Author here.
That seems reasonable. However, spending 5x/revenue $ seems a lot more. Twitter could also spend some of that money on getting more eng hires to make their advertising product easier to sell vs only focussing on sales/marketing. Also, Twitter's biggest challenges have been on the user growth side - so it was surprising to me to see that their SBC spend on R&D is trending lower vs their sales/marketing spend.
Could it be that Facebook is just a more compelling platform to advertise on, so they have less need for salespeople to shove it down their customers' throats, as opposed to Twitter?
Facebook is definitely a more compelling advertising platform... Given that, Twitter should be doubling down on engineering a better one. That is what I find surprising about these metrics, if they are accurate. Granting the most SBC to Sales & Marketing seems like an admission of product failure.
That was exactly the point I was trying to point out. FB is definitely a more compelling ad platform. However, Twitter's biggest challenges (since the IPO) have been wrt user growth. As such, I would have expected them to double down on their product/eng resourcing and build more compelling products vs spending large amount of $$ on their sales/marketing teams. Also, the recent trend is a concern as well where product/eng SBC spend (which was already low as a % vs FB) is going down while sales is going up.
I'd be really interested in seeing some additional data in this analysis, although it might be hard to come by.
For example, what are the demographics of FB's marketing/sales team vs. Twitter's? I'd be willing to bet on average that younger sales and marketing employees are willing to accept more SBC vs. salary because they have a higher risk tolerance and might be a bit less skeptical. Senior sales and marketing people have more expenses, families, etc. and I'd be surprised if many of them are willing to accept a lottery ticket and its associated tax burden in lieu of guaranteed cash and simplified taxes.
Additionally, without comparing the commission/bonus structure, I think there's a big missing piece of this picture. When you are a market leader and have an easy product to sell, you have less incentive to offer massive commissions than if market sentiment shows you to be on your way out and you need to be aggressive to court strong candidates away from "an easy sell."
Lastly, I'd be curious as to the average tenure of these various functional groups. If equity comes with vesting periods, cliffs, etc., do people stick around long enough to capture all of that SBC? If data says no, that might be an incentive to offer more to groups that are statistically more likely to leave a lot of it on the table.
Twitter's product is significantly less complex than Facebook's. A 1:1 comparison of engineering compensation proportions isn't very relevant.
Additionally, it's not like 100% of their MAU problems can be solved from engineering -- there are significant gains to be made from Marketing, and they can certainly leverage their current engineering talent (which is substantial) to work on product feature tweaks which will generate more stickiness.
I think analyzing only two companies is too short sighted, it would be better if you benchmarked against 5-10. It could be that twitter is in line with other companies and facebook is actually high - suggesting FB R&D staff get higher comp in SBC than their peers. Also there is little talk about head count, which drives SBC ratios such as this. Another - why compare sbc to revenue, you should compare to expenses. I think the author brings up some good points but is missing key analysis.
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[ 0.29 ms ] story [ 36.5 ms ] threadDoesn't sound like Twitter is easy to sell compared to FB.
For example, what are the demographics of FB's marketing/sales team vs. Twitter's? I'd be willing to bet on average that younger sales and marketing employees are willing to accept more SBC vs. salary because they have a higher risk tolerance and might be a bit less skeptical. Senior sales and marketing people have more expenses, families, etc. and I'd be surprised if many of them are willing to accept a lottery ticket and its associated tax burden in lieu of guaranteed cash and simplified taxes.
Additionally, without comparing the commission/bonus structure, I think there's a big missing piece of this picture. When you are a market leader and have an easy product to sell, you have less incentive to offer massive commissions than if market sentiment shows you to be on your way out and you need to be aggressive to court strong candidates away from "an easy sell."
Lastly, I'd be curious as to the average tenure of these various functional groups. If equity comes with vesting periods, cliffs, etc., do people stick around long enough to capture all of that SBC? If data says no, that might be an incentive to offer more to groups that are statistically more likely to leave a lot of it on the table.
Additionally, it's not like 100% of their MAU problems can be solved from engineering -- there are significant gains to be made from Marketing, and they can certainly leverage their current engineering talent (which is substantial) to work on product feature tweaks which will generate more stickiness.