is also no replacement for what they
provide and how they provide it, as of now.

At $2.4 - $2.6 billion in annual sales, they should be generating $600 to $800
million in net income. It's an absurdity of mismanagement that they're not.
Their margins should be extremely high. At that level of net income, they can
sustain a ~$20 billion market valuation and remain fully self-sustaining while
they focus on growth + product.

They built Twitter as if it was going to be a juggernaut with high perpetual
growth. They've been scaling back that structure very slowly, which is a
mistake. They need to pull the band-aid off a lot faster, the crazy growth
days are over.

If Wall Street doesn't give them a reasonable multiple on their new highly
profitable structure, they should then work with perhaps a Ballmer + private
equity + other insiders, to take Twitter private, where it can get out from
under the Wall Street quarterly rat race.

~~~
foobarian
I keep wondering about their part-time CEO. That has got to have some impact
on the company culture. Just imagine how you would feel if your CEO couldn't
be bothered to commit to the company full-time; would you in turn make
suboptimal decisions through apathy? And then multiply that by everyone in the
command chain.

------
btilly
Given the choice between believing stock analysts and stock prices, I err on
the side of believing the price.

The price is set by people betting their money based on all available
information INCLUDING stock analyst opinions. Any stock analyst's opinions are
ALREADY factored in the price. Unless you have a reason to believe either that
the market is irrational or that you have a more informed opinion, there is no
more reliable prediction that you can make of future stock prices than current
ones.

And remember, there are many, many, many billions of dollars looking for any
market irrationality or lack of information so that investors can profit off
of mistakes in current stock prices.

~~~
bittercynic
The market may not be irrational, but I think that's only because the concept
of rationality doesn't apply to markets.

------
metaphorm
at what point do we all wake up from the momentary lapse of reason and admit
that Twitter is not a good idea? it's not a good way to communicate (unless
propaganda and vicious harrassment is what you're going for). it's not a good
way to make money. it's not a good way to advertise. it's not good for
anything really.

~~~
pedalpete
Those trying to further a cause such as the Arab spring my beg to differ.

Twitter is an important platform for open communication.

~~~
metaphorm
> Arab spring

oh? and how did they turn out for everyone?

~~~
slim
It tutned out good for Tunisia

~~~
metaphorm
how about Libya, Egypt, and Syria?

------
baron816
I think Twitter's business model should be to charge users based on the number
of followers they have. Give them a free threshold of say 10K followers, and
then charge them a fee after that. Users clearly benefit, and often profit,
from their large follower base. Twitter should profit from it too.

~~~
idiot_stick
> _Give them a free threshold of say 10K followers, and then charge them a fee
> after that. Users clearly benefit, and often profit, from their large
> follower base. Twitter should profit from it too._

Interesting idea, in theory. In reality, the "thought leaders" will simply
move to another platform that is "free". Is Twitter markedly different than
Facebook/G+/Instagram/Snapchat/email?

~~~
r00fus
Wouldn't it be _more_ social (in the sense that human organizations are often
hierarchical/weblike) in this way?

You are a thought leader - you'd want to have your immediate 10k followers to
retweet your message to their groups.

If you absolutely needed more leverage, you'd pay for the privilege.

~~~
tynpeddler
The 'thought leaders' are the product. They're the reason new people sign up.
It would probably be better to implement something like twitch where you can
'subscribe' to someone with lots of followers for a small fee that twitter can
take their cut of.

------
intrasight
I think of Twitter as free multicast SMS on the internet. There is no business
model in that.

~~~
akuma73
WhatsApp is 'just SMS' but it was bought for 20+ billion.

Twitter has a multitude of opportunities to monetize their user base. Their
management has just done a poor job.

~~~
niftich
WhatsApp was bought because it was popular in India and Brazil, markets that
have historically been weaker for Facebook Messenger. Together, they ensured
that Facebook would get a nigh-insurmountable lead in marketshare over Google
in the messaging space [1].

Twitter in neither a threat to anyone, nor a strong candidate for a defensive
purchase [2][3][4]. The two companies are hardly comparable.

[1]
[https://news.ycombinator.com/item?id=13465483](https://news.ycombinator.com/item?id=13465483)
[2]
[https://news.ycombinator.com/item?id=11914620](https://news.ycombinator.com/item?id=11914620)
[3]
[https://news.ycombinator.com/item?id=12420732](https://news.ycombinator.com/item?id=12420732)
[4]
[https://news.ycombinator.com/item?id=12083975](https://news.ycombinator.com/item?id=12083975)

------
drops
I just want Twitter to die as soon as possible so that people move on to a
better (and hopefully a decentralized) alternative.

~~~
ihuman
Like Micro.Blog?

