Fail whale: hax0red!!

July 15, 2009 2:43 PM

TechCrunch claims it has been sent hundreds of internal Twitter documents from passcodes to meeting notes. Today the site released several of the documents, including financial projections. The documents were provided by "Hacker Croll" and were accessed in May.

According to the documents, Twitter will have 25 million users this year, 100 million next year and 350 million in 2011. By 2013, internal projections are 1 billion users, $1.54 billion in revenue, 5,200 employees and $111 million in net earnings.

posted by uaudio (72 comments total)

Biz Stone's response is here.
posted by uaudio at 2:46 PM on July 15 [1 favorite]

Is it just me or are there no actual documents in any of those links?
posted by spitefulcrow at 2:50 PM on July 15

Projection: 100 million users by next year
Reality: the next Friendster by next year.
posted by mullingitover at 2:50 PM on July 15 [17 favorites]

we believe the hacker was able to gain information which allowed access to this employee's Google Apps account[...] This attack had nothing to do with any vulnerability in Google Apps which we continue to use.

That seems like a rather naïve assumption.
posted by Sys Rq at 2:51 PM on July 15

Projection: 100 million users by next year
Reality: the next Friendster by next year.

Awesome. Not even three comments before TwitFilter kicks in and people start slamming the site.
posted by spitefulcrow at 2:51 PM on July 15

1.65 Billion in revenue?
posted by boo_radley at 2:53 PM on July 15

So they're saying they only plan to make about $1.50/year per user?

What's interesting about twitter is, even though they aren't making any money, their services wouldn't really cost a lot of money to operate. I mean they're shuttling these tiny messages around, it can't cost all that much.
posted by delmoi at 2:58 PM on July 15

Anway, I seriously doubt they'll ever have a billion users.
posted by delmoi at 2:58 PM on July 15

1.65 Billion in revenue?

The 3Q 2013 projections call for 1.65B in high-denomination Monopoly currency. A big stack of $500 bills, basically.
posted by Blazecock Pileon at 3:00 PM on July 15

Spitefulcrow: the second link appears to have a few screenshots showing the godaddy registration confirmation for the Twitter.com domain, a European DNS management tool, and a office floorplan.

This is a link to a screenshot of a 2/2009 projection spreadsheet.
posted by uaudio at 3:00 PM on July 15

The Techcrunch thread on ethics is actually pretty good.
posted by Xoebe at 3:04 PM on July 15

IANAL, but this seems to be an actual criminal offense under §496 of the California Penal Code (Receiving Stolen Goods).

In fact, this California lawyer even advertises that he defends people who are criminally prosecuted for receiving "a copy of an unlawfully acquired private or unpublished document, transcript, deed, or other form of intellectual property."

Does anyone know enough about California law to verify this?
posted by pjdoland at 3:04 PM on July 15 [2 favorites]

Daring Fireball's take on the matter.
posted by johnny novak at 3:05 PM on July 15 [9 favorites]

I actually spoke to multiple people whose job it was to make those kinds of forecasts for social networks during my last job search. To a person, they all joked about how the biz folks latch on to a number (users/earnings/whatever), while completely brushing aside the probability clouds around those numbers.

So who cares if someone got access to confidential projections? The only thing those numbers tell us is the probability cloud is pretty big and fuzzy, and frankly, we already knew that.
posted by NoRelationToLea at 3:08 PM on July 15 [1 favorite]

Awesome. Not even three comments before TwitFilter kicks in and people start slamming the site.

If they're expecting a billion users, their app should be able to handle it.
posted by Brak at 3:09 PM on July 15

How does twitter make money? Am I already blocking their ads and simply not realizing it?
posted by filthy light thief at 3:09 PM on July 15

1 billion users. So more than 50% of the world population that has consistent access to the Internet? Seems reasonable.
posted by Mayor Curley at 3:10 PM on July 15 [1 favorite]

Awesome. Not even three comments before TwitFilter kicks in and people start slamming the site.

If they're expecting a billion users, their app should be able to handle it.

