[smacktoward]

Dusk approaches when Twitter sheds its desire to leave a mark on humanity

Look, I understand the sentiment, but here's the thing.

Twitter only exists as we know it today because a lot of people have poured a lot of money into it. Without that money, Twitter would be an impossibility. It simply would not exist, at least not at anywhere near the scale it exists at today.

My guess is that, for the people who poured in all that money, "leaving a mark on humanity" was not the primary reason they opened their wallets. They opened their wallets because they expected to make more money by doing so. They were making investments, not charitable contributions. And at some increasingly near point, those people are going to want to see a return on their investments. That means that, barring an acquisition, Twitter needs to find a way to turn a (hopefully large, from the investors' viewpoint) profit -- and sooner rather than later.

Why would you ever have thought things would be otherwise? Twitter is a company. Companies that don't make money usually don't survive. The best case scenario is that they get bought out and operated as a vanity project by a deep-pocketed patron, the way a lot of magazines are. But a magazine is a much smaller and cheaper-to-run enterprise than a centralized, global real-time communications network. Whose pockets are deep enough to run Twitter at a loss indefinitely?

If you organize yourself as a for-profit corporation, and take on investors, at some point you have to bring in more money than you burn. Otherwise you will at some point have to scale back your ambitions, because you simply will not be able to afford them anymore.

Twitter, in other words, is meeting its destiny. Maybe that destiny is not to make as big a "mark on humanity" as people wish. But without all the money they took from those investors who are breathing down their necks now, Twitter would never have been able to scale up to where it is today at all. And that money came with the condition that Twitter would at some point figure out a way to pay it back, with interest.

That point is now.

[OzzyB]

Yes, but the problem with Twitter is they took too much money.

You don't need to have $1Billion dollars in financing to offer a service like this -- this is what the likes of app.net are teaching us.

A $50million Twitter could have "easily" sustained it's vision/objective without having to cannibalise it's entire ecosystem.

However someone promised the moon to a bunch of financiers and now they have to deliver above and beyond of what Twitter could have been, or should have just been.

As far I'm concerned that is the story of Twitter, a company that took the money and ran.

[potatolicious]

> "You don't need to have $1Billion dollars in financing to offer a service like this"

Sometimes you do. We've seen a dramatic amount of "overfunding" of social media startups, and I have a theory why.

When your business model doesn't involve well, actually making money at its core, you end up in a position where you have to staff up massively so you can pursue an enormously vast range of monetization strategies in the hopes of finding something that sticks.

How many people on Facebook do you think are working on the core product - as in the Facebook that end users interact with on a daily basis? How many instead are working on a enormously numerous systems that Facebook hopes would make them monetizable? Ad platforms, billing systems, support systems, analytics systems, etc etc.

So yeah, Twitter as defined as "that thing where you submit strings of 140 chars or less and follow others doing the same" probably didn't need $1bn to get off the ground. Twitter in the "this might actually make money" sense though, probably isn't THAT overfunded.

[pitchups]

So in other words, they needed $1 Billion dollars in order to have enough money to make money from the $1 Billion dollars?

[quanticle]

It's like a rocket. Most of the fuel in a rocket goes towards lifting the rest of the fuel. Likewise, Twitter needs that level of investment to scale to the point where it can make a return on that level of investment.

[001sky]

This is a good analogy. But with 800m raised in 2011, arguably when they were close "escape velocity" already, its also a fair point to wonder if destiny could have been any different with less $$$ weighing them down.

[potatolicious]

Yeah, it's pretty perverse. I sometimes wonder how many AirBnb's and Squares we could've gotten for the price of Twitter.

[fusiongyro]

Sounds to me like the ultimate a posteriori argument.

[photorized]

What I always found curious about Twitter, despite its massive concurrency requirements, is how low quality and short-lived the content is. Outside of charting historical trends, there's very little value in mining historical Twitter data - it's only the real-time part that matters. Theoretically, they coould just delete all content older than x days - and I doubt that many would notice.

1bln is funding is unreasonable, both from a technology standpoint (Twitter does go down, btw) and from a "let's figure out a way to monetize this" standpoint.

[gavinlynch]

1) How do you know how much money it takes or does not take for Twitter to offer it's service?

2) Don't you think it's a little early to compare app.net and twitter? App.net is in it's infancy and is nowhere near the product twitter is

3) What could Twitter have been exactly? How did closing a few API's off prevent it from getting there?

