4 ms·

A sad day for Twitter, but a dose of reality for a lot of the fluffiness in the market at the moment. Companies need to have real revenue and produce real prof

A sad day for Twitter, but a dose of reality for a lot of the fluffiness in the market at the moment. Companies need to have real revenue and produce real profit and then need a valuation based on sane multiples. Twitter got behind that curve badly and ultimately this is what happens.

wyclif 11y ago
Yes, it's sad for employees being let go, but it's good news for Twitter. I don't think Twitter is going anywhere; it has a huge user base and a lot of people think of it as a branch of the internet. By cutting surgically (removing, as you put it, the "fluffiness"), Jack might very well be able to bring some fighting spirit back.
- swingbridge 11y ago
  Oh I agree, I didn't say I thought the company was going bust... just saying that this is likely the start of a lot more focus on the hard numbers of tech companies and less focus on hype-based valuation (although the later isn't going to disappear entirely). Just that question a a lot of startups hate "So how are you going to make money?" is likely going to start getting asked a lot more.
- tedks 11y ago
  Yes, it's sad for employees let go, but it's good news for AOL. I don't think AOL is going anywhere; it has a huge user base and a lot of people think of it as the internet. By cutting surgically (removing, as you put it, the "fluffiness"), Jonathan might very well be able to bring some fighting spirit back.
  - Ao7bei3s 11y ago
    Nothing inspires fighting spirit like layoffs.
    - jalfresi 11y ago
      What utter tosh! Layoffs just inspires the remaining staff to update their CV and start looking around. Layoff are the result of incompetent management, and nobody wants to work for a company staffed with incompetent managers.
- scurvy 11y ago
  Not trying to be snarky, but when have you ever seen a company do "surgical" layoffs? Anything across the board is not surgical by definition. This is just a plain, simple RIF to stem the losses. There's nothing surgical about it. Surgical would imply killing off specific teams and products. This is across the board.
  - BinaryIdiot 11y ago
    > Surgical would imply killing off specific teams and products. This is across the board. Perhaps I missed it but no where did I see any specific mention that this was either surgical or across the board. Care to elaborate? If they didn't specify it certain could go either way.
    - scurvy 11y ago
      Earlier reports said 10% across the board.
      - cpeterso 11y ago
        Non-surgical layoffs suggests there is no change in product strategy and that fewer people will be expected to do the same amount of work.
      - wyclif 11y ago
        So how did Twitter decide who is in that 10%? Was it by seniority?
- hugh4 11y ago
  >I don't think Twitter is going anywhere; it has a huge user base and a lot of people think of it as a branch of the internet. It's not going anywhere in the next year or two. But in five years? Ten years? Twitter's main problem is that it has one product, and it's possible to get bored with that product. It's not really possible to get bored of googling things or buying things off amazon, but it's entirely possible to get bored of twitter. Remember when every man and his dog had a blog? (Or possibly a livejournal?) Remember when the word "blogosphere" was all over the news? What happened to all the blogs?
  - rtpg 11y ago
    That analogy doesn't hold up as well to tools. I mean we're still using E-mail right? Twitter is basically a format in its own right at this point
    - imron 11y ago
      No it's not, and unlike email, it's a proprietary system under the control of a single company.
      - Axsuul 11y ago
        A format like Twitter requires major infrastructure to work well so being under one company makes complete and necessary sense. This doesn't detract from the fact that it's become a format that a lot of the Internet now depends on for communication and news. Simply saying "no, it's not" doesn't prove anything.
    - hugh4 11y ago
      I don't see it so much as a tool as an experience. The twitter experience is almost always the same, which is why I got bored of it. > What my vague acquaintance had for breakfast > What my vague acquaintance had for breakfast > What my vague acquaintance thinks about politics, which I need to grit my teeth and not reply to. > Slightly amusing post from a well-known celebrity I follow, which someone will post on facebook later in the day anyway. > Slightly amusing post from a well-known celebrity I quite deliberately don't follow, but which gets retweeted into my feed anyway. > A politician I am starting to regret following wants my money. > What some well-known celebrity I don't follow had for breakfast Tools do something useful. Twitter doesn't -- at least, not for 95% of users.
deleted 11y ago
[deleted]
adventured 11y ago
You're spot on about Twitter basically being far overvalued. However their problem isn't lack of real revenue. They're tracking to $2+ billion in revenue in the next four quarters. Assuming a significantly slowing growth rate, they can easily double that sales trajectory to $4 billion in three years. Their problem is that costs are far out of line, which is why they're cutting. Twitter could turn a significant profit if they design for $3 or $4 billion in sales (rather than pretending they're heading toward $20 billion). Their margins should be comparable to Facebook's, their business is no more difficult to optimize. They have 12% of the sales of Facebook, with ~38% of the employee base. It's an extremely poorly run, bloated business. They're built to scale to Facebook's size, but they will never achieve that size no matter what happens. Long-term they're a $20 or $40 billion market cap business, instead of $250 billion.
kelseydh 11y ago
You're seeing this from the wrong angle. Twitter's problem is NOT the lack of "real revenue" or "real profit." This is the sort of thinking that stagnates the platform. Google's original investors were FUMING that the company didn't pursue ads earlier, following with what Yahoo did. In retrospect we now see the insight of that approach. Twitter's problem is one of product. It's not innovating, it hasn't changed it's core formula in many years. Compare that to Google and Facebook which both made many bold improvements to their platforms after booming into success. (Though facebook one could argue has slowed down in its innovation.)
marcusgarvey 11y ago
>Companies need to have real revenue and produce real profit and then need a valuation based on sane multiples. I wonder how many unicorns lack these criteria. Only Twitter has the discipline of public markets. If it doesn't deliver, public shareholders get burned. If unicorns don't deliver, private investors get burned, but where do the losses go? VCs, founders, employees, as well as some family offices, banks, university endowments, pension funds...where else? And I sure am curious about the exposure of these last three groups.

