That said, while that brand recognition and reach is scarce and hard to reproduce, it's not necessarily something anyone would want to pay a lot of money for. How would anyone monetize it? Twitter can't really control how many non-users see a tweet.

Problem #2: It's expensive to support millions of users who post shit

Problem #3: Twitter's revenue base is too small for its cost base

Solution: Eliminate advertising and charge $20 per 1000 tweets. Free to read, costs a tiny bit to tweet.

People who post shit will disappear. People who have an audience and something to say won't bat an eye at this low cost.

If this weeds out 80% of the shit while keeping 80% of the good stuff, Twitter will simultaneously shrink their costs while growing revenues to become a sustainable business.

With this model, Twitter is a $1 billion per year profitable business [2] with a much higher signal-to-noise ratio. [3]

Improve the signal-to-noise ratio and Twitter becomes THE place to be for all kinds of communities. That means a return to growth and higher rates per 1000 tweets.

[1] https://en.wikipedia.org/wiki/Sturgeon%27s_law

[2] Start with 200 billion tweets per year. 90% are shit, and 80% of these go away, leaving 36 billion shitty tweets. 10% are good, and 80% of these stay, leaving 16 billion good tweets. 52 billion tweets in total, monetized at $20 per thousand is a billion bucks a year.

[3] Signal-to-noise ratio before is 1:9, after it's 1:2.

Is it? I always assumed all their money was plowed into moonshot development to try to find something, ANYTHING to make a billion dollar company (stuff they throw away within 12 months, like Twitter #Music)

Just supporting their core functionality could be done with a fraction of the workforce, and could probably be profitable (although it would never satisfy the investor valuation)

You could add a "tip jar" to allow followers to support someone by buying Tweets for them, so that high-signal accounts would seldom have to pay that fee.

If you disagree and feel strong enough about it to do that, post a comment like nowprovision did.

I'm only slightly not serious about this :-)

If you don't even notice it, the algo has got you...

I wonder if they're also messing with the lists... In any case, as far as I can tell, I seem to be getting all the tweets of people in the list in chronological order.

Twitter has been trying to reign that in since (various things their official client can do is not accessible via the public APIs), but they can't just drop their third party support or they would see the usage rates dwindle in no time flat.

Twitter just has a terrible advertising platform. FB is making huge amounts on what should be basically the same product.

Twitter is in between anonymous forums (unfortunately they all died) and FB/LinkedIn in terms of ability of advertisers to target users. They're living off of high impressions, and they've basically already saturated the market. Now they need to somehow raise ad value, which would mean integrating hundreds of free, quality services to gather data like Google or tying Twitter accounts to real identities (like the Google+ attempt)

Yet Twitter has people like Kim Kardashian selling tweets for $200K/tweet[1] (so there's your measurement of ad-value), and yet Twitter can't make money.

Meanwhile, people are moving to Snapchat stories which is exactly the product Twitter should have built. Twitter, on the other-hand make the ground breaking decision to not include URLs in the 140 char tweet count.

Twitter can't ship new product.

[1] http://haveuheard.net/2015/08/kim-kardashian-how-much-money-...

I marked it as offensive ;)

Just because something costs money doesn't mean it's valuable. Being at the center of the zeitgeist definitely seems like it would be profitable, but de facto it hasn't been for 10 years, so it probably just isn't.

Being in the center of the zeitgeist isn't a substitute for making a profit.

Facebook seems to have a reputation of being more ubiquitous, yet creepier than Twitter.

(None of which inherently makes it profitable.)

A $29 valuation per MAU is low if anything. Facebook is almost 10x that (and deserves to be). Early stage startups often get 50x that or higher.

yep. I don't think the difference between WhatsApp and Twitter in features explain such a difference in headcount and expenses.

Rapidly-growing tech behemoths like Google can afford to acquihire hundred of engineers and, eventually, assign them to other work.

And that's in an incognito tab.

Amazon was pouring money into infrastructure while growing a massive retail business.

Worlds different than some company that's trying to figure out how to sell ads better.

At 10 years in, this isn't a conflation--these are just equivalent.

> Early stage startups often get 50x that or higher.

