
Twitter beats estimates, cuts jobs with eye on 2017 profitability - ghosh
http://www.reuters.com/article/us-twitter-results-idUSKCN12R1GW?feedType=RSS&feedName=topNews&utm_source=twitter&utm_medium=Social
======
wpietri
Let me do a mini-askHN: I'm thinking of joining Twitter to work on their anti-
abuse efforts. What factors should I consider in my decision?

At first consideration, this news doesn't worry me a ton. They provide a
product that provides a lot of user value, just to a smaller user base than
they/investors hoped. They've found a reasonable way to monetize it, with
$2b+/year in revenue. Their expenses are too high for that, but not
egregiously so, with previously committed stock compensation being a big chunk
of things. There's still a lot they can do with the product. And they've got a
unique value that's hard for other people to replicate: it's the place for
public figures (public figures at all scales) to interact.

Am I crazy here? I know I'm taking a risk, but I'm not seeing more risk than,
say, joining a Series A startup, which I've happily done before.

~~~
braythwayt
If you are sincerely interested in quashing abuse, and if the risk of being
laid off does not frighten you, forget about the numbers and let’s talk about
quashing abuse.

Twitter gets extremely mixed reviews from people who are the targets of abuse,
and I believe I am putting that conservatively. So, what I would ask is not
whether they are going to lay me off because they run out of money, but
whether I am going to quit because when I get inside, I discover that they are
not going to actually do much about it.

If Twitter has had a come-to-jesus moment about abuse, and there are no
structural obstacles to doing something about abuse, this could be a job where
you will one day look back and say, “I was part of the team that turned the
corner on Twitter’s biggest problem. I made a difference.”

On the other hand, if Twitter doesn’t have quashing abuse in its cultural DNA,
or if there are deep structural obstacles to quashing abuse, then you may
discover that you cannot actually make a difference. That can be soul-crushing
if you are passionate about the work.

I am not making a claim one way or the other about where Twitter is with this,
I’m just suggesting that if you are motivated by making a difference, the
biggest thing to figure out is whether you will actually be able to make a
difference.

IMO, this matters more than the financial risk.

~~~
grus
What are we even talking about here - "quashing abuse"? Are we talking about
going to work deleting spam, statementless insults, etc., literally combating
people abusing the platform? Or is it about stopping people abusing other
people, deleting hateful comments, and maybe censoring certain ideologies
(nazis, etc.)? I'm just wondering what abuse is, and what a twitter
moderator's job description even is.

~~~
cloakandswagger
I imagine "abuse" is whatever the moderator in question defines it to be.

Look at Twitter's history of curbing "abuse" and you'll find that this
nebulous definition gives plenty of room for their subconscious and conscious
biases to take over--a disproportionate number of the targets of censorship on
Twitter are of a certain political influence.

So I see no nobility in the original commenter's goal. Taking away the voice
of people you don't agree with is not noble, and censorship of any kind is
unfortunate.

~~~
fareesh
I have a fairly fundamentalist view of free speech, so in my opinion the only
reasonable standard where censorship would be an acceptable solution to any
speech is either:

a) content that violates an individual or entity's privacy; or

b) direct incitement to physical harm to an individual, group or property; or

c) to protect the platform from legal damages or other legal quandaries

Unfortunately, most codes of conduct tend to be structured around public
perception, which better serves a business' long-term interests over the
"killer feature" of a truly open platform, which is seen by many as more
trouble than it is worth, from the perspective of the platform owner.

------
fowlerpower
What I love is this:

"The move could hurt the companies image in San Francisco where the
competition for engineers is fierce."

I live in New York and I would never work there. Why would anyone want to join
a sinking ship? It's image is gone all in the name of the mighty stock price.

~~~
rpeden
Well, to extend the ship analogy: Twitter seems to believe that they're
sinking because the ship is overloaded, so they're trying to improve things by
tossing people overboard. I don't mean to make light of the situation; I truly
feel for all of the people affected by this.

So, why would anyone want to join Twitter _now_? Well, the diminished share
price could be one reason. If you believe the company can turn things around,
and you believe that your contributions would help the company do so, then
getting in now and hopefully acquiring some shares or options at the current
market price could be a rational move. You'd probably want to make sure you've
got a lifejacket (i.e. an emergency fund) handy just in case you find yourself
thrown overboard in the future.

~~~
mvindahl
Also, working at a company which actually has a deployed product with a high
public profile is probably not bad. There are plenty of startups which never
pan out. And there are plenty of companies out there with a single profitable
cash cow and futile strategic projects searching for the next hit. Or barely
running but business critical legacy projects written in Cobol, C++ or Java.
Twitter doesn't strike me as particularly bad in comparison.

