What? Twitter, You Just Bought A Competitor? Hmmm…

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What? Twitter, You Just Bought A Competitor? Hmmm…

Today, during an early morning coffee with one of our best instructors, I found out that Twitter recently purchased one of DevelopIntelligence's competitors. Interesting move. Bold move. But was it the right move?

I've been in and out of the corporate training and the developer training space since 1996.

I've worked for training resellers (companies that resell a software / hardware vendor's training) and for vendors who sell training directly to their customers. I've helped internal corporate training departments design and manage internal training programs. I've helped fast-growing software companies increase top-level revenue by creating external facing training departments. I've designed developer boot camps, back before they were en vogue (the first one was piloted by the University of Colorado back in 2008). And now, I get to be part of the fastest growing developer training company in the US, thanks to our wonderful clients and instructors. 

Along the way, I have seen companies adopt a ton of different models in how to account for and run training.

At one point in time, early in my career, the BIG deal, was to have a large internal training department, that functioned as an in-house university or academy or what-ever-you-want-to-call-it. Not only were the OpEx and investment in non-revenue producing assets (ie: courseware) hard to justify, the biggest challenge “corporate universities” faced (and still face) is keeping up with and staying on top of the constantly changing technologies.

Then, in the mid-90s, the BIG deal was leveraging (remember the S&L scandal of the 90s?). Companies (rather, CFOs) started to wise up, and realized a better model was to decrease OpEX (save money), increase flexibility, and stop investing in non-revenue producing assets. Most companies (still to this day) kept a minimal, yet core, L&D staff on board. They outsourced the rest to to training companies. In other words, the company OpEX now became the training OpEx. I'm partial, but I think this was the nearly a brilliant move. More on on that later. 

Today, we see an emerging company do something the tech media is considering “bold”. They have acqui-hired Marakana to build their “corporate university”. The goals of the aqui-hire, according the PR, are to attract talent and help current talent stay up-to-date. Nearly the same reasons internal training deparments were all the rage, back when COBOL was all the rage, in the 80s.

While I don't have insight into all the motivations behind the aqui-hire, the question isn't, was this a bold move for Twitter? The question is, was it the right move?

I've always felt cashflow (and dollars in the bank) are king when growing a business. If I were an investor in Twitter, I would be scratching my head. In my opinion, an emerging company that wants to attract and keep current talent up to date should focus on reaching profitiablity by investing in revenue-producing assets (aka IP), growing the customer base (adoption), AND keeping OpEx down. They should not focus their investment (time and money) on creating an “internal university”. 

Why? Well, what's typically outsourced in the up and coming, emerging technologies companies?

  • Infrastructure: no one wants to own their data center anymore; that's why Amazon and RackSpace can barely keep up with customer demand for the PaaS offerings
  • Business systems: sales enablement, marketing tools, HR, etc. are all being pushed to the cloud; look at Salesforce, SuccessFactors, HubSpot, etc – they are growing like weeds
  • Learning Assets: no one “buys” their LMS and content anymore; the trend is to license hosted-LMS (cloud based) and content
  • Talent Attracting Perks: aka, massages, free food, soda, etc. – all outsourced
  • Software development: yes – tech companies do this
  • Product design: and this too

I could go on, but I think you get the idea. Nearly everything is outsourced. And leverage (outsourcing) seems to work well.

After being in this industry for 17 years, I wonder why Twitter wouldn't just create a trusted partnership with a company and outsource their university? This model would have kept cash in the bank, allowed them to flex their spend as growth increases and decreases, leverage the OpEX investment made by the third party required to stay on-top of new technologies, all while still having a solution that attracts and retains talent. That's what a number of our clients do with us, and it seems to work quite well. 

I guess I'll never know what went on in the board room to make that decision.

But, I am not convinced it was the right decision. 

– Kelby