[http://micro.blog/about](http://micro.blog/about)

~~~
anigbrowl
Thanks for the tip.

------
nodesocket
Twitter is the perfect case of a technology company that should have never
gone public. They should have followed their valley peers with inflated
valuations and no actual business and take private equity and foreign
investment. Wall Street calls bullshit when they see it, and smart people
short these types of companies. Silicon Valley doesn't provide a way to short
these propped-up companies, they just continue to self-promote themselves on
private equity and foreign investment. Wall Street is the most perfect market
in the world.

------
Animats
Twitter is useful, but needs to be smaller as a business. If they focus on
their core business, tweets, and get rid of at least half the employees,
they'll be profitable. They just have to accept that they're no longer a
growth company.

------
234dd57d2c8dba
Between the censorship, the "banning people for reporting child porn" thing,
and the lack of new products and features (what are they spending so much
money on, they spend as much as Tesla for crying out loud!) I think it's well
deserved scorn from Wall Street.

------
bcg1
> _When analysts start to throw in the towel on a company, that is not a good
> sign._

I've been led to believe that is the exact opposite of the truth. Isn't the
consensus most bullish at the top and most bearish at the bottom? Its almost
self evident that a stock is most hated when it is low and most liked when it
is high. That's not to say that it can't go lower and so from a short term
trading perspective it might not be good, but at some point the sellers will
be exhausted and shorts will have to be covered and the trend will reverse.
Unless Twitter they are so broke that they are going out of business, at some
point it will become a good buy.

~~~
pedalpete
I was eyeing up the chart for evidence of this, because my knee-jerk reaction
was similar to yours.

I'm still not sure how to judge this. The stock is essentially at the same
place it was last year. There was some growth through Sept, Oct
(hmmm...election??) but then it came back down to the mid-teens.

At this point, the stock is trading higher than expectations, which I think
could be a good thing.

I didn't know about the earnings call when somebody mentioned Twitters
disastrous stock price yesterday, I took some of that to be due to Snap
filing, and investors looking at the market realising that much of Twitter's
revenue will be moving over to Snap. That has probably already happened, but
putting an IPO out likely raises a few eyeballs.

------
edblarney
Lofty valuations are based on expectations of a lot of growth in subs and
$/sub.

Even though they have a lot of users and some $/sub - without the growth it
won't justify the valuation multiple.

So they have to get priced more like a normal company, with normal growth
rates.

Which is the 'bubble burst' that so many post-IPO companies have to face.
There's a few that can keep it going, or make up for it in other ways ... but
not Twitter.

I feel Snap may be in the same category: their offer at least today is
somewhat nichy. My mother uses Facebook, but will never use Snapchat as it is
today.

~~~
dhimes
Please, what are "subs" and "$/sub"? I haven't heard of these. Thank you.

~~~
edblarney
'sub' is the business shorthand for 'subscriber'.

$/sub is revenue per subscriber.

$/sub, sub growth, 'cost of acquisition' of each sub, (and assumptions about
margins) is what 95% of the valuation is based on.

Now that they are 'going IPO' they're not going to be judged so much on 'lofty
ambitions' and 'intangible market opportunities' \- they are going to be
judged mostly on 'how much free cash flow' they can generate over time.

So, $/sub (minus the cost to acquire each sub) and some assumptions about
operating margins gives you the how much free cash flow per customer they can
expect. This is widely different on different platforms.

Sub growth tells you how many customers investors can expect over time.

Hence profits.

Obviously it's very crude, and there's a lot more to it - but that is the most
essential, basic economic equation that investors will look at to determine a
valuation.

Snaps $/sub right now is negative at the 'net' level - i.e. after R&D, etc. -
but the key metric people will be interested in is the 'gross' revenue (and
profits) per subscriber. The idea being - one day, 'R&D' costs will stop
growing so much, and customer base will still grow quite a lot. R&D and
Operational costs are spread over an ever increasing user base, which will put
the per-subscriber net margins into the positive.

~~~
dhimes
Thank you.

------
maverick_iceman
The board was wrong to allow Jack Dorsey to be the CEO of two public companies
at the same time.

------
antoinevg
Free Twitter business plan suggestion:

Given Twitter's utility to the rich, famous and powerful why not introduce a
follower limit of say 1000?

If you want to allow more people than that to follow you then Twitter will
sell you an increase in that limit.

------
bekman
of course, it's barely growing.

~~~
riprowan
this is the sad truth.

Twitter is a perfect example of something that could have worked as a small
company with moderate expectations and a tight budget. Instead they presumed
that "eventually" the money would catch up to their Fortune 500 ambitions, if
they could just get enough eyeballs.

Welcome to the new "real world" of the "Long Tail," Twitter. Turns out that
being the #2 social network, just like being the #2 music streaming service,
the #2 ride-sharing network, or the #2 search result means a big step down in
importance, reach, and profit potential in the Long Tail world (and being #50
puts you in a completely different zip code altogether).