Also, having had layoffs is not necessarily only a bad thing. Even the best
company will end up with a certain amount of substandard, undermotivated
employees after a long hiring frenzy. The best thing for everyone is to let
them go and hopefully blossom elsewhere.

~~~
iamatworknow
Being able to say "I worked for Twitter" is and will be impressive to most
people regardless of Twitter's future. It's not like future employers will see
that on a resume think you're the one who sunk the ship (unless you do
something high profile to make your negative impact public knowledge).

------
JumpCrisscross
_Reuters_ leading with "Twitter beats revenue estimates..." while the _Wall
Street Journal_ chose "Twitter to Cut 9% of Workforce as Revenue Growth Slows"
[1]. This is usually a sign of a political fragmentation, _e.g._ within
management, within the Board, between the former or within the shareholder
base.

( _Reuters '_ correspondent is based in Bangalore; the _Journal_ 's in the Bay
Area [2]. Neither contains any direct quotes. _Journal_ cites multiple Wall
Street analyst reports.)

[1] [http://www.wsj.com/articles/twitter-to-cut-workforce-as-
reve...](http://www.wsj.com/articles/twitter-to-cut-workforce-as-revenue-
growth-slows-1477566772)

[2]
[https://www.linkedin.com/in/dseetharaman](https://www.linkedin.com/in/dseetharaman)

~~~
mrcwinn
Meanwhile, TechCrunch led with "Twitter lays off 9% of its workforce as it
posts a desperately-needed positive Q3," [1] a clear and obvious sign that
there is a shareholder struggle within Aol, TechCrunch's parent, and that
ultimately they decided to split the difference to avoid the website shutting
down. I point to my magic slippers as evidence supporting this fact.

[1] [https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-
its-...](https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-its-
workforce-as-it-posts-a-much-needed-positive-q3/)

------
sulam
My belief, sadly held, is that this is just the 2nd step of a Yahoo-scale
transition. It won't be the user numbers that get them, it will be the ads
side. Twitter is going to get a shrinking piece of the ad budget, especially
as new entrants arrive. Which new entrants you ask? Snapchat, for one.
Pinterest is heating up as well.

~~~
fullshark
As long as they carve out a niche as the source of live news and comments and
other products (FB / Instagram / Snapchat / etc) don't eat that space they can
be successful. But they seem destined to be a niche product at best.

~~~
madeofpalk
To be successful "as the source of live news and comments" they need to figure
out how to make money from that.

------
NightMKoder
Also Vine is getting shut down: [https://medium.com/@vine/important-news-
about-vine-909c5f4ae...](https://medium.com/@vine/important-news-about-
vine-909c5f4ae7a7)

~~~
GFischer
That might warrant it's own submission. They say the mobile app is shutting
down, was that the most significant part or was it the web side?

I thought it should have been a good service to monetize.

Edit: was already submitted - discussion on
[https://news.ycombinator.com/item?id=12806409](https://news.ycombinator.com/item?id=12806409)

~~~
NightMKoder
I don't believe it's possible to create new posts from the website so it's
essentially being put into read-only mode.

------
koolba
> Twitter Inc's quarterly revenue growth slowed sharply in the third quarter
> but topped analysts' expectations, and the company said it would cut 9
> percent of its global workforce.

> Revenue rose about 8 percent to $616 million, above the average analyst
> estimate of $605.8 million. The company reported a 20 percent rise in
> revenue in the previous quarter and 58 percent last year.

> Twitter had 3,860 employees globally as of June. The layoff could hurt the
> company's image in San Francisco, where the competition for engineering
> talent is fierce.

Total revenue of $616M and 3,860 employees (pre-layoff) means they've got
$159K of _revenue_ per employee. If the majority of their work force is
engineers that's pretty weak. After adding in health insurance, 401k, real
estate (for office locations), and all the rest of the usual expenditures,
it's no wonder they can't turn a profit.

> "We're getting more disciplined about how we invest in the business, and we
> set a company goal of driving toward GAAP profitability in 2017," said Chief
> Financial Officer Anthony Noto.

They're going to need go _significantly_ deeper than 9% to get to
profitability.

EDIT: _Per the replies the revenue numbers quoted are per-quarter, not annual.
Still begs the question of how they hell they 're not profitable making $636K
per employee._

~~~
d3ckard
Remember that it is quarterly revenue. That gives an average revenue of %636K
per year per employee, which does not sound that bad.

