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Twitter finances (TTM): revenue: $2.52B gross profit: $1.49B It's only losing money because of stock grants.

by fraserharris 10y ago

nickbauman 10y ago
Which is a lesson in how VC can easily destroy a viable, profitable business with a "money-chasing-money" strategy.
- nl 10y ago
  How do you figure that? 1) VCs own hardly any shared of Twitter[1] 2) Stock grants are used as compensation for people working at Twitter, NOT something that benefits investors (except in the sense people are working at the company the investors invested in I guess). It's easy to blame VCs for everything, but I don't see how this makes any sense at all in this case. [1] http://www.recode.net/2016/8/11/12417064/twitter-stock-ownership-takeover-acquisition-challenges http://www.recode.net/2016/8/11/12417064/twitter-stock-owner...
  - nickbauman 10y ago
    Who is in line for a buyout before other investors and at what multiplier? That information is usually not public and can be more important than what percentage of ownership a particular investor has.
    - nl 10y ago
      They are a public company, with a single class of shareholder. They can all choose to buy or sell via the public market. Your comments would make some sense if they were pre-IPO.
      - nickbauman 10y ago
        Derp, you're right. I'm an idiot.
  - EGreg 10y ago
    Didn't USV invest in Twitter? Did they cash out after IPO?
    - vram22 10y ago
      >Didn't USV invest in Twitter? They sure did. Fred Wilson (USV partner) has talked about it (Twitter as a portfolio company of USV) many times on his blog avc.com . >Did they cash out after IPO? Not sure.
      - EGreg 10y ago
        Well otherwise what does it mean if they have a tiny part of an $18B company?
        vram22 10y ago
        Ok got you. I had not read the OP. Interesting.
- fraserharris 10y ago
  Twitter IPO'd over 3 years ago.
JoachimSchipper 10y ago
Okay, but don't these stock grants substitute for salary? It's not like Twitter could just stop granting stock with no ill effects.
- rco8786 10y ago
  They pay pretty competitive salaries as well. The stock grants will eventually roll off as people's plans vest and are replaced with smaller ones(new employees have been getting smaller ones for a while already)
jessedhillon 10y ago
NYT story on the matter: https://www.nytimes.com/2016/09/27/business/dealbook/twitters-steep-premium-the-cost-of-employee-stock-grants.html?_r=0 https://www.nytimes.com/2016/09/27/business/dealbook/twitter... TL;DR -- Twitter paid out about $680M in grants
maccard 10y ago
> It's only losing money because of stock grants. That's like saying "We're only losing money because we have to pay our staff"
- acdha 10y ago
  They do pay their staff. Unfortunately the stock compensation was based on the … highly optimistic … story they told around the IPO about growing to be as large as Google or Facebook. Why spend prudently when you're about to be stupid-rich?
  - danudey 10y ago
    I can't count the number of companies I've seen die or collapse because of this mentality.

Twitter finances (TTM): revenue: $2.52B gross profit: $1.49B It's only losing money because of stock grants.

nickbauman 10y ago

Which is a lesson in how VC can easily destroy a viable, profitable business with a "money-chasing-money" strategy.

nl 10y ago
How do you figure that? 1) VCs own hardly any shared of Twitter[1] 2) Stock grants are used as compensation for people working at Twitter, NOT something that benefits investors (except in the sense people are working at the company the investors invested in I guess). It's easy to blame VCs for everything, but I don't see how this makes any sense at all in this case. [1] http://www.recode.net/2016/8/11/12417064/twitter-stock-ownership-takeover-acquisition-challenges http://www.recode.net/2016/8/11/12417064/twitter-stock-owner...
- nickbauman 10y ago
  Who is in line for a buyout before other investors and at what multiplier? That information is usually not public and can be more important than what percentage of ownership a particular investor has.
  - nl 10y ago
    They are a public company, with a single class of shareholder. They can all choose to buy or sell via the public market. Your comments would make some sense if they were pre-IPO.
    - nickbauman 10y ago
      Derp, you're right. I'm an idiot.
- EGreg 10y ago
  Didn't USV invest in Twitter? Did they cash out after IPO?
  - vram22 10y ago
    >Didn't USV invest in Twitter? They sure did. Fred Wilson (USV partner) has talked about it (Twitter as a portfolio company of USV) many times on his blog avc.com . >Did they cash out after IPO? Not sure.
    - EGreg 10y ago
      Well otherwise what does it mean if they have a tiny part of an $18B company?
      - vram22 10y ago
        Ok got you. I had not read the OP. Interesting.
fraserharris 10y ago
Twitter IPO'd over 3 years ago.

JoachimSchipper 10y ago

Okay, but don't these stock grants substitute for salary? It's not like Twitter could just stop granting stock with no ill effects.

rco8786 10y ago
They pay pretty competitive salaries as well. The stock grants will eventually roll off as people's plans vest and are replaced with smaller ones(new employees have been getting smaller ones for a while already)

jessedhillon 10y ago

NYT story on the matter: https://www.nytimes.com/2016/09/27/business/dealbook/twitters-steep-premium-the-cost-of-employee-stock-grants.html?_r=0 https://www.nytimes.com/2016/09/27/business/dealbook/twitter... TL;DR -- Twitter paid out about $680M in grants

maccard 10y ago

> It's only losing money because of stock grants. That's like saying "We're only losing money because we have to pay our staff"

acdha 10y ago
They do pay their staff. Unfortunately the stock compensation was based on the … highly optimistic … story they told around the IPO about growing to be as large as Google or Facebook. Why spend prudently when you're about to be stupid-rich?
- danudey 10y ago
  I can't count the number of companies I've seen die or collapse because of this mentality.