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As I indicated in my post https://albertcory50.substack.com/p/should-elon-lay-off-all-those-developers https://albertcory50.substack.com/p/should-elon-lay-off-a

As I indicated in my post https://albertcory50.substack.com/p/should-elon-lay-off-all-those-developers https://albertcory50.substack.com/p/should-elon-lay-off-all-...: Twitter spends more on R&D as a percentage of sales than 5 other large tech companies, even Facebook, and moreover, the percentage is increasing. Where is this "innovation"? It's not a new platform. Its market is, arguably, saturated; I don't see a "next billion users" (as they say at Google) coming from anywhere. So the answer to "If there is a major exodus, will it even matter?" is pretty clear: No, as long as it's not the operations people.

avrionov 4y ago
Thank you for the post. Twitter is also the youngest company on your list. The percent spent on R&D goes done when the company get older.
- AlbertCory 4y ago
  .. and yet, the percent is going up, not down. secondly, you are incorrect about it being "young." It was founded March 21, 2006, making it 16 years old. For a web company, that's an eternity.
  - avrionov 4y ago
    Younger than the other companies on your list. Microsoft is 47 years old.
    - AlbertCory 4y ago
      .. and Facebook is only a couple years older. And their numbers are not monotonically increasing. Can you find some companies you think are comparable?
      - avrionov 4y ago
        Palantir 19 years old - 2021 R&D expenses were 25%, 2020 - 50% https://seekingalpha.com/symbol/PLTR/income-statement https://seekingalpha.com/symbol/PLTR/income-statement RingCentral - 23 years old - R&D Expenses increasing for the last 3 or 4 years https://seekingalpha.com/symbol/RNG/income-statement https://seekingalpha.com/symbol/RNG/income-statement
        AlbertCory 4y ago
        I can't look at seekingalpha without being logged in, which I refuse to do for publicly available information. Anyway: Palantir is developing lots of new products, being in the security area, I imagine, while I don't know what RingCentral is doing. In any case, getting aggregate info or industry info, seems inordinately difficult without having a paywall in the way. That's why I went straight to SEC filings, which are public. And that brings me to: * So you found a couple other big spenders and you want to single out those as your comparables. I'll be more impressed when you define a class of tech companies that you think are comparable. We can argue about whether they are, but in any case: where does TWTR rank in that class? And then the subjective question: what have they delivered to shareholders for all that spending?
adrr 4y ago
Most software development is in that r&d figure.
therealdrag0 4y ago
Some of that might be differences in business areas. Have you had to do paperwork for R&D tax deductions? It’s pretty flexible. Like “did you do a design doc for a new thing?” “Did you have to solve a problem for which the answer wasn’t obvious ahead of time?” So a lot of “normal engineer” activities are R&D. So maybe they have too many engineers, or maybe they have less non-engineers and just not a lot of revenue due to their niche market coverage. Aka I’m not sure R&D equals innovation equals revenue.
- AlbertCory 4y ago
  That's true. I could make the argument that, on the macro scale, it all evens out. So maybe some activities are counted that shouldn't be, and some aren't counted that should be. On the scale of billions of dollars, it probably doesn't matter. You can buy that, or reject it. I won't try too hard to persuade. Our whole system of financial reporting is based on trying to make things comparable, and CFOs are very well versed in the current doctrines and IRS rulings on R&D. But we'd be headed into the weeds if we went any further.
  - therealdrag0 4y ago
    To be clear I’m not saying it’s in accurate I’m just saying it depend on the rest of the domain. Social media is different than cloud providers, and require different investments. Social media doesn’t require a hoard of sales and support and legal for B2B and B2G clouds for example. So we can note that in the list the closest example is Facebook to twitter, which also has the closest business domain. So maybe Facebook is bloated too or maybe both just have more engineers as a percentage of their workforce because of the domain. (Sorry I didn’t read the article if this is addressed their)
    - AlbertCory 4y ago
      All good points. If you look online for industry-wide comparisons, you tend to find them behind paywalls. That's why I used SEC filings, which are public. It's also very tedious. I suppose that's why people think they can charge for having done it. A list of "comparables" for Twitter might be hard to compile. If you take a really new company, of course they have to invest in R&D, a lot. Twitter really isn't coming out with radically new products, AFAICT.

avrionov 4y ago

Thank you for the post. Twitter is also the youngest company on your list. The percent spent on R&D goes done when the company get older.

