Video Of The Week: Dick Costolo at Re/code

I like how Dick answers the question about whether he’s going to be CEO of Twitter by the end of the year. It is about time that Twitter articulates how large their audience really is and why their usage numbers can’t be compared directly to Facebook, Snapchat, and Instagram.

Full disclosure, I own a lot of Twitter and am a big fan of the company and of Dick. I do not plan to be more critical of Twitter in the coming months.


Comments (Archived):

  1. JimHirshfield

    I do not plan to be more critical of my children’s behavior in the coming months. Thought I’d throw that out there as long as we’re making promises to each other.

    1. fredwilson

      that was a thinly veiled reference to another vocal/public twitter investor

      1. JimHirshfield

        Chris-tal clear.

        1. Twain Twain

          Maybe he’s switched to tough love?

      2. Alex Dunsdon

        Do vocal activists ever achieve their goals? Or are they invariably harmful / self defeating ?

        1. pointsnfigures

          hedge fund activists have more power.

      3. LE

        Sounds like like you are talking about a big “sacca shit”.

      4. Twain Twain

        Clearly Twitter mgmt already executing on algorithmic surfacing announced today:*…BEFORE Chris Sacca’s suggestions on Jun 03 2015 of:2. Thoughtfully curated follows to build the initial stream.3. Human editors.Likely that Twitter’s Chief Media Scientist with his PhD in AI & Psychology from MIT and knowhow in brand conversions and the Data Science team contributed to this algorithmic strategy.Good move.

        1. Joe Cardillo

          Yeah, agreed. I have a friend over there (not in the data sci or ux area, but still smart) who says they’ve committed to a fast, clear road map for testing discovery features…I bet this is just the beginning.

          1. Twain Twain

            Fred’s blogged in the past about “managing upwards at investors” and the recent events wrt Chris Sacca-Fred-Twitter made me think of that.I’m a fan of Product and Engineering teams deciding, building stuff and driving strategy more than “back-seat drivers”, for sure — being a Product & Engineering type myself, lol.

          2. Joe Cardillo

            +1. I thought about that a bit this week too. As someone who’s got a lot of product & proj. mgmt experience I’ve always felt it’s reasonable to ask engineers to help me understand the architecture, and it’s my responsibility to care about what that means across teams. If you don’t trust someone to do the job, then either you or they need to leave.That’s one thing I like about Costolo, it’s obvious he gets product & trusts his team, and that’s not true of all (many?) CEOs at his level.

          3. Twain Twain

            Some people would say that Twitter’s product strategy has been inconsistent and point to the 5 Heads of Product in 5 years.I haven’t used enough Twitter, watched enough interviews with Costolo or taken a deep enough look at their financials to have a view on whether he gets product. And I doubt it matters to Costolo what I think anyway.What I can see are product gaps and, therefore, opportunities for developers.

          4. Joe Cardillo

            Well, Costolo is out as CEO today! Yikes. So I guess we’ll see what direction product takes from here ..

  2. Joe Cardillo

    I actually like the trajectory of Twitter, seems like they’ve done a reasonably good job of focusing the core product (consumer) into B2B (or as Dick called it, distribution) and are owning the data firehose and the potential that will come from that.When you create a universe, everyone’s got an opinion on how / why it should be like [xyz example of another universe]. I’m not naive about monopolies and competition, but at that level of creating / maintaining.. what balances & grows your universe is really important. DC seems as good as anyone you’d want at the helm of it.

  3. William Mougayar

    You know I never thought about the Twitter distribution reach (800 million as Dick says). That’s a humongous number, and we kind of take it for granted.One thing that Twitter has is a lot of malleability and flexibility in their platform. They can almost wiggle it any way they want, and that presents new opportunities product-wise and revenue-wise.Stock wise, I think Twitter is a buying opportunity, now.

    1. fredwilson

      i don’t know if the stock will go up or down. that’s the market and i try not to get caught up in that shit.but i do know that 1.5bn people around the world consume tweets every month that’s a lot of people

      1. Twain Twain

        If Twitter hadn’t alienated the developer community over the years they might have been bigger than FB.*…I’m hoping they don’t mess up in this area again.

      2. LE

        To grow twitter the focus should perhaps be on why so many people don’t use it, or see any benefit to them, not the people that already use it and find it valuable.So I wonder how much research twitter has done into why certain people don’t think it has any value and don’t use or even visit. At all. For example I don’t have any use for twitter, [1] although I do breeze by Facebook or Linkedin perhaps 1 or 2 times per week to see what’s up. And there is a reason for that. [2] [4]I don’t know enough about twitter to see the value of the millions that see tweets in syndication other than as a branding value to twitter to get more users to use twitter in a way that twitter can make money. With that kind of impact already, there isn’t great additional value to getting 1 billion that see twitter in syndication vs. 800 million that are already (guestimated) there. How do you earn money with that? We aren’t talking about re-runs of “Lost in Space”. [3] Of course if that has been explained I apologize and throw this paragraph out.[1] And that is with being reminded of it every single day and multiple times per day by the media that I do watch and read. So it’s not for lack of branding an exposure.[2] Linkedin mainly and almost exclusively as an information and research utility. Facebook just to see and perhaps get annoyed and laugh at the goofy shit that other people seem to care about that is posted.[3] I might be missing something here and I assume this is not the syndication that Dick is speaking of:…[4] For example I just went to this page (while writing this comment)… and my thought is “to many clip art pictures per ounce of actual information delivered that is of benefit to me.”Compare that to the gold standard ( ) and it fails as a resource. On HN I get 30 things that I can quickly scan. So I visit that everyday and find links that I can read and that are interesting (and always the sometimes annoying naive comments). On twitter I see a bunch of clip art. Ironically I started to visit HN based on a single comment that you made several years ago. Ditto for techmeme. A single comment.