No no, I meant slamming the site as in insulting it here on MeFi, as members seem so wont to do.
posted by spitefulcrow at 3:12 PM on July 15

In related news: Another Security Tip For Twitter: Don’t Use “Password” As Your Server Password

"With all the chatter about the current security issues surrounding Twitter, its workforce and the cloud-based Google apps they use, a new security issue has popped up that makes it trivially easy for anyone to access the Twitter servers directly. The problem? The password to the servers was, literally, 'password.'"

posted by ericb at 3:14 PM on July 15 [2 favorites]

Sys Rq: According to Twitter themselves, it appears that someone got access to a personal email account, and used that to get access to a Google Apps account with the data. They probably had the back up email account to send password reset links set to the personal account, and from there, it was easy to reset the password and get in.

This just appears to be a problem of mixing one's personal accounts with one's business accounts, and the perils of weak passwords/recovery questions.

What I'd pay a decent amount for, is one of these for my Google account. A video game has better security than most banks, a site that most people entrust with all of their communications, and most work accounts. The future is an odd place to live in.
posted by zabuni at 3:15 PM on July 15

This isn't the first time: Twitter Gets Hacked, Badly (January 2009).
posted by ericb at 3:15 PM on July 15

The problem? The password to the servers was, literally, 'password.'

Runs home to change router configuration.
posted by Brak at 3:17 PM on July 15 [2 favorites]

L.A. Times: Ethical implications of the leaked Twitter documents.
posted by ericb at 3:18 PM on July 15

zabuni: "According to Twitter themselves..." Yeah, that's what I was quoting from. I guess the point I was trying to make is that Google Apps has a pretty big vulnerability: It's owned by Google, who may or may not have some interest in Twitter's internal documents. It's like Willy Wonka hiring Slugworth as a courier.
posted by Sys Rq at 3:22 PM on July 15 [4 favorites]

Mayor Curley: "1 billion users. So more than 50% of the world population that has consistent access to the Internet? Seems reasonable."


If I'm not mistaken there is more than 2 billion people on the planet; that does not change my opinion that forecasting out a billion users is asinine.

I gave twitter a few twats and decided I don't like it.
posted by Gravitus at 3:23 PM on July 15

"the world population that has consistent access to the Internet" != "people on the planet"
posted by Sys Rq at 3:24 PM on July 15

spitefulcrow: "Awesome. Not even three comments before TwitFilter kicks in and people start slamming the site."

Not slamming (I have a twitter account, too). Then again, I have a friendster account as well...

People in a 'business' with no barriers to entry and zero switching costs shouldn't get too far ahead of themselves. That's all.
posted by mullingitover at 3:27 PM on July 15

Oh, come on, spitefulcrow, admitting that the current hot toy will not be the hot toy forever isn't the same thing as hating on it. I like Twitter. It's fun, and I get a lot of good information from it. But when people stop using it and start using the next thing, I will too. That's okay.

One thing I love about Metafilter is that people here can talk about new technologies without it devolving into the marketspeak that takes over these discussions everywhere else on the internet. People here have enough intelligent cynicism to recognize statements like "Twitter is the new dialtone" as the advertising they are.

Yes, Twitter is interesting. Yes, Twitter has limitations. That's okay.
posted by roll truck roll at 3:28 PM on July 15 [1 favorite]

1 billion users. So more than 50% of the world population that has consistent access to the Internet? Seems reasonable.
posted by Mayor Curley at 6:10 PM on July 15 [+] [!]

Yeah, it kinda does. Considering that you don't need a computer or the internet to use it.

Go to a cafe once, create an account.

Buy a 20 dollar cellphone and text your tweets to the 5 digit code.

Seeing as how this is revolutionarily simple to set up and participate in, it doesn't seem a stretch to predict that 1 billion people on the planet will take part in some kind of service like this by then.
posted by lazaruslong at 3:28 PM on July 15

"Twitter is the new dialtone"

Twitter is the new horrible screech/beep the phone makes when it's been left off the hook.
posted by Sys Rq at 3:31 PM on July 15 [1 favorite]

1 billion users != 1 billion people.

For instance, I am probably counted as 8 users.
posted by Mick at 4:19 PM on July 15

Seeing as how this is revolutionarily simple to set up and participate in

But why would they do it at all? I don't think 50% of the internet users (or whatever) have a use for Twitter. It's not as obviously generic as email or SMS (private communications). I can't believe 50% of people want to communicate in public.... sure, it's easy to use, but you still have to have a reason to use it, and I don't think most people do.
posted by wildcrdj at 4:26 PM on July 15

Most of these internet "businesses" are hula-hoops, pet rocks, or Furby.
posted by five fresh fish at 4:44 PM on July 15

But why would they do it at all? I don't think 50% of the internet users (or whatever) have a use for Twitter. It's not as obviously generic as email or SMS (private communications). I can't believe 50% of people want to communicate in public.... sure, it's easy to use, but you still have to have a reason to use it, and I don't think most people do.
posted by wildcrdj at 7:26 PM on July 15 [+] [!]

