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The problem with letting Twitter be Twitter is that Twitter took money on the promise of being something other that just Twitter.

Or to put it in analogy form. You give me $500,000 to buy you a Ferrari and I give you a Toyota Corolla.

You complain that I haven't held up my end of the bargain and I point out that the Corolla is a perfectly fine car that can get you from point a to point b and even has some strengths when compared to the Ferrari, so why are you complaining?

That's the point Twitter is at right now. They took the money to be something other than what they are right now. If Twitter wants to be just Twitter, that's fine, but you'll need to cut their 20 Billion market cap down to somewhere around a 3-4 Billion market cap, I don't have a model with me right now.

having said that, Twitter has some good things going for it.

  - Mobile Advertising numbers are up Year over year

  - Data licensing revenue is up

  - monthly active users are up
IMHO, twitter just needs to shrink in size or find a way to really start growing revenue.

EDIT to the child comment, you are confusing revenue and earnings. There is a huge difference between the two:)

It's interesting to compare the investment amounts into Twitter vs Google. Very different trajectories in how things actually turned out.

(Boy would I love to see the 2011 Powerpoint deck shown to the Twitter investors in Round 7 & and Round 8 that convinced them to sink the additional $400 million & $300 million. It seems like there must have been some wildly optimistic projections in that presentation.)

Twitter Inc:

  - +$1.0 billion from 8 rounds of funding pre-IPO [1]
  - +$1.8 billion raised from IPO [2] (sold 13% of the company)
  - ====
  - +$2.8 billion total

  - -$511 million loss[3] in first post-IPO quarterly report
Google Inc:

  - +~$1 million from angel investors (including Andy Bechtolsheim's famous $100k check)
  - + $25 million from Sequoia, KPCB
  - + $1.9 billion raised from IPO (sold 8% of the company)

  - +$66 million profit[4] in first post-IPO quarterly results (and would have been +$200 million if they didn't pay to settle Yahoo patents)
  - +$$$ millions in growing profits in subsequent years as we all know now
[1] http://upstart.bizjournals.com/money/loot/2013/11/06/twitter...

[2] http://www.bloomberg.com/news/articles/2013-11-07/twitter-ra...

[3] https://investor.twitterinc.com/releasedetail.cfm?releaseid=...

[4] https://investor.google.com/earnings/2004/Q3_google_earnings...

What really can a software company do with a billion dollars of investment nowadays? Where can it spend this much?

It's pretty easy to get numbers that big when you're Twitter's size. Salary and overhead (taxes, rent, food) for 1000 employees is probably on the order of $300-400m/year, and server costs for a high traffic site like Twitter is probably on the order of $100m/year.

Does Twitter have anything near 1000 employees? I wouldn't expect that.

I'd also expect the sever and trafic cost to scale from a "minimal" of around $100k a year in proportion with revenue. That is, I don't see how that's a good target for investiment money.


"Twitter has over 4,100 employees in more than 35 offices"

...what do they do?

> in more than 35 offices

As a second thought, that makes some sense. Regional offices do localization, sales (with support), and legal adaptation mostly. Any company that wants to sell on several countries need such stuff.

More than a hundred employees for each office looks oversized, but not extremely so.

The only question yet open is if Twitter needed all this infrastructure to become a viable business, of if they could open smaller and grow into that size organically. But well, even if Twitter didn't need it, it's reasonable to imagine that some business would need it.

I guess my question of what a company could spend 1 billion of investment on is answered.

This, exactly. Twitter could "just be twitter" if they were private. They made the choice, though, to go public, and now they have to answer to shareholders, whose needs are quite different from the needs of their users. The fact that they're under a lot of fire for "not being a good enough investment" is a problem of their own creation.

The stock market is evil shit

That would be Capital.

(Also, not really, really evil. I subscribe to the 1848 _Manifesto_ part 1, not parts 2,3 and 4)


totally evil enough for me to cal it evil. or capitalism if you want. i do not care what the words are, it still transforms good products into shitty products for the benefit of a few individuals.

not saying something else is better, though. most things we came up with always end up evil due to the way humans pervert it, not due to the concept.

The saddest thing about Twitter's path is that the tool is so good, but if they don't fix the problem you just described (brilliantly btw), they can be doomed.

Sure, the company may (or may not) be doomed, but the value provided by the product is here to stay.

All it takes is a critical mass of users to migrate to a clone, (which I assume is very likely if the company were to fail).

I think if something the size of twitter failed, the loss of trust in a similar service's sustainability would prevent a clone from seeing critical mass for a long time, if ever.

edit: why the downvote? If you disagree, let's talk about it.

I hear your point, but what becomes the goto place for live events on the internet? Does a company with an established brand (like Google) attempt to step in with its own clone service?

I just can't see this form going away. A public-by-default, one-to-many microblog service has proven to be valued by a substantial userbase.

I have to think that the "next Twitter" could disguise itself as a sufficiently fresh take in order to gain enough trust from enough users.

(I upvoted you, btw.)

There's always RSS and mailing lists :D

Joking aside, I wish there were some meaningful numbers around how many people (as a percentage of active user base) use it that way (live events) vs just seeing what their friends and/or favorite celebrities have to say.

proven to be valued by a substantial userbase

Not so valued that they could charge a subscription to it tho', there lies the rub.

$3Bn is still vastly overpriced. What's their P/E again? You can trade at a loss while you're flush with cash, but not forever, you have to grow your way out somehow...

You must think whatsapp acquisition is insane and fb ran by amateurs. The fact is Twitter is of great value to the likes of Google and fb, beyond simplistic pe ratios. In fact, pe is a very poor valuation tool for tech companies.

The true value of Google and FB remains to be seen too. You can't keep using your investor's capital in place of earnings forever.

$569.2M of earnings on Q3, and you want it to be worth $3-4B?

Why everyone ignoring the financial facts?

I don't like or use Twitter/Vine/Medium. But those guys generate load of money even that it look like they don't...

Not trying to nitpick, but wasn't it $569.2M of revenue, not earnings? I believe they lost $132M in Q3.

> "In the third quarter, the company lost $132m, equivalent to 20 cents a share."


> Not trying to nitpick...

It's not nitpicking when correcting a meaningful mistake.

>$569.2M of earnings on Q3, and you want it to be worth $3-4B?

That's $569.2M in revenue, not profit.

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