Employee bloat can take down a company of any size. They employ nearly 4,000 people. That's 1/3rd the size of Facebook, yet they have 1/6th the users and the users are of lower value due to shorter engagement times and the smaller amount of data they have to target ads.

Not sure why you're downvoted (you've since added to your sentence; it was just fine alone though). Twitter's has way too many people on payroll. I personally know some buffoons they hired in the past year or so, and I doubt I'm alone.

They always seem to be hiring people for sales and advertising. I've known some people go to them, and from what they've said their ads team is huge.

Hence why they have so much "free" advertising - they likely have a massive department swarming every major media outlet to create and maintain partnerships, i.e. the little Twitter mentions that you see on TV.

I don't know if these kinds of deals cost Twitter money directly (I wouldn't be surprised), but I'm sure their marketing department is the most expensive operation they have.

I personally know a few people on their media team, the ones responsible for these relationships, and it sounds like they have 1-3 people per genre (tv, music, government), at least in the US. The amount of media they get on television alone is likely worth multiples of that if you think how expensive it is to buy tv spots, even if you try to normalize for the "Twitter shout outs." Maybe a lot of resources, but nothing compared to the engineering.

Put enough bright engineers in a room and they'll over-engineer a monstrosity. They probably didn't need as many engineers as they have to scale, but it's entirely possible that they've introduced enough unnecessary complexity into their systems that scaling back down isn't easy or even possible in the short term.

what roles do these "buffoons" work in? tech?

Perhaps they're Court Jesters?

It wouldn't surprise me to hear some tech company has hired comedians to entertain the staff.

Nice, implying that this council of non-profits and academics (who, I'm unsure, but it doesn't seem like they've been "hired" or are necessarily being paid) aiming to reduce abuse are buffoons.

The problem is that they are in a position where they need more moderation in order to enforce their community standards which are not being met.

Just think if they got rid of 2000 of those, probably free up $200,000,000 in operating costs.

So then they would be operating at only a $300,000,000 loss? ;P

Might be worth reading: https://news.ycombinator.com/item?id=12626314

Youtube had massive free promotion too but according to the book 'In the Plex' by Steven Levy, Youtube's founders and VC backers knew the only viable path forward was an acquisition. In that case Youtube's massive fees for sending data and lack of advertising system were going to result in continued massive losses unless someone who had a structural advantage in reducing those costs acquired it. Google did: (at the time of the acquisition the book says Google with its fibre and agreements could ship Youtube's data for $83m a year vs c. half a billion for anyone else). Google could also leverage its advertising infrastructure to increase revenues. Given how other commenters are highlighting the massive employee bloat at Twitter, especially in the advertising department, I can see this being the case here too (and am somewhat surprised at the report based on anonymous sources that Google are out of the bidding).

This isn't an accurate comparison, serving video has much higher hardware costs than 140chr text.

I was illustrating another situation where the only viable path forward was an acquisition in response to the parent comment. I was not suggesting that there would be comparable hardware cost savings at Twitter. The comparison which I did make to Twitter was regarding advertising delivery where I said "Google could also leverage its advertising infrastructure to increase revenues. Given how other commenters are highlighting the massive employee bloat at Twitter, especially in the advertising department, I can see this being the case here too (and am somewhat surprised at the report based on anonymous sources that Google are out of the bidding)."

Two words: revenue stream.

Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.

The reality is, Twitter's DAU growth YoY has flat lined at around 300M while Facebook is nearly four times that and growing steadily.

Meanwhile, Twitter user engagement is somewhere around 3 minutes a day. Facebook? 10 times that.

The result: Twitter's ARPU is around $6. Facebook? Over double that, just north of $13 (both US numbers).

So while the media may love to mention them, my view is this is just a reality for the product. It's niche to begin with, and its focused on very small, bite-sized content that doesn't encourage prolonged engagement.

Wait... Twitter has about 1/10 the engagement of FB but lags in revenue per user by only a factor of 2? I might be going crazy but it sure sounds like you're making an argument for specialness of twitter here.