There's a complex answer to the question of why people would choose to Twitter, or use some other type of extremely limited cell-phone compatible social communication interface. I imagine I don't know all of them.

A couple things I would put forward as possibilities: Some of the most notable uses of twitter in the general populace are the terrorist attacks that took place in Mumbai and the reaction to the stealing of the Iranian election. In both groups I think you see a big stimulus event that motivates them to organize, and you also see cultural and technological components that provide obstacles to free organization.

In the case of Mumbai, you saw individuals using cell-phones to report where they heard violence and where it might be safe. They used it to shepherd people to safe places and to coordinate real time information with the law enforcement individuals trying to help. In Iran, we saw people able to show the brutality of the riot police supressing peaceful demonstrations and in general being able to break open the lockdown the government put on communications.

All of this is to say that a service like Twitter can be used as an amazing tool for organization when people are either too freaked out to organize or being brutally suppressed. I think other 2nd and 3rd world peoples with the ability to see this contributing to affecting change to other 2nd and 3rd world countries might decide they want to the ability to talk to whoever they want locally or globally without having the ability to get a real computer and an internet connection.

This brings me to the second idea, which is sort of the inevitability of the spread of communication networks when the availability is increased and the bar to entry is lowered. I think people inevitably gravitate towards increased communication and the only proof we need of that is to look at the massive amount of work and interest there has been since we started writing at all.

The last thing I would suggest is that the most important part of this type of tool is what I touched on before. Because it's so limited (140 characters for basic tweets), and can me accessed by sending SMS messages from any SMS enabled phone to a number, it can literally be done by anyone with a cellphone and reception. Anywhere, anytime. Even if you are busy movie star, or running from murdering terrorists, or in a crowd of people being beaten by riot police batons.
posted by lazaruslong at 4:45 PM on July 15 [3 favorites]

I am of course invested in the idea that a lot of people "We know" in developed internet enabled wealthy 1st world countries are not interested in Twitter is because we don't need it. We have about gazillion other ways to communicate with each other on the web. Twitter seems extraneous and limiting to some people, and that's cool. For me it's a supplemental and easy way to keep up with friends in touring bands or traveling, and it's a really fun way to be entertained by famous folks I like (Questlove comes to mind) that use Twitter without consulting the PR person or whatever.

There are lots of uses and niches it falls into that it does well, and there are lots of uses that it is terrible at. But then, most of the internet is, and we are a teensy bit spoiled in that regard. When everyone has the opportunity to talk to whoever they want if they can afford a phone, I think they might just decide to use Twitter or some other simple connectivity tool like it.
posted by lazaruslong at 4:50 PM on July 15

I can definitely see some uses for it or a similar service, but it seems to me that most people will be consumers instead of producers (unlike something inherently more 2-way like email), and that doesn't require having accounts. In other words, the Iran stuff was a great demonstration of how people can use it to get the word out, but 99% of people heard about the info posted on Twitter from other sources, Twitter was simply a great distribution mechanism because once it's published, it gets indexed/copied so many places you can't easily censor / hide the information.
posted by wildcrdj at 4:53 PM on July 15

From the LA Times: the ordeal also carries obvious ethical implications..

The problem is they don't seem too obvious to a whole horde of the commentariat, who are stomping around saying "nobody would care if this was Apple stuff!" and "What about when papers do this to politicians?!" as if the public interest was nothing more than things the public are interested in.

More than anything, it's the shitty state of tech journalism that makes me fear for the future of real journalism. If the new news is this bad on its home turf, what's it going to be like outside its comfort zone? (A: Eaten for lunch by professional operatives, that's what). It gives no indication of "reinventing" the news, more "rediscovering" it. "wha? there are ethical issues in these things? But I wanna print it!"

