10 ms·

Twitter beats estimates, cuts jobs with eye on 2017 profitability

222 points by ghosh 10y ago

fowlerpower 10y ago
What I love is this: "The move could hurt the companies image in San Francisco where the competition for engineers is fierce." I live in New York and I would never work there. Why would anyone want to join a sinking ship? It's image is gone all in the name of the mighty stock price.
- harryh 10y ago
  Twitter certainly has problems but they have nothing to do with any sort of unhealthy pursuit of the mighty stock price. They have to do with poor management, lackluster growth & inflated expenses.
  - fowlerpower 10y ago
    Well I haven't been following them but my comment was based on this article. They had a good quarter they still laid people off, their stock price went Up. That seems to me like some kind of persuit.
    - harryh 10y ago
      They didn't have a good quarter. They had a slightly less bad quarter than originally predicted.
- dkopi 10y ago
  Twitter isn't sinking. It just isn't ascending as fast as investors would like to ensure hyper growth. While its always great for your career to be in a company that's constantly growing - sometimes being that person that can help the company do a lot more with less resources is even better for your career. When everyone's jumping ship - the people who choose to stay on-board can often be very rewarded as far as their career growth goes.
  - fowlerpower 10y ago
    You sure it's not sinking? First Disney wanted to buy them apperantly, then Google. Then they both pulled out for some reason, and they are laying people off like crazy. I may be wrong but from the little research I just did it sure seems like things aren't great.
    - criddell 10y ago
      > Then they both pulled out for some reason The reason is that it's too expensive. For the right price, those companies would still be interested. The high stock price indicates investors think Twitter can still grow a lot. That isn't clear to me.
    - nkozyra 10y ago
      The biggest criticism levied against Twitter are: 1. Not lean enough. That's why today's news bumped their share price. 2. Not great at leveraging value into revenue. That's what an acquirer would do, ostensibly. Plus, the specifics of the Disney/Google rumors are of dubious veracity. Don't put too much, er, stock into them. You could argue that they've hit peak audience and that might be fair. A change in leadership would probably push Twitter into becoming a more aggressive on the acquisition front itself, too. Basically, a lot of untapped value and too much overhead.
    - untog 10y ago
      > You sure it's not sinking? As the article implies, it isn't far from profitability, and is cutting back to ensure it will be profitable. Silicon Valley demands hockey-stick growth, but there's no reason why Twitter can't keep ticking along comfortably.
      - user5994461 10y ago
        Having half the guys around you laid off [or about to be] is not what I would call "ticking along comfortably". Twitter is not a 100 000 people company where there's a 300 people division being restructured. It's a major management failure that needs at least 50% of lay off. At this scale, it will reflect to the entire environment and all the employees.
- kasey_junk 10y ago
  I'm not up on the Bay Area hiring scene these days, but I would guess that the people that would never work there, wouldn't have before the layoffs. The big companies use stock as a major component of their compensation package, so the stock price being down already was impacting their ability to hire in comparison to their peer companies. By cutting staff and beating revenue estimates they might be able to raise their stock price which may keep some of their existing engineers from jumping ship. But I'd agree, Twitter does not look like a great long term prospect for ones career.
- rpeden 10y ago
  Well, to extend the ship analogy: Twitter seems to believe that they're sinking because the ship is overloaded, so they're trying to improve things by tossing people overboard. I don't mean to make light of the situation; I truly feel for all of the people affected by this. So, why would anyone want to join Twitter now? Well, the diminished share price could be one reason. If you believe the company can turn things around, and you believe that your contributions would help the company do so, then getting in now and hopefully acquiring some shares or options at the current market price could be a rational move. You'd probably want to make sure you've got a lifejacket (i.e. an emergency fund) handy just in case you find yourself thrown overboard in the future.
  - mvindahl 10y ago
    Also, working at a company which actually has a deployed product with a high public profile is probably not bad. There are plenty of startups which never pan out. And there are plenty of companies out there with a single profitable cash cow and futile strategic projects searching for the next hit. Or barely running but business critical legacy projects written in Cobol, C++ or Java. Twitter doesn't strike me as particularly bad in comparison. Also, having had layoffs is not necessarily only a bad thing. Even the best company will end up with a certain amount of substandard, undermotivated employees after a long hiring frenzy. The best thing for everyone is to let them go and hopefully blossom elsewhere.
