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Twitter was losing millions of dollars each day. It wasn’t profitable or even break even. An engineering culture that’s awesome at a company like that will onl

by mfer 4y ago

Twitter was losing millions of dollars each day. It wasn’t profitable or even break even. An engineering culture that’s awesome at a company like that will only last until the money runs out. I’m not supporting what Elon is doing. I’m just saying that what Twitter was doing before wasn’t sustainable or on a path to being sustainable. The culture was part of that

ketzo 4y ago
I don’t understand why people keep saying this. Twitter was a public company. You can see from their financial statements that they recorded positive operating income for all of 2021. Not very positive! They weren’t a great business! Then they had to pay a huge fine, and lost a bunch of money because of it. But they weren’t operating at a loss. Certainly not “millions a day.” Where do people get that figure? 2020, they had a $1B net loss for the year. 2019, they had a $1B net gain. I dunno, it’s clear they were a weird and not great business. But like, they weren’t JUST lighting cash on fire.
- foundajob 4y ago
- d23 4y ago
  I think they got it from Elon shortly after he took over, turned everything into chaos, and advertisers started bailing. That being said, he also appears to be a pathological liar, so he could just be making it up on top of that. But yes, this notion that Twitter was just hemorrhaging money seems flatly false and easily disprovable. I haven't read the financial statements in a while, but when I last did I indeed saw one of the few tech companies that was actually profitable.
  - midoridensha 4y ago
    >That being said, he also appears to be a pathological liar Is there a such thing as a person who reaches that level of wealth who isn't? Perhaps people who were born with it might not be, but it seems to be a prerequisite for people who achieve that level of wealth themselves.
    - d23 4y ago
      Buffett and Munger seem like genuinely good guys from the various talks and writings I’ve seen of theirs.
      - midoridensha 4y ago
        I guess there's always an exception.
- unsui 4y ago
  It's frustrating to regularly hear people (particularly on HN, but not exclusively) justifying, or even just giving a light nod of approval, to Musk's horrendous "leadership" via firings, simply because twitter isn't profitable in their eyes. It seems like cherry-picking excuses to support Musk's leadership style rather than any justified basis. If the parent comment is correct, they just aren't as profitable as Wall Street would like (therefore they are not "profitable"). Saying that the firings are justified is then just moving the goalposts to support an a-priori conviction. Additionally, it seems ironic that this is coming from proponents of the Silicon-Valley ethos of "screw profitability, we'll figure it out later"... an ethos that created Amazon and so many other tech titans. Yes, profitability matters, but only when your other forms of capital (e.g., social, political) have been depleted. It's tragic that Musk is depleting whatever capital twitter had remaining on its current death march. Financially "profitable" or not, twitter did undeniably have social and political capital. Soon, it will have neither.
  - ethanbond 4y ago
    It’s because people are looking at him and saying, “whoa, I can behave like that and not only get away with it, but win by it?!” There’s room for sincere curiosity about what’s going on and what’ll happen, but a lot of what I see online is people just relishing in the sadism of the whole ordeal.
    - abathur 4y ago
      The cruelty does seem to be the point. Not sure how we escape the gravity of it.
      - andirk 4y ago
        Part of the mostly made up version of the American Dream is like "pull yourself up by your bootstraps" which oddly also implies "and then once you have, close the door behind you. Don't want this party getting too crowded". My point is that fetishizing capitalism requires a taste for squeezing others for all their worth. If others aren't, then that means you endured that bootstrap pain for no reason!
- deleted 4y ago
  [deleted]
- metamet 4y ago
  > Certainly not “millions a day.” Where do people get that figure? I suspect that $4m a day number Musk has been tossing around is rooted in his terrible financial investment. He purchased the company for $44b, which has something like $1.4b in interest every year? Which would be $3.8m a day. So Twitter wasn't losing $4m a day--Musk was.
  - HWR_14 4y ago
