
Twitter Files For IPO - coloneltcb
http://allthingsd.com/20130912/twitter-files-for-ipo/?mod=atdtweet
======
sheri
Advertising.

Three of the largest, most influential and defining technology companies of
our lifetime (Google, Facebook, Twitter) make money pretty much solely through
advertising. Is there no other way companies can use this data to generate
revenue other than to sell ads? I don't have anything against ads, but I'm
just trying to understand how (if at all) this could change in the near
future. What is the future of advertising? Will it continue to remain relevant
10 or 20 years down the line in its current form, allowing so many massive
companies to be built on its back?

~~~
zanny
My personal impression is that the rise of advertising has emerged from the
collapse of disposable income. In a world where everyone has wealth to spend,
it is better to just make more goods people want to buy as efficiently as
possible. In a world where everyone is poor, and losing money to capital
siphoning through the rich (who do not evenly reinvest this capital into the
economy, and expect reliable returns meaning more long term concentration of
money), advertising becomes more relevant because you compete over scarce
dollars and more so need to motivate purchases through psychological breaking
down of a targets resistance to splurge buy something of yours.

When actually making more goods doesn't make you more money (at least
commodity goods, there is a growing market for the absurd luxury goods
targeting those that own dividend stocks and have multiple houses and personal
chefs) your alternative is to use psychological manipulation to drive the
limited dollars towards your goods, even if it means the per-unit cost is
higher. You make the gambit - persuade someone to buy, or don't sell at all
because your product isn't really that competitve anymore when you are
spending upwards of 30% of your budget on ads.

Look no further than the evolution of the video game industry - since it is so
new, it also shows this effect strongly, where the biggest titles like the CoD
games can see 80% of their budget spent on advertising (cursory google search
to get these numbers on the latest title, Black Ops 2, turned up nothing
citeable). If you spend $28 million making a game, and $120 - 200 million on
ads, your economic model must be fucked.

So because you compete for scarce dollars, customers aren't coming to you, you
need to manipulate customers into spending money they don't have. Hence why
advertising is so huge, even with 1% click-through rates. All that
concentrated wealth getting reinvested has limited alternative options of
where to go, so you just try to pry more money out of people through
bombardment.

~~~
twoodfin
_who do not evenly reinvest this capital into the economy_

Huh? Do most rich people have their money under their mattresses?

Rich people try to maximize their returns as much as anyone else, which
typically means a mix of stocks (that's capital for businesses to grow) and
bonds (capital for cities, states and nations as well as businesses).

~~~
seiji
_Do most rich people have their money under their mattresses?_

Apple has a hundred billion dollars sitting around not doing very much.

Landlords in The Bay Area are capturing extra money available to
FaceLinkGoogTwitIPO Heads and pocketing it themselves.

Most rich people aren't investing in startups. Most rich people are probably
corrupt doing borderline, if not flat out, illegal things, and are only
interested in hoarding more wealth for themselves.

~~~
dxhdr
"Apple has a hundred billion dollars sitting around not doing very much."

Couldn't be further from the truth. Apple runs one of the world's largest
hedge funds: [http://www.zerohedge.com/news/2012-09-30/presenting-
worlds-b...](http://www.zerohedge.com/news/2012-09-30/presenting-worlds-
biggest-hedge-fund-you-have-never-heard)

Not even going to bother with your other statements.

~~~
pbreit
Hedge funds have very little impact on the economy. The same dollars would
have a much bigger impact if spent or left to consumers.

------
austenallred
So much pessimism in the comments about the viability of Twitter as a business
model. I've heard multiple sources (Chris Sacca, Ron Conway) not only say that
Twitter has perhaps the best monetization opportunity of any web 2.0 company
but dump as much money as they can into the stock. I've advertised on Twitter
for quite a while, and the returns destroy Facebook and Adsense.

Advertising makes _a lot_ of money if the audience is big enough. Twitter's
audience is huge, connected, well sorted, and interested.

~~~
bolder88
Advertising makes money when the audience has intent.

People search google for "Best washing machine". Google shows them adverts for
washing machines, customer buys washing machine.

Where is the intent on twitter? To gossip? I just don't see it.