    - iamatworknow 10y ago
      Being able to say "I worked for Twitter" is and will be impressive to most people regardless of Twitter's future. It's not like future employers will see that on a resume think you're the one who sunk the ship (unless you do something high profile to make your negative impact public knowledge).
- fullshark 10y ago
  Its image is gone because its MAU count is basically stable and no longer exploding. The stock price and image are both symptoms of that problem.
- deleted 10y ago
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- deleted 10y ago
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JumpCrisscross 10y ago
Reuters leading with "Twitter beats revenue estimates..." while the Wall Street Journal chose "Twitter to Cut 9% of Workforce as Revenue Growth Slows" [1]. This is usually a sign of a political fragmentation, e.g. within management, within the Board, between the former or within the shareholder base. (Reuters' correspondent is based in Bangalore; the Journal's in the Bay Area [2]. Neither contains any direct quotes. Journal cites multiple Wall Street analyst reports.) [1] http://www.wsj.com/articles/twitter-to-cut-workforce-as-revenue-growth-slows-1477566772 http://www.wsj.com/articles/twitter-to-cut-workforce-as-reve... [2] https://www.linkedin.com/in/dseetharaman https://www.linkedin.com/in/dseetharaman
- matt4077 10y ago
  Or, you know, journalistic discretion?
- mrcwinn 10y ago
  Meanwhile, TechCrunch led with "Twitter lays off 9% of its workforce as it posts a desperately-needed positive Q3," [1] a clear and obvious sign that there is a shareholder struggle within Aol, TechCrunch's parent, and that ultimately they decided to split the difference to avoid the website shutting down. I point to my magic slippers as evidence supporting this fact. [1] https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-its-workforce-as-it-posts-a-much-needed-positive-q3/ https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-its-...
dilemma 10y ago
What's the phrase, cut deep and fast? Twitter should probably cut more like 25-50%.
- criddell 10y ago
  I was thinking 90%. Why can't Twitter operate with three or four hundred employees rather than three or four thousand employees?
  - jeeeeefff 10y ago
    From the perspective of the 10% that remain, why would they bother to stay if 90% were cut? Sounds like taking on ten times the day to day workload. In SF, it's not like they couldn't go elsewhere for work.
    - criddell 10y ago
      I would cut 90% of the people and cancel lots and lots of projects. The people that remain would be well compensated. If you can cut 90% of the workforce and still preserve half the revenue (and that might not be possible), then you can pay each person $1 million per year. Really though, I just have a hard time understanding what three thousand people are doing to keep Twitter running day after day. I keep coming back to thinking about how Instagram had 15 people working there when Facebook bought them.
koolba 10y ago
> Twitter Inc's quarterly revenue growth slowed sharply in the third quarter but topped analysts' expectations, and the company said it would cut 9 percent of its global workforce. > Revenue rose about 8 percent to $616 million, above the average analyst estimate of $605.8 million. The company reported a 20 percent rise in revenue in the previous quarter and 58 percent last year. > Twitter had 3,860 employees globally as of June. The layoff could hurt the company's image in San Francisco, where the competition for engineering talent is fierce. Total revenue of $616M and 3,860 employees (pre-layoff) means they've got $159K of revenue per employee. If the majority of their work force is engineers that's pretty weak. After adding in health insurance, 401k, real estate (for office locations), and all the rest of the usual expenditures, it's no wonder they can't turn a profit. > "We're getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP profitability in 2017," said Chief Financial Officer Anthony Noto. They're going to need go significantly deeper than 9% to get to profitability. EDIT: Per the replies the revenue numbers quoted are per-quarter, not annual. Still begs the question of how they hell they're not profitable making $636K per employee.
- d3ckard 10y ago
  Remember that it is quarterly revenue. That gives an average revenue of %636K per year per employee, which does not sound that bad.
  - koolba 10y ago
    > Remember that it is quarterly revenue. That gives an average revenue of %636K per year per employee, which does not sound that bad. Oh wow I totally missed that. I thought it was annualized. Okay that changes my question to, "How the hell can you not turn a profit making $636K per employee?!". As in how seriously inefficient and overpaid is this company?
    - product50 10y ago