        1. fredwilson

          if 1.5bn people around the world use twitter every month, that is a lot of people using it

          1. LE

            Let me not be Dale Carnegie here for a second. (Why start now?) [1]According to Costolo in the video, 700 of those 1.5bn see tweets in syndication.Is seeing tweets in syndication “using twitter”? What am I missing?This sounds like investor wordplay. I saw a news show the other week where someone said that they “do business in 50 countries”. Sounded very impressive. Well by that metric “where someone is located that we have sold a product or a service to” I did business in 70 countries. And that was back in 2000 when I stopped keeping track of the countries. It sounds great but doesn’t accurately show much if you dig deeper. Kind of like people that put “Wharton” on their linkedin because they took a single short course there. Not what people are thinking that it is.[1] From what I read (sorry to be harsh here but you want true raw thoughts I assume) perhaps the investors are not buying this as well.

          2. pointsnfigures

            Content creation is key for Twitter, as is consumption. I have seen some bloggers recently blog about Twitter being a waste of time to drive traffic to their blogs.

        2. Twain Twain

          We’re similar in how Twitter is relatively “low utility” for us.So realizing how I’m one of those inactive users (300 million active users per month and 1.2 billion passive users = the 1.5 billion Fred seems to be referring to?), I gave some thought to how to make Twitter more purposeful for the 1.2 billion passive users like me.

          1. LE

            I gave some thought to howWere you planning to share those thoughts?

          2. Richard

            Search (Google Now), Discovery (yelp) Accreditation (linked in)

          3. Twain Twain

            Better. My team’s making an app because I like my thoughts to manifest in practical stuff, :*).

        3. Dave Pinsen

          To grow twitter the focus should perhaps be on why so many people don’t use it, or see any benefit to them, not the people that already use it and find it valuable.That’s analogous, IMO, to political consultants telling GOP presidential candidates to try to get more black or Latino votes when they’d benefit more by giving their base more reasons to show up at the polls.300 million active users is plenty to monetize. I’d focus on that rather than trying to convert those who aren’t interested in Twitter. Everyone’s heard of it by now, and it’s not for everyone.

          1. LE

            300 million active users is plenty to monetize.Don’t disagree see my other comment about selling some product or service and not just the “marsha marsha marsha” of yet another advertising product.

          2. Simone

            I disagree. Twitter is a global agora and 300m is only the beginning. I have an account but don’t use it. I am waiting for a reason to be on their platform every day.

          3. Dave Pinsen

            Everything isn’t Facebook. 300 million is plenty of users.If you don’t see a reason to be on the platform everyday, when there’s all sorts of news and views breaking on Twitter everyday, it’s not for you.

          4. Simone

            To me FB is not competition to Twitter. I use FB, but if the platform was gone tomorrow, it doesn’t mean I lose my friends. I use FB, but it is not critical to me. What the world does and thinks is critical to me, and I would love one platform to replace the tens of websites I visit everyday to feel reassured that I stay informed. I hope Twitter will be this easy to use platform one day

          5. Dave Pinsen

            If every one of the tens of websites you visit is on Twitter, then you can follow them all on Twitter and be set. If they’re not, or if they are and you don’t see the benefit of following them, there’s nothing Twitter can do about that. It’s just not for you.I’m not on Facebook. I don’t hope Facebook changes in some way to get me to use it. Whatever it’s doing is working for enough users. It’s just not for me.

          6. Simone

            I believe in iteration, I think there is a lot twitter can do about engaging me and the other hundreds of millions who have an account but are not active yet. I think twitter has a huge potential to be relevant to my life once they can focus on organizing information. I understand that after going public they had to obsess first about revenue. So I believe in this product, although today I am not using it.

          7. Dave Pinsen

            You believe in iteration? How novel.

          8. Simone

            Sorry if I sounded dumb, not my first language. I was trying to say that, unlike you, I wouldn’t dismiss 500 million registered but not active users. And I would make a guess Twitter is more concerned with the 500 million non active users rather than with the 300 million active. From a patronizing stance, you can never understand how to enhance a product and increase usage.

          9. Dave Pinsen

            Your English is fine, and you’re right Twitter is more concerned about the non-active users. I just think some of its most recent iterations to draw them in have been kind of pointless.There is one simple, obvious improvement they could make, as Bob Brinker suggested: on their unsigned in website, show the top few trending topics, instead of the current static photos of Indians playing cricket in front of the Taj Mahal, etc.

          10. pointsnfigures

            best reason is breaking news.

  4. Twain Twain

    Fabric SDK was a good strategic move plus partnership with Google search.Still it has…BIG missing pieces that prevent it from realizing its potential and explains why it lags its peer, FB.My startup #2 may plug those missing pieces now Fabric is available. Plus some other SDKs that can be mashed with it…

  5. Richard

    how do you “come to Twitter without logging in” ?