Right now we're not far away from "you furnish the tweets and I'll furnish the war".
posted by fightorflight at 5:16 PM on July 15

And honestly, love twitter or hate it, the real story is Tech Crunch's continued sleaziness; let's not lose sight of that. I've never seen one person say "yeah, Arrington is alright" or even, "he's kind of a dick, but at least he's filling a need". He's an amoral remora on the bloated underbelly of the information age.
posted by boo_radley at 5:18 PM on July 15 [15 favorites]

@boo_radley, yeah. I came into the tech crunch thread slightly late; i.e., I saw the justification for posting before I saw the "we've got this stuff" post. I just found it so unpleasant, unsettling, aggressive, arrogant, distasteful and self-aggrandizing that I realized I need to stop reading TC. I lived fine before I read it, and I'll live fine afterward.
posted by stevil at 5:54 PM on July 15

'amoral remora' is such a great term that I want a sockpuppet account with that name.
posted by lukemeister at 6:06 PM on July 15 [3 favorites]

"If they're expecting a billion users, their app should be able to handle it."

I say this with all due humility from my time as LiveJournal's business manager... That billion users figure?! Absolute bullshite. Intentionally misleading hype designed to drive suckers with more money than common sense to support a website that is still fishing around in the dark for a viable business model.

LiveJournal has 21 million accounts right now, but only an idiot would equate that as being the same as 21 million active users.

Instead, what Twitter can hope for -- at best -- with its current projections is a billion accounts created by 2013, with a huge amount of them either duplicates or inactive, having been used just once in their entire existence.

Also, Twitter is going to go through stages of aging and decline -- JUST LIKE EVERY OTHER ONLINE SERVICE HAS DONE IN THE PAST -- with shifts as to where the company's growth and activity is actually taking place.

One thing we've seen with sites like LJ, Blogger, and the like is that they are aggressively used at first with a core group which attracts a disproportionate amount of traffic, but that over time, that core group tends to either give up on the site, post less often, post more reservedly/ less interestingly, or simply post in an annoyingly commercial fashion. THESE CHANGES ARE NATURAL AND INEVITABLE REACTIONS of having such a large audience. Indeed, success attracts the very elements to the site who tend to drive users away over time, and encourage people to go "friends only"... which from a social standpoint is ultimately quite damaging and discourages site activity levels, even though it's oftentimes understandably necessary.

There's also a matter of gradual shifts of age demographics, which effects how the site is used. For instance, LJ started with its users being very open, and with all accounts public. Nowadays, though, users are increasingly guarded about what they say, and increasingly "friends locked". Part of that is simply a matter of growing older, and of seeing how being yourself on the internet can be damaging to your public life, career, etc. That makes a big difference in how people use the site, and how they connect with the site itself. Twittering celebs might help attract people to the site, but they are unlikely to keep someone an active and connected user. Friends actively using the site to regularly discuss their own life are likely to keep other people active, however.

One of the things that has kept LJ functional for nearly a decade now is that its user base was quite young when it started, and could avoid the pressures of career and the like. Indeed, the peer pressure at first was to be more open and expressive, not less. Also, it didn't tend to promote specific users to an "A-list" to quite the degree that Twitter does, and there were caps on growth. This probably helped offset some of the self-defeating effects that come from rapid growth and the maturation of the site. Twitter doesn't have such an advantage, however.

Lastly, I wanted to point out that having more followers is oftentimes worse, not better. Active LJ users nowadays follow many, many times the amount of people they used to on the site, but post far less often. Following too many people leads to overload... and more specifically, it leads to you hearing from everyone you want to hear from, except the people who actually matter the most to you, and who get drowned out in the flurry of content.

From a social software design perspective, monitoring too many people can be just as damaging as monitoring too few / not having enough "friends" to keep you interested. There's a sweet spot in there somewhere, but I suspect that most active Twitter users have already surpassed that point, and that it's going to get even worse in the future.

There are serious scholarly efforts out there that have been done by people like Clay Shirky at NYU which have tried to point out that there appear to be some natural limitations to the size of online communities. I think it needs to be pointed out that AOL once made rosy projections about growth continuing, and that they even allowed free accounts... but they hit a wall at about 25M active users. I think Twitter can certainly get more than 25M accounts... but more than 25M users active every month? That's going to be harder.