4) Have you ever imagined that perhaps your vision for Twitter and Twitter's vision for Twitter just do not mesh?

[OzzyB]

1) No, but I know that the difference between $50M and $500M+ would change my outlook in terms of who I need to satisfy dramatically.

2) Don't like App.net? Pick Reddit vs Digg, same case. One managed to "get by" with a core team, the other took a ton of money, hired a bunch of folks, made a bunch of promises, and tried to shoehorn their original vision, the one that got them established in the first place, into something completely different. Reddit, makes money and is sustainable -- it just didn't need to make that much money -- as a user that's fine by me, and the reason why Reddit "won". If only Digg was happy to "just" be a $50mill website...

3) Twitter is what it's users/supporters made it to be. Its service/value was understood from the get-go, and in turn, it's popularity grew for that same reason -- ppl understood it's vision and supported by building upon it -- hence cannibalizing your core base by knee-capping your API, probably isn't the best way to go.

4) My vision of Twitter is fine, like many others, I think it's got something to do with SMS-web-mobile-140-characters-distributed-micro-messaging-or-summin? Does it need to be more than that?

[smacktoward]

The wrinkle in #2 is that once you decide to take conventional venture funding (as opposed to bootstrapping, or fundraising through angels, incubators, etc.), you really don't have the option to just be a small, sustainable business anymore. VCs don't want to invest in small, sustainable businesses, they want to invest in aggressive plays that have the potential to blow up into something huge.

According to TechCrunch the only money Reddit ever raised was $100k of seed funding (http://www.crunchbase.com/company/reddit). That's a very different trajectory than Twitter, who (again according to TC: http://www.crunchbase.com/company/twitter) have raised $1.16 billion (with a B) in funding.

Taking in that sort of money raises the stakes dramatically. Nobody loans you a billion dollars to build a $50 million/year business.

[jdbernard]

> Taking in that sort of money raises the stakes dramatically. Nobody loans you a billion dollars to build a $50 million/year business.

That was OzzyB's original point: Twitter should not have taken big VC money. They took too much money. From his first post:

> someone promised the moon to a bunch of financiers and now they have to deliver above and beyond of what Twitter could have been, or should have just been.

[001sky]

Certainly fair questions. Here are some of the data:

1.16 billion of capital and 140 employees

6.0-7.0 billion valuation, estimated

In terms of profit per employee, you're looking at 50 to 100 million to 'break even' at that vauation

So, part of it is the $$ raised and part is the $$ valuation

Is it possible paint yourself into a box, strategically, if you take money at aggressive valuation?

Source: http://www.crunchbase.com/company/twitter

Edit: Headcount data look out of date at TechCrunch. See comment below, this now ~1,000 not 140.

[stevencorona]

Woa woa, 140 employees? You mean over 1000 now. Source: http://www.mediabistro.com/alltwitter/twitter-1000-employees...

[001sky]

Thanks, this is a good catch. I pulled the data from techcrunch (they were out of date, added reference above).

General direction of the comment is distilled, still as follows:

1) valuation is 7x invested capital

2) The invested capital is large, requires large exit

3) This is going to put pressure on the team ($10-15B exit?)

4) Thats a requires lot of $$/head for the team to bring in

[stevencorona]

Not to mention well over 100mil/yr in salaries alone (prob more like 150-170mil with benefits, taxes, and generally high salaries in SF, glassdoor shows avg salary 120-130k)

[photorized]

Re: "how do you know how much money it takes ..."

I don't know how much it takes Twitter (even though it should be relatively easy to find out), but I do have an idea how much it should take.

Twitter presentations suggest 70 million messages per day. 800 tweets per second:

http://www.slideshare.net/raffikrikorian/twitter-by-the-numb...

It's not that much, actually. Some of us have processed 50-70 million transactions per day on a much smaller infrastructure (25..40 AWS boxes) - quite often designed and deployed just days prior to the massive traffic spike, with fancy features like real-time fraud checking etc.

It's not that hard to do what Twitter does. At least, with the amount of financial backing that they have, I don't expect them to be failing in a spactacular fashion periodically.

[ericd]

The reason for the mismatch is that it's not 70 million transactions a day. It's potentially 70 million times the average number of people that access each tweet, which is probably more like 100+, plus all the polling that twitter applications do even when there are no new tweets, as well as all the ancillary stuff that's required to run something like this (spam filtering, API servers, etc).

