I find it strange that no one seems to have identified Twitter's real problem.
Twitter is a real business - it has users who are at least as passionate as Facebook, it is much more influential (cite: the number of mainstream figures who actively use it) and yet, even now, in the middle of the most hotly contested election campaign in memory, when one of the two candidate's primary means of communication is Twitter they still aren't releasing any new features to support the way people use it!
Think of this: Instagram copied Snapchat stories, which is exactly the kind of feature that Twitter users would use.
And think of how many features FB has built (and how many abandoned!) since the last time Twitter shipped a major feature.
The need to find a way to try new things, and they need to do it quickly.
My understanding is that Twitter's culture has strangled it. I've heard that they developed a culture of blaming individuals when things went wrong, but distributing the credit when something goes right. Consequently, Twitter developers don't want to ship anything. There's no upside --- only severe risk of being flamed, punished, and fired.
I don't know if it's an overall trend of stagnant growth or slowing economy, but bigger companies/unicorns are definitely feeling the pressure from overvaluation and being forced to downsize employees and office space, as evident by leasing out office space they bought up and doing down rounds. It's kind of this version of the dot-com bubble popping, except this time it's more of like a slower deflation than a pop.
Walmart could fill a hole in the ground with $3 billion dollars and burn it, and not care. [A bit of an exaggeration, as that's half their annual profit]
If it were Jet.com buying Wal Mart, then no you would not be alone. That it's a bricks-and-mortar behemoth buying a startup facing an uphill battle against a much larger online incumbent seems altogether more rational this time around.
There is an interesting way to look at the AOL-TW merger: AOL knew it was extremely over-valued, and that valuation wouldn't hold, so it used the very high prices to buy something which actually had value.
From that perspective, it was a highly successful move. But it might all be hindsight, just like the Honda Motorcycle case.
As an Atlantan who has seen Ted have to sell most of his Turner based business interests (Braves, Hawks, TBS, Thrashers) I can tell you it wasn't a very profitable merger.
Do you happen to have other examples of larger companies doing this? I haven't heard of anything concrete other than this, mostly just anecdotes from people here on HN saying they feel the job market is cooling.
For reference, 6% of revenue is what a marketing agency/consultancy pays on average for offices. Mature software product companies should be earning a higher multiple of expenses.
I'm curious -- why is that? Marketing agencies/consultancies set up on prime real estate in order to impress clients, whereas software companies typically wouldn't care so much about location?
I wouldn't say 6% is prime real estate. Using a simple example: in my area of the US, $300-500/mo gets a freelancer a one-person office. That freelancer must make $60k-$100k/year to get rent under 6% of revenue. In CA, that $300/mo would be quite a bit more. Larger offices might be able to pack in more people per square foot, but even a modest office starts to need more room for common areas (conference rooms, kitchens, bathrooms, etc.)
The 'why' is just that the 6% is a market average where some firms are leasing dirt cheap cubicles, others are leasing to impress, and some (like ours) are near the middle.
> Marketing agencies/consultancies set up on prime real estate in order to impress clients,
which is really bass-ackwards when you think about it. If I have the choice between a badass agency who watches costs or a badass agency that is spending piles of dough on glassy offices, I know where my dollar is going to go further.
It sounds backwards, but if you think about it: A marketing firm's job is to "wow" you, not be efficient. Sure, they'll "waste" money on trivial, flashy bullshit, but that's kind of what marketing is
> A marketing firm's job is to "wow" you, not be efficient.
Glassy offices work in the segment for which that is true. There is another segment, which wants maximum ROI ie customer-wow-per-dollar. And that's the segment hindered by glassy offices or oversized trade booths.
Sorry, I also meant to say that I expect a software product company to have higher revenue per employee. Employees are the main factor in office size, and agency/consulting revenue scales linearly with headcount whereas software product sales aren't constrained as much in that way. Particularly that should be the case with free B2C software.
Commercial rents in the US are usually not advertised monthly but annually instead.
$66/sqft/month = $792/sqft/year would be far and away the most expensive commercial rent in the US, by nearly an order of magnitude.
Side note: commercial rents also imply different cost sharing than residential rents - many buildings do not include maintenance of common spaces (lobbies, restrooms if they are in "public" areas of each floor) in the rent cost, whereas it's nearly unheard of for residential rents to exclude common spaces.
"San Francisco office landlords are now asking for higher rents than ever before, juicing prices this quarter past the dot-com-era high of $66 a square foot annually, according to brokerage Cushman & Wakefield."
indeed, it's incredible how twitter is in such disarray
and from the outside, the parallels to yahoo's strategy of the early 2000s are so striking - is it a product company or a media company?
* twitter (the product) has been so slow to improve and fix its issues (minor bugs, spam, harassment/bullying, etc)
* it seems to be going for media deals with the upcoming sports streaming
* vine and periscope started out nice but flamed out after snapchat's stories took over the world
I'm curious to know what's causing all this: are they paralyzed by bureaucracy? did internal politics fighting take over? Any throwaways want to comment?