If someone is about to buy something, they're likely to go to google and
search. They're not likely to go to twitter. Google gets them at the crucial
point _before_ they buy something.

~~~
debt
One of these companies(FB, twitter, YELP, Goog, etc) is going to rethink and
reinvent advertising. All these companies use old models on the web(playing an
ad before a video like tv, banner ads are like magazine or classifieds ads).

That's kind of the name of the game. "How can we show people ads in a new way
that integrates seamlessly with their experience?"

What if Twitter found a way to do it? Facebook seems to be getting the hang of
it with their newsfeed ads.

~~~
kybernetyk
> "How can we show people ads in a new way that integrates seamlessly with
> their experience?"

Imho Google does this pretty well with Adwords (those that you see in the
search results).

------
wpietri
My guess is that profits will be low. And they should be. Declared profits are
basically a way of saying, "We can't figure anything more useful to do with
this money than put it in the bank or give it back to our investors."

That's fine for a large company in a stable market. But Twitter is a young
company battling to establish market share with products they hope will last
for decades or centuries. [1] If the management really can't think of anything
useful to do with cash, they should step down and help hire somebody who can.

[1] Yes, centuries. The New York Times started publishing in 1851. It's
reasonable to think that the World Wide Web will have a historical place
similar to print periodicals. And network-effect businesses are notoriously
hard to dislodge once widely adopted.

~~~
pjc50
The web is _very_ churny; waves of people move from service to service over
5-10 year adoption cycles. Eventually people will declare twitter "uncool"
(perhaps as a result of abuse problems?) and move onto the next thing.

~~~
wpietri
The modern web has been very churny, but I think we have been witnessing the
equivalent of the Cambrian Explosion [1]. Eventually both tech and behavior
will settle down. Some evidence for that was the rapid churn cycles in social
tools from 2002-2008 or so. But Facebook, Twitter, and LinkedIn could well be
where the musical-chairs game stops.

[1]
[http://en.wikipedia.org/wiki/Cambrian_explosion](http://en.wikipedia.org/wiki/Cambrian_explosion)

------
ebiester
Ironically, I think this is both the sign to buy twitter and stop using it at
the same time.

I no longer trust American companies to do right by the user the moment that
their stock becomes public. When wall street is banging on the door for a
quarterly result, most CEOs end up listening.

I'm not deleting my account just yet, but I'm wary from everything I've seen
in the last decade.

~~~
6cxs2hd6
Glass half full: There might be another 5-7 good years, if it's similar to
Google (2004 IPO).

~~~
yuhong
I would not even go that far either, and I am not saying Google is free of
problems.

------
unknownian
Maybe this will get buried, but as a huge fan of Twitter and the team I can't
help but think they can try making more cool stuff? This huge _benevolent_
profitable business with amazing developers has a shot at making more than a
web application, I suppose. Others may say it's unfair for the big guy to
cannibalize business ideas though.

~~~
Karunamon
I gotta disagree with you on "benevolent". Twitter's been mistreating their
developers for quite some time now.

[http://developingzack.blogspot.com/2012/09/wait-what-
twitter...](http://developingzack.blogspot.com/2012/09/wait-what-twitter-
hates-outside.html)

[http://www.androidpolice.com/2013/02/26/falcon-pro-
developer...](http://www.androidpolice.com/2013/02/26/falcon-pro-developer-
raises-app-price-to-132-13-to-discourage-downloads-petitions-twitter-to-raise-
token-limit/)

~~~
unknownian
Yes, I've heard about the API issue. I don't really care anymore. It's wasting
Twitter's money to give free access to every dev, and yet they do anyway. If
they want to set limits that's their issue. The only real downside I see is
that if someone wants to use a FOSS Twitter client it might be harder.

Yes, I know Twitter grew because of these developers. But think about all the
good Twitter does, sponsoring the Apache Foundation, not giving into the NSA,
etc. They have much higher standards than most mainstream tech corps, imo.

~~~
disgruntledphd2
Well, I suspect that most tech companies don't really want to give in to the
NSA. Twitter have been better though, I do agree.

However, on the sponsorship of the Apache foundation, you may wish to peruse
[http://www.apache.org/foundation/thanks.html](http://www.apache.org/foundation/thanks.html)
for the list of sponsors. You'll note that Twitter are Bronze, while Goog and
FB are Platinum (along with Microsoft, oddly enough).

------
debt
They have a lot of really sharp talent over there. I'm confident they can make
a killer ad platform. Sign me up.

