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Why Twitter Turned Down Facebook

29 points by makimaki 18y ago

swilliams 18y ago
To boil it down, a generic answer: "The timing wasn't right." I still think it was a very prudent decision. Gruber said it best: "I’m not sure I’d sell a sandwich in exchange for Facebook stock." (http://daringfireball.net/linked/2008/11/24/twitter-facebook http://daringfireball.net/linked/2008/11/24/twitter-facebook)
- michael_dorfman 18y ago
  Yeah, but with no business model to speak of, Twitter has yet to prove they are worth as much as a sandwich.
  - riklomas 18y ago
    You could say the same thing about Facebook, they're currently losing $50m a year.
    - stillmotion 18y ago
      But it costs a lot more time and money to create Facebook than it does a sandwich. You could roughly build Twitter in the time that it takes to make a good Ruben or grilled cheese.
      - DaniFong 18y ago
        You can't build a user base.
        patio11 18y ago
        Yes, but Facebook could replicate it by putting a link on Facebook to Facetwitter and then hiring both Twitter users who do not have Facebook accounts.
  - swilliams 18y ago
    True, but Twitter isn't even trying yet. I think it would be easier to generate revenue with it than Facebook. I'd rather be in Twitter's position than Facebook's.
    - mattmaroon 18y ago
      I don't know, at least as far as profits go. They've got significant SMS expenses to overcome. Facebook's per user cost of delivering service has to be much cheaper. I think Facebook has a pretty solid path to revenue (re-legitimize apps and they provide a dead simple payments platform) though they don't seem like they're going to take it.
    - hiffy 18y ago
      It's weird, they're both now credible mainstream sources with huge brands. I was a bit put off on how they spent a whole five minutes on CBC newsworld looking at the buzz in Twitter, and it gets frequent mentions in newspapers.
    - tortilla 18y ago
      Another point in Twitter's column is their relatively small staff. How many employees does Facebook have?
  - oconnor0 18y ago
    It's interesting that neither Facebook nor Twitter, which appear to be integral parts of this developing Web 2.0/social network-y thing, are making money or really have any idea how to do so. I wonder how it'll all play out.
    - ojbyrne 18y ago
      Facebook has a couple of hundred million in revenue, as I recall. They're just using it to finance growth. They could be profitable tomorrow just by laying off half the people there.
mattmaroon 18y ago
For those not in the Valley "it wasn’t the right time" == "they didn't offer enough cash".
- ojbyrne 18y ago
  Which, given the current conditions, means "they didn't offer any cash."
  - mattmaroon 18y ago
    Yeah, I don't think they're in the position to be throwing 9 digits around.
- tlrobinson 18y ago
  $500 million is a hell of a lot for something like Twitter, even if it is stock, not cash.
  - whatusername 18y ago
    But it was $500 mill giving FB a $15B valuation.. If you assume FB is worth $3B - then it was only a $100 mil offer. (Still nothing to be sneezed at)
    - wheels 18y ago
      $3B would be a pretty good value for Facebook given that 2008 revenues were projected at roughly $300m (no idea if they'll hit that). Twitter has raised $20m in funding, so I'd guess, this early on, that their investors wouldn't be super excited about cashing out at $100m in hand-wavey stock values.
    - tlrobinson 18y ago
      $100 million seems like a more fair valuation of Twitter to me. I feel like people around here ("here" meaning Silicon Valley, etc) overvalue Twitter.
flashgordon 18y ago
I think in this case twitter has a lot more leverage here. THey have a lot of traction, great reputation (especially after "fixing" their scalability issues) and no competitors (not talking about friendfeed yet). So they can afford to hold out to sweeten the deal a bit more.
- evgen 18y ago
  I would probably read this in the opposite direction. All of the points you mark in favor of twitter are similarly true for facebook (they have more competition, but are pulling away in most important demographics.) The difference is that facebook can create a twitter competitor themselves and with their chat system have already shown that they know how to handle messaging, while twitter is nowhere close to getting into facebook's turf. The dangerous point about waiting for someone to sweeten an offer is that they probably have some internal "how much would it cost us to do this ourselves and just crush them" numbers to look at as well.
- whatusername 18y ago
  Twitter has a great reputation in small tech circles. My mum is on facebook. There is still a significant difference in user bases.. On the flipside - our lovely PM has a twitter account: http://twitter.com/KevinRuddPM http://twitter.com/KevinRuddPM So perhaps this is changing..
- tlrobinson 18y ago
  Not so sure about that. Twitter has about a million users (most of whom seem to be part of the tech crowd). Facebook has 100+ million users. Facebook's features includes basically all of Twitter's features, and a whole lot more. And Facebook doesn't experience nearly as much downtime, despite having 100x as many users and way more functionality.
- trezor 18y ago
  I'll just refer to my previous comment about twitter. http://news.ycombinator.com/item?id=378541 http://news.ycombinator.com/item?id=378541 Outside hacker news and "Valley-oriented" news-sites I've hardly heard it mentioned. Twitter may have potential, but it still has massive usability problems, and at large is one of the few services I've signed up for which has offered me absolutely nothing of value and no way to improve on that. Saying twitter, a bandwidth hole with no actual plan to monetize on its service, is worth millions is clearly overstating its value, even with its current user-base.