    No, Musk signed for the loan, but as Twitters CEO. Twitter is on the hook, not him personally.
- lijogdfljk 4y ago
  Elon said it, and it was what they wanted to hear. Like most information on the internet.
- trap_goes_hot 4y ago
  I'm curious to know if anyone has accounted for losses from all the prior years? Those still need to be paid back/accounted for. Did they break-even?
- ilyt 4y ago
  I'd imagine by googling it and getting this: https://www.statista.com/statistics/274563/annual-net-income-of-twitter/ https://www.statista.com/statistics/274563/annual-net-income... https://www.businessofapps.com/data/twitter-statistics/ https://www.businessofapps.com/data/twitter-statistics/ and see that revenue is growing but it's still in the red, and obvious conclusion to that being "they hired a lot of people that don't bring that much profit"
slongfield 4y ago
I've seen this sentiment elsewhere, but it doesn't match my reading of Twitter's financial statements: https://investor.twitterinc.com/financial-information/quarterly-results/default.aspx https://investor.twitterinc.com/financial-information/quarte... In 2021, Twitter would have been profitable were it not for a ~$800 million legal settlement payout. They posted a net profit in Q4 2021 and Q1 2022.
xbar 4y ago
I think your argument reduces to "culture is better the more you spend on people" and "Twitter overspent on engineering people in order to create culture." This is false. Twitter was profitable in 2017, 2018, 2019 and 2020 and its R&D budget was half that of 2022, or less, for those years and by all accounts it had a fantastic culture. In 2021, the last year available and its very worst year since 2015, Twitter made $5 billion in revenue and lost $492 million. So your "millions of dollars a day" is not wrong-- $1.4 million per day. Twitter spend $1.2 billion on R&D-- less than 25% of its revenue. In 2020, it spend $873 million on R&D and made a profit. In 2019, it spent a mere $682 million on R&D and made a $366 million dollar profit. Similarly in 2018.
- KptMarchewa 4y ago
  The loss in 2021 was due to 765 million dollar lawsuit settlement. Also, after that loss was 221 million not 492. It would be 0.5B profitable if not that.
mapme 4y ago
Excluding a settlement from 2014 that was paid this year, Twitter would have made 500mil on 5B revenue in 2021. They were also GAAP profitable in 2019. Additionally, the incentive from wall street is to spend all your money to grow users. Whether that is right or wrong it’s the path they chose which led to users and revenue roughly doubling over 5 years. https://s22.q4cdn.com/826641620/files/doc_financials/2021/ar/FiscalYR2021_Twitter_Annual_-Report.pdf https://s22.q4cdn.com/826641620/files/doc_financials/2021/ar... https://s22.q4cdn.com/826641620/files/doc_financials/2019/FiscalYR2019_Twitter_Annual_-Report-(3).pdf https://s22.q4cdn.com/826641620/files/doc_financials/2019/Fi...
throoo0ooowaway 4y ago
Twitter pre-Elon wasn't losing millions of dollars a day. Twitter post-Elon is losing millions of dollars a day because of the extra $1B/year in interest payments he took on because he wildly overpaid for the company right before everyone figured out just how badly Apple's new privacy practices affected the revenue of social media companies.
- nailer 4y ago
  Elon losing money buying Twitter does not mean Twitter itself is losing more money.
  - KptMarchewa 4y ago
    It literally is. That's how every debt-financed corporate acquisition works. Twitter is paying this debt, not Elon from his pocket. https://www.wsj.com/articles/elon-musks-buyout-will-load-twitter-with-debt-high-leverage-ratio-11651007981?mod=article_inline https://www.wsj.com/articles/elon-musks-buyout-will-load-twi...
    - ilyt 4y ago
      So if it goes bankrupt what happens ? None of his assets aside Twitter gets seized ?
      - plorkyeran 4y ago
        If Twitter fails to make payments on its debt then Morgan Stanley will become the proud new owner of Twitter. It is similar in structure to a mortgage on a house.
        midoridensha 4y ago
        That seems like a really stupid loan to make then. If Twitter fails, it becomes mostly worthless, much like MySpace today. Why would a bank make such a loan? (It does seem like bankers are pretty stupid these days though, or just don't care because it's not their money.)
trap_goes_hot 4y ago
People on HN used to poke fun at unprofitable social media companies, and about how they're all declining. Its interesting to see from outside the political bubble how the conversations have now shifted to defending Twitters' income statement.
roland35 4y ago
Sounds like it was a business problem, not an engineering or culture problem.