One of the things I *DO* expect to see with Twitter is a situation similar to that of LJ, where users in the US who have been active over the past month has declined steadily for some time, while users in Russia are significantly on the increase, because the Internet is still comparatively new and growing there. Twitter will likely also find the rate of usage drops off sharply in the US, with people moving on to the next big thing, while usage increases in other countries of the world. This will likely encourage increased localized competition too, but that's to be expected.

Finally, I think we need to appreciate the fact that the idea of a 140 character, texting-driven site is likely to become quite antiquated in the future. Why should we expect similar technical limitations to exist in the future? The situation is ripe for change and modernization... a smart phone, rich media future with smart clients that allow drag-and-drop sharing of video, music, etc. Under such an environment, text becomes minor commentary... a "wrapping" to the real content. That's an environment where Twitter's attractive simplicity becomes a major liability, much as we've seen happen with Blogger.

This isn't to say that Twitter isn't a valuable service or site. It does, however, make this idea of a billion users look pretty silly. I frankly see Facebook as having better longterm potential than Twitter, if only because its better suited for that kind of environment.
posted by markkraft at 6:09 PM on July 15 [17 favorites]

well said markkraft.
posted by device55 at 6:18 PM on July 15

Just chiming in to say that Arrington is a horrible person and amoral remora is a phrase that I'm likely to repeat steal.

Nobody puts boo_radley in the corner!
posted by defenestration at 6:27 PM on July 15

Most of these internet "businesses" are hula-hoops, pet rocks, or Furby.
posted by five fresh fish at 12:44 AM on July 16 [+] [!]

Ahem! I am not an internet business.
posted by awfurby at 6:32 PM on July 15 [1 favorite]

Oh, and as far as the business model goes? There have been people pointing out recently that YouTube, which is absolutely enormous, is hemorrhaging money and is still searching for a viable business model.

...but the thing is, if YouTube, which operates in the rich commercial field of video, which can be highly customized and targeted for advertising by Google... if they can't find a working business model capable of paying the salaries of hundreds of employees, what makes people think that Twitter, a company that operates in 140 boring characters of text, will do any better?

Twitter is a horrible medium for ad-based success... and paid accounts are likely to infuriate users... especially those overseas in countries like Iran... and will drive their customers towards alternatives. Advertising models for websites have already been shown to be quite risky and vulnerable during the dotbomb crash, with wild fluctuations in ad demand and the price you can afford to charge for ads during economic downturns. A plethora of companies bit the dust between '99-'01 because the ad market dried up.

Twitter *might* be able to create a "paid-but-free" business model like LJ had, with a lower tier of service always available for free... but they lack one thing that LJ had which they don't, particularly. LJ was open source, volunteer-run, and had a non-commercial ethos that people WANTED to support at the time. Twitter?! Not so much.

Indeed, limiting tweets would've be a horrible way to make a buck during the current Iranian protests. Other major worldwide news events are likely to be Twittered too, but don't expect to hear them if people have to pay to post.
posted by markkraft at 6:34 PM on July 15

it can literally be done by anyone with a cellphone and reception. Anywhere, anytime. Even if you are busy movie star, or running from murdering terrorists, or in a crowd of people being beaten by riot police batons.

Unless the government knows what it's doing.
posted by Lemurrhea at 6:36 PM on July 15

How exactly do we know these documents weren't leaked by Twitter itself? So far, we've seen some numbers that Twitter wants every potential purchaser to believe, and a pitch you couldn't get people to read unless you convinced them Twitter didn't want you to see it.

Really, the grand story is that Twitter expects 400k in revenue starting like next month. And what better way to get everyone talking about it than false claims of security breach?
posted by pwnguin at 6:58 PM on July 15

Sorry, furbyaw. I'm sure you're not a flash-in-the-pan fad, either.
posted by five fresh fish at 7:00 PM on July 15

In the future, we will all be internet businesses and flash-in-the-pan fads.
posted by markkraft at 7:03 PM on July 15

...and good luck for those trying to tell the two apart.
posted by markkraft at 7:03 PM on July 15

No social networking service needs more than 640K users. Pffffttth.
posted by GuyZero at 7:23 PM on July 15 [2 favorites]

[LOTS OF STUFF] I frankly see Facebook as having better longterm potential than Twitter, if only because its better suited for that kind of environment. posted by markkraft

That is one heck of an analysis. Also, I love "Bounce" - you're totally the best Canadian hip-hop act out there.
posted by GuyZero at 7:29 PM on July 15

Sorry!! Electro, not hip-hop. What the heck was I thinking.
posted by GuyZero at 7:29 PM on July 15

I can't wait till we can make a post here about Twitter that doesn't have anyone bitching and moaning about how much Twitter sucks, which is more or less off topic.
posted by chunking express at 8:44 PM on July 15

"Also, I love "Bounce" - you're totally the best Canadian hip-hop act out there."