I think that there investors wanted $10bn from the IPO, they wanted it because they could (and did) get it, but this meant that Twitter needed to heavily monitize and therefore hire and army of folks to sell adverts and so on.
I think that in 2009 Twitter had ~300 employees. Now it's ~4000, I think it actually needs ~500 (based on the products and a realistic need to create revenue). At that scale it will be worth ~$2bn, which would not inspire the current shareholders, so this cannot happen. But at that scale it would be a profitable and sustainable company, and it would last for the next 50 years.
This is one of the essential problems of financialization: companies are able to grow extremely fast, but they can not stay viable if they ever stop growing.
Twitter could be a perfectly fine company where a few hundred employees serve a few hundred million users, but there is not enough profit to be made in that, so it won't happen.
> but they can not stay viable if they ever stop growing
Lots of fine low-growth companies regularly paying their dividends. You can't promise lots of growth, pump up your valuation, fail to deliver and then expect to keep that valuation.
Single anecdote, but someone who started there a few years ago reported huge chunks of people basically just playing ping pong waiting for IPO+lockout period. They expressed a lot of frustration about it to me.
Don't know if a failure in entry level management like that tells you much more, but it didn't sound like a good sign for a company still on the wrong side of the profit equation.
Not really. There is something bigger going on here.
When is the last time you saw an article on the front page of HN/Reddit with blogging advice, or making the case for developing a personal brand? Who are the top ten most up-and-coming bloggers of the last year? It's not just Twitter that's underperforming, the whole social media space right now is super fragmented and lacking in direction.
Back when "the social media space" was people's blogs, a blogroll and pingbacks (or before that, when it was basic HTML and webrings) it was super fragmented, yet somehow the quality was a lot better, the protocols were open and you didn't have to give anyone your private information to participate. Maybe we can go back to that.
Hear, hear! Add the rss protocol and feed readers, and who needs Facebook either. Short tweets or long form, you can write either or both on your own blog.
Building a personal brand in 2016 is much less about blogs than it ever has been.
Most of the people I know building big-ish personal media properties in 2016 are doing it on a siloed platform: YouTube, Instagram, Facebook, Medium.
Building an independent blog from scratch is probably the hardest it's ever been. It can still be done if you're talking to a tight-knit community and you know where they hang out, but "viral" / "social" brands are much more dominant right now.
Twitter was never a business, at least Yahoo was at one point but which was frittered away. Twitter was a clever and powerful idea that could never make money, or at least no one ever saw a way to do it. Of course a lot of folks made money on Twitter by selling it to investors and the public market but otherwise it's not a real business. Twitter should have been (and may become) one of those things like youtube that makes sense as part of another business.
Facebook has locked down their API as well, but they haven't been hurt by it. Even when users give permission to access their friends list, apps can only access their list of friends that are already users of the app. Since in most cases the number of friends already using the app will be 0, the Facebook API is arguably even less useful than Twitter's.
It's always like that. A company that wants adoption will make things all "open" and "free", and let the developers do the hard work. Once the users are there, turn off the API (or severely restrict it) to keep the users in.
Ironically, because Facebook requires in-game payments to be processed through their payments platform (for which they take 30%), much of the feed spamming specifically for games is allowed. Take the case of Slotomania - a mobile app that just sold for $4.4 billion last week [1]. Unless you manually uncheck a box in the UI each and every time it is presented - and I'm not exaggerating here - this game will wind up publishing something to your news feed approximately once per minute while you are playing the game. They printed $4.4 billion out of thin air using nothing more than aggressive spamming techniques.
News feed spam that makes Facebook money is allowed. Spam that doesn't is not.
Maybe they decided to stop selling out their users to outside developers. I can't think of any good use for friends lists apart from spamming the users' friends.
He probably built a viral thing during the initial land-grab and then sold it.
There were tons of people selling sheep-throwing apps and whatnot back then, and it wasn't uncommon to hear of deals in the hundred-thousand dollar range. Then FB killed the virality.
Pretty much every time Facebook releases a new feature, some lucky sod gets rich. See also: Socialcam, which failed to gain any real traction, but got early access to the feed API, and leveraged that into a pump-and-dump.
Socialcam's "success" came from Facebook's actions publishing API (which is also now locked down). Every time someone watched a video, they would publish that fact on the user's news feed with a link to the video. It's hard to not go viral when you are carpet bombing users' news feeds. They were smart and sold out for $60M before Facebook outlawed the only thing that they had going for them. Unsurprisingly, they are now closed [1].
Twitter never appealed to ordinary users. It always appealed to celebrities and journalists however. Wall St mispriced its future based on the disproportionate media buzz that it received.
This might be a bit of an exaggeration. It has potential, but it's still just too messy and complicated for most users. If that doesn't change, they're going to die a long, slow death. If they do get their act together though, with such an enormous user base, they could come back to life in dramatic fashion very quickly.
