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True story: I was at a fundraiser in SF in about 2009, and over the course of the evening I found myself chatting about Twitter on two different occasions: once with Bill Maris of Google Ventures, and once with Joi Ito.

Bill and I were actually talking about what kind of investments GV was looking to make. He stressed that GV was looking to invest in businesses that were actually good businesses. As a counterexample, he brought up Twitter, which at the time he considered to be a "good investment" (said with a grin and a wink) but not a "good business". I had one of those feelings that you get when somebody really smart just shared with you The Truth.

Later I found myself in a conversation with Joi, I think as part of a group and not one-on-one, and Joi was talking about Twitter's lack of revenue. Joi was an early stage investor in Twitter, and he was telling us something to the effect of, "once we have all these users, we're going to bring everyone to the table and figure out how to monetize and what we can charge for."

Over the years I've thought a lot about Bill's distinction between a "good investment" and a "good business", and about Joi's "users first, money later" optimism. I always felt like Bill would be proven right in the long-term, and I think at this point he sorta has been.

Ultimately, though, either approach to investing can work -- but if you're gonna do the Joi thing, you gotta know when to get out of the trade. (I have no idea if/when Joi got out... just stating a general principle.)




I was a huge naysayer about the Facebook model that Joi espouses in your story. Facebook ended up being very successful with their users first approach surprising everyone.

I suspect that in 10 years Facebook will be an exception rather than a rule.


Instagram, WhatsApp, WeChat, Line?


Up until earlier this year, WhatsApp actually had a for-pay business model: it cost $1 per year. They stopped charging in January, evidently, in theory to remove a barrier to entry. (Being owned by Facebook now probably helps them make that move, though.)

I've wondered how Twitter would have been different if they'd taken a similar approach: $1 per account per year. They'd certainly be smaller than they are now, but I suspect they'd still be bringing in several hundred million a year before going the advertising route--the pursuit of which seems to be at the root of a lot of their questionable product decisions over the last few years.

None of that's directly relevant to the article, of course, which is implicitly about better filtering tools. I continue to be kind of bemused that this is so difficult for modern services to figure out, given that LiveJournal essentially figured it out fifteen years ago. Yes, the two services aren't directly comparable, but it wouldn't be wildly difficult to offer controls over, for example, who's allowed to @mention you.


The problem is that people treat free very differently from very cheap. Rationally, they shouldn't, but they do. So I suspect the number of users with the dollar-a-year plan wouldn't just be lower, it would be really dramatically lower. An order of magnitude, probably. Two, even.


The problem is that Twitter delivers very little real value to the majority of the people who use it. If it was switched off tomorrow how many people would really miss it? I suspect the answer is just their core user base, which is a very small % of all accounts Twitter has.

IMO had Twitter tried to charge their demise would have been even faster than the current slow but steady decline we're all watching.


That's quite possible. But if you're not the kind of user who checks Twitter on a fairly regular basis--not necessarily more than once a day, but at least several times a week--you're probably not the kind of user who's bringing in much advertising revenue, either. Maybe making signing up free but requiring the $1/yr to be able to post, or to follow more than 50 people.

It's possible none of that would work, either, but I'm confident in saying there are at least tens of millions of people who do get value from Twitter. They've chosen a business model where having "merely" tens of millions of users may not be enough to support them, but I don't think that points to an intrinsic flaw in Twitter's concept--just an intrinsic flaw in their particular monetization strategy.


Fair point, although I'd replace WeChat with SnapChat (WeChat being created by Tencent).

I don't think it's impossible to convert a large non-monetizing user-base into a profitable company (Google, Facebook, Snapchat, etc.) but I think that strategy is not a wise one for someone interested in building a sustainable company. There's a bigger reward to scaling before monetizing, but there's also a bigger gamble.


Ya, in general I agree with you. Just listing a few more exceptions to the rule. Also, I can't believe I left out SnapChat! Showing my age there aren't I?


SnapChat was what made me realize I was old. I never got the hang of the UI.


Bill is wrong. Twitter's revenue per user is quite good. Their problem is that user growth is poor. They can't get enough users to meet their goals. Joi was correct that focusing on users first was the correct decision. They just haven't been able to execute on that goal as well as they hoped for.


There is evidence from past social networks that if you don't hit critical mass of mainstream user adoption, and you've got these lofty valuations, the company is in for a really bad time


Yes, exactly. Hence the maniacal focus on "users first" to reach critical mass because if you don't do that you are dead.

Then "money later."


How is Twitter not a good business? It's still worth $11 billion.


Any public company's valuation is the sum of every vested actor's belief in the stock's promise of (future) value. It definitely doesn't mean that Twitter has $11 billion in the bank.

If anything happens that makes vested individuals doubt that Twitter is worth as much as it is, its value will drop, as it did right after the Q2 2016 earnings report was released.


It's never made a profit.


This is a good point. So I looked up some Twitter financials.

In 2015 they posted a Net Income of -$521.03M and EBITDA of -$137.21M.

I don't exactly understand how those two numbers can differ so much, but either way they're pretttty bad.


I was curious as to why the two numbers differed so much. A lot of it seems to be deprecation charges on servers and networking gear.




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