    1. ErikSchwartz

      Tweets embedded in 3rd party sites. I am not sure that traffic has that much value but it does make the reach numbers look good.

      1. Richard

        3rd party sites are syndication views.Costollo said that 300M logged in, 500M not logged in and 700 M via 3rd party sites.Hard to believe that after all this time, Twitter is still bumbling about MAU.Key metric should be time per user per month and distibuition thereof.

  6. BillMcNeely

    Personally as a non Ivy calibre, CS, no big name tech co in my background guy Twitter gives me the opportunity to fight effectively above my weight class in the startup space

    1. LE

      How so? Can you explain that? (And also what does this have to do with “non Ivy Calibre no big name tech company in your background?)

      1. BillMcNeely

        LE Twitter gives me an opportunity to interact with thinkers and leaders I would not have otherwise. The otherwise is the circle where folks with Ivy League calibre educations ( Stanford, Harvard etc) who have worked at name brand companies ( McKinsey, Google etc) share ideas. Twitter has also given me a distribution outlet for my blog posts and build a following I could never have on my own .

        1. LE

          Interesting so that is actually an angle that could be used by twitter in order to gain other twitter users, say students or any person who is on the ladder to success, and is a clear benefit.

          1. Dave Pinsen

            There’s no obligation to respond to an @ mention on Twitter, and, since a tweet is only 140 characters, responding doesn’t require much time. It also doesn’t imply any continuing correspondence relationship. Because of all that, prominent people are more likely to respond to you on Twitter than via other media.E.g., I doubt Elon Musk would respond to an email I sent him, but he has responded to me tweeting at him.

          2. LE

            An “Elon Musk” will probably only respond to you if there is a benefit to him. But for that matter so will “Joe Blow”. In the case of replying to a tweet (the way you put it) there is a benefit to him which I am guessing is one of the main motivations. You retweet what he says and also others know that he has responded to you. (Don’t they?)Note that when Steve Jobs used to reply to emails in many cases it got out that he had done so. And everybody got so excited. Why? Because it creates a sort of “elevation” that gives someone a story to tell their friends as if a King had given them more food.That said I do buy into specifically the “no obligation to respond” and “doesn’t take much time” as well.

          3. Dave Pinsen

            I don’t know what % of emails Steve Jobs responded to. I do remember one exchange that became famous, where he told off some pushy girl who was trying to have him help her with a school project. I don’t know how much “elevation” she got out of it.Oh, I forgot to mention one more advantage Twitter has for prominent people: they can easily block other users. So not only are they not obligated to continue corresponding with someone, but they can make that person disappear from their Twitter experience if they want.

          4. LE

            I don’t know what % of emails Steve Jobs responded to. Well no doubt it was almost certainly exceedingly small. Of course we also don’t know it was Jobs and not someone sitting in for him, despite any evidence to the contrary. I don’t know how much “elevation” she got out of it.By my theory, she got a great deal of elevation for sure and quite a party telling people that that had happens. Of course if mentally unstable, a different outcome (jump off building…)What could be a better thing than to tell your friends than an important person saying that you are a moron? Everybody will laugh simply because of the delta in the status of the two people. Given this happens to 100 people, I say the majority of people would brag about it and not hide it.Oh, I forgot to mention one more advantage Twitter has for prominent people: they can easily block other users.Probably not apparent to prominent people but that is fairly easy to do with email. I don’t mean bounce, I just mean have the email redirected to /dev/null so you never have to see it.Someone calling themselves “Mark Cuban” was posting on AVC one day recently. I wrote to Mark Cuban at a know address and asked if it was him. He replied pretty quickly that it was.I’ve also cold emailed several “famous” people and sold them things or have done business. If they are interested they do write back.

  7. BillMcNeely

    Wow the questions were coming in faster than rockets do in Gaza

  8. Naga Surendran

    Twitter has to do something to reduce the noise level though. As a startup founder and a twitter newbie (active for last 1 year), I find it impossible to get a quality feed, because I follow people who follow me. Maybe I shouldn’t. Of late, I find myself using Nuzzel more to consume tweets than the timeline since I get thousands within a few minutes/seconds. If its overwhelming for a tech startup founder like me, I’m sure its scary for an average person who comes to twitter.Based on my limited observation, the people I see very active on twitter are a) Journalists b) Investors c) Social Media People, because they have something to sell. Adding to this, there are bots/CRM software that would favorite/retweet any tweet with a #Hashtag contributing to the noise. So, if you don’t have anything to sell, is Twitter still as valuable as LI or FB is the question for an average user.As a Twitter user, I love the power of the platform to reach anyone and I wish they did improve the product to show me tweets by various segments such as Friend, Colleagues, Experts, news, blogs, videos etc.. to effectively reduce the noise.Maybe there’s already a way to do this or the answer might be use one of the social media software such as HootSuite but given my volume, I don’t feel like paying for them. Maybe an opportunity for twitter to acquire one of them to improve the product.

    1. pointsnfigures

      all about who YOU follow.

      1. SubstrateUndertow

        But isn’t that his point !It could be all about a customizable neural-net of topic/purpose-driven feeds/behaviors ?

