TelecomTV reports that Twitter is pulling out of the UK market because they were “unable to form a proper cost sustainable relationship with a UK mobile operator.”

A little rule I have of new businesses is that, at the core, they have a kernel of a very profitable product or service. It does not have to be big, but it has to be big enough such that the inevitable mistakes and blunders that any company makes won’t sink them. If there’s no profitable core, it’s a huge red flag for me. I think this holds true for all businesses, not just technology based business. You need to make a good margin first, then you worry about scale. There are exceptions (of course), but they are few and far between.

Which gets me to Twitter. Many have been looking at them, wondering where the real business model is. I’m looking at them wondering where that kernel of high profit is. This bit of news is worrying, because it says to me that what they are doing is not insanely valuable enough to pay for their communications costs. Or at least, in the UK. And why would the UK be substantially different than France or Germany? It is not different.

Maybe I’m over reacting, but I can just imagine a meeting where somebody is going to say “OK, I know you lose a little bit of money on each message, but do you expect to make it up in volume?” It’s just not smelling like a fat margin business.