wyclif 11y ago

Yes, it's sad for employees being let go, but it's good news for Twitter. I don't think Twitter is going anywhere; it has a huge user base and a lot of people think of it as a branch of the internet. By cutting surgically (removing, as you put it, the "fluffiness"), Jack might very well be able to bring some fighting spirit back.

swingbridge 11y ago
Oh I agree, I didn't say I thought the company was going bust... just saying that this is likely the start of a lot more focus on the hard numbers of tech companies and less focus on hype-based valuation (although the later isn't going to disappear entirely). Just that question a a lot of startups hate "So how are you going to make money?" is likely going to start getting asked a lot more.
tedks 11y ago
Yes, it's sad for employees let go, but it's good news for AOL. I don't think AOL is going anywhere; it has a huge user base and a lot of people think of it as the internet. By cutting surgically (removing, as you put it, the "fluffiness"), Jonathan might very well be able to bring some fighting spirit back.
- Ao7bei3s 11y ago
  Nothing inspires fighting spirit like layoffs.
  - jalfresi 11y ago
    What utter tosh! Layoffs just inspires the remaining staff to update their CV and start looking around. Layoff are the result of incompetent management, and nobody wants to work for a company staffed with incompetent managers.
scurvy 11y ago
Not trying to be snarky, but when have you ever seen a company do "surgical" layoffs? Anything across the board is not surgical by definition. This is just a plain, simple RIF to stem the losses. There's nothing surgical about it. Surgical would imply killing off specific teams and products. This is across the board.
- BinaryIdiot 11y ago
  > Surgical would imply killing off specific teams and products. This is across the board. Perhaps I missed it but no where did I see any specific mention that this was either surgical or across the board. Care to elaborate? If they didn't specify it certain could go either way.
  - scurvy 11y ago
    Earlier reports said 10% across the board.
    - cpeterso 11y ago
      Non-surgical layoffs suggests there is no change in product strategy and that fewer people will be expected to do the same amount of work.
    - wyclif 11y ago
      So how did Twitter decide who is in that 10%? Was it by seniority?
hugh4 11y ago
>I don't think Twitter is going anywhere; it has a huge user base and a lot of people think of it as a branch of the internet. It's not going anywhere in the next year or two. But in five years? Ten years? Twitter's main problem is that it has one product, and it's possible to get bored with that product. It's not really possible to get bored of googling things or buying things off amazon, but it's entirely possible to get bored of twitter. Remember when every man and his dog had a blog? (Or possibly a livejournal?) Remember when the word "blogosphere" was all over the news? What happened to all the blogs?
- rtpg 11y ago
  That analogy doesn't hold up as well to tools. I mean we're still using E-mail right? Twitter is basically a format in its own right at this point
  - imron 11y ago
    No it's not, and unlike email, it's a proprietary system under the control of a single company.
    - Axsuul 11y ago
      A format like Twitter requires major infrastructure to work well so being under one company makes complete and necessary sense. This doesn't detract from the fact that it's become a format that a lot of the Internet now depends on for communication and news. Simply saying "no, it's not" doesn't prove anything.
  - hugh4 11y ago
    I don't see it so much as a tool as an experience. The twitter experience is almost always the same, which is why I got bored of it. > What my vague acquaintance had for breakfast > What my vague acquaintance had for breakfast > What my vague acquaintance thinks about politics, which I need to grit my teeth and not reply to. > Slightly amusing post from a well-known celebrity I follow, which someone will post on facebook later in the day anyway. > Slightly amusing post from a well-known celebrity I quite deliberately don't follow, but which gets retweeted into my feed anyway. > A politician I am starting to regret following wants my money. > What some well-known celebrity I don't follow had for breakfast Tools do something useful. Twitter doesn't -- at least, not for 95% of users.

deleted 11y ago

[deleted]

adventured 11y ago

You're spot on about Twitter basically being far overvalued. However their problem isn't lack of real revenue. They're tracking to $2+ billion in revenue in the next four quarters. Assuming a significantly slowing growth rate, they can easily double that sales trajectory to $4 billion in three years. Their problem is that costs are far out of line, which is why they're cutting. Twitter could turn a significant profit if they design for $3 or $4 billion in sales (rather than pretending they're heading toward $20 billion). Their margins should be comparable to Facebook's, their business is no more difficult to optimize. They have 12% of the sales of Facebook, with ~38% of the employee base. It's an extremely poorly run, bloated business. They're built to scale to Facebook's size, but they will never achieve that size no matter what happens. Long-term they're a $20 or $40 billion market cap business, instead of $250 billion.

kelseydh 11y ago

You're seeing this from the wrong angle. Twitter's problem is NOT the lack of "real revenue" or "real profit." This is the sort of thinking that stagnates the platform. Google's original investors were FUMING that the company didn't pursue ads earlier, following with what Yahoo did. In retrospect we now see the insight of that approach. Twitter's problem is one of product. It's not innovating, it hasn't changed it's core formula in many years. Compare that to Google and Facebook which both made many bold improvements to their platforms after booming into success. (Though facebook one could argue has slowed down in its innovation.)

marcusgarvey 11y ago

>Companies need to have real revenue and produce real profit and then need a valuation based on sane multiples. I wonder how many unicorns lack these criteria. Only Twitter has the discipline of public markets. If it doesn't deliver, public shareholders get burned. If unicorns don't deliver, private investors get burned, but where do the losses go? VCs, founders, employees, as well as some family offices, banks, university endowments, pension funds...where else? And I sure am curious about the exposure of these last three groups.