    2. dulk

      Twitter can’t help that. Now what you see as a problem of Twitter is actually a glimpse of a future in which everything you will sense is coming at you as a hose. The problem is solved by attacking it one account at the time. Twitter does help me to cancel out what I see as noise. As @pointsnfigures:disqus says, by who I follow, and I trained myself to create and curate my lists. I run about twenty of them, of which 25% is public. I see twitter as gym to expand my capacity to drink out of a hose and live to tell.

  9. ErikSchwartz

    Twitter really needs to implement Andrew’s old Twitter snooze functionality so that you can simply mute an individual for a fixed period of time.

    1. LE

      It took me years to take the time to find out how to remove annoying facebook posters (like a certain cousin..). I knew that it could be done (many would not of course) but I didn’t want to take the time to RTFM to see how to do it.In any case a feature like that should be inline with a simple click, not a config and menu choice.

    2. Dave Pinsen

      They do have a mute feature.

      1. ErikSchwartz

        But you have to remember to unmute. Mute is stupid, if I want to permanently mute someone I unfollow them. Mute exists to support the vanity metric of number of followers.The brilliant thing about Andrew’s utility was that it was a mute that expired. So if someone was tweeting up a storm at a conference you don’t care about, or if someone was pissing you off you could make them go away for a predetermined period of time. Then a few days later they would reappear.

  10. Salt Shaker

    TWTR needs to do a better job educating the Street about what it is and isn’t. It isn’t FB and shouldn’t be penalized for not being so. Yes, metrics matter, but so does context.Noto says they’re working on a broad based consumer ad campaign. As a long time ad guy, I’m scratching my head and asking why? Twitter doesn’t have an awareness problem. It’s biggest prob is educating current and prospective subs about best use cases. Increasing frequency of use among current light users and dormant subs will drive the company’s ARPU and MAU metrics, though FB comparisons will always be a losing prop. Focus on driving usage among current subs before throwing money at an inefficient consumer ad campaign that likely has limited expectations for payout.

    1. pointsnfigures

      Street won’t care. Won’t cut them slack. Revenue growth is what they will focus on.

    2. awaldstein

      educating the street is a great line but kinda a my tenure I’ve tried and had mixed results.easier to say than to do. easier to point in that direction. the issue goes much deeper.

  11. LE

    I love the Swisher/Kafka fake hot seat interview. Trying to ask tough questions, but never re-questioning or hardly challenging answers that are given. I guess that’s an artifact of being on a stage and this type of venue.Dick did a great job. He seems genuine and was well prepared. I wonder to what extent he knows all of the questions in advance.

    1. Twain Twain

      He’s had almost 2 years of increasingly hard questions from the media and Wall Street and all that prep has honed his answers to Swisher?

      1. LE

        In a way it sounded like in some of the answers that he wanted to be able to be Bezos.I guess the difference is that more people (who are investors) actually get benefit from Amazon personally so they are willing to take a flyer on future profitability because they see what it does for them. And how it has changed their buying habits. And is crushing and putting competition out of business. So the profitability is less of a concern because you live it every day and you experience it and it seems real. [1][1] I mean for god’s sake I don’t have to even get into my car and visit Office Max for supplies or even buy paper towels at the Supermarket anymore. I don’t even have to plan in advance (like I did in the 80’s) I can just order a day or two before I need something. I don’t have to keep inventory. And so on.

        1. Twain Twain

          It’s SUPER-funny you mentioned Besoz because I was just about to reply to your “Were you planning to share those thoughts?”So…I was going to write this…Amazon has always positioned itself as a superior discovery proposition than Google because its search results are directly linked to actual product purchase and intent.Google has been playing catch-up in this respect and is adding a “Buy” button to its search results:*…Who recently announced a strategic partnership with Google search and launched a “Buy” button in Q3 2014?*…*

          1. LE

            One thing about whatever Google will do is that it won’t be like Amazon.On Amazon I get a history of all that I have bought from Amazon that I can easily find and re-order by searching old orders to “buy again”.That is a huge benefit. Way better than dealing with a multitude of vendors. As such I try to put as much as I can through Amazon even if the price is nominally higher. Little things like this matter. And many people think this way, not just me. We run into it with people switching from us to “keep all of there things in one place”. We can counter that in some ways if we try hard of course by giving them a reason why it is better not to have all eggs in one basket (and there are reasons…)Sometimes the advantage of other vendors trumps the Amazon “single place which tracks things” though. A case would be where I bought from BH Photo because they ship with no sales tax.Of course it would be possible for Google to duplicate this Amazon functionality. But somehow knowing the type of people that work at Google I don’t expect this to happen for a long long time, if ever. And if it does it still might not work as it does at Amazon.

          2. Twain Twain

            Amazon Prime members can also do “buy again” with voice commands via Echo (aka Alexa).*…Echo isn’t intelligent by my definitions of Machine Intelligence but Amazon’s tailored it to its specific, narrow but highly useful purpose: recurring revenues.Twitter hasn’t figured that out yet and none of its Machine Intelligence or Data Science is engineered for that. The content and data it’s collected over the last decade simply isn’t of the same value as what Amazon has.

