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Comment by jsonne | Hacker News Reader

Losing 200 million a year and mostly being not profitable is viable?

Edited to say "mostly" not profitable.

I think it is fair to say that left to its own devices (that is, pretend the last year of disruption and then this hadn't happened), Twitter could have become profitable enough to muddle on.

Everyone knew they had too many employees, and that big money-making possibilities... don't seem to be there, due to the nature of the niche they've carved. But they had a lot of money in the bank, so they didn't need to make any sudden movements. Sensible downsizing and incremental improvement of the bottom line, and, yeah, that's a viable business.

It may not be super exciting, but if you want exciting, head south on 101, Meta is about 40 minutes out depending on time of day.

16 years isn't enough time to figure out a profitable business strategy? How much longer would you have given them?

Business thats covering its costs doesn't need anyone to give them anything. They just have to survive. They were surviving.

They could turn no profit in a hundred years, and thats fine.

A business that does not turn a profit pretty explicitly does need people to give them money though right?

it can be cash neutral

No, having enough cash in the bank to continue on for another 10 years (as Twitter did) is viable. Viable is not "making profits".

Didn't Twitter post like a billion in profits in 2019?

yea, and profit in 2018. 5 billion revenue in 2021 with a 200 million loss.

Best info I can find is that they were only ever profitable in 2018 and 2019.

They certainly could do worse.

Like owing $1B/year in interest?

Anyone got real numbers for the debt?

Grade CCC bonds are well above 16% these days, and the amount of debt is $13 Billion. This very well could be $2 Billion/year interest payments.

I remember reading rumors of ~10% since the debt was signed in April 2020 and rumored to be 50% fixed and 50% adjustable. But I never actually found the real information or confirmation.

I think it's safe to say that the interest payment is somewhere between $1 and $2 billion, but there is also principal that needs to be paid back, right?

-----

That's not counting whatever debt Elon did to get his $33 Billion portion of the bill. I'm just looking at Twitters debt they now owe Morgan Stanley (and a few other banks) as part of the $13 Billion leveraged buyout portion of this company purchase.

> Last year, Twitter’s interest expense was about $50 million. With the new debt taken on in the deal, that will now balloon to about $1 billion a year.

https://www.nytimes.com/2022/10/30/technology/elon-musk-twit...

Amazon went 14 years before posting a profit. Not that I think Twitter was necessarily investing revenue correctly, but a business can go pretty far even in the red.

Because Amazon was spending on R and D. AWS came as a result of that. Amazon's core business was known to overspend(still do) just for customer's satisfaction, and it was very clear Amazon could turn into profit any day they want. Same is not the case for Twitter.

Twitter spent more than a billion dollars on R&D in 2021, which more than eclipsed its net loss.

Difference is Amazon spent a lot of it on durable infrastructure (datacenters, servers, fulfillment centers).

I don't know how Twitter spent its money, but seemingly on undifferentiated software (i.e. not durable) or moderation? Both of which are recurring expenses.

The difference is that Amazon made plenty of cash, and chose to reinvest all of it. For nearly all of those 14 years they could have just decided to be profitable, if it had been advantageous to do so.

I don't think Twitter is in the same position at all

Tesla historically has not been profitable until recently and they are getting help from carbon credits.

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