LinkedIn

Don’t Rush the Cash Flow

TWTR crashed 20% last week after Twitter’s earnings report indicated a slowdown of user growth.

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The income statement, at first glance, would appear to be a winner – TWTR beat analysts’ revenue expectations by 12%, with reported earnings of 2 cents per share as opposed to the 2 cent loss that was expected.

Silly Twitter. You’re an internet stock, which means shareholders care about user growth, not cash flow. Every last cent should go towards making the fire burn hotter.

Remember, Facebook was founded in 2004 and did not become cash-flow positive until the end of 2009. Google was founded in 1998 and turned profitable in 2001, with the invention of Adwords. LinkedIn was founded in 2003 and probably didn’t become profitable until 2010.

Check out these gross margins:

Quarterly Gross Profit Margins, Dec 2013. Source: ycharts.com
Quarterly Gross Profit Margins, Dec 2013. Source: ycharts.com

Twitter, you have lower profit margins than Facebook, Google, or LinkedIn. If you are coming back with positive net income, you’re doing something wrong. Your cash flow is too strong. Get back out there and lose more money for your shareholders!

But only in the name of user growth, of course.

See Also:
Which Internet Stock is the Most Overvalued? –New Yorker

The Superpower of Invisibility

René Magritte, The Pilgrim
René Magritte, The Pilgrim

I am learning to master the power of invisibility. It is a superpower that is bestowed upon us with age, but young people make every effort to avoid this endowment.

No one ever really wants to become invisible. We spend our youth fighting for as much attention as possible. That’s how we attract mates and whatnot.

An interesting question was posed on Quora: What do people in Silicon Valley plan to do once they hit 35 and are officially over the hill? Do the Sunset Squad Robots come and abduct them? Does their Lifeclock crystal turn flashing red as they are shuttled into the Carrousel for Renewal?

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Some of them go on to found companies like Zynga, LinkedIn, Salesforce, and Wikipedia. We don’t pay attention to these people, because old people aren’t sexy.

If no one hears a tree falling in the woods, it makes no sound. If nobody looks at 35-year olds, they’ve unlocked the magic power of invisibility.

Forbes publishes an annual list of 30 under 30, the entrepreneurs who are out to change the world. Fortune has 40 under 40. There is no 50 over 50, because nobody cares.

When no one is looking at you, there’s no one to impress. Priorities become intrinsically motivated. Invisibility is liberating.

We all become invisible someday. The ability to appreciate invisibility is the real superpower.

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