29 points by makimaki 18y ago

To boil it down, a generic answer: "The timing wasn't right." I still think it was a very prudent decision. Gruber said it best: "I’m not sure I’d sell a sandwich in exchange for Facebook stock." (http://daringfireball.net/linked/2008/11/24/twitter-facebook http://daringfireball.net/linked/2008/11/24/twitter-facebook)

michael_dorfman 18y ago
Yeah, but with no business model to speak of, Twitter has yet to prove they are worth as much as a sandwich.
- riklomas 18y ago
  You could say the same thing about Facebook, they're currently losing $50m a year.
  - stillmotion 18y ago
    But it costs a lot more time and money to create Facebook than it does a sandwich. You could roughly build Twitter in the time that it takes to make a good Ruben or grilled cheese.
    - DaniFong 18y ago
      You can't build a user base.
      - patio11 18y ago
        Yes, but Facebook could replicate it by putting a link on Facebook to Facetwitter and then hiring both Twitter users who do not have Facebook accounts.
- swilliams 18y ago
  True, but Twitter isn't even trying yet. I think it would be easier to generate revenue with it than Facebook. I'd rather be in Twitter's position than Facebook's.
  - mattmaroon 18y ago
    I don't know, at least as far as profits go. They've got significant SMS expenses to overcome. Facebook's per user cost of delivering service has to be much cheaper. I think Facebook has a pretty solid path to revenue (re-legitimize apps and they provide a dead simple payments platform) though they don't seem like they're going to take it.
  - hiffy 18y ago
    It's weird, they're both now credible mainstream sources with huge brands. I was a bit put off on how they spent a whole five minutes on CBC newsworld looking at the buzz in Twitter, and it gets frequent mentions in newspapers.
  - tortilla 18y ago
    Another point in Twitter's column is their relatively small staff. How many employees does Facebook have?
- oconnor0 18y ago
  It's interesting that neither Facebook nor Twitter, which appear to be integral parts of this developing Web 2.0/social network-y thing, are making money or really have any idea how to do so. I wonder how it'll all play out.
  - ojbyrne 18y ago
    Facebook has a couple of hundred million in revenue, as I recall. They're just using it to finance growth. They could be profitable tomorrow just by laying off half the people there.

mattmaroon 18y ago

For those not in the Valley "it wasn’t the right time" == "they didn't offer enough cash".

ojbyrne 18y ago
Which, given the current conditions, means "they didn't offer any cash."
- mattmaroon 18y ago
  Yeah, I don't think they're in the position to be throwing 9 digits around.
tlrobinson 18y ago
$500 million is a hell of a lot for something like Twitter, even if it is stock, not cash.
- whatusername 18y ago
  But it was $500 mill giving FB a $15B valuation.. If you assume FB is worth $3B - then it was only a $100 mil offer. (Still nothing to be sneezed at)
  - wheels 18y ago
    $3B would be a pretty good value for Facebook given that 2008 revenues were projected at roughly $300m (no idea if they'll hit that). Twitter has raised $20m in funding, so I'd guess, this early on, that their investors wouldn't be super excited about cashing out at $100m in hand-wavey stock values.
  - tlrobinson 18y ago
    $100 million seems like a more fair valuation of Twitter to me. I feel like people around here ("here" meaning Silicon Valley, etc) overvalue Twitter.

flashgordon 18y ago

I think in this case twitter has a lot more leverage here. THey have a lot of traction, great reputation (especially after "fixing" their scalability issues) and no competitors (not talking about friendfeed yet). So they can afford to hold out to sweeten the deal a bit more.

evgen 18y ago
I would probably read this in the opposite direction. All of the points you mark in favor of twitter are similarly true for facebook (they have more competition, but are pulling away in most important demographics.) The difference is that facebook can create a twitter competitor themselves and with their chat system have already shown that they know how to handle messaging, while twitter is nowhere close to getting into facebook's turf. The dangerous point about waiting for someone to sweeten an offer is that they probably have some internal "how much would it cost us to do this ourselves and just crush them" numbers to look at as well.
whatusername 18y ago
Twitter has a great reputation in small tech circles. My mum is on facebook. There is still a significant difference in user bases.. On the flipside - our lovely PM has a twitter account: http://twitter.com/KevinRuddPM http://twitter.com/KevinRuddPM So perhaps this is changing..
tlrobinson 18y ago
Not so sure about that. Twitter has about a million users (most of whom seem to be part of the tech crowd). Facebook has 100+ million users. Facebook's features includes basically all of Twitter's features, and a whole lot more. And Facebook doesn't experience nearly as much downtime, despite having 100x as many users and way more functionality.
trezor 18y ago
I'll just refer to my previous comment about twitter. http://news.ycombinator.com/item?id=378541 http://news.ycombinator.com/item?id=378541 Outside hacker news and "Valley-oriented" news-sites I've hardly heard it mentioned. Twitter may have potential, but it still has massive usability problems, and at large is one of the few services I've signed up for which has offered me absolutely nothing of value and no way to improve on that. Saying twitter, a bandwidth hole with no actual plan to monetize on its service, is worth millions is clearly overstating its value, even with its current user-base.