Ah. Satire. Heh.

I said that Facebook was better suited for a mobile, rich-media sharing environment. I never said they were particularly good at it, however.

There is *STILL* a lot of open ground for developing better alternatives than either Twitter or Facebook... which again, is another reason why these services are built on sand and not bedrock.
posted by markkraft at 8:44 PM on July 15

Also, TechCrunch sucks and Arrington is a dick. Do we really need to link to that site?
posted by chunking express at 8:45 PM on July 15 [2 favorites]

Oh, come on, spitefulcrow, admitting that the current hot toy will not be the hot toy forever isn't the same thing as hating on it. I like Twitter. It's fun, and I get a lot of good information from it. But when people stop using it and start using the next thing, I will too. That's okay.

I think the interesting thing about Twitter is that it's turned into more than just a toy/personal silly thing. It's an SMS enabled loosely coupled asynchronous messaging system that used 'tell people about your lunch' to get its foot in the early-adopter door.

That doesn't mean that it's going to rule the world or anything, or even thaht it will change the world, but I think that Twitter -- or an API-equivalent service with a similar userbase has just as much potential as RSS to become one of the underlying information exchange mechanisms that is taken for granted and built on top of.

There's a lot of noise in it, but there's a lot of noise in the global aggregate of RSS feeds, too.
posted by verb at 9:41 PM on July 15

No, really, I actually agree with your comment. I just think it's mildly amusing that your username looks like MSTRKRFT. It's not that deep.
posted by GuyZero at 10:08 PM on July 15

People seem to forget that it's taken 2 years for Twitter to blow up and demonstrate how useful it is for getting out the news for:

censored protests across the globe (Iran wasn't the first.)
deaths of beloved or hated politicians and other celebrities
brief updates about traffic in your locale
discounts on the web or in real life
spam
disaster warnings and floods of "I'm OK" messages
promoting your new project (NKOTB? Souljaboy?)
tracking or logging all of the above

How many people got news about the tsunami warning in the South Pacific either directly or indirectly from Twitter yesterday? I know I did, and I called my father to allay some of his fears about my half brother who lives in Wallington, VIC. Friends of mine have posted to Twitter to let groups of loved ones know that they're OK. It's easier than calling each person you know across the country and letting them know what's happening.

I heard about Michael Jackson and Billy Mays through Twitter. I heard about Iran a full 24 hours before CNN felt it was a story worth more than 35 seconds. I heard about Red Shirt and Yellow Shirt demonstrations for the first time, and I haven't seen anything on American media about that. And of course, I hear about Britney sex vids and dating sites 2-3 times on a daily basis before blocking the accounts.

Just as spam doesn't prevent me from using an email account, though, it doesn't prevent me from using Twitter. Spam is probably a good example of how useful it is for good or bad. Twitter won't replace email, but it's certainly not "Next year's Friendster." It did not show up over night although it's suddenly widely known in a short amount of time. It's a branded application of existing technology, and it's doing a better job than similar applications. It does one thing well, give very short messages to lots of people.

I apologize for the derail, but I'm sick to death of the Friendster comparisons. Honestly, Facebook is the new Friendster. Do I mean that Facebook is going to be abandoned en masse by users bored with the service? No, I mean it's got similar uses. Twitter may be abandoned some day in the near future, but you don't define a tool by how long it's in use. You define it by how useful and well suited it is to a task.
posted by crataegus at 10:27 PM on July 15

Finally, I think we need to appreciate the fact that the idea of a 140 character, texting-driven site is likely to become quite antiquated in the future. Why should we expect similar technical limitations to exist in the future?

140 characters isn't a limitation, it's a sweet spot.
posted by Lazlo at 10:56 PM on July 15

"Twitter may be abandoned some day in the near future, but you don't define a tool by how long it's in use."