by mfer 4y ago

ketzo 4y ago

I don’t understand why people keep saying this. Twitter was a public company. You can see from their financial statements that they recorded positive operating income for all of 2021. Not very positive! They weren’t a great business! Then they had to pay a huge fine, and lost a bunch of money because of it. But they weren’t operating at a loss. Certainly not “millions a day.” Where do people get that figure? 2020, they had a $1B net loss for the year. 2019, they had a $1B net gain. I dunno, it’s clear they were a weird and not great business. But like, they weren’t JUST lighting cash on fire.

foundajob 4y ago
d23 4y ago
I think they got it from Elon shortly after he took over, turned everything into chaos, and advertisers started bailing. That being said, he also appears to be a pathological liar, so he could just be making it up on top of that. But yes, this notion that Twitter was just hemorrhaging money seems flatly false and easily disprovable. I haven't read the financial statements in a while, but when I last did I indeed saw one of the few tech companies that was actually profitable.
- midoridensha 4y ago
  >That being said, he also appears to be a pathological liar Is there a such thing as a person who reaches that level of wealth who isn't? Perhaps people who were born with it might not be, but it seems to be a prerequisite for people who achieve that level of wealth themselves.
  - d23 4y ago
    Buffett and Munger seem like genuinely good guys from the various talks and writings I’ve seen of theirs.
    - midoridensha 4y ago
      I guess there's always an exception.
unsui 4y ago
It's frustrating to regularly hear people (particularly on HN, but not exclusively) justifying, or even just giving a light nod of approval, to Musk's horrendous "leadership" via firings, simply because twitter isn't profitable in their eyes. It seems like cherry-picking excuses to support Musk's leadership style rather than any justified basis. If the parent comment is correct, they just aren't as profitable as Wall Street would like (therefore they are not "profitable"). Saying that the firings are justified is then just moving the goalposts to support an a-priori conviction. Additionally, it seems ironic that this is coming from proponents of the Silicon-Valley ethos of "screw profitability, we'll figure it out later"... an ethos that created Amazon and so many other tech titans. Yes, profitability matters, but only when your other forms of capital (e.g., social, political) have been depleted. It's tragic that Musk is depleting whatever capital twitter had remaining on its current death march. Financially "profitable" or not, twitter did undeniably have social and political capital. Soon, it will have neither.
- ethanbond 4y ago
  It’s because people are looking at him and saying, “whoa, I can behave like that and not only get away with it, but win by it?!” There’s room for sincere curiosity about what’s going on and what’ll happen, but a lot of what I see online is people just relishing in the sadism of the whole ordeal.
  - abathur 4y ago
    The cruelty does seem to be the point. Not sure how we escape the gravity of it.
    - andirk 4y ago
      Part of the mostly made up version of the American Dream is like "pull yourself up by your bootstraps" which oddly also implies "and then once you have, close the door behind you. Don't want this party getting too crowded". My point is that fetishizing capitalism requires a taste for squeezing others for all their worth. If others aren't, then that means you endured that bootstrap pain for no reason!
deleted 4y ago
[deleted]
metamet 4y ago
> Certainly not “millions a day.” Where do people get that figure? I suspect that $4m a day number Musk has been tossing around is rooted in his terrible financial investment. He purchased the company for $44b, which has something like $1.4b in interest every year? Which would be $3.8m a day. So Twitter wasn't losing $4m a day--Musk was.
- HWR_14 4y ago
  No, Musk signed for the loan, but as Twitters CEO. Twitter is on the hook, not him personally.
lijogdfljk 4y ago
Elon said it, and it was what they wanted to hear. Like most information on the internet.
trap_goes_hot 4y ago
I'm curious to know if anyone has accounted for losses from all the prior years? Those still need to be paid back/accounted for. Did they break-even?
ilyt 4y ago
I'd imagine by googling it and getting this: https://www.statista.com/statistics/274563/annual-net-income-of-twitter/ https://www.statista.com/statistics/274563/annual-net-income... https://www.businessofapps.com/data/twitter-statistics/ https://www.businessofapps.com/data/twitter-statistics/ and see that revenue is growing but it's still in the red, and obvious conclusion to that being "they hired a lot of people that don't bring that much profit"