~~~
koolba
> Remember that it is quarterly revenue. That gives an average revenue of
> %636K per year per employee, which does not sound that bad.

Oh wow I totally missed that. I thought it was annualized.

Okay that changes my question to, " _How the hell can you not turn a profit
making $636K per employee?!_ ". As in how seriously inefficient and overpaid
is this company?

~~~
product50
THey are paying $170M in stock based compensation this quarter. That is in
addition to salaries. These costs add up fast. No wonder lay offs are needed.
If I were them, I would target people who are stock compensated very high to
start lowering those costs. That said, Adam Bain and Anthony Noto are each
paid $70M/yr in stock compensation [1] - so you have that.

[1] [http://www.wsj.com/articles/twitters-anthony-noto-had-top-
pa...](http://www.wsj.com/articles/twitters-anthony-noto-had-top-pay-
of-73-million-last-year-1429569351)

~~~
drakonandor
They're offered a lot of stock because they're worth something to the company.
Same goes for new grad engineers pulling tons of income in stock. It's
possibly a bad strategy for a tech company to start firing the people it
values most.

------
intrasight
One of my concerns with Twitter is that I think their usage is going to drop
considerably after the election is over. I say this only because half of
Twitter mentions in the press related to Trump tweets.

~~~
jarsin
Unless he wins. He will start twitter wars while in office with heads of other
states.

It will be the best thing that could happen for twitter. Believe me!

~~~
trhway
> He will start twitter wars while in office with heads of other states.

why only wars? How about a bit of bromance with the other "strong leaders"
like Putin?

------
triplebit
What's with all the anti-Twitter bias among techies lately?

~~~
cicero
Twitter is currently in the trough of the hype curve.
[https://en.wikipedia.org/wiki/Hype_cycle](https://en.wikipedia.org/wiki/Hype_cycle)

~~~
philipodonnell
Are there any numbers behind that curve? Its interesting, but has anyone tried
to measure "expectations"?

------
perseusprime11
They spend about 2.5 billion dollars to make 2 billion dollars. Not a great
business model. If they can do more cuts and bring the expenses way down and
seriously turn around the product, they will have a good future. I almost
feel, they need somebody like Eric Schmidt to manage the company while Jack
learns and focuses on the product.

~~~
nkozyra
> They spend about 2.5 billion dollars to make 2 billion dollars. Not a great
> business model.

You must be new here ;)

------
danieltillett
A question for those with far more management experience than me at large
companies - why cut 9%? Is it really twitter's management view that they are
only slightly over staffed? Do they think that their employees are going to
believe this is the last cut?

9% seems like a large enough number to destroy moral, but too small to make
any material differences to the cost base.

~~~
slgeorge
There are a lot of people in this discussion who know more than I do about
Twitter - and part of the answer is situational specific.

Often, "cut fast and deep" makes sense because you're in a difficult situation
where both expenses and time are against you. People use all sorts of
analogies (e.g. "cutting the fat") but the reality is that if you take out
20-30% of your workforce you will cut back needed functions and you will lose
people who are both good and whom you need: there simply won't be enough time,
insight or structural ability not to make some mistakes. There tends to be a
big impact on morale for a long time after the event - improving morale
becomes a major management objective. The upside of this approach is you do it
once, it's a big shock internally but then everyone can focus back around the
mission.

The alternative approach is a more gradual deflation of your numbers, closing
down teams and not-backfilling roles. If you have time then the upsides of
this approach are that you can be much more surgical about the changes.
Presented in the right way it's going to feel more like a "pivot" with some
natural wastage of people that won't work in the new mission. The downside -
is that it can feel like a "long march" as successive sets of cuts are made.

Pick your poison as it's both the framework and the implementation!

------
dilemma
What's the phrase, cut deep and fast? Twitter should probably cut more like
25-50%.

~~~
criddell
I was thinking 90%. Why can't Twitter operate with three or four hundred
employees rather than three or four thousand employees?

~~~
jeeeeefff
From the perspective of the 10% that remain, why would they bother to stay if
90% were cut? Sounds like taking on ten times the day to day workload. In SF,
it's not like they couldn't go elsewhere for work.

~~~
criddell
I would cut 90% of the people and cancel lots and lots of projects.

The people that remain would be well compensated. If you can cut 90% of the
workforce and still preserve half the revenue (and that might not be
possible), then you can pay each person $1 million per year.

Really though, I just have a hard time understanding what three thousand
people are doing to keep Twitter running day after day. I keep coming back to
thinking about how Instagram had 15 people working there when Facebook bought
them.