You don't *define" a tool by how long it's in use... but it certainly helps you to set its value.

Even jumping to a wild assumption of Twitter having a billion active users and $111 million in profit per year, how much is Twitter really worth if it only performs like that for a couple of years before becoming a dinosaur?!

Certainly not the billions that people are wildly throwing around... unless investors want a nickel back for every dollar they invest in it.
posted by markkraft at 11:01 PM on July 15

Oh, and I've said it before, but the best dotcom with the most solid business model is...

Craigslist.

A staff of about 25 people, $80M in revenue for 2008 -- up 47% from the prior year -- and it's entirely free and non-commercial to the people who really matter.

Best of all, it's privately owned, not required to be accountable to shareholders, and has an ethos which merits the loyalty of its users, with an emphasis on charity, good works, and giving back to the community.

Craig, by making all the "loony", "granola" choices that a non-commercial individual would make about how to run a service for his users, has built the leanest, meanest, most solid, most responsible dotcom in history, with a profit margin that is out of this world.
posted by markkraft at 11:14 PM on July 15 [4 favorites]

Whomever wrote the Techcrunch "analysis" of the Twitter financial data knows precisely squat about finance: "We’re including just the projections through 2010, the data for the following three years is too pie-in-the-sky to be useful. But here are the numbers they were targeting for the end of 2013: 1 billion users, $1.54 billion in revenue, 5,200 employees and $1.1 billion in net earnings."

The spreadsheet they've based their analysis on is - well, an undergraduate could put together something more useful and comprehensive -- the entire spreadsheet is "pie-in-the-sky"


I'm not gonna waste a lot of time on this, but a few points:

1. User base increases linearly; this is bogus, most forecasting spreadsheet would include factors to probability adjust these numbers. This would tie back to the business plan (I'm sure they got one), and define mininally acceptable growth levels so management would know they've got a problem as early as possible.


2. Same comment for "people" (most forecasters would call it "FTE" or "headcount"), a simple linear increase, with absolutely no consideration of A) effort required to service the customer base noted above, B) productivity increases necessary as your user base grows (if not considered this would negatively impact net earnings). Also having created lots of these spreadsheets in the past - you rarely see integers - yes, headcount is very often fractional


3. Absoutely no consideration of fixed and variable costs, or financing costs (yes, money costs money). As user base changes (remember, these numbers can and should go down to reflect prudent planning) you'll see marginal changes in both fixed & variable costs - this has to be reflected in your plan. Financing costs need to be included as well since we know everything else in the business plan is based on cost of capital


4. The "margins" look totally fictional and made up

I wonder where they got this spreadsheet. Its absolutely useless for any reasonable forecasting as it makes considerable unwarranted assumptions, and is very, very crude.

I bet this spreadsheet was just sitting on someone's machine and doesn't represent official financial policy.
posted by Mutant at 1:34 AM on July 16 [1 favorite]

Mutant: You'd be surprised at how astonishingly incompetent the people running Twitter are, though I'll admit they've made a few incredibly good hires (like Alex Payne).

It would not surprise me at all if all of this ridiculously naive business stuff was %100 real, and came from the very top.
posted by blasdelf at 2:09 AM on July 16

This $1.65 billion in revenue, do we have any idea where it will be coming from? This is a genuine question, I am not familiar with twitter.
posted by Dr Dracator at 4:42 AM on July 16 [1 favorite]

Best of all, it's privately owned, not required to be accountable to shareholders, and has an ethos which merits the loyalty of its users, with an emphasis on charity, good works, and giving back to the community.

From what I've read about Craig, he is possibly the best businessman alive. All his morals seem to be correctly placed. He is content with extremely good pay, and seems to feel no need to become the kind of gluttonous, ravenous, society-fucking, destructive asshole we see on Wall Street.

Good on ya, Craig. I hope you can spawn more internet business folk like you.
posted by five fresh fish at 7:03 AM on July 16

Todd Dagres, founder of Boston-based VC Spark Capital which participated in the Twitter's $35 million fourth round this past February:

"We think it’s kind of funny to listen to people [in the press] talk about the lack of a business model," he said. "We know how we’re going to do it, and we’re very confident about how we’re going to do it, and it’s not necessarily in our interest to tell people how we’re going to do it. There is a biz model that has yet to be implemented. Of course, I can't guarantee it’s going to work."