  12. Yinka!

    From a user perspective, Twitter seems like such a *noisy* opportunity. Overwhelming traffic and frustrating sense of missing useful news. It’d be so useful if all users were auto-tagged by type based on primary use case and sortable by channel (and sub-channels), so one could follow channels in order to see more of news on topic X. Lists are inefficient because you don’t know all/best tweeters of topic X. Likewise, system recommendations of who to follow are useless for me as it’s never suggested anyone relevant to my interests and the insistence on “celebrities” is perplexing.Seems improving user utility is not a top concern strategically, but this could lead to bigger engaged/regular user base (they do have large user #s, but a large proportion are transient), more opportunities for monetization and at higher rates of revenue (due to deeper wells of relevant target users for each case).I also agree with the notion that Twitter, FB, Instagram, etc are not directly comparable; they exist very different contexts and the insistence by Wall St on simplistically lumping they together is silly.

    1. SubstrateUndertow

      from: Ben Thompson’s —>”TWITTER NEEDS NEW LEADERSHIP” Specifically, Twitter should dramatically increase the number of applications — and thus the number of potential reasons — a potential user might create and maintain an active user account. For example, Twitter could follow the Facebook strategy and build out a family of apps — one for messaging, another for news, others for specific events — and enhance the ways one could interact with Twitter content, whether that be through comments, private communities, etc. It’s ok that this is aping Facebook; what differentiates social networks is not their feature set but rather their organizing principle. Facebook is about people you know, and Twitter about those that share your interests. Everything else — including all the quixotic features that Twitter holds dear — are implementation details.Bold emphasis mine.Talking about the “no-stack-strartup” who will be first to get into the “stack-supply business” by specifically targeting the development of a pure-play “no-stack-strartup” platform.Edit:I’m not agreeing or disagreeing with the overall sentiment of his post but the above point is well taken either way 🙂

      1. Yinka!

        Yes to organization! The company seems content to let the platform be like wild west for now, while chasing ad revenue (which ain’t what it used to be). Thanks for the link; will check out the entire post.

  13. Dave Pinsen

    Jason Calacanis wrote a good post about Twitter’s recent tack toward (seemingly, politically motivated) censorship, as exemplified by its banning of Chuck Johnson:…One of the great things about Twitter is how it attracts users from all different points of view. It would be a shame (and it would likely have fewer users) if turns into an echo chamber.

  14. Daniel Clough

    Twitter is such an intriguing product.It’s the product I use the most, and the product I get the most value from. It’s not trying to do the same thing as Facebook and it certainly doesn’t feel as casual – so the comparison is a little unfair.What I will say is that you have to work HARD to get value from twitter. It took me a while to figure out how to efficiently use it for what I want – which is content discovery. You have to follow a low number of people (sub 30), you can’t follow people who post too frequently, and you have to be ruthless in unfollowing people who you’re not finding useful. Do that and it’s second to none for content discovery IMO.I’d imagine it’s the same if you decide to use it for news, following celebrities, friends etc.The fact you have to think about it and work at it, feels a problem to me. They need to figure that bit out if you ask me…Either way, I like Dick C. You can just tell he’s a good CEO. I wonder if he is a good product person?

    1. Dave Pinsen

      30 is a very low number to follow, but to each his own. IMO, the sweet spot is somewhere between 500-1000. Anyone who’s following thousands of users isn’t really following them.

      1. Daniel Clough

        wow. I can’t understand how you can properly follow anyone even going over 50. As soon as I do so, I find myself missing updates from people which contain things I really wanted to read (blog posts, smart advice etc.)

        1. dulk

          50 would have been humongous before Gutenberg. Since 21.03.2007, you *are* the printing press. Tuning your inflow, and fostering your outflow is what a modern day Gutenberg printing press has become. While Ink and Paper were the scarce tools then, now Time and Delegates are. Twitter is a giant rowing machine to train your capacity to follow more and lead better.(Delegating the non important non urgent decisions about what content informs you and yours to less than 50 others is dangerous for survival of your time. For Dave, 500-1000 is the sweet spot. In 10 years time, this number could tenfold if Costello and we succeed.)

  15. steve nson

    Twitter reaches 800 million people so what? He sounds like he is a running a startup and eventually they will figure out their business model. The company has not articulated a strategy to capitalize on their reach and audience. I just don’t get how such an answer can illicit confidence in Dick Costolo’s vision of the company.

    1. fredwilson

      They have a great business model. They do billions of dollars of revenue a year and produce hundreds of millions of positive cash flow a year. What’s wrong with that?

      1. JLM

        .Fred —I am getting some very confusing signals as to what is happening at TWTR when looking at their financials.Here is the kind of stuff I look at with my Dodd-Graham hat on.…It doesn’t show anywhere near what you are describing. Am I missing something?I have no dog in the fight either way — just want an accurate picture.JLMwww.themusingsofthebigredca…

        1. Richard

          Noncash compensation

          1. JLM

            .I don’t think that is the issue as it is considered an “extraordinary” and the numbers disregard that.Doesn’t show up when you double check EBITDA.JLMwww.themusingsofthebigredca…

        2. fredwilson

          click the drop down and look at the quarterly data instead

      2. steve nson

        Absolute nothing wrong, but so did Blockbuster and RIMM until they didn’t. To continue growing, the leader of the company needs to have a clear sense of what makes his company relevant and where future growth lies. Compare Twitter to Facebook, Amazon, Google or even Apple and you see the difference in terms of how they are attacking the future.(New products, new business lines, disrupting industries etc)I don’t know what Twitter means to the world 5 to 10 years from now and neither does Dick Costolo. I am not the CEO of Twitter but Dick Costolo is.

