San Francisco writes Twitter a tax break

Ronny Kerr · April 6, 2011 · Short URL: https://vator.tv/n/18f6

Board of Supervisors votes 8-3 in favor of keeping the influential microblogging company in the city

It’s morning in San Francisco and the birds are tweeting with glee.

In a split 8-3 vote, the city’s Board of Supervisors approved a proposed tax break for growing companies, but especially Twitter, if the companies move or stay in the Mid-Market and Tenderloin districts west of downtown.

"Central Market and the Tenderloin have been burdened with high vacancies and blight for decades,” said Mayor Ed Lee. “[T]he payroll tax exclusion is a powerful tool that will help us bring in much-needed jobs, services and retail.”

We first reported back in January that Twitter was considering a move, possibly to Brisbane, to a 200,000 square foot complex that formerly served as the Walmart.com campus. Talk of giving Twitter a tax break had already begun then.

As a result of this week’s vote, Twitter’s payroll taxes will be capped at their current level for the next six years, meaning it will only pay for existing employees, not new ones. This is significant for Twitter because the company currently employs only around 350 people but plans on expanding aggressively over the next few years, adding 2,000 more jobs. Over the course of six years, the microblogging could save $22 million in tax expenses.

It’s not necessary to explain why that’s great for Twitter.

For the tax break’s supporters, it’s about revitalizing broken neighborhoods with the presence of some of the world’s most influential tech companies.

"It is a first step forward of really trying to bring back these neighborhoods and it is a first step forward for making sure that we get our economy back on track," said Board of Supervisor President David Chiu.

Dissenters argued merely for the status quo, that companies simply pay the taxes they’re meant to pay. Supervisor John Avalos specifically said that everyone, including booming tech companies, have a “social responsibility,” to pay for taxes.

Avalos is also concerned that the approved proposal sets a bad precedent, as San Francisco is home to several growing companies, like Zynga and Yelp.

With all these companies, it’s a fine line between encouraging them to grow freely and also using their growth to help the city improve. While some are disappointed that Twitter will be paying San Francisco less in taxes, supporters point out that the company would have left otherwise, cutting out jobs and any taxes at all.

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What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests. 

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes. 

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

How do you make money from Twitter?

There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.

In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet. 

At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.

Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.

 

What's next for Twitter?

We continue to focus on building a product that provides value for users. 

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.

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