      THey are paying $170M in stock based compensation this quarter. That is in addition to salaries. These costs add up fast. No wonder lay offs are needed. If I were them, I would target people who are stock compensated very high to start lowering those costs. That said, Adam Bain and Anthony Noto are each paid $70M/yr in stock compensation [1] - so you have that. [1] http://www.wsj.com/articles/twitters-anthony-noto-had-top-pay-of-73-million-last-year-1429569351 http://www.wsj.com/articles/twitters-anthony-noto-had-top-pa...
perseusprime11 10y ago
They spend about 2.5 billion dollars to make 2 billion dollars. Not a great business model. If they can do more cuts and bring the expenses way down and seriously turn around the product, they will have a good future. I almost feel, they need somebody like Eric Schmidt to manage the company while Jack learns and focuses on the product.
- nkozyra 10y ago
  > They spend about 2.5 billion dollars to make 2 billion dollars. Not a great business model. You must be new here ;)
wpietri 10y ago
Let me do a mini-askHN: I'm thinking of joining Twitter to work on their anti-abuse efforts. What factors should I consider in my decision? At first consideration, this news doesn't worry me a ton. They provide a product that provides a lot of user value, just to a smaller user base than they/investors hoped. They've found a reasonable way to monetize it, with $2b+/year in revenue. Their expenses are too high for that, but not egregiously so, with previously committed stock compensation being a big chunk of things. There's still a lot they can do with the product. And they've got a unique value that's hard for other people to replicate: it's the place for public figures (public figures at all scales) to interact. Am I crazy here? I know I'm taking a risk, but I'm not seeing more risk than, say, joining a Series A startup, which I've happily done before.
- harryh 10y ago
  It seems like you are in the stage of your career where you are mostly making decisions based on who you want to work with and what interests you. So, if this meets those criteria, you should do it. That being said: A) I think you underestimate how out of wack their expenses are. There is a decent chance that larger cuts will come in the next 12 months. B) Additional cuts, along with internal management turmoil, are likely to effect your day to day job there to some degree. Are you comfortable with your manager changing? With the composition of your team changing? Are you the kind of person that just rolls with this sort of thing or will you find it frustrating as it impedes your ability to plan and execute? If I were you, I'd be asking myself these sorts of questions.
  - wpietri 10y ago
    Hi, Harry! (We met at a Scala unconference a while back.) You are a person who knows from turmoil, so I take this advice seriously. You're correct about my motivations; this is a problem I want to work on. After a career in startups I'm more comfortable with turmoil than most, but you're right ability to keep delivering user improvements is very important to me. I suppose the question I have to struggle with is how much this crunch will force positive change versus pathological contraction-cycle chaos. I've seen organizations do both, and from the outside it's hard to guess which one will win out.
danieltillett 10y ago
A question for those with far more management experience than me at large companies - why cut 9%? Is it really twitter's management view that they are only slightly over staffed? Do they think that their employees are going to believe this is the last cut? 9% seems like a large enough number to destroy moral, but too small to make any material differences to the cost base.
- slgeorge 10y ago
  There are a lot of people in this discussion who know more than I do about Twitter - and part of the answer is situational specific. Often, "cut fast and deep" makes sense because you're in a difficult situation where both expenses and time are against you. People use all sorts of analogies (e.g. "cutting the fat") but the reality is that if you take out 20-30% of your workforce you will cut back needed functions and you will lose people who are both good and whom you need: there simply won't be enough time, insight or structural ability not to make some mistakes. There tends to be a big impact on morale for a long time after the event - improving morale becomes a major management objective. The upside of this approach is you do it once, it's a big shock internally but then everyone can focus back around the mission. The alternative approach is a more gradual deflation of your numbers, closing down teams and not-backfilling roles. If you have time then the upsides of this approach are that you can be much more surgical about the changes. Presented in the right way it's going to feel more like a "pivot" with some natural wastage of people that won't work in the new mission. The downside - is that it can feel like a "long march" as successive sets of cuts are made. Pick your poison as it's both the framework and the implementation!
- lucozade 10y ago