[adgar]

> the average number of people that access each tweet, which is probably more like 100+

I'm sorry. I really am. I know this isn't Reddit. But...

HAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHHAHAHA

Yes. Yes, on average, a given tweet reaches ONE HUNDRED PEOPLE. Do any of you folks even listen to yourself? Even if you change that to "users" instead of "people," since so many twitter accounts are robots - even then, 100 users on average for every tweet is ABSURD.

> the polling that twitter applications do even when there are no new tweets

Polling with no new tweets is far easier to optimize than polling when there are tweets. So just discount this almost entirely in your roughshod analysis.

> spam filtering

Have you been on twitter? We all get spam and see fake accounts trying to get at us regularly. Try mentioning you're on a diet on twitter and see how many followers you rack up. If they're filtering spam, they're not filtering it well, so I hope they aren't burning too much cash on it.

> API servers

API servers are frontends that use dramatically fewer resources than the work the backends have to do. If Twitter's frontends are costing them much money, again, they're wasting money.

[ericd]

I don't see what's hilariously off about that? If you look at the average number of people that a given real person follows, 100 probably isn't that far off. I'm not saying those are actually read by a human, but associated with that many, sure.

My point was that the grandparent was probably an order of magnitude or more off counting 70 million new messages per day as 70 million transactions per day.

I'm not saying they're doing things well, but it's pretty naive to think that you could build Twitter's infrastructure with <50 AWS instances.

You think the API is a trivial matter of spinning up some front end machines? From that presentation linked to above, they were getting 6 Billion API calls per day, or 70k/sec.

Besides that, all of these numbers are 2 years old, and according to those slides, they were growing at about 10x per year. It has probably slowed, but those numbers may all be much bigger now.

[smacktoward]

I have no idea if Twitter is over-funded or not, but App.net has yet to have to service anywhere near the level of simultaneous traffic that Twitter deals with daily. App.net services 20,000 users (http://thenextweb.com/socialmedia/2012/09/07/off-slow-start-...); Twitter services 140 million (https://business.twitter.com/en/basics/what-is-twitter/). Twitter went through severe growing pains to reach the point where it could handle that much traffic; there's no reason to believe App.net won't have to go through similar issues if/as it grows.

Any centralized system that has to support tens or hundreds of millions of users in real time is going to be seriously expensive to operate. There may well be a point at which it's simply economically infeasible to do it without splitting the expense into tiny slices borne by lots of different parties, the way we do for email.

[beagle3]

> Twitter went through severe growing pains to reach the point where it could handle that much traffic; there's no reason to believe App.net won't have to go through similar issues if/as it grows.

Actually, there is: app.net could just observe what twitter did.

And twitter didn't have to go through it either; There's discussions going on about that since 2008 when their uptime suffered outage after outage; here's something I wrote 2 years ago, for example: http://www.reddit.com/r/programming/comments/b2u6t/twitter_o... and I had given that same answer before several time in other forums.

> Any centralized system that has to support tens or hundreds of millions of users in real time is going to be seriously expensive to operate.

And yet, reddit which is much more complex, and of comparable reach (I don't have time to google the numbers right now, let's say it has 1/10 of the audience), costs much less than 1/10 of twitter's operational costs. And is profitable.

> There may well be a point at which it's simply economically infeasible to do it without splitting the expense into tiny slices borne by lots of different parties, the way we do for email.

Actually ... I suspect gmail can easily handle the entire world email infrastructure, cheaply and reliably. They already handle a two-digit percentage of the world email accounts.

For sure, facebook can do that - they already do it (although it is simplified email).

The reason email is sliced is not a problem of scale - it is a problem of control.

edit: removed half a sentence that was there, and which was written earlier.

[defen]

If you think you could have replicated Twitter with 300K of hardware and software 2 years ago, surely it would be even cheaper now. Why wouldn't you go to Twitter and offer to do it for them? Even if they paid you three million dollars it would give them massive savings in headcount and operational costs.

[beagle3]

I'm sure there's at least one technical person high enough there who is aware of how inefficient their implementation is, and how much better it can be. And I suspect that person is unable to do anything about it, despite being in a way better position than anyone on the outside.