      3. kidmercury

        twitter’s free cash flow:…average over the past 5 years is -18.86 milion per quarter.

        1. fredwilson

          the past was the pastcurrent and future is what matters

          1. kidmercury

            yes, that is one perspective, though it cannot factually be said that twitter brings in “hundreds of millions of positive cash flow a year.” at least since going public their annual free cash flow has always been negative.

          2. fredwilson

            operating cash flowinvesting and financing are at the control of mgmt

          3. kidmercury

            if investing cash flow were zero operating cash flow could (and in my opinion and in probably conventional opinion, would) decline. so i don’t think disregarding investing cash flow 100% is fair, though of course this is all any event, twitter still doesn’t have “hundreds of million in [operating] cash flow a year.” if we combine 2013 and 2014, the only two years of positive OCF, we still don’t get to are the operating cash flow numbers:

          4. fredwilson

            present, not past

  16. Simone

    My intuition is that Twitter is a much more important platform to humanity than FB, it’s just that we didn’t figure out yet what to do with it. Much like the internet :). I truly hope the product will identify and reach its revolutionary potential.

  17. LE

    I am thinking about many years ago how a single tiny syndicated story about what I was doing at the time, that was in maybe 20 newspapers, put a boatload of money into my pockets. One story. God knows everyone would be impressed if they knew the amount of money. I am also thinking of another time where someone that I know was on a national tv show and was selling something (a product) and that exposure put a boatload of money (and still does) into their pocket.This is exposure that twitter gets every single minute of every single day but twitter doesn’t really sell anything so all of that goes down the drain. (All of the free twitter publicity that is…)So it now occurs to me that with all of the mention of twitter that happens each and every day perhaps the way for twitter to make money is to actually sell something other than what they are selling now. (Advertising is what they sell). In other words twitter is a brand. The question is what products or services can twitter sell to take advantage of the billions that know about twitter and are exposed to that brand or visit the website?Let’s say for example that twitter decides to sell “beer” or “whole wheat pasta” or “premium widgets” or “hair color” or hotel rooms or canaries or whales?. (Odd examples to show the concept). What is the chance that as brands go given the right product or service people wouldn’t choose and buy that product the same way that they bought Paul Newman’s salad dressing?The task at hand is finding the right product, service or offering that people will pay for and taking advantage of the twitter brand.

    1. John Rhoads

      I don’t think these are the right analogies because of the complicated multi-customer models of advertising/distribution/publication.I agree that Twitter is in-part a brand.The challenge of recode, Twitter, and many others is how competitive the “attention” game is…

  18. JLM

    .There is no question that even if Twitter’s data is off by a order of magnitude that it has reached a lot of people.It is debatable whether those people are, in fact, touching each other and that may not matter.As to its importance, it has clearly become an effective tool for communication with the White House and State announcing foreign policy initiatives on Twitter–behavior that might have been thought unthinkable a few years ago.War is being made and reported on Twitter. I bet the NSA and CIA (the dirty tricks bunch — you know who you are, fellas, haha) are having a field day. Still, it is making the world smaller and communication movement faster.I am a little disappointed that the CEO doesn’t have a “talking points” idea of where he intends to drive the business.I took away something like this — “We’ve got a shit pot of subscribers. Huge numbers. Not sure exactly what we’re going to do with them or how we’re going to monetize them but I’ve been hiring great people, they show up for work on time and we’ll be doing what the market tells us to do as we learn it. Trust us.”That is disappointing to me in the “CEO” sense of sticking a stake in the ground and making the world walk around it.OTOH, it is a little refreshing that he is not slinging hash telling us he has the world figured out and he’ll let us know shortly.I do wish he would dress a little nicer [bug up my ass] and look a little more professional. I don’t mind startup “hoodies” but at a billion dollar market cap, a CEO should go to Jos. A Bank and buy one get 5.9 for free. May just be me. Sorry.Companies like Twitter and Amazon which are “cool”, have made investors a lot of money but haven’t exactly wowed with real GAAP profit cannot continue to operate on fumes and perfume forever.I am modestly skeptical but would immediately concede this is a company with a huge presence and betting against 1.5B anything is a dicey bet.JLMwww.themusingsofthebigredca…

    1. pointsnfigures

      Not sure he wants to telegraph his whole strategy to the street. As long as the team knows it, and executes, they can do it. Corporations shouldn’t articulate strategy until they want their customers to act upon it.

      1. JLM

        .Fair play but they don’t really have a reason to do that; they have no real competitors.If so, they should say that.JLMwww.themusingsofthebigredca…

        1. pointsnfigures

          Depends on how you define their competitors. My kids use Snapchat a lot more than Twitter.

  19. george

    Outsider view: Twitter is an amazing product and the organization deserves tremendous respect – they have truly built the absolute best live, mobile storytelling experience!My POV: DC has executed very well on many levels: (1) Revenue Growth – comparative sales from 2012-2014, nearly double the YoY sales growth rate of FB (110% vs.58%); (2) Strategy Development – acquisition of Periscope should silence the critics…enormously brilliant move. Periscope’s live streaming further reenforces Twitters core strength and position in the marketplace – any user, anywhere in the world can broadcast anything live whenever they like; (3) Platform – the ecosystem is sound, established, competitively more relevant and the runway to acquire more users and revenue is very long.It’s hard to lead a public company and manage wide expectations. I’ve read plenty of criticism and most of it I disagree with. The vision is clear to me, Twitter is strategically and socially pioneering all forms of spontaneous digital communications!

