Another Twitter cynic

May 27, 2009
By

Serial CEO Peter D. Csathy says:

Twitter’s revenues will pale compared to the ever-growing expenses needed to scale the service. And, my prediction is that the Twitter nation will lose steam in its passion and the bloom will be off the rose.

So, Twitter — here’s a tweet in less than 140 characters — “SELL NOW!  Follow YouTube’s lead!”

It’s interesting when I see people talking about how they wish they had thought of Twitter first. As I see it, that misses a critical point.  First, you have to come up with the $55 million it has taken to create and operate the service (so far).  Do you have access to that kind of money?  If not, then the idea might not be enough.

It’s a myth that if just any schmo came up with a Twitter-esque idea that VC money will come rolling in.  There are plenty of other ideas that could have lost $55 million in the same amount of time on the cutting room floor (that never receiving funding and therefore went nowhere). @Ev was not just any schmo – he was already rich and had already made a bunch of VC’s a lot of money before he started Twitter. He may not know much about building scalable infrastructure – guess what it doesn’t matter – he knows how to raise money.  And that’s what matters.

Likewise, it’s a myth that the users (insane growth) come first “without spending money” and that the money comes after.  This happens one in a zillion times but  even in most of those cases, at least SOME money came in early. Many startups that have created the mythology that they had “amazing growth without any money” are BS. They raised a lot more money than people think before they had significant growth (Skype, Facebook, and Twitter all come to mind).

Twitter is cool (but also has issues) but it’s taken $55 million (and 45 people) to get here and they still don’t have any revenues or a published plan to get revenue, so the costs and requirement for more and more other-peoples’ money goes on. The founders themselves recently said “We’re one percent into Twitter.” Does that mean they will need $5.5 billion? 🙂 They also said “if we described Twitter in three sentences, the first two would be about not putting too much fidelity on it, and the last sentence would be ‘we don’t know.’

So before you start having Twitter-envy, you need to ask yourself, “do I have access to $50 million (or $5.5 billion)?” If not, then don’t worry about it – you were never going to build a high operating cost company like Twitter or Youtube anyway, whether you had the idea first or not.

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