...and this makes sense for some early-stage startups. But Twitter isn't an early-stage startup.

The problem is, it's hard to simultaneously clamp down on costs and push for growth. In SV, anything other than growth is an admission of failure. If you aren't flinging money into R&D, everyone will assume it's the start of a downward spiral.

[That, and you can't buy twitter without outbidding all the True Believers]

[1] http://www.viewproxy.com/twitter/2016/2/annualreport2015.pdf

106.31M

316.93M

664.89M

1.4B

2.22B

That's their revenue over the past 5 years. Their R&D cost last year was over 800M.

I'm not saying they are Google, I'm not saying they are LinkedIn, but there is definitely big money at play here at a scale investors love (hundreds of millions of users, over 300M at last check) so it might be premature to completely dismiss them.

Yes, Twitter has challenges in monetizing, and yes, Twitter is weird, and yes, Twitter hasn't made a profit yet. But fundamentally, Twitter is still the preferred platform for following media, celebrities, politicians, internet-famous-people, and quick ad-hoc public communication with those people. And just like how Facebook's success is that all your friends are there, Twitter's success is that every public figure you're interested in is there, even the geeky small nuts-and-bolts types like writers and programmers and artists.

It has become the public plaza of the Internet.

If I want to post pictures of my kids, I'll do it on Facebook. If I want to pick a fight with my city councillor about a decision he made or get in touch with a script-writer of my favourite movie, I'll do it on Twitter.

But the greater indicator of potential for profit here is that Twitter has existed for 10 years and has never turned a profit.

Given this, I think that revenue, users, scale, investor love, patents, staff, infrastructure, etc. have all become disconnected from Twitter's actual profit potential. They haven't made a profit, they aren't going to make a profit. I think that the only logical choice is to dismiss the idea that Twitter has value.

But, as I noted, perceived value can be as profitable as real value for an investor. Just don't be naive and mistake the perceived value for real value--naivety will lose you money.

What about non-monetary value like playing a key role in 'Arab Spring'[1]

https://en.wikipedia.org/wiki/Social_media_and_the_Arab_Spri...

When I made some napkin calculations some time ago, Arab Spring and its fallout so far killed about 300.000 people and displaced millions. Is the positive non monetary value enough to compensate that much deaths and destruction?

The rise of the group now called the Islamic State as an armed force controlling substantial territory started well before the Arab Spring, and is a pretty direct result of the US invasion and occupation of Iraq, and particular policy choices made during that occupation.

Admittedly, then it was just called the "Islamic State in Iraq". If you want to blame the Arab Spring for contributing the situation in which occasioned its next two name changes and its expansion into Syria, sure, but if it hadn't felt secure enough in Iraq to form separate groups to go fight in Syria rather than worrying about holding on to its (at the time) core territory, it couldn't have exploited that opportunity.

The sectarian corrupt violent syrian state and the U.S. invasion of Irak are much better suspects

No, the Islamic State in Iraq, which arose in Iraq before the Arab Spring, became the Islamic State in Iraq and the Levant (and later simply the Islamic State) after sending offshoots to fight in the Syrian Civil War, and then reintegrating those offshoots. But it is a mistake to say that the Syrian Civil War "became" IS; before the Arab Spring and Syrian Civil War, the Islamic State in Iraq was already a substantial armed force holding territory and heavy weapons, most of which were taken from the Iraqi military, which it became as it grew up fueled largely by resistance to the US occupation (and, for a while, its temporary attachment to the al-Qaeda brand as "al-Qaeda in Iraq", which was useful when al-Qaeda was the most visible brand in Islamist opposition to the U.S., though eventually they outgrew the need to be a franchise of a foreign brand.)

do you see a lot of difference between Iran's revolution and Arab Spring?

>The sectarian corrupt violent syrian state and the U.S. invasion of Irak are much better suspects

Granted similar elements - a major group of population dissatisfied with the governing power as well as US hand cooperating with the side/power opposing to that group - were present in Iran too. One can see how religious extremists hijack that dissatisfaction and use US' involvement to fuel it. So the US' involvement is a catalyst, not the root cause.