Twitter created expectations that it cannot meet.

~~~
reubenswartz
Agree that Twitter could have been great with different expectations.

However, I don't even think they're number 2. Depending on how you count it,
that's got to be WhatsApp, Instagram, SnapChat, or LinkedIn.

------
zherbert
1) Make a better version with extra features tailored to celebs and
businesses. 2) Charge for the better version.

------
mpg33
I don't even think the product is bad...they just haven't been able to
discover a successful business model.

------
brilliantcode
Will we see the same fate for other low interest capital fueled profits-are-
so-yesterday unicorns? Dare I say Facebook even?

------
nickgrosvenor
Short Facebook, Buy Twitter

------
Karunamon
HN folks, does _every_ post about Twitter need to be made about the president?
The unwarranted injection of politics into every single discussion is getting
very, very tiring.

The article didn't mention him. He's not even in the top 25 most followed or
active people on the site. Obama had more influence as #3! And yet, as I write
this, _every single comment_ in this damn thread mentions him. [1] Enough
already! This is the first time I've wanted to flag an article for its comment
section rather than the article itself.

[1]: [http://i.imgur.com/cHEV2ww.png](http://i.imgur.com/cHEV2ww.png)

~~~
sctb
This kind of comment, though surely well-intended, unfortunately doesn't push
us in the right direction. The best move is to just post civilly and
substantively on the topic at hand.

Edit: do flag unwarranted injections of politics, because you're right that
we're not here for that either.

~~~
Karunamon
What would you suggest I do?

Given the comment score over the past few minutes, this is a contentious
issue, and not one I'm willing to risk my flagging privileges (or other
backend consequences like slowdowns or post throttles) for.

"Commenting substantively" about Twitter does nothing about the political
flamebait that always winds up in threads about the subject, yet the only tool
I have to combat it could blow up in my face.

~~~
grzm
To be fair, at this point the overwhelming majority of the comments for this
submission are politics-free.

------
xj9
forget twitter, gnu/social is the future
[https://gnu.io/social/](https://gnu.io/social/)

~~~
condescendence
While I would like to see this as the future of social relations, I doubt it
in just about every aspect.

The reason services like twitter and snapchat are so dominate is because
they're so easy to use and uniform across everything. It's why everyone now
prefers slack/discuss to IRC and other legacy channels (among features
aswell). Typical users don't have time to research and setup software, they
simply just want to use it.

I understand that there's federated signup and all that, but the second you
have to explain what any of that means to a user, you've basically lost them.

On the first listed GNU site:

    
    
      This is the place for you who are tired of private companies controlling your conversations and contacts and selling them for profit.
    

While I care deeply about what this statement has to say, I don't think my
ideals fall in line with the average twitter user. They simply don't care
about who's profiting off of it, as long as they get to announce their next
vlog.

~~~
xj9
of course, this isn't going to happen by itself. foss is famously bad at user
acquisition and ui/ux. the interesting thing about federated (or federate-
able) social networks is that they aren't designed as silos.

i'm in the very early stages of building a meta-social network[1] thing on top
of matrix that gives you bi-directional access to gnu/social, irc, reddit,
nntpchan, &c.

 _while I care deeply about what this statement has to say, I don 't think my
ideals fall in line with the average twitter user. They simply don't care
about who's profiting off of it, as long as they get to announce their next
vlog._

put your money where your mouth is and help us[2] fix it.

[1]: [https://source.heropunch.io/bbnet](https://source.heropunch.io/bbnet)

[2]:
[https://riot.im/app/#/room/#bbnet:matrix.heldscal.la](https://riot.im/app/#/room/#bbnet:matrix.heldscal.la)

~~~
condescendence
I'll take a look tonight and see if its something I can contribute to.

------
ddingus
Punishment? Wasn't Twitter missing from transition team meetings?

------
vishalzone2002
I think twitter needs to be saved. It obviously needs a lot of work especially
with language and spam tweet filtering and fake accounts. But it is totally
doable.

Why can't twitter charge a certain fee to official verified accounts of famous
people who do use the platform to engage with their followers. And to justify
their fee they can provide them with more tools at hand. I am not a very heavy
twitter user but it is one social network product that has the power to do
good and bad in real world.

~~~
vishalzone2002
What was the negative point for?

------
mschuster91
Here's something from a heavy Twitter user that could save Twitter:

1) Offer ad freedom. Twitter has IIRC 300M users - if only 10% of these pay 1€
a month, that's 30M a month or 360M a year. Way more than enough to keep the
lights on, and maybe even enough to replace lost ad revenue.

2) Open up the app ecosystem again - allow third party clients features like
DM pictures and polls. Many people are fed up with the official mobile client.

3) Donald J. Trump. About 25M people follow him, and ad slots on his account
should fetch a boatload of money. Not to mention that people sign up for
Twitter just to read his latest brain f.rts... these could all be
"upconverted" to full-on engaging Twitter users.

~~~
ar0
I doubt that 10% of Twitter users would pay 1 EUR / month (=> 12 EUR / year!)
for an ad-free experience.

Here is one survey I found, which states that ~10% of people said they would
pay at least 10$ / year for ad-free Facebook:
[http://marketingland.com/survey-ten-percent-would-pay-at-
lea...](http://marketingland.com/survey-ten-percent-would-pay-at-least-10-per-
year-to-remove-ads-from-facebook-19885)

Surveys greatly overstate such figures because it is much easier to say "yes I
want to pay" than to actually hand over money. Also, I would argue that
Facebook is more important for most users than Twitter (their central
problem).

~~~
problems
In reality most people who want "ad free" anything will just install an ad
blocker - it's free.

~~~
PKop
The ads on social networks are native content though (in the feeds). Much more
difficult to block.

Not to mention most use in in native mobile apps, a further hinderance to ad
blocking.