  I don't know why they specifically chose 9% but I can say that substantial redundancies at a large corporation are horribly complex for both legal and logistical reasons. Reasons why they might have chosen a number of this magnitude? 10-15% annual attrition for a large corporation is fairly normal i.e. losing that sort of experience spread around an organisation isn't particularly challenging (although you would normally backfill some/all). You wouldn't have to do some massive re-org just for this reason (there might be other reasons to do one of course). In many jurisdictions there are different rules for layoffs over a certain size. So they may be choosing to trigger rules in some areas and not others. Occasionally I have seen companies choosing to "overcut" in a particular jurisdiction in order to take the legal pain once rather than drip feed pain over a long period. It may also be that they can cut or sell specific areas so that pervasive impact is limited. This might produce a number that's larger or smaller than needed for cost purposes but helps to control the morale issues as many people see no direct impact. Edit: another very popular reaons is that that's the number that the analysts are expecting. I didn't say it's a good reason, just a common one. There are plenty of other reasons for ending up with a number up to and including "ip dip sky blue" that I have seen over the years. Generally though, it's tricky and often unpleasant.
triplebit 10y ago
What's with all the anti-Twitter bias among techies lately?
- ilyanep 10y ago
  10:00 SVT https://backchannel.com/how-the-tech-press-forces-a-narrative-on-companies-it-covers-5f89fdb7793e#.y3h0beglv https://backchannel.com/how-the-tech-press-forces-a-narrativ...
- cicero 10y ago
  Twitter is currently in the trough of the hype curve. https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle
  - philipodonnell 10y ago
    Are there any numbers behind that curve? Its interesting, but has anyone tried to measure "expectations"?
- fullshark 10y ago
  I don't know if it's bias I've seen. A lot of talk about how no one was going to buy them for what they wanted (which turned out to be true) and a sense that the product has peaked which could very well be true if competitors eat into their use case.
- firebones 10y ago
  That's a very good question. Amazon has gone through similar periods where the thesis to not invest has almost always been "they don't make any money" (something that would have cost you roughly a 25x gain since 2008). The hate seems to happen when a) there's a disjunction between market cap and a traditional reading of the balance sheet, b) that difference is due to some poorly understood measure of value that isn't directly captured in traditional financial metrics, c) people either don't see the strategy or are comparing apples to oranges but thinking they're comparing apples to apples. Mostly it seems to be comparing Twitter's numbers with Facebook's, and assuming there is 100% overlap between the two companies in terms of niche. This could be an error of putting Twitter in the wrong category. Maybe they should be compared to media companies, not social networks? Maybe by those measures they are doing just fine?
NightMKoder 10y ago
Also Vine is getting shut down: https://medium.com/@vine/important-news-about-vine-909c5f4ae7a7 https://medium.com/@vine/important-news-about-vine-909c5f4ae...
- GFischer 10y ago
  That might warrant it's own submission. They say the mobile app is shutting down, was that the most significant part or was it the web side? I thought it should have been a good service to monetize. Edit: was already submitted - discussion on https://news.ycombinator.com/item?id=12806409 https://news.ycombinator.com/item?id=12806409
  - edwinnathaniel 10y ago
    Mobile app probably act as an input. They probably keeping the vine videos for its views.
  - NightMKoder 10y ago
    I don't believe it's possible to create new posts from the website so it's essentially being put into read-only mode.
intrasight 10y ago
One of my concerns with Twitter is that I think their usage is going to drop considerably after the election is over. I say this only because half of Twitter mentions in the press related to Trump tweets.
- jarsin 10y ago
  Unless he wins. He will start twitter wars while in office with heads of other states. It will be the best thing that could happen for twitter. Believe me!
  - trhway 10y ago
    > He will start twitter wars while in office with heads of other states. why only wars? How about a bit of bromance with the other "strong leaders" like Putin?
- deleted 10y ago
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sulam 10y ago
My belief, sadly held, is that this is just the 2nd step of a Yahoo-scale transition. It won't be the user numbers that get them, it will be the ads side. Twitter is going to get a shrinking piece of the ad budget, especially as new entrants arrive. Which new entrants you ask? Snapchat, for one. Pinterest is heating up as well.
- fullshark 10y ago
  As long as they carve out a niche as the source of live news and comments and other products (FB / Instagram / Snapchat / etc) don't eat that space they can be successful. But they seem destined to be a niche product at best.
  - madeofpalk 10y ago
    To be successful "as the source of live news and comments" they need to figure out how to make money from that.