slongfield 4y ago

I've seen this sentiment elsewhere, but it doesn't match my reading of Twitter's financial statements: https://investor.twitterinc.com/financial-information/quarterly-results/default.aspx https://investor.twitterinc.com/financial-information/quarte... In 2021, Twitter would have been profitable were it not for a ~$800 million legal settlement payout. They posted a net profit in Q4 2021 and Q1 2022.

xbar 4y ago

I think your argument reduces to "culture is better the more you spend on people" and "Twitter overspent on engineering people in order to create culture." This is false. Twitter was profitable in 2017, 2018, 2019 and 2020 and its R&D budget was half that of 2022, or less, for those years and by all accounts it had a fantastic culture. In 2021, the last year available and its very worst year since 2015, Twitter made $5 billion in revenue and lost $492 million. So your "millions of dollars a day" is not wrong-- $1.4 million per day. Twitter spend $1.2 billion on R&D-- less than 25% of its revenue. In 2020, it spend $873 million on R&D and made a profit. In 2019, it spent a mere $682 million on R&D and made a $366 million dollar profit. Similarly in 2018.

KptMarchewa 4y ago
The loss in 2021 was due to 765 million dollar lawsuit settlement. Also, after that loss was 221 million not 492. It would be 0.5B profitable if not that.

mapme 4y ago

Excluding a settlement from 2014 that was paid this year, Twitter would have made 500mil on 5B revenue in 2021. They were also GAAP profitable in 2019. Additionally, the incentive from wall street is to spend all your money to grow users. Whether that is right or wrong it’s the path they chose which led to users and revenue roughly doubling over 5 years. https://s22.q4cdn.com/826641620/files/doc_financials/2021/ar/FiscalYR2021_Twitter_Annual_-Report.pdf https://s22.q4cdn.com/826641620/files/doc_financials/2021/ar... https://s22.q4cdn.com/826641620/files/doc_financials/2019/FiscalYR2019_Twitter_Annual_-Report-(3).pdf https://s22.q4cdn.com/826641620/files/doc_financials/2019/Fi...

throoo0ooowaway 4y ago

Twitter pre-Elon wasn't losing millions of dollars a day. Twitter post-Elon is losing millions of dollars a day because of the extra $1B/year in interest payments he took on because he wildly overpaid for the company right before everyone figured out just how badly Apple's new privacy practices affected the revenue of social media companies.

nailer 4y ago
Elon losing money buying Twitter does not mean Twitter itself is losing more money.
- KptMarchewa 4y ago
  It literally is. That's how every debt-financed corporate acquisition works. Twitter is paying this debt, not Elon from his pocket. https://www.wsj.com/articles/elon-musks-buyout-will-load-twitter-with-debt-high-leverage-ratio-11651007981?mod=article_inline https://www.wsj.com/articles/elon-musks-buyout-will-load-twi...
  - ilyt 4y ago
    So if it goes bankrupt what happens ? None of his assets aside Twitter gets seized ?
    - plorkyeran 4y ago
      If Twitter fails to make payments on its debt then Morgan Stanley will become the proud new owner of Twitter. It is similar in structure to a mortgage on a house.
      - midoridensha 4y ago
        That seems like a really stupid loan to make then. If Twitter fails, it becomes mostly worthless, much like MySpace today. Why would a bank make such a loan? (It does seem like bankers are pretty stupid these days though, or just don't care because it's not their money.)

trap_goes_hot 4y ago

People on HN used to poke fun at unprofitable social media companies, and about how they're all declining. Its interesting to see from outside the political bubble how the conversations have now shifted to defending Twitters' income statement.

roland35 4y ago

Sounds like it was a business problem, not an engineering or culture problem.