Yahoo actually made some big profits back in the day and still does. Twitter is around for ten years and was never able to, so it's unlikely that they ever will.
Am I the only one that thinks that Twitter is not and should not be a growth company? It has a clear function of attractiveness which is linear with the population of the earth. All of the people who want to use Twitter are (for the most part) using it.
The only reason for me not to use Twitter right now is all of the ridiculous, desperate nonsense they are doing to maintain their outsized workforce. If they would make timelines linear again, and focus on improving performance, their audience could be maintained and their ad revenues could be retained; they'd also have room for improving targeting.
Agreed. It's a web app that should be a protocol. The tent.io guys were thinking in the right direction, but they didn't seem to really get much traction.
I feel Twitter is constantly chasing the wrong metrics - MAU and DAU. Twitter's reach is far more compelling that their MAU numbers. Imagine the number of people that have read a Donald Trump tweet but have never logged into Twitter. Twitter, IMO, should be singularly focused on impressions and embedding ads in impressions no matter what the channel is (other websites, CNN, Facebook etc.)
Is this maybe a "sell high" scenario for twitter? Sounds like the article is suggesting that, while demand is still strong, the supply of available office space is rising.
Perhaps their thinking is to get the asset under lease while the price is still at it's current rate and then spend on expansion later if it's necessary (at theoretically lower prices based on the supply trend?).
The current tech boom started around 2011-2012, and a lot of companies signed multi-year leases around that time. My company leased an office for 5 years in 2012, and our lease will expire in early 2017. We expect the price to increase substantially, and we are considering moving the office to save some money.
I suspect a lot of 5-year leases are going to be ending this year, and a lot of companies will be looking for new space. If Twitter might as well get a piece of the action, if they aren't using that part of their building.
Didn't they let a lot of people go in the last two years? It seems sensible to me to downsize office space after that kind of thing. Would it be better to their PR if they just burned money on the empty space?
Twitter was originally ad-free. Only once it got big did it get ads. Then they started getting user resistance to the ads. The stock dropped from $60 to $14. The company is losing money heavily. The sales and ad services aren't working out for them. Now they have to cut back.
Two worldviews on this. You could say "Twitter is an ad company that happens to sell ads on a social microblogging service" or "Twitter is a social microblogging service that makes revenue by selling ads". Same with Google. Some call it an advertising company, some call is a search/services company.
That seems to seriously underestimate Google's footprint in SF. If 180000 square feet is enough space for 1400 twitter employees, you can extrapolate from Google's public leases that they have enough space to be either the #2 or even #1 tech employer in SF.
1: Both sides of the Hills Plaza building: ~450k sq. ft. 2: 250k sq. ft. at 1 market. 3: the entire 188 Embarcadero, which looks like maybe 75k sq. ft.
Just straight-line extrapolating from the Twitter property, that's space for over 5000 people.
Ok but the north side alone is pretty large and anyway wouldn't you agree that 1500 is a very low number for those three properties combined? I'm sure they have other offices that haven't been made public, too.
Maybe Twitter should be less concerned with censoring Conservative voices and dissenting opinions that disagree with third wave Feminism and Social Justice Warriors (yet radicals like ISIS can still propagandise via Twitter) and spend more energy trying to actually make some money.
But it's a private company so they can do whatever they like with it. I wonder anyways who would invest their own money in Twitter. The fundamentals always were and still are so bad you'd have to be nuts or a true believer.
> Maybe Twitter should be less concerned with censoring Conservative voices and dissenting opinions that disagree with third wave Feminism and Social Justice Warriors (yet radicals like ISIS can still propagandise via Twitter) and spend more energy trying to actually make some money.
Twitters stock was built on journalists (One of the only groups of people the format actually serves well) pretty much raving about it and making it's brand into a phrase that the general public recognises.
Twitter is going to pander to whatever Journalists want, if journalists write about harassment on Twitter, then Twitter is going to double down on that.
Twitter was hyped as one of the greatest Internet businesses, yet it makes 7 times less profit than a company like Yahoo, that is loosing now for 15 years in the market.
That is also reflected in Twitters stock value, which lost 60% of it's value since the IPO.
Billions were literally burned by investors on this company because they will not even get back their investment.
As a developer I would never touch something like Twitter just as I wouldn't work for Yahoo, as it's a sure path to destroy your own career. (what career progress can you make in a company that will most definitely be irrelevant and likely even out of business in the next few years)
If they couldn't get their business model right after 10 years, they likely never will.
Twitter is a real business - it has users who are at least as passionate as Facebook, it is much more influential (cite: the number of mainstream figures who actively use it) and yet, even now, in the middle of the most hotly contested election campaign in memory, when one of the two candidate's primary means of communication is Twitter they still aren't releasing any new features to support the way people use it!
Think of this: Instagram copied Snapchat stories, which is exactly the kind of feature that Twitter users would use.
And think of how many features FB has built (and how many abandoned!) since the last time Twitter shipped a major feature.
The need to find a way to try new things, and they need to do it quickly.