222 points by ghosh 10y ago

What I love is this: "The move could hurt the companies image in San Francisco where the competition for engineers is fierce." I live in New York and I would never work there. Why would anyone want to join a sinking ship? It's image is gone all in the name of the mighty stock price.

harryh 10y ago
Twitter certainly has problems but they have nothing to do with any sort of unhealthy pursuit of the mighty stock price. They have to do with poor management, lackluster growth & inflated expenses.
- fowlerpower 10y ago
  Well I haven't been following them but my comment was based on this article. They had a good quarter they still laid people off, their stock price went Up. That seems to me like some kind of persuit.
  - harryh 10y ago
    They didn't have a good quarter. They had a slightly less bad quarter than originally predicted.
dkopi 10y ago
Twitter isn't sinking. It just isn't ascending as fast as investors would like to ensure hyper growth. While its always great for your career to be in a company that's constantly growing - sometimes being that person that can help the company do a lot more with less resources is even better for your career. When everyone's jumping ship - the people who choose to stay on-board can often be very rewarded as far as their career growth goes.
- fowlerpower 10y ago
  You sure it's not sinking? First Disney wanted to buy them apperantly, then Google. Then they both pulled out for some reason, and they are laying people off like crazy. I may be wrong but from the little research I just did it sure seems like things aren't great.
  - criddell 10y ago
    > Then they both pulled out for some reason The reason is that it's too expensive. For the right price, those companies would still be interested. The high stock price indicates investors think Twitter can still grow a lot. That isn't clear to me.
  - nkozyra 10y ago
    The biggest criticism levied against Twitter are: 1. Not lean enough. That's why today's news bumped their share price. 2. Not great at leveraging value into revenue. That's what an acquirer would do, ostensibly. Plus, the specifics of the Disney/Google rumors are of dubious veracity. Don't put too much, er, stock into them. You could argue that they've hit peak audience and that might be fair. A change in leadership would probably push Twitter into becoming a more aggressive on the acquisition front itself, too. Basically, a lot of untapped value and too much overhead.
  - untog 10y ago
    > You sure it's not sinking? As the article implies, it isn't far from profitability, and is cutting back to ensure it will be profitable. Silicon Valley demands hockey-stick growth, but there's no reason why Twitter can't keep ticking along comfortably.
    - user5994461 10y ago
      Having half the guys around you laid off [or about to be] is not what I would call "ticking along comfortably". Twitter is not a 100 000 people company where there's a 300 people division being restructured. It's a major management failure that needs at least 50% of lay off. At this scale, it will reflect to the entire environment and all the employees.
kasey_junk 10y ago
I'm not up on the Bay Area hiring scene these days, but I would guess that the people that would never work there, wouldn't have before the layoffs. The big companies use stock as a major component of their compensation package, so the stock price being down already was impacting their ability to hire in comparison to their peer companies. By cutting staff and beating revenue estimates they might be able to raise their stock price which may keep some of their existing engineers from jumping ship. But I'd agree, Twitter does not look like a great long term prospect for ones career.
rpeden 10y ago
Well, to extend the ship analogy: Twitter seems to believe that they're sinking because the ship is overloaded, so they're trying to improve things by tossing people overboard. I don't mean to make light of the situation; I truly feel for all of the people affected by this. So, why would anyone want to join Twitter now? Well, the diminished share price could be one reason. If you believe the company can turn things around, and you believe that your contributions would help the company do so, then getting in now and hopefully acquiring some shares or options at the current market price could be a rational move. You'd probably want to make sure you've got a lifejacket (i.e. an emergency fund) handy just in case you find yourself thrown overboard in the future.
- mvindahl 10y ago
  Also, working at a company which actually has a deployed product with a high public profile is probably not bad. There are plenty of startups which never pan out. And there are plenty of companies out there with a single profitable cash cow and futile strategic projects searching for the next hit. Or barely running but business critical legacy projects written in Cobol, C++ or Java. Twitter doesn't strike me as particularly bad in comparison. Also, having had layoffs is not necessarily only a bad thing. Even the best company will end up with a certain amount of substandard, undermotivated employees after a long hiring frenzy. The best thing for everyone is to let them go and hopefully blossom elsewhere.
  - iamatworknow 10y ago
    Being able to say "I worked for Twitter" is and will be impressive to most people regardless of Twitter's future. It's not like future employers will see that on a resume think you're the one who sunk the ship (unless you do something high profile to make your negative impact public knowledge).
fullshark 10y ago
Its image is gone because its MAU count is basically stable and no longer exploding. The stock price and image are both symptoms of that problem.
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JumpCrisscross 10y ago