    1. fredwilson

      exactly. it is easy to critique. all the folks pissing on dick in this thread ought to try doing the job.

      1. TJRoberts

        I think the lack of investor patience is a general symptom, and Costolo is the easiest pressure point & lightning rod. I don’t recall if Bezos faced this level of constant criticism when Amazon went through much worse rock bottom valuations, but playing the long game requires a level of patience that is not as prevalent today. There’s an irony that the ‘immediate media’ revolution also has enabled this generation of instant armchair CEOs to broadcast their disapproval of Costolo.

  20. pointsnfigures

    It was nice to see a CEO be rational, not defensive, not full of bullshit (although he did shade the numbers a bit) and not speak in typical corporatese.I missed buying the dip. But, waiting for the right opportunity to buy with both hands

  21. John Revay

    Just saw this come across my twitter feed this AM :)If Twitter was a country, it would be the 12th most populated country in the world.— Google Facts (@GoogleFacts) May 31, 2015

    1. Matt Henderson

      If by citizenship of a country you mean spending time reading comments about some celebrity gossip, instead of, you know, living and working in an actual physical location.

  22. Stuart Willson

    I haven’t read through the thread but as someone who uses twitter all the time (using Tweetdeck to organize streams by type), I am someone, who like Chris (though I don’t know him), just really wants the platform to be as good as it can be.As one example, I sure do wish it were easier to engage and have conversations. It’s pretty amazing how many comments you’ll see on a Facebook post relative to a tweet, despite that the audience on Twitter – I would imagine – is more sophisticated and more likely to engage.And so, whether it’s engagement, or issues around search, organization and managing the firehose, most of the criticism I hear/see (aside from calling for Dick’s head) is coming from a good place and usually has solid reasoning. So, I don’t see any reason why people who care about the platform shouldn’t suggest areas of improvement. Pissing on people is another story.

  23. Sebastian Gonzalez

    I understand that your job and perhaps moral duty now is to back Dick Costolo. I even don’t care about what Wall Street has to say about tech companies, since in my opinion that’s a lagging indicator.But the problem with Twitter is probably that Costolo tried to build a company out of a great product, and in the process he killed what made that product so special: the innovation that came out of it’s ecosystem.Without that, Twitter is still a good product, but it isn’t special anymore. 5 years ago people were excited about it. Not now. The product hasn’t evolved much since then.Wall Street’s financial projections probably assumed that Twitter would continue thriving like when the ecosystem was alive. But it isn’t.

  24. dineshn72

    I rarely comment here, but — I get the feeling Fred is stepping out into a territory that doesn’t come naturally to him (in the sense he is publicly stepping into a minefield, even if trying to do so delicately), and I applaud him for that. Guys like him need to do that more often, even though no one likes the mud slinging that inevitably follows from the peanut gallery, muck rakers and cowboys 😉 DickC has a tough gig, but give him time, and this is an incredible platform that is hard to replicate – it is only a matter of time.

  25. BengtNilsen

    Nobody discussing the magnitude of stock-based compensation…

  26. dick-not-costolo

    Fred, at the risk of being shouted at by your faithful let me say this. Twitter really, really lost the plot long time back. I remember telling a friend in 2010/11 that Twtr will be more successful, survive longer and more impact-ful than FB. I doubt it now. There is so much they could have done and still do to make it more useful, but they seem to be more worried about revenue growth (not an evil thing) etc.And screwing the developers was a total dick move. Didn’t help.And please, there was nothing wrong with what Sacca said.

  27. Lucas Dailey

    I use and love Twitter. I haven’t put my CEO glasses on and given the company a good once over, but..I’ve always been a little uncomfortable that they bear the sole cost of the infrastructure of Tweets, but don’t control the interface.As a parallel look at email: could a single company bear the infrastructure of all email? Google slings a lot of emails in Gmail, but they (mostly) control the interface, and more importantly their business models aren’t all built around and reliant on maintaining the entire infrastructure of email for free.Facebook posts could be another example, but unlike Twitter they fully control the interface.Owning the backbone of massive communication protocol, with no way to directly charge for it, and no enforced interface, is just a little scary to me.

  28. Twain Twain

    I haven’t done much with Twitter or Facebook’s APIs as a developer before but am now on such an adventure. Whilst other developers were piggybacking off their APIs and tapping into their firehoses to create “no-stack” startups like Tweetdeck and doing data viz on that firehose, I was busy:(1.) Trying to solve arguably the hardest of hard Human+Machine Intelligence problems.(2.) Custom coding a full-stack invention by hybridizing a few languages and mobile+Web technologies.The other day in the ‘No-stack startup’ thread LIAD made this comment: “For those who’ve been burnt before building on others infrastructure only to be told one day “hey kid, get off my lawn!!” – the idea of a leveraged stack startup is as appealing as getting poked in the eye with a rusty fork. Twice.”That made me think of examples like TwitPic which piggybacked off Twitter API:* Twitter has also steadily narrowed the number of companies to which it grants full access to its API over the years.(…Recently I put a new team together to build out a product vision I have.It’s “no-stack” and makes use of Twitter Fabric.The tool sets and documentation are fine. It takes less than half an hour to create an App in Twitter Mgmt Console, get the userID and custom keys and have an iOS app communicating with Twitter and a database, and collect data inputted by users.Developing no-stack apps with APIs is easy peasy and doesn’t require much problem-solving.However, we are going to risk manage the possibility of Twitter saying “Hey kids, get off our lawn!”If they do that, it wouldn’t be in their interests because what we’re innovating is…GENIUS. And ahead of the curve to what FB is doing.

