A few thoughts on a sustainable business.

A couple of hours ago I argued why Twitter needs to make the changes it’s making to stay independent.

Now I’d like to write down a few thoughts on why I agree with what Twitter is doing.

You know what happens if you don’t make enough money to sustain your business? One word: Instagram.

Everyone loved Instagram, most still do. But let me ask you: Do you really believe that Instagram will be better, having been bought by Facebook?

Let me remind you that Facebook is the company that IPO’d a while back, and to date has managed to wipe out billions of dollars, closing at the lowest valuation since said IPO just today. From $38 to $19,88 in a few weeks. Wow…

I’ve said this before: Facebook has no sustainable business model. They have 500 million mobile users and make no money off of them. How long do you think this will go on? What does that mean for Instagram and Facebook’s own mobile apps? Right. You know.

This is a point where I agree with Brian S. Hall: Almost all VC-backed/funded ventures are there to make them money, not you. Preferably by selling to a huge tech company. Nobody builds a business anymore to stay in business. They’re being built to be sold.

And this is why I understand what Twitter has to do.

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2 comments on “A few thoughts on a sustainable business.

  1. dinakaranonline says:

    Interesting take Scott !

    But there seems to be some contradiction : You say Twitter needs to do those changes to stay independent which means to make money from ads and sustain in the business .

    And then also argue that Facebook has no sustainable business model and most of them are accessing Facebook from mobile.

    If Twitter follows the path of Facebook , with regard to monetizing , even if it is independent , how is it good for Twitter ?

    Am I missing some thing here ?

    • scottph says:

      Well, what I’m saying is that Facebook on mobile doesn’t generate any profits for Facebook that are worth mentioning, but I think Twitter does actually generate profit from mobile, albeit on a smaler scale, which is all they need because their oprations are much smaller than Facebooks. I think Twitter has the advantage here, because they are predominately mobile, and have always been, whereas Facebook makes most of it’s money from the web and games on the web.

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