Reuters leading with "Twitter beats revenue estimates..." while the Wall Street Journal chose "Twitter to Cut 9% of Workforce as Revenue Growth Slows" [1]. This is usually a sign of a political fragmentation, e.g. within management, within the Board, between the former or within the shareholder base. (Reuters' correspondent is based in Bangalore; the Journal's in the Bay Area [2]. Neither contains any direct quotes. Journal cites multiple Wall Street analyst reports.) [1] http://www.wsj.com/articles/twitter-to-cut-workforce-as-revenue-growth-slows-1477566772 http://www.wsj.com/articles/twitter-to-cut-workforce-as-reve... [2] https://www.linkedin.com/in/dseetharaman https://www.linkedin.com/in/dseetharaman

matt4077 10y ago
Or, you know, journalistic discretion?
mrcwinn 10y ago
Meanwhile, TechCrunch led with "Twitter lays off 9% of its workforce as it posts a desperately-needed positive Q3," [1] a clear and obvious sign that there is a shareholder struggle within Aol, TechCrunch's parent, and that ultimately they decided to split the difference to avoid the website shutting down. I point to my magic slippers as evidence supporting this fact. [1] https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-its-workforce-as-it-posts-a-much-needed-positive-q3/ https://techcrunch.com/2016/10/27/twitter-lays-off-9-of-its-...

dilemma 10y ago

What's the phrase, cut deep and fast? Twitter should probably cut more like 25-50%.

criddell 10y ago
I was thinking 90%. Why can't Twitter operate with three or four hundred employees rather than three or four thousand employees?
- jeeeeefff 10y ago
  From the perspective of the 10% that remain, why would they bother to stay if 90% were cut? Sounds like taking on ten times the day to day workload. In SF, it's not like they couldn't go elsewhere for work.
  - criddell 10y ago
    I would cut 90% of the people and cancel lots and lots of projects. The people that remain would be well compensated. If you can cut 90% of the workforce and still preserve half the revenue (and that might not be possible), then you can pay each person $1 million per year. Really though, I just have a hard time understanding what three thousand people are doing to keep Twitter running day after day. I keep coming back to thinking about how Instagram had 15 people working there when Facebook bought them.

koolba 10y ago

> Twitter Inc's quarterly revenue growth slowed sharply in the third quarter but topped analysts' expectations, and the company said it would cut 9 percent of its global workforce. > Revenue rose about 8 percent to $616 million, above the average analyst estimate of $605.8 million. The company reported a 20 percent rise in revenue in the previous quarter and 58 percent last year. > Twitter had 3,860 employees globally as of June. The layoff could hurt the company's image in San Francisco, where the competition for engineering talent is fierce. Total revenue of $616M and 3,860 employees (pre-layoff) means they've got $159K of revenue per employee. If the majority of their work force is engineers that's pretty weak. After adding in health insurance, 401k, real estate (for office locations), and all the rest of the usual expenditures, it's no wonder they can't turn a profit. > "We're getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP profitability in 2017," said Chief Financial Officer Anthony Noto. They're going to need go significantly deeper than 9% to get to profitability. EDIT: Per the replies the revenue numbers quoted are per-quarter, not annual. Still begs the question of how they hell they're not profitable making $636K per employee.

d3ckard 10y ago
Remember that it is quarterly revenue. That gives an average revenue of %636K per year per employee, which does not sound that bad.
- koolba 10y ago
  > Remember that it is quarterly revenue. That gives an average revenue of %636K per year per employee, which does not sound that bad. Oh wow I totally missed that. I thought it was annualized. Okay that changes my question to, "How the hell can you not turn a profit making $636K per employee?!". As in how seriously inefficient and overpaid is this company?
  - product50 10y ago
    THey are paying $170M in stock based compensation this quarter. That is in addition to salaries. These costs add up fast. No wonder lay offs are needed. If I were them, I would target people who are stock compensated very high to start lowering those costs. That said, Adam Bain and Anthony Noto are each paid $70M/yr in stock compensation [1] - so you have that. [1] http://www.wsj.com/articles/twitters-anthony-noto-had-top-pay-of-73-million-last-year-1429569351 http://www.wsj.com/articles/twitters-anthony-noto-had-top-pa...