~~~
jchonphoenix
Not to be mean, but in the dev circles in the valley, I tend to hear the exact
opposite. Just what I've gathered from the rumor mill.

~~~
debt
I'm a software engineer. I work down the street from Twitter. I hear nothing
but great things about their devs.

~~~
mynameishere
What exactly are those devs doing? I mean, aside from scaling to million and
millions of users...which happened a while ago...it's pretty much the same
thing as it's always been.

~~~
andyhmltn
If you look at their Github, they are always coming out with great stuff. They
also have their name on the biggest frontend framework out there :)

------
joe5150
"Confidentially" meaning they submitted all the paperwork via Snapchat, of
course.

------
dev_jim
This is awesome. I use Twitter everyday in a way that can't be replicated by
any other service out there - there's zero competition. Once they really
figure out monetization, as Facebook eventually did, it will be a home run for
investors.

~~~
chii
would you mind describing in what way(s) you use twitter?

------
tinbad
Great, did they find a way to monetize their service yet?

~~~
jlebron2
Mainly through advertising, like "promoted tweets"

~~~
bolder88
Is there much evidence to suggest that actually brings in value and profit
though?

People search google for washing machines, then click on an advert, and buy a
washing machine. I can see how that works, and makes google lots of money.

But a "promoted tweet", to people who are tweeting gossip, wasting time, etc?
There's no intent there. They're not looking for a washing machine, they're
wasting time.

~~~
sferik
What you are describing is direct response advertising.

There is another type of advertising called branding. Budweiser doesn’t spend
$25 million per year advertising during the Super Bowl because they expect you
to see the advertisement and immediately order a beer at the bar. Instead,
Budweiser is trying to tell you a story about their brand to evoke an
emotional response that will be stored deep in your amygdala such that every
time you go to buy beer in the future you will reflexively choose Budweiser.

Google is better for direct response advertising; Twitter is better for
branding.

PS: There is more money in brand advertising.

~~~
bolder88
I don't buy that. On the web, there is far more money in direct response
advertising. Branding is far more prominent in old media.

~~~
sferik
Yes, that's the point. As people spend more of their time and attention on
social media relative to other media, where will those branding budgets go?
Not to Google (well, actually, that's why they bought YouTube...but not to
Google Search).

Twitter is one of the few outlets where brands can effectively communicate
their message online. That's the theory, anyway. You can argue that Twitter is
a bad medium for branding but arguing that it's a bad medium for direct
response advertising is missing the point.

------
jmduke
I'm curious if Hacker News would have brought such pessimism to the AAPL and
MSFT IPOs as they have with Facebook and Twitter.

Around 500 million users, around 750 million tweets per day. That data might
not be worth everything, but it's definitely worth something.

~~~
loganfrederick
A major difference is the valuation these companies are getting. Compare
Facebook's $80 billion to $100 billion to Apple's $4.8 billion IPO in today's
inflation-adjusted dollars. I think that is a large part of where the cynicism
is coming from.

Calculated using: [http://www.quora.com/What-was-Apples-valuation-at-
IPO](http://www.quora.com/What-was-Apples-valuation-at-IPO) and
[http://www.usinflationcalculator.com/](http://www.usinflationcalculator.com/)

~~~
redthrowaway
AAPL IPO'd in 1980, when there were 1M personal computers in the world.
Total.[1] The tech sector was just tiny compared to what it is today, and
nobody predicted the WWW or the ubiquity of web-capable devices.

By contrast, when FB IPO'd it had 845M users[2], or _8.3% of the world 's
population_. The two simply aren't comparable. AAPL made niche luxury
products, and FB had something close to half the potential market engaged on a
daily basis.

[1]
[http://www.corbinball.com/articles_technology/index.cfm?fuse...](http://www.corbinball.com/articles_technology/index.cfm?fuseaction=cor_av&artID=8878)

[2]
[http://en.wikipedia.org/wiki/Initial_public_offering_of_Face...](http://en.wikipedia.org/wiki/Initial_public_offering_of_Facebook#Filing_and_roadshow)

~~~
krrrh
Every time one of Apple's products sold it resulted in cash transferring over
to Apple. They had a viable, proven business model selling computers to
business, consumers, and educational institutions, were leaders of a new
industry that everyone agreed had a huge amount of growth ahead of it. Nobody
thought that PCs would continue to be a niche product throughout the 1980s.

