3 ms·

Sure. But Musk is betting that Twitter is not profitable because of the people running it. And Twitter was profitable for a while before the marked management

Sure. But Musk is betting that Twitter is not profitable because of the people running it. And Twitter was profitable for a while before the marked management change in late 2018.

deleted 4y ago
[deleted]
phire 4y ago
It's not a result of bad management. Twitter is only non-profitable because they choose to spend all that excess revenue on R&D; Partly because, that's what tax law incentives, partly because that's what investors in tech companies want: Growth If you look at twitter's own financial filings, they could easily be profitable if they just dropped their R&D budget. The filings claims in the 2021 year it only cost about $500 million to "operate" the platform, and the platform bought in over $5 billion in revenue. All Musk is doing is switching the company priorities from growth to profit extraction. In theory, you can drop the R&D spending to zero, and you can sit there claiming a cool 90% profit ratio. However, some of that R&D spending is probably "necessary" to the continued functioning of twitter as a platform, and it's improvement. If you dropped R&D to zero twitter (the platform) would slowly wither and die, but theoretically there is a happy medium where you can maximise for long-term profit and extract the maximum value over time (though, it still might be profitable to run the company into the ground eventually)
- imron 4y ago
  > because they choose to spend all that excess revenue on R&D; And what do they have to show for it?
  - Spivak 4y ago
    R&D covers all development that would qualify as more than “maintenance mode” for Twitter. It’s not necessarily a bunch of skunkworks teams making moonshot bets. It’s a very loosely defined tax category. The dirty not so secret of “we could be profitable if we just dropped our R&D budget” is that maintaining your existing revenue depends on that new development work.

Sure. But Musk is betting that Twitter is not profitable because of the people running it. And Twitter was profitable for a while before the marked management change in late 2018.

deleted 4y ago

[deleted]

phire 4y ago

It's not a result of bad management. Twitter is only non-profitable because they choose to spend all that excess revenue on R&D; Partly because, that's what tax law incentives, partly because that's what investors in tech companies want: Growth If you look at twitter's own financial filings, they could easily be profitable if they just dropped their R&D budget. The filings claims in the 2021 year it only cost about $500 million to "operate" the platform, and the platform bought in over $5 billion in revenue. All Musk is doing is switching the company priorities from growth to profit extraction. In theory, you can drop the R&D spending to zero, and you can sit there claiming a cool 90% profit ratio. However, some of that R&D spending is probably "necessary" to the continued functioning of twitter as a platform, and it's improvement. If you dropped R&D to zero twitter (the platform) would slowly wither and die, but theoretically there is a happy medium where you can maximise for long-term profit and extract the maximum value over time (though, it still might be profitable to run the company into the ground eventually)

imron 4y ago
> because they choose to spend all that excess revenue on R&D; And what do they have to show for it?
- Spivak 4y ago
  R&D covers all development that would qualify as more than “maintenance mode” for Twitter. It’s not necessarily a bunch of skunkworks teams making moonshot bets. It’s a very loosely defined tax category. The dirty not so secret of “we could be profitable if we just dropped our R&D budget” is that maintaining your existing revenue depends on that new development work.