perseusprime11 10y ago

They spend about 2.5 billion dollars to make 2 billion dollars. Not a great business model. If they can do more cuts and bring the expenses way down and seriously turn around the product, they will have a good future. I almost feel, they need somebody like Eric Schmidt to manage the company while Jack learns and focuses on the product.

nkozyra 10y ago
> They spend about 2.5 billion dollars to make 2 billion dollars. Not a great business model. You must be new here ;)

wpietri 10y ago

Let me do a mini-askHN: I'm thinking of joining Twitter to work on their anti-abuse efforts. What factors should I consider in my decision? At first consideration, this news doesn't worry me a ton. They provide a product that provides a lot of user value, just to a smaller user base than they/investors hoped. They've found a reasonable way to monetize it, with $2b+/year in revenue. Their expenses are too high for that, but not egregiously so, with previously committed stock compensation being a big chunk of things. There's still a lot they can do with the product. And they've got a unique value that's hard for other people to replicate: it's the place for public figures (public figures at all scales) to interact. Am I crazy here? I know I'm taking a risk, but I'm not seeing more risk than, say, joining a Series A startup, which I've happily done before.

harryh 10y ago
It seems like you are in the stage of your career where you are mostly making decisions based on who you want to work with and what interests you. So, if this meets those criteria, you should do it. That being said: A) I think you underestimate how out of wack their expenses are. There is a decent chance that larger cuts will come in the next 12 months. B) Additional cuts, along with internal management turmoil, are likely to effect your day to day job there to some degree. Are you comfortable with your manager changing? With the composition of your team changing? Are you the kind of person that just rolls with this sort of thing or will you find it frustrating as it impedes your ability to plan and execute? If I were you, I'd be asking myself these sorts of questions.
- wpietri 10y ago
  Hi, Harry! (We met at a Scala unconference a while back.) You are a person who knows from turmoil, so I take this advice seriously. You're correct about my motivations; this is a problem I want to work on. After a career in startups I'm more comfortable with turmoil than most, but you're right ability to keep delivering user improvements is very important to me. I suppose the question I have to struggle with is how much this crunch will force positive change versus pathological contraction-cycle chaos. I've seen organizations do both, and from the outside it's hard to guess which one will win out.

danieltillett 10y ago

A question for those with far more management experience than me at large companies - why cut 9%? Is it really twitter's management view that they are only slightly over staffed? Do they think that their employees are going to believe this is the last cut? 9% seems like a large enough number to destroy moral, but too small to make any material differences to the cost base.

slgeorge 10y ago
There are a lot of people in this discussion who know more than I do about Twitter - and part of the answer is situational specific. Often, "cut fast and deep" makes sense because you're in a difficult situation where both expenses and time are against you. People use all sorts of analogies (e.g. "cutting the fat") but the reality is that if you take out 20-30% of your workforce you will cut back needed functions and you will lose people who are both good and whom you need: there simply won't be enough time, insight or structural ability not to make some mistakes. There tends to be a big impact on morale for a long time after the event - improving morale becomes a major management objective. The upside of this approach is you do it once, it's a big shock internally but then everyone can focus back around the mission. The alternative approach is a more gradual deflation of your numbers, closing down teams and not-backfilling roles. If you have time then the upsides of this approach are that you can be much more surgical about the changes. Presented in the right way it's going to feel more like a "pivot" with some natural wastage of people that won't work in the new mission. The downside - is that it can feel like a "long march" as successive sets of cuts are made. Pick your poison as it's both the framework and the implementation!
lucozade 10y ago
I don't know why they specifically chose 9% but I can say that substantial redundancies at a large corporation are horribly complex for both legal and logistical reasons. Reasons why they might have chosen a number of this magnitude? 10-15% annual attrition for a large corporation is fairly normal i.e. losing that sort of experience spread around an organisation isn't particularly challenging (although you would normally backfill some/all). You wouldn't have to do some massive re-org just for this reason (there might be other reasons to do one of course). In many jurisdictions there are different rules for layoffs over a certain size. So they may be choosing to trigger rules in some areas and not others. Occasionally I have seen companies choosing to "overcut" in a particular jurisdiction in order to take the legal pain once rather than drip feed pain over a long period. It may also be that they can cut or sell specific areas so that pervasive impact is limited. This might produce a number that's larger or smaller than needed for cost purposes but helps to control the morale issues as many people see no direct impact. Edit: another very popular reaons is that that's the number that the analysts are expecting. I didn't say it's a good reason, just a common one. There are plenty of other reasons for ending up with a number up to and including "ip dip sky blue" that I have seen over the years. Generally though, it's tricky and often unpleasant.