Facebook owned, and owns, only a tiny slice of the advertising market, despite
being so far along in developing their product. Remember, facebook's users and
attention is their product. Their customer-base - companies who want to
advertise is still underdeveloped.

~~~
dreamdu5t
This is an excellent point. Sure, Facebook has the biggest audience, but
somehow I only ever see a few companies in my ad rotation.

------
dm8
Congrats, Twitter. Another product that was mocked as a "toy" becomes
revolutionary and finally going to raise money on public market. I use twitter
everyday and it is my primary information network. I'm sure they will be
successful!

~~~
marssaxman
What do you use it _for_?

~~~
dm8
Discovering new content. I follow influential people in the areas that I'm
interested in. And they are always sharing interesting
links/insights/opinions. And I also share some!

------
aganek
I love that Twitter announced it via a tweet. Good work dogfooding their own
product :)

------
nichodges
As one of the people who decides where and how brand marketing budgets are
spent - I would say Twitter's advertising product and approach is far more
viable and attractive than Facebook's is (or ever has been).

On top of that, the work Twitter is doing with TV networks, producers, and
sporting organisations is unique and has a high chance of success because it
provides value to those organisations.

While some have tried, nobody else has come as close as Twitter to accessing
and disrupting the $180B (annual) TV advertising market.

I wish them luck. I think they're going to nail it.

------
6thSigma
I'm bullish on Twitter for a few reasons.

I think Twitter has a unique opportunity in advertising. I'd be interested in
seeing how many businesses are on Twitter and what percentage of Twitter users
follow a business. I'm assuming both of those numbers are fairly high. If so,
that means that a large number of users expect to see information about
businesses they follow in their feed (and thus are ok with receiving
marketing/business information/etc.) That in turn means ads are not viewed by
a large percentage of the user base as intrusive. I think psychologically that
is very important for an advertising company.

In terms of the rumored market cap, all I have to say is there is no way
Twitter is worth only 1/10 of Facebook. I'm not sure what Facebook is worth,
but I'm sure the gap between those two companies is much closer than that.

I really like the Twitter platform, and while I know they messed up by
restricting their API, I think their leadership generally make good decisions.

------
jlebron2
I'm skeptical about Tech IPOs. I wonder if as many people are going to buy
into the hype as they did with the Facebook IPO.

~~~
colmvp
Isn't FB now at a high a year after its IPO?

~~~
cmod
FB is 15% above its IPO; LNKD is 2.6x above IPO; TSLA 8.2x above IPO.

~~~
kybernetyk
> TSLA 8.2x above IPO

Last year around the FB IPO I thought about what stock to buy. Either FB or
Tesla.

It boiled down to a company that is revolutionizing transportation with real
world products VS. a company that enables people to click on virtual pixel
cows without a real business model.

The choice was easy.

~~~
melling
Really bad advice. Yes, you get to gloat because you got lucky...

However, I hope people stop and think before listening to you. Yes, it's
really cool that Elon hit it out of the park, but at the end of the day,
that's not the way to make investment decisions. The market is a fickle place.
TLSA could be worth have as much in a year and FB could be worth double. Of
course, TSLA will still be worth more since its IPO price.

~~~
bennyg
Tesla's doing cooler shit, in my opinion, than FB is. Stuff that matters more,
again in my opinion, for at least the U.S. and reducing our total dependency
on oil. Look here
([http://www.teslamotors.com/supercharger](http://www.teslamotors.com/supercharger))
for their plan to cover the US in two years, albeit through backwards routes,
with supercharging stations. Tesla actually makes a good-looking electric car.
This is all about marketing, and Americans love performance and slick cars -
they don't care about the happy and petite (though not really, just going by
marketing here) Prius or Nissan Leaf. Tesla is gonna' be huge and their stock
is going to go up. It could halve, but I doubt it right now. I'm not an
investor by any means - I don't have the money to invest, but I've watching
them for a while. We should stop relying on oil, and Tesla is one of the few
companies selling part of that dream with a beautiful product.

~~~
melling
Whether they are doing cooler "shit" or not, is irrelevant to investing in
them. It's way too geeky to get into one of these Android vs iOS, Steve vs
Elon, Microsoft vs Apple, Superman vs Mighty Mouse debates.

Let's just say that when a company like Facebook or Google, which builds large
data centers, and has a billion customers, make small changes, or increases in
efficiency, they have an opportunity to make a big impact too.

Where you want to rank them in your mind on an absolute scale, well, that's
really up to you. It's probably meaningless, but I guess people like to
believe in people/companies. It's how we're wired.