If anything, Facebook and Twitter kept a lid on things. Only when the governments cut the national net connections did things really hit the fan.

This likely because now people had to actually go out and talk to their neighbors to figure out what was happening, and thus were more easily pulled along.

I would agree that the democratic organizing power of twitter is impressive.

Personally it was Twitter that educated me about some of the horrendous laws that the Indian government passes/planning to passed.

I don't think that they are that overvalued. To me, better examples are companies that get very high valuations in a short time that aren't justified. Twitter has had significant sustained usage and has monetized somewhat effectively.

Disagree. They got a massive valuation quickly, never made a profit, and have lost much of that value because of it.

"Twitter has lost $2 billion since in 2011." http://money.cnn.com/2016/03/21/technology/twitter-10th-anni...

Name one other platform which has Obama, Trump, Hillary, Beiber, JK Rowling, Pope, United Airlines, Marc Anderseen, Borrat, Bozo the Clown all engaging in two way communication with their fans and haters ?

I think an investor should worry less about $29 per user metric and worry more about the incompetence of the top management which has failed to generate revenue out of this.

With the likely exception of Andreesen, all you're getting are particularly fragmented and discombobulated press releases from 'their people' (in house or consultant PRs).

I could live without them.

a) advertisers reduce their spend on FB because of poor results and the usual problem with saturation of any advertising channel and start looking at other options, or

b) more events play out in the future where Twitter's place as the "other social network that people actually care about" becomes more important/relevant - e.g. one more mass hysteria event surrounding some censorship from FB, or

c) anything happens to block FB from being able to show ads inside WhatsApp?

The problem I see is that FaceBook's news feed is a driver of traffic to other websites, as people click those links, whereas Twitter doesn't seem to drive much traffic. I know sites that get 40% of their traffic from m.facebook, and another 30% from www.facebook.com month in, month out. I don't know many (if any?) sites where Twitter is ONE OF the major source of traffic, let alone THE major source of traffic.

That makes Twitter's product far less advertiser useful than even companies like Outbrain and Taboola.

I just think the way things have panned out, it is a source of interesting comments, but not really a place to find interesting stuff. Both FaceBook and Google are the roads that lead to destinations, whereas Twitter is the destination. Sadly, for an advertising play, being the road is more profitable.

If Twitter is able to time an addition of ads with a major event that damages FB's user base, the influx of users from FB might cancel out the loss of users from the addition of ads, and Twitter might be able to turn a profit. But that effect is a) temporary, and b) fairly unlikely. Even if they managed to eat into their competitors' user bases, they have failed to monetize their existing hundreds of millions of users, so there's no reason to believe they'd be able to monetize future hypothetical users.

But no. It's always "monetize by becoming another goddamn channel to advertise to people through".

Even better, actively mock Facebook/Google's privacy track record (while peddling the paid Twitter accounts) like the way Apple did to Microsoft. If you are going down anyway, why not go out with a resounding bang? :-) But you will burn all your bridges. Very few folks have the kind of chutzpah that Steve Jobs had.

That's an excellent point. I started this discussion wondering "Is the company in such bad shape that it needs to find a buyer?" and I think you might have just convinced me that it needs at least some kind of joint venture , if not be bought outright.

Hope Twitter doesn't go the way of MySpace.

In those 10 years Twitter has changed leaderships multiple times. Twitter has never had stable and competent management.

What resulted is that everybody searched on Google to find the thing they were interested in, then searched for that specific item on Bing, collected the cash, and quickly went back to Google. You don't change habits with a dollar or even $29, and consumer habits are immensely valuable.

I am SO glad that someone else realizes this. Many journalists, and lots of regular people subsequently, mistake revenue for profit.

$29 per human is a steal, however if 9/10 accounts are bots, spammers, or dead, that's $290 per human which is a total ripoff.

I'm not sure why you consider $29 per human user a steal. There are two sides to a transaction--what you pay and what you get for it. What exactly do you think investors are getting for their money here?

I don't know if that's true, or how strong the correlation is, but if it's there and you as a founder can detect it before others, that's a good sign you should sell the company rather than stay independent.