triplebit 10y ago

What's with all the anti-Twitter bias among techies lately?

ilyanep 10y ago
10:00 SVT https://backchannel.com/how-the-tech-press-forces-a-narrative-on-companies-it-covers-5f89fdb7793e#.y3h0beglv https://backchannel.com/how-the-tech-press-forces-a-narrativ...
cicero 10y ago
Twitter is currently in the trough of the hype curve. https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle
- philipodonnell 10y ago
  Are there any numbers behind that curve? Its interesting, but has anyone tried to measure "expectations"?
fullshark 10y ago
I don't know if it's bias I've seen. A lot of talk about how no one was going to buy them for what they wanted (which turned out to be true) and a sense that the product has peaked which could very well be true if competitors eat into their use case.
firebones 10y ago
That's a very good question. Amazon has gone through similar periods where the thesis to not invest has almost always been "they don't make any money" (something that would have cost you roughly a 25x gain since 2008). The hate seems to happen when a) there's a disjunction between market cap and a traditional reading of the balance sheet, b) that difference is due to some poorly understood measure of value that isn't directly captured in traditional financial metrics, c) people either don't see the strategy or are comparing apples to oranges but thinking they're comparing apples to apples. Mostly it seems to be comparing Twitter's numbers with Facebook's, and assuming there is 100% overlap between the two companies in terms of niche. This could be an error of putting Twitter in the wrong category. Maybe they should be compared to media companies, not social networks? Maybe by those measures they are doing just fine?

NightMKoder 10y ago

Also Vine is getting shut down: https://medium.com/@vine/important-news-about-vine-909c5f4ae7a7 https://medium.com/@vine/important-news-about-vine-909c5f4ae...

GFischer 10y ago
That might warrant it's own submission. They say the mobile app is shutting down, was that the most significant part or was it the web side? I thought it should have been a good service to monetize. Edit: was already submitted - discussion on https://news.ycombinator.com/item?id=12806409 https://news.ycombinator.com/item?id=12806409
- edwinnathaniel 10y ago
  Mobile app probably act as an input. They probably keeping the vine videos for its views.
- NightMKoder 10y ago
  I don't believe it's possible to create new posts from the website so it's essentially being put into read-only mode.

intrasight 10y ago

One of my concerns with Twitter is that I think their usage is going to drop considerably after the election is over. I say this only because half of Twitter mentions in the press related to Trump tweets.

jarsin 10y ago
Unless he wins. He will start twitter wars while in office with heads of other states. It will be the best thing that could happen for twitter. Believe me!
- trhway 10y ago
  > He will start twitter wars while in office with heads of other states. why only wars? How about a bit of bromance with the other "strong leaders" like Putin?
deleted 10y ago
[deleted]

sulam 10y ago

My belief, sadly held, is that this is just the 2nd step of a Yahoo-scale transition. It won't be the user numbers that get them, it will be the ads side. Twitter is going to get a shrinking piece of the ad budget, especially as new entrants arrive. Which new entrants you ask? Snapchat, for one. Pinterest is heating up as well.

fullshark 10y ago
As long as they carve out a niche as the source of live news and comments and other products (FB / Instagram / Snapchat / etc) don't eat that space they can be successful. But they seem destined to be a niche product at best.
- madeofpalk 10y ago
  To be successful "as the source of live news and comments" they need to figure out how to make money from that.