~~~
apalmer
Basically, from a fundamental investment analysis standpoint Tesla is way more
logical than Facebook.

Tesla makes a tangible good for sale with a straight forward business model.
You can evaluate Tesla using the same criteria that Ford was evaluated with 90
years ago, same way that Westinghouse, or GE were evaluated. They are a new
technology with a potential to revolutionize a major industry, with a high
risk of failure and high return on investment if they succeed. For Facebook or
Twitter a savvy investor has to first theorize how to even evaluate them.

The investment potential in a facebook or a twitter is there definitely... but
its much easier for an investor to evaluate a tesla compared to a facebook.

------
crapshoot101
[http://gigaom.com/2013/09/12/twitter-files-papers-to-go-
publ...](http://gigaom.com/2013/09/12/twitter-files-papers-to-go-public-at-
less-than-1-billion-valuation/) \- interesting; secondary valuations are in
the $14-15B range per GigaOM. I'm a believer at some level.

------
swalsh
Nice! Another shorting opportunity.

~~~
jusben1369
How's the FB short working out for you?

~~~
gfodor
I realize this is pure snark, but fixating on daily price fluctuations is no
way to think about a FB short thesis. It's always long term play if you're
betting against the company. You're waiting for the market to come to its
senses, which can take a long time.

~~~
laxatives
I thought it was common sense not to short anything long term because the
market can take far longer to come to its senses than you can remain solvent.

~~~
foobarqux
More importantly you have to pay a regular fee to the owner as long as you are
borrowing their stock.

------
mrgleeco
Delivering ads could be the lesser half. Realtime sentiment analysis on
Twitter's scale will explode and hyper-accelerate advertising in ways
advertisers cannot yet foresee -but will surely be willing to pay for. They're
just getting started.

------
rplnt
Another bubble appearing I see. Their user base to revenue ratio is pretty
average. Their revenue by itself is not that impressive and I'm pretty sure
they will be priced in tens of billions. Solely because they are visible and
known.

------
dweekly
What a Dick move.

------
joering2
1.16B in funding, any ideas on profits and how much they ask to get via IPO?

[http://www.crunchbase.com/company/twitter](http://www.crunchbase.com/company/twitter)

~~~
bolder88
profit? What relevance has profit to tech companies?!

~~~
hrasyid
the prospect of future profit allows them to get funding..

------
pdevr
Any idea about their valuation? Facebook is now worth more or less what they
claimed at the time of their IPO. Is it safe to assume this is will be around
the same range (i.e., $100b)?

~~~
the_economist
It hasn't been announced but I think 10-20 billion is the expectation.

------
anmalhot
twitter presents a unique opportunity to choose the 'people' you want to
follow & tailor your own feed. It's like handmade versus machine made feed.
The former worth much more than the latter nowadays. I imagine if they could
establish a business where people build/manage personalized feeds for others &
in turn get paid - that would be fun!

------
bnuighr
Sorry for my ignorance, but what's the general timeline for the IPO process?
When could I start buying shares on the open market?

------
wehadfun
I hope they make a cool stock certificates. People were upset that facebook
didn't do this.

------
aflam
Entertaining. Now will the blue bird fare better than the blue chips ?

------
tn13
Well, hope that does not shoot up housing prices in SF area again.

------
chris_wot
I hope they keep the prospectus to 140 characters or less.

------
modarts
Why?

~~~
kybernetyk
I guess the investors are looking for a bigger idiot to buy them out.

------
RexRollman
Brace for monitization.

~~~
chii
i forsee twitter handle squatters.

------
kaonashi
Well, there goes that.

------
ulfw
Do people still actively use twitter?

~~~
crazypyro
Only millions of people everyday... Is this a real question?