But ... the real question, is even if I brought it in a turn-key and backward compatible setup for them (that is, they pay $3M, I install stuff, we flick a switch, and everything just works) - would it be worth $3M to them?

I suspect the answer is: Not worth any kind of risk or hassle to save $10M/year (or however much it would save them; if it is more than $10M/year, I'd be surprised).

I don't know how they spend their money, but I'm willing to bet that running the service is less than 10% of their expenses. (Of the money spent to get e.g. win95, or a new drug, to market, r&d costs are usually no more than 5-10%)

I think Twitter hasn't been a lean organization in years, and they took too much money to "reboot" themselves as a lean.

I think Twitter is already dead, it just won't acknowledge.

[gavinlynch]

I think this "mark on humanity" talk is rubbish. I mean, what does that even mean? Twitter is just a service that allows people to connect and publicly talk to each other on the Internet. That's it.

There have been previous, less successful iterations of the same common idea. Twitter hit critical mass in terms of it's user base and has created neat and unique nuances that make it's version of human-human communication on the web innovative and fun and successful. Kudos to them. It's the social network du jor for fast communication. But there will eventually be other iterations in the future. Some more successful, some less. Perhaps some new incarnations from Twitter itself as they evolve their product over the next decade.

If Twitter has a "mark", it's that they created a way to "flatten the world of communication" and take discussions to a realm where everything and everyone are drawing on the same board at the same time.

But in the end, these are all services that facilitate human interactions that have existed for thousands of years. We've just taken those interactions and put them all on an even plane at the same time, and exposed them in a way that is amazingly accessible.

So when we talk about "Twitter changing the world", I get confused. It's always humans that change the world, we're just using a different vehicle and techniques to get there. So... Rhetorical flourishes and hyperbole aside... How was Twitter changing the world, and how is it not anymore...?

[MatthewPhillips]

> How was Twitter changing the world, and how is it not anymore...?

Twitter was a utility. Now it's ABC. It could have changed the world in the way that, you know, the web changed the world. But instead it's changing the world in the way that cable news changes the world. That's what's so bizarre about Ev Williams to me. He's so damn talented but he doesn't give a shit about anything but the flip. It's true of so many founders these days; everyone worships Steve Jobs and not enough worship Tim Berners-Lee.

[gavinlynch]

>> "Twitter was a utility. Now it's ABC."

I honestly have no idea what this means. Twitter is still a utility for communication. ABC is a content provider, not a utility.

>> " It could have changed the world in the way that, you know, the web changed the world."

I am also scratching my head at this statement. Perhaps you could elaborate, I have no concept of how Twitter could have changed the world in the way that the World Wide Web did. WWW was an astronomical leap in the way we perceive and use the Internet. Twitter has been a revelation for many average consumers who did not take advantage of the social nature of the web as many people had previously, but to compare it to the creation of the WWW itself is--in my view--a little far-fetched.

>> "But instead it's changing the world in the way that cable news changes the world. "

I again respectfully have no concept of what you are talking about.

And finally, generally: All this hand-wringing about Twitter irrationally eschewing it's mantle as the savior of humanity and as the last true final hope for a social web and social networking services in general (or whatever values you are projecting on this company)....

Wow... I mean seriously guys? We're talking about closing down a few client-side API's among other things.

Don't you think this hyperbole is getting just a tad out of touch with reality?

[001sky]

Just playing devils advocate - but who wants to be a utility?

[fuzzix]

Playing the actual devil here, who doesn't?

Everybody needs you, low maintenance + reasonable income space on the Monopoly board.

[MatthewPhillips]

I gave an example; Tim Berners-Lee.

[001sky]

I think thats a valid example/counterexample.

But to rephrase slightly, is that the exception that proves the rule?

[nb - I don't disagree with your point, but what is missing to encourage more things in this direction? Wikipedia is another utility example, but again is so rare]

[shazow]

I completely agree with everything you've written except your "but here's the thing" should have been an "and here's the thing". We're all on the same page here.

Yes, that's reality. Yes, it's unfortunate and we wish it wasn't so.

I love Twitter the medium. I wish Twitter the company would find a way to monetize without taking this route. I like to think that I would have done something different in their position, but who knows.

[rosenthall]

At least from my point of view his comments weren't meant as a criticism of twitter so much as a neutral observation. He also didn't seem to be disparaging the monetization of twitter, but simply making a prediction for its evolutionary path he sees it following.