Comment by mechanical_fish | Hacker News Reader

Comment by mechanical_fish | Hacker News Reader

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mechanical_fish

Factors to keep in mind:

Twitter is a global, high-traffic operation with a pile of dedicated servers. It takes a lot of facilities staff to deal with that.

Twitter is an HA service that is trying to build a reputation for reliability. You need enough ops staff to keep a 24/7 NOC up and running and to deal with illnesses and vacations.

Twitter is in an explosive growth phase. They are quite likely to be employing lots of engineers on strategic projects. It can be a mistake to think of your R&D team as some kind of cost that you need to contain. R&D is an investment in the future. And Twitter has a lot of VC money to invest right now.

Not everything scales. In particular: Sales and customer service don't scale perfectly unless you deliberately engineer that from day one. For example, if you build Google Ads (and are able to compete with the original Google Ads) you can sell ads with Perl scripts. But traditional ad sales requires salespeople. Customers like to be talked to, they like to get their problems solved and their tickets closed by sympathetic humans. Depending on the various business models that Twitter is considering, they may need a bunch of sales people to negotiate deals with customers, and/or a bunch of systems integrators to help customers learn to process the data coming out of the firehose.

Twitter needs lawyers and moderators and ombudsmen. They receive DMCA takedown notices. They receive reports of threats and spam. People steal credentials and impersonate other people. There are privacy laws and telecom regulations. They have to deal with these things in multiple languages and around the world.

Just to give some deeper understanding of why sales doesn't scale: here at The Ad Agency, we're responsible for spending our clients' large budgets buying media from people like Twitter (I don't think we ever buy from Twitter, but we theoretically could). That process involves having Twitter come into our offices to pitch their platform to us, justify an investment, provide us with the tools to sell the idea to our clients, then provide us with ongoing account management to coordinate, implement, track, and report on the campaign. Ad agencies rarely do self-serve media buying, so media sellers need to pound the pavement in NYC to get big brands on their platforms.

Ad agencies rarely do self-serve media buying

And why is that, one might ask?

I'll take a guess: Companies hire ad agencies to pursue advertising strategies that go well beyond what's possible with self-serve media buys. It's not that you can't do a lot with self-serve media, or that there's not a huge business for such media. It's that ad agencies serve a different class of clientele, one that has bigger scope and bigger budgets. And, once the budget and scope grow beyond a certain point, it becomes worthwhile to have actual humans negotiate the deals. After all, negotiation is pretty difficult to automate, and most ads are not commodity products.

Well said. There are better "self-service" marketplaces for TV, where the media sellers have organized, but the online landscape is too fragmented. It would be inane for an agency to train someone up in "Twitter buying", so instead there are people trained in "media planning" (usually specialized in TV, Print, or Digital) who then coordinate with specialists at individual vendors (Twitter, Facebook, Google, other networks).

Ad agencies add value to their clients through strategy, creative, planning, and experience in execution. The actual serving of ads is largely a pass along expense, and therefore ripe territory for smart technology companies.

Pretty good list so I'll add:

The "sponsored tweets" need a sales team. Someone also needs to run metrics, analyze results, report back to the customers, etc.

When you start taking/spending a lot of money you suddenly need finance folks. Someone has to budgeting, analysis, cash flow projections, payroll, benefits, external reporting, etc. A company their size will need several accounting positions as well as a few tax people.

I can't believe I left out the finance and the HR and the office facilities. Those trash cans don't empty themselves. Those tax forms don't file themselves. And the employees that Twitter wants certainly don't recruit themselves.

Just sending your CEO out to raise money requires several people's worth of orchestration and supporting research and due diligence.

Nice reply, also gives a good idea on the complexities/challenges involved in scaling up a startup to global markets.

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