  29. Yinka!

    I don’t mean FOMO, I mean frustration of plenty of noise crowding my feed at expense of the few but more useful bits I’d rather see. I definitely don’t want to see it all, per se.

  30. steve nson

    How exactly does this translate into making more money? Twitter is no longer a startup, they are a publicly traded company, which means the metric is profitability. Dick Costolo has to explain how twitter handles translate to higher earnings for his company.

  31. LE

    there are huge opportunities to monetize that engagementYeah but “huge potential” is a cliche in business models.The question remains (and one that I asked). Given that seeing @ on the jumbotron is great publicity for twitter given that it’s 2015 and everybody already knows about twitter how is having @ on the jumbotron directly putting money into the twitter bank account? I am only seeing “keeps twitter in front and relevant” which is the same reason you see advertising on billboards at ballparks. It doesn’t really sell, it just keeps it in the forefront of people’s minds.

  32. Dave Pinsen

    Didn’t they bring in Google to help with ads? That didn’t sound encouraging.I’ve advertised with both, and both seem overpriced to me.I’d make a few changes to the revenue model if I were running Twitter:1) Start charging engaged, first world users – i.e., those who are hooked on Twitter — for using it. The key here would be to figure out who’s an engaged user, but I’m sure that wouldn’t be too hard for Twitter to do. And the fee could be differentiated by the number of followers. So, for example, for users from first world countries (or for those who don’t allow their location to be tracked):< 500 followers: $0 per month500 < followers < 1000: $12 per year1000 < followers < 10,000: $24 per year10,000 < followers < 100,000: $36 per year> 100,000 followers: $0 (figure Twitter needs them more than vice-versa).2) Let anyone pay to get verified. You could charge somewhere between $100 and $500 for that.3) Limit ads to users within, say, 1 degree of separation from you. So, one of your followers, or one of your followers’ followers could buy an ad or promoted tweet in your timeline. Because of that restriction, ads would be more relevant and more rare, and Twitter could charge more for them.

  33. kidmercury

    they don’t need to be profitable so long as the share price is high enough, they can just keep issuing stock. here’s a chart of their shares outstanding:

  34. steve nson

    That’s an Enron type business model 🙂 or the greater fool theory. As long as someone is willing to pay a higher price than you did, it’s all good.A legitimate business has to be profitable to be considered a smart investment.

  35. Girish Mehta

    That is interesting. According to this, shares outstanding is up by 20% within 18 months since IPO. Thanks.

  36. kidmercury

    i agree 100%

  37. JLM

    .Remember on thing about Enron — it was a substantial business before the management started to cut corners and move investments (liabilities) off the balance sheet.If someone had called “calf rope” at some time and stopped them before their manifest wickedness became public, they would still be in business today.They were a real business until the pencil whipping started.JLMwww.themusingsofthebigredca…

  38. steve nson

    Maybe. Twitter is a product that is great for self promotion, Google is a utility(something we need to live our everyday lives). In time, Twitter might get there but the CEO’s answer was not convincing.

  39. Dave Pinsen

    I guess if someone’s willing to pay for the ads, they’re not overpriced, but my experience has been that they’re overpriced for me. And every time I watch a video on Google’s YouTube, I get hit with an ad trying to get me to use Adwords again.I think partnering with Google on ads is probably a mistake. Twitter ought to further develop its own analytics and carve out its own advertising niche.

  40. steve nson

    It is but will the audience eventually shift to a different platform at some point? What’s their innovation strategy? How are they going to create new business lines etc? I get a lot of news from Facebook

  41. dulk

    In the other reply you say something about noise too, @YinkaAre you saying you make lists yourself or do you follow lists made by others? The only way it can work with limited noise to your likings, is if lists are yours. Carefully curated and privately or publicly available, as you care. They will work magic on the noise. What is noise and what is useful can only be distinguished by you.I think this is the non-telegraph part in Costello’s strategy: As we refuse to be mediated by old-skool broadcast, each brain needs eventually to figure out how to take responsibility to be the medium.To accomplish the noise free feed, companies have algorithms-only solutions on one side and hybrid artificial/human intelligent solutions on the other end of the strategic spectrum.(I bet Costello and his team figure that some humans find music in noise, which algorithms will never understand)

  42. Yinka!

    I was referring to lists I make myself; I don’t subscribe to others’ lists, partly in quest to keep noise low. But even within my lists, I often only want to see content of type X from list member Y, versus everything Y tweets. Unfortunately, it seems implementing more sophisticated AI/hybrid capability for noise-free feed at scale is probably not something the company is concerned with now.

  43. dulk

    I get it @Yinka! Thanks. That would be hybrid.