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Comment by jusben1369 | Hacker News Reader

There's too much of this ignorance being couched as sound financial analysis here time and time again. Twitter's revenue's are exploding: $28,278,000: revenue generated in 2010, $106,313,000: revenue generated in 2011, $316,933,000: revenue generated in 2012 $253,635,000: revenue generated in the first half of 2013. They could easily be profitable if they cared to. They don't. They shouldn't. They have this fantastic opportunity to build a platform that touches everyone's lives. They have easy access to capital. Seize the day! They don't need to run Twitter like you run a corner store.

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> They could easily be profitable if they cared to. They don't.

I frequently wonder about this. Funny thing is that none of these latest crop of tech ipo's, which are mostly saas or social media companies, actually make money. NONE. Not one. Years ago, non-saas software companies didn't seem to have much trouble earning money when they were in growth mode. Adobe, to pick one, ipo'd in 1986. Between 1984 and 1988 their revenues grew from $2 million to $83 million (including 110% in 1988), aka hypergrowth. Guess what? They had positive net income every single year...huge margins, too. I see stuff like this and wonder about today's saas and social media craze, and I cant help but be very skeptical about these business' abilities to make any kind of meaningful profits ever.

Is it really a coincidence that they're all managed like this, strictly for revenue growth? Or are these businesses structurally incapable of earning a profit? I honestly have no idea anymore. Salesforce has been public for almost 10 years and if they had to pay all of their comp in cash there would be almost no cash flow at all. Maybe these companies just dont add as much value as we think.

They increased their top-line revenues by ~10x over the last three years, but they also increased their sales and marketing expense by ~10x over the same time period. Call me crazy, but I'm guessing that "sales & marketing" spend is mostly sales, and they're essentially buying revenue right now.

That strategy can work, but it remains to be seen if revenue growth will continue once the sales spending slows (i.e. if the sales operation will become more efficient). If they can't make the revenue graph separate from the costs graph, they're cooked.

> They could easily be profitable if they cared to. They don't. They shouldn't.

And herein lies the problem with tech stock IPOs of this generation and this kind of thinking.

Investors are supposed to sleep easy that they've bought stock in an unprofitable company? Pretty sure the business model of "touching lives" isn't going to sit well.

Twitter is just another useless "tech" startup powered by bullshit but soon any sucker will be able to buy in on the dream. This sort of practice should be illegal. What the hell are they selling? Tweets?

Followers, but that may just be a description for something different.

PS - Well said.

Amazon often operates at a break-even or loss yet investors sleep quite easy putting their money into AMZN stock.

Not really. http://ycharts.com/companies/AMZN/net_income

Amazon actually sells and produces things.

Yeah they also invest heavily in infrastructure. I am not sure if the same can be said of Twitter...

> investors sleep quite easy [citation needed]

Twitter vs. Amazon? Seriously? C'mon!

Same thing Google does. Targeted Ads. Is Google bullshit?

No, "promoted" tweets/followers/trends aren't even close to targeted ads or what Google does.

What are these promoted videos I keep seeing on Google-owned Youtube?

Are you an advertiser? If not, you may not be in Twitter's customer base.

>And herein lies the problem with tech stock IPOs of this generation

Of this generation? If anything there are far fewer money bleeding IPOs than there were in the late 90's.

It's like I stepped off a time machine and I'm in 1999 reading the Yahoo Finance message boards.

Right. Because the world has 30 - 50 years of successful tech companies that utilized venture capital to create lasting companies of value. But you want to pick the bubble year. You want to make the next Google Glass? The next self driving car? You have two choices. Work with a very large company who will use profits from their existing businesses to subsidize your efforts for years with loss making. Or start your own company and raise capital to sustain yourself while you build a super duper company that's defensible. I think they're both great routes to take. One of the main reasons Twitter is IPO'ing is that their competition (FB and Google) have a massive war chest. They need to have the ability to stay competitive.

So they are going to raise a war chest to do battle, hooray!

Before they spend the money, will they refund the taxpayers of San Francisco for the tax break they got?

I have no idea naturally. Are you feeling like San Francisco got a raw deal out of creating all that wealth (post IPO) in their City?

The question is why they felt they deserved a tax break in the first place. They even threatened to move to Australia at one stage.

We're not talking about small businesses, strapped for cash, struggling to make ends meet, asking the city for some help so they can keep the lights on and people employed.

We're talking about well-funded companies, with an army of lawyers and accountants, deliberately bullying a city, to eek out every little advantage they can.

Not sure what stage they were when the got that tax break (nor do I know the details) I do know a lot of cities offer these and the cities tend to reap a lot of benefits through having them stay. So maybe it's fair.

What is this message board you talk of? I might be interested in lurking.

> They could easily be profitable if they cared to. > They don't need to run Twitter like you run a corner store.

You know what the difference between a corner store and Twitter is?

The corner store pays it taxes and doesn't bully the city to get a tax break!

The taxpayers of San Francisco should be demanding a refund with interest on top.

Revenue growth is decelerating significantly and they are not even close to a billion. Obviously, they will get a billion in the next year or two but given their lofty valuation expectations, they need to find a way to stem the revenue deceleration for a number of years.

Wow....sounds like you're still partying like it's 1999.

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