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Twitter Contemplates the Risks It May Face in the Future

| October 7, 2013
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Twitter headquarters, on Market Street in San Francisco (Olivia Hubert-Allen/KQED).

Twitter headquarters, on Market Street in San Francisco (Olivia Hubert-Allen/KQED).

Buried deep within Twitter’s  S-1 filing last week — part of the process of preparing to go public — the micro-blogging service lists page after page of the kinds of business risks it faces that could undermine its success. It’s kind of a pro forma exercise for companies getting ready to sell stock to investors on the open market: “You know, we’re a great company, and we’d love to have you buy in, but just be aware that you could lose your shirt in this deal.”

Here are a few of the more amusing risks that Twitter listed when it made its prospectus public last week:

Remember Webvan?: “A number of consumer-oriented websites that achieved early popularity have since seen their user bases or levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our user base or engagement levels.”

Celebrities are fickle: “(I)nfluential users, such as world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands or certain age demographics (may) conclude that an alternative product or service is more relevant.”

Spiced ham: “(W)e are unable to combat spam or other hostile or inappropriate usage on our platform.”

Non-people: “(T)here are a number of false or spam accounts in existence on our platform. We currently estimate that false or spam accounts represent less than 5% of our (accounts).”

Too much money: “Moreover, liquidity available to our employee security holders following this offering could lead to disparities of wealth among our employees, which could adversely impact relations among employees and our culture in general. Our transition from a private company to a public company may result in a change to our corporate culture, which could harm our business.”

There also are some distinctly unamusing risks listed:

The NSA and hackers: “(T)here are user concerns related to privacy and communication, safety, security or other factors.”

Failure to scale: “Our business and operating results may be harmed by a disruption in our service, or by our failure to timely and effectively scale and adapt our existing technology and infrastructure. … For example, in July 2012, due to the failure of two parallel systems at nearly the same time in one of our data centers, Twitter became inaccessible for approximately two hours.”

The San Andreas Fault (and terrorists): “Our headquarters and certain of our co-located data center facilities are located in the San Francisco Bay Area, a region known for seismic activity. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our data centers could result in lengthy interruptions in our services. In addition, acts of terrorism and other geopolitical unrest could cause disruptions in our business. All of the aforementioned risks may be further increased if our disaster recovery plans prove to be inadequate.”

Oops: “We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to our business that may result from interruptions in our ability to provide our products and services.”

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Category: Business and Finance, Tech

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