Dagres continued, "All of a sudden there will be some changes that won’t undermine the experience or the virality -- but it will be pretty obvious how we’re going to monetize it."

Twitter hasn't generated any revenue thus far. Dagres said that changing that situation was definitely a project for 2009. But "we’re in no rush right now," he said. *

posted by ericb at 10:59 AM on July 16

TechCrunch is the TMZ of the internets.
posted by runningdogofcapitalism at 12:25 PM on July 16 [1 favorite]

"We know how we’re going to do it, and we’re very confident about how we’re going to do it, and it’s not necessarily in our interest to tell people how we’re going to do it."

...because then Twitter's users would primarily be using the service to tell Twitter's owners what tonedeaf, self-destructive idiots they are being, and encouraging others to move towards less commercialized alternatives.

Basically, they're saying that they would rather bait as many people into the Twitter experience as possible, before switching. If their business model was so likely to not annoy people and potentially slow site growth to a crawl -- or push it into negative territory -- then they wouldn't want to delay its implementation a second longer than necessary.
posted by markkraft at 2:56 PM on July 16

"It would not surprise me at all if all of this ridiculously naive business stuff was 100% real, and came from the very top."

I'm CERTAIN it is. Certain its ridiculously naive, and certain that it is real.

People have this strange idea that Ev Williams knows a lot about business. What part of "attended University of Nebraska, but never declared a major, and eventually dropped out" do they not understand?

The fact is, he didn't invent Blogger. One of his employees created it, modeling it upon previously existing web tools such as Userland, while Ev's startup was basically fishing around blindly for a good idea for a product.

Who goes into business without even a potential product / business model?

So, when Blogger was created, did it succeed wildly as a business? NO. Ev had to llet go every one of its employees, because he was basically underfinanced and overstaffed, and lacked a well-implemented business model capable of supporting its staff. This left Blogger without an oar in the water, from a coding perspective, while its competitors made huge inroads into its marketplace.

Blogger could've helped remedy this matter by moving towards a more open source platform and encouraging independent development, but Ev was too shortsighted to see that fact.

So, despite having every possible advantage, Blogger ultimately threw it away. If you want to credit him for eventually flipping the site, well... that, to me, is not really the goal that any good businessman should aspire to. The goal *should* be to create something of lasting worth and value by serving your customers.

Ev replaced Twitter's previously successful, highly innovative CEO, but he didn't create Twitter.

So now, they have a CEO who has both zero record for actual innovation, zero record for being particularly clued-in about what customers want, and zero record for the kind of educational business background which actually does help at times.

They have, in short, a hype collector... which usually leads to phony valuations followed by big letdowns. This is not what you should want if you're a Twitter user who actually values the service that Dorsey created, who has invested their time -- and even their love -- into the community, and who wants to see it last a long, long time.
posted by markkraft at 3:36 PM on July 16

Damn, did the dude punch you in the dick?
posted by chunking express at 4:38 PM on July 16

It's not even that. It's that I'm sick of people viewing execs in the whole "net 2.0" world as if they know what the hell they are/were doing.

Ev certainly didn't when it came to running Blogger as a profitable enterprise. Brad at LJ knew how to code, but little else. The people at SixApart were foolish enough to buy LJ, uproot its culture, drive its value into the toilet, and then sell it for a loss.

Really, they were young, and they didn't know all that much about running a business... which really sucks if you're an enduser who pours your life and time into their services, because it means/meant that those services were subject to going badly downhill, without the kind of longevity and commitment to improvement that you'd want.

As a particular category of business, they really lack the kind of business acumen you'd expect elsewhere. All of them have made a bit of money for themselves, but have been rather poor at running services of lasting value to their users. And I take that kind of thing personally, because *I* use these services too, and I want them around awhile, or at least run in a way that doesn't violate people's trust.

That's what I think sets Craig Newmark apart from many others. He's no expert in business, per se... but he is absolutely dedicated to his users, to doing the right thing, and he's not willing to sell out his creation for a quick buck... and he stands to make more in the long run because of that fact.

The thing is, any developer can move into his niche... but they'd fail in comparison, not because Craigslist is so new or so wonderfully designed, but simply because after over a decade, he's never given his users a particularly good reason to go anywhere else.
posted by markkraft at 11:34 PM on July 16