Maybe.. I'm in a different mindset when using Twitter than FB. I use Twitter somewhat professionally, to discover new tools, learn things, follow people that are relevant to my work. I use FB purely for my private personal life.

When I see Twitter ads for SaaS offerings or software tools, I actually read them. On FB, I'm very good at completely ignoring the ads.

That's precisely my experience. I've actually read Twitter ads because, what do you know, those ads are better targeted.

For all the data that Facebook is said to collect, they actually don't have much on me besides friends I barely know, pictures of my child, some political rants and jokes liked.

Twitter on the other hand has a list of people with which I share interests and they can do targeting based on that list. Which is exactly what they are doing and for me it worked. I'm actually amazed that they aren't doing better on paper.

Depends. If I spend 1 hour on FB - showing me 2 min of ads is easier. If I spend 6 minutes on twitter - with one minute of ads I am not only heavily monetized, but probably you are pushing my ad tolerance limits.

FB could easily double their ad content and still be usable. Is that true for twitter?

Do you actually spend 1 hour per day on FB? And lets not include FB's messenger, since that doesn't count.

Seriously, what do you do for 1 hour per day?

And don't get me wrong, because I've seen some folks spending a lot of time on FB, I've got at least one family relative doing it, but those are the losers that are IMHO only worth targeting by soda and beer companies.

Messenger counts because I prefer to do my chatting on desktop on their website (preference to use keyboard sized for humans not chipmunks). Also you have to somehow fill the time between 9 and 5.

> Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.

Twitter only failed at b); its user base should be enough to generate a nice profit.

So if I pay $13 a year to use Facebook they'll no longer need to collect my data for advertising?

If setting up and maintaining both as supported and fee-based infrastructure had no costs to Facebook and didn't hurt their advertising revenue per ad-supported user, sure, that would be the case.

In the real world, first, setting up and maintaining such a system would have substantial initial and operating costs (and possibly engagement costs, as it would complicate the UX), and, as opt-outs feom advertising would tend to be weighted toward the wealthier, more valuable (to advertisers), users, it would drop per advertising revenue per remaining advertising-supported user. So the buyout cost would have to be substantially more to break even.

I doubt it. You're paying cable television and still see ads. They'll always be companies willing to give Twitter money to be able to advertise to them.

But how much would cable cost if the individual channels didn't rely on advertising for profit?

They'll never do this.. it is way more profitable to keep your value opaque. The average user might be worth $13 but not you!

Promotion and great tech can't make up for leadership running the entire company into the ground.

It's still a really simple product that could be replaced by a new fad at any moment. Who really expects Twitter to be around in ten years?

I don't think that the only path forward is an M&A since they have plenty of cash, good revenue, and a reasonable product strategy. Doesn't mean, like any startup with way less traction, they wouldn't consider one at the right price.

Twitter have $4.4bn of current assets, half a billion of current liabilities and $1.5bn of long-term debt. That leaves $2.4bn unencumbered (of which $900MM are trade receivables and prepaid expenses). Meanwhile, they're losing half a billion a year.

Google is saying no to paying $18bn (just under $15bn in enterprise value) for that. I have a tough time valuing it north of $5 or 6bn EV, and that's assuming $500MM in earnings within 6 years (and break-even in fewer than 3).

And 2B in revenue - it's worth it for some private equity firm to come in, pay more than 10B, fire everyone except an essential staff and milk the revenue stream.

That's how I see it as well. A cash cow, a kind of infrastructure that never really adds anything new. Perfect for PE.

I was in their office last year, talking to people who had nothing at all to do with the core product. There seemed to be all sorts of APIs and whatnot that they are trying to push, all of it marginal in relation to what most people think of Twitter.

What happened between this article, and now?

http://www.usatoday.com/story/money/markets/2016/01/25/twitt...

I wonder how much in costs they can cut if they can quit desperately throwing everything at the wall in order to find more growth (no way are all 4000 developers working on the core product)

Do they have 4k developers or 4k employees?

Based on their balance sheet, it seems they have net assets (~$6.6 billion in assets - $2 billion in liabilities) of $4.556 billion. Am I doing the Math wrong?