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Are You All A-Twitter?

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I made a conscious decision recently about my writing. You see, I've covered technology, business-small and large, entrepreneurs, the Internet, software, wireless technology, rock 'n roll and more. I will continue writing about these things about which I am passionate.

However, I'm going to take a new thrust occasionally and that's into something I'm going to call "The Impact of Technology on Humanity." I will be asking myself, then researching and writing about three main things:

1) For established, broadly used technologies or apps, are these products helpful? Do they solve a problem quickly, efficiently and economically?

2) Is there identifiable hype--overstatement, embellishment or lies--around the technology and why we should be aware. In technology, there almost always is.

3) Where will the beginning technology go? How can it improve? What would work better for us humans?

What motivated me? You see, when I wrote my recent slamming of Facebook, I really researched the heck out of it and in that process, learned so much; not just about Facebook but about technology, about other peoples' use of it and about us as humans, struggling through our days and nights. "Is technology helping us or hurting us?" I wondered.

Now I love technology. Understand that. I'm also very suspicious of its lofty claims; ways in which it impacts our health; and very worried about what I call "Tech Stress" in our everyday lives using technology of all sorts.

So with that prologue, let me step into Twitter.

Full Definition of TWITTER

twit·ter verb \ˈtwi-tər\
Verb
1: to make fast and usually high sounds
2: to talk in a quick and informal way about unimportant things

Noun
1: the short, high sounds that birds make
2: a light, silly laugh
3: a trembling agitation, quiver
4: a small tremulous intermittent sound (as of birds)
5: a light chattering, a light silly laugh, giggle
Intransitive verb
1: to utter successive chirping noises
2: to talk in a chattering fashion, giggle, titter
3: to tremble with agitation, flutter
Transitive verb
1: to utter in chirps or twitters
2: to shake rapidly back and forth, flutter

Synonyms: babble, blab, cackle, chaffer [British], chatter, chin [slang], converse, gab, gabble, gas, jabber, jaw, kibitz (also kibbitz), natter, palaver, patter, prate, prattle, rap, rattle, run on, schmooze (or shmooze), talk, chat, visit Related Words: gossip, tattle; descant, discuss, expatiate; yak (also yack), yammer, yap
Near Antonyms: bawl, blubber, cry, sob, weep; howl, scream, squall, wail, yowl; bleat, pule, whimper, whine; sniffle, snivel; groan, moan, sigh

"The twitter of songbirds filled the air." "Our grandmother gets all in a twitter if she doesn't get her weekly phone call right on time."

Right, I think that sets the scene.

As I've said regularly here, I'm an 'early-adopter' of everything tech. Twitter is no different. I tried it in, let me guess here, about 2007. When I first tried it I thought, "Why in the world do I want to know that some businessman is having a slice of pizza at O'Hare? How does that help me put food on the table?" I thought then, and still think now, that I don't and it doesn't.

But don't let that stop you world. Everybody, let's get on Twitter and begin our omnipresent, never-ending stream-of-consciousness thread of "Where I am now," "Here's a cool article" or "Look at who I'm with." Of course to be fair to Twitter, it's become so much more important now covering things like, "Look what I think of Obama/Romney/Palin/Pelosi," "Look at this cool new technology I've discovered" or "Look what I did today." It all "look, look, look ... " all the time ... 24/7. As if anybody really cares. LOOK at me. Don't you see? Nobody does.

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So to answer my question number one from above, "For established, broadly used technologies or apps, are these products helpful? Do they solve a problem quickly, efficiently and economically?" I have to respond that, "No, I'm sorry. Twitter doesn't solve any problem in my world."

The entire value proposition of Twitter is about vanity. And self-aggrandizement. And narcissism. There's nothing else there. "LOOK at me!" is what the investors invested in. Speaking of Twitter's investors, let us investigate who put more than $1.16 billion into the company (according to Crunchbase).

Series A, 7/2007
Charles River Ventures
Union Square Ventures
Marc Andreessen
Dick Costolo
Naval Ravikant
Ron Conway
Chris Sacca
Greg Yaitanes
Brian Pokorny
SV Angel
$5M

Series B, 5/2008
Union Square Ventures
Bezos Expeditions
Spark Capital
Digital Garage
Kevin Rose
Timothy Ferriss
$15M

Series C, 2/2009
Benchmark
Institutional Venture Partners
Spark Capital
Union Square Ventures
Charles River Ventures
Digital Garage
$35M

Series D, 9/2009
Insight Venture Partners
T. Rowe Price
Spark Capital
Benchmark
Institutional Venture Partners
Morgan Stanley
$100M

Series E, 1/2010
$5.17M

Series F, 12/2010
Kleiner Perkins Caufield & Byers
$200M

Series G, 8/2011
DST Global
DFJ Growth
Alwaleed Bin Talal
Chris Sacca
T. Rowe Price
$400M

Secondary Market Transaction, 9/2011
$400M

Now far be it from me to criticize these investors or the Twitter founders. What I am writing now are my opinions; educated or uneducated though they may be. I just happen to disagree with the entire proposition that Twitter should receive over one billion dollars in capital or have doubled or tripled revenue every year since 2010. Couldn't these savvy investors have invested in something that cures cancer or Parkinson's or something more beneficial to the world than Twitter? Can anybody say Webvan?

Since Twitter's IPO, these investors have undoubtedly become richer from their financial support of Twitter, a company with $664 million in 2013 revenue and a net loss of ... oh look!! ... a net loss of $645 million. How convenient; it's almost like an economic wash. After paying no taxes, foreign or domestic in 2013, Twitter has little to show for all the hype and could be considered to have never existed but for the ever-Tweeting public. One might ask whether Twitter is a contributor to the global economy and US tax base or a drain.