AlbertCory 4y ago
.. and yet, the percent is going up, not down. secondly, you are incorrect about it being "young." It was founded March 21, 2006, making it 16 years old. For a web company, that's an eternity.
- avrionov 4y ago
  Younger than the other companies on your list. Microsoft is 47 years old.
  - AlbertCory 4y ago
    .. and Facebook is only a couple years older. And their numbers are not monotonically increasing. Can you find some companies you think are comparable?
    - avrionov 4y ago
      Palantir 19 years old - 2021 R&D expenses were 25%, 2020 - 50% https://seekingalpha.com/symbol/PLTR/income-statement https://seekingalpha.com/symbol/PLTR/income-statement RingCentral - 23 years old - R&D Expenses increasing for the last 3 or 4 years https://seekingalpha.com/symbol/RNG/income-statement https://seekingalpha.com/symbol/RNG/income-statement
      - AlbertCory 4y ago
        I can't look at seekingalpha without being logged in, which I refuse to do for publicly available information. Anyway: Palantir is developing lots of new products, being in the security area, I imagine, while I don't know what RingCentral is doing. In any case, getting aggregate info or industry info, seems inordinately difficult without having a paywall in the way. That's why I went straight to SEC filings, which are public. And that brings me to: * So you found a couple other big spenders and you want to single out those as your comparables. I'll be more impressed when you define a class of tech companies that you think are comparable. We can argue about whether they are, but in any case: where does TWTR rank in that class? And then the subjective question: what have they delivered to shareholders for all that spending?

adrr 4y ago

Most software development is in that r&d figure.

therealdrag0 4y ago

Some of that might be differences in business areas. Have you had to do paperwork for R&D tax deductions? It’s pretty flexible. Like “did you do a design doc for a new thing?” “Did you have to solve a problem for which the answer wasn’t obvious ahead of time?” So a lot of “normal engineer” activities are R&D. So maybe they have too many engineers, or maybe they have less non-engineers and just not a lot of revenue due to their niche market coverage. Aka I’m not sure R&D equals innovation equals revenue.

AlbertCory 4y ago
That's true. I could make the argument that, on the macro scale, it all evens out. So maybe some activities are counted that shouldn't be, and some aren't counted that should be. On the scale of billions of dollars, it probably doesn't matter. You can buy that, or reject it. I won't try too hard to persuade. Our whole system of financial reporting is based on trying to make things comparable, and CFOs are very well versed in the current doctrines and IRS rulings on R&D. But we'd be headed into the weeds if we went any further.
- therealdrag0 4y ago
  To be clear I’m not saying it’s in accurate I’m just saying it depend on the rest of the domain. Social media is different than cloud providers, and require different investments. Social media doesn’t require a hoard of sales and support and legal for B2B and B2G clouds for example. So we can note that in the list the closest example is Facebook to twitter, which also has the closest business domain. So maybe Facebook is bloated too or maybe both just have more engineers as a percentage of their workforce because of the domain. (Sorry I didn’t read the article if this is addressed their)
  - AlbertCory 4y ago
    All good points. If you look online for industry-wide comparisons, you tend to find them behind paywalls. That's why I used SEC filings, which are public. It's also very tedious. I suppose that's why people think they can charge for having done it. A list of "comparables" for Twitter might be hard to compile. If you take a really new company, of course they have to invest in R&D, a lot. Twitter really isn't coming out with radically new products, AFAICT.