Does an amazing and revolutionary idea translate to big bucks?
This is the question that investors will be asking as Twitter just announced a loss of $511m in the 4th quarter. Yes, Twitter’s instant messaging was groundbreaking and really took ‘Social Networking’ to a whole other level. But why isn’t it making the big bucks like Facebook and Google? After being around for 8years as opposed to Facebook being around for 10?
It is shocking because Twitter (little white bird) has become one of the most visible and popular brands in the world today. Popular is the key word here! It is not only popular but the popularity of others is judged by it. Just last week Katy Perry logging 50 million Twitter followers made headline news. It’s like the new Queen B or well Queen T, with everyone vying for its attention.
So, why isn’t this popularity translating into $$$$? If it were another firm, it will not be as shocking. Well, $511m loss is a huge loss! So, lets say it will not be as headline grabbing. (A friend of mine stressed that people live their lives on a hundredth of that amount and asked whether the money fell out of a bag, just to make sense of the huge loss).
I believe Twitter’s major issue is that the company is still trying to find a way to earn money. I recall when Twitter was preparing to launch its IPO, analysts too were skeptical of its earning capacity, seeing as along with Facebook, earns its income almost exclusively via adverts, in this case, these are promoted tweets.
Frankly, stock analysts on Bloomberg state that Twitter is not really expected to make a profit till 2016 anyways, so I can assume the losses were expected because by and large it is still a relatively new firm, which is finding its way.
What I find intriguing about this is that, usually people will expect Twitter to be making serious monies, maybe even more that Facebook. Yes, it’s a lovely idea. One can even use words such as ‘Ground-breaking’ and ‘Revolutionary’ to describe Twitter. Its mission is “To give everyone the power to create and share ideas and information instantly, without barriers”. Which I believe has been met.
By no means is this a diss piece, because analysts are still very confident in Twitter’s earning abilities. But this loss just goes to show that ideas are amazing and you have some ideas that are groundbreaking. But translating an idea into a profitable business is a completely different ball game!