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Wall Street: Twitter's Number One audience

Once a company goes public, the strong focus on their customers, innovation through R&D and most of the fun of running and working at a small company goes right out the window. Wall Street becomes the god they worship and it's an unforgiving, stern and mean god indeed, sucking all fun and spirit out of the organization. Only the stock price matters.

Prior to the Twitter' IPO, the only way the investors were going to get paid back was if some competitor like Google or Facebook or Microsoft or Yahoo! were to buy Twitter. Now as the Twitter' share value rises and falls with the fortunes of the company itself, the only salvation for these investors cum shareholders looking to further enrich themselves is still a trade sale. I've identified this malodorous situation as one of the key predecessors of a 'Dot-Com Bubble' or 'Tech-Wreck.' When a company has only two options for its continued success, to go public or be sold, and no potential for staying independent and becoming a profitable, 'built-to-last' enterprise, well then, there's another bubble already upon us.

And, I can imagine Twitter's investors saying to me upon reading this, "What do we care? We've already cashed-out." That's true. And if all you want to do is make money with no other goals, I'd say that's a pretty myopic and short-sighted mindset which can never result in your investing in and building anything that is ultimately worthwhile and long-lasting. Moving money from one person's pocket to another, is not an egalitarian process.

To put a fine point on Twitter's financials: I don't like them. Not one bit. With my limited financial and economic knowledge, I took a quick look at the MarketWatch financials for Twitter (TWTR).

Besides the horrifying losses and net sales figures, there were a few things that jumped out at me, stimulating my suspicions. First, Twitter's 2013 COGS (Cost of Goods Sold) was more than $268 million of their $664 million total revenue. To me, again with my limited knowledge, I find the COGS--how much it costs an enterprise to deliver its product, all-in--to be a crucial financial metric. And whenever there is malfeasance, it can often be due to an inflated COGS in order to reflect a loss and defraud investors/shareholders or allow the founders to live a lavish lifestyle. Now I know there are all kinds of costs and expenses thrown into the COGS, but I have a hard time believing that Twitter's COGS is 40% of total revenue when they have a preexisting product that costs virtually nothing to manufacture, having been 'manufactured' in 2006. If they were manufacturing a physical product like an iPhone, then alright, they would have significant, tangible expenses but how much does a Tweet cost to make?

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Another financial worry was the SG&A line. "Selling, General and Administrative Expense" is defined as "all direct and indirect selling expenses and all general and administrative expenses of the company," by Investopedia. They also go to great lengths to highlight something I say above by saying, "High SG&A expenses can be a serious problem for almost any business. Examining this figure as a percentage of sales or net income compared to other companies in the same industry can give some idea of whether management is spending efficiently or wasting valuable cash flow." Twitter's 2013 SG&A Expense was $1.03 billion; $340 million more than it took in through the door in sales revenue. Hmmm ...

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The last concern was the R&D (Research & Development) expense. With high-tech companies, their investment for R&D is crucial to their survival. Giants like Apple, Microsoft, Google, Facebook and others make these brobdingnagian investments because they have to. To remain competitive. And though they sometimes come up empty, there are generally some results they can point to after the expenditure. Twitter's financials indicate a 2013 R&D expense of $593 million. This, I cannot fathom. If I were a Twitter shareholder, I'd be all over this number. "So please Mr. Dorsey, can you tell us shareholders why this number is almost 90% of total revenue? And once you've done that, please inform us about the R&D results achieved." Nobody would want to receive that question in front of an annual shareholder meeting, least of all Jack Dorsey.

And that brings us to Jack Dorsey, the Twitter lightning-rod, 'rock star' and current "Executive Chairman," if his title didn't change last night. One would be correct in assuming that at some point in the Twitter gestation period, somebody must've said, "Who's gonna be our front-man?" like the lead singer for U2. Dorsey was, and continues to be that guy. Though he's no Bono, that is the clear Twitter' marketing strategy with Dorsey, make him a star in the media; wrap him up in amaranthine hyperbole and complimentary adjectives; and make it seem that this delicate genius-hero has built something very special to humanity. Nonsense. His other company, Square has a much stronger value proposition to its users than Twitter ever will.

In response to my question number two, "Is there identifiable hype--overstatement, embellishment or lies--around the technology and why we should be aware. In technology, there almost always is." My answer would have to be: "Yes, there is identifiable and annoying hype surrounding Twitter."

Beyond the vanity aspect of Twitter is the 'signal-to-noise ratio' aspect. I wrote about this dynamic in the Facebook column but essentially, it is that the value of any network--social, virtual or real-life--can only be as high as it is easy to navigate. In other words, the more 'nodes' or in Twitter's case, people in the network, the harder it must be to navigate and therefore accomplish anything. Meeting new people helpful to you making your living, your business or any productivity at all becomes impossible when there are a billion or hundreds of millions of people Tweeting their 'white noise.'

As with my Facebook column before this, Twitter's reach-and-frequency and impressions numbers that they give to advertisers and Wall Street are momentous for their survival. And the advertising numbers are not looking good.

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The tendency to 'overstate' in some cases and in others to outright lie about user data and advertising numbers such as CPC and CPA, is irresistible for these tech/social-media giants to inflate.

The upward trend for Twitter as the communications method of choice may be drawing to a close. People I talk to tell me that they've already moved on. While the people still Twittering away madly carry on oblivious, those of us who were in that place years ago and who have stopped, wonder "When will they move on?"

The correct answer for me to my third question, "Where will the beginning technology go? How can it improve? What would work better for us humans?" is this: I cannot imagine where Twitter can go from here. Perhaps Dorsey has a master plan. Let us hope for Twitter's shareholders' sake, he does. It seems to me that at the 140-character limit and as established as it is, there's nowhere but down to go.

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