360° Coverage : Twitter Is Killing Itself In Order To Grow And Please Wall Street

2 Updates
Twitter Is Killing Itself In Order To Grow And Please Wall Street
Photo Credit: Forbes Business

Twitter Is Killing Itself In Order To Grow And Please Wall Street

Mar 29 2014, 12:57pm CDT | by

In case you missed it, Twitter (TWTR) is having big problems as a public company. They don’t have a problem with their core product.  Its users seem to adore it.  And it’s not a problem with making...

Filed under: news

 
 
 

24 weeks ago

Twitter Is Killing Itself In Order To Grow And Please Wall Street

Mar 29 2014, 12:57pm CDT | by

In case you missed it, Twitter (TWTR) is having big problems as a public company.

They don’t have a problem with their core product.  Its users seem to adore it.  And it’s not a problem with making ad money from it.  All indications are that that’s going swimmingly.

The problem is that its executives are worried that not enough people use it.  And, because of this, they feel external pressure – from

Wall Street – to increase the number of users it has how often people use that.

Since it was founded, Twitter has always been compared to Facebook (FB).  Twitter’s always been smaller but it’s felt that they were more ideally situated to take advantage of the shift to mobile.  Facebook was built in a PC era; Twitter was originally built to be an SMS app (later adapted to PCs).  It had mobile flowing through its blood from birth.

But one of Facebook’s – under-appreciated – geniuses has always been its mass appeal.  It was so easy, even your mom could use it.  Combine that with a winner-take-all phenomenon which occurred at the end of the last decade when it dramatically expanded into basically all the geographies around the world and Facebook was able to very quickly get to over 1 billion users (now at 1.2 billion monthly active users).

Twitter has always had the ambition of growing to similarly large numbers of users, but there growth has really stalled out in the last

year at around 241 million users.

Just last week, it was reported that Instagram – now owned by Facebook – will surpass Twitter in users by the end of this year.

Twitter’s growth flat line – which applies internationally as well as domestically — has created a crisis of confidence within the upper ranks of Twitter – especially since it’s playing out in the first few months after the company held its IPO.

The reaction by Twitter seems to have been to broaden the appeal of the product to the masses.  Grandma doesn’t know what an “@” sign or a hashtag is, so let’s try and make the product easier to use.  Let’s add photo-tagging.  Let’s add more frequent notifications that tell me two people I follow are having a conversation about the Academy Awards, so that maybe I’ll join in.

As someone who joined Twitter in 2007 and use it at least 50x more than I use Facebook, the effects of all these Twitter product tweaks has been to water it down and make me less (not more) interested in using it.

Now, I’m not grandma.  So maybe the calculus by CEO Dick Costolo and others is: who cares?  Maybe they believe the Twitter die-hards like me will always use Twitter. This is all about onboarding the normals, come hell or high water.

These product tweaks won’t make me likelier to use Facebook.  But it will make me likelier to seek out what’s next – probably through messaging apps.

I would argue that Twitter doesn’t have a product problem or an ad problem.  The company built a great product with a lot of appeal.  The reality might be that there is a ceiling to the number of users who will use it.

And maybe that’s ok./>/>

It’s madness to try and dilute Twitter down into a Facebook clone.   Costolo and the board might “think” that’s what Wall Street wants from them, but guess what Wall Street will do to the stock if the core Twitter users start disengaging en masse?  If you think they have a growth problem now, just wait.  All the Wall Street friends who wanted Twitter to grow more will turn around and start selling the stock because of rapid disengagement of Twitter’s core users.

Fickle, thy name is Wall Street.

Twitter shouldn’t be changing its core product to get more growth.  They should be buying totally new companies which are just about to grow in adjacent areas, using their wildly (still) over-priced stock.

Essentially, they should start following the Facebook playbook of buying any leading company in an adjacent space that’s a threat.

They should have bought Instagram, but they didn’t go public soon enough and were at a disadvantage in bidding compared to Facebook.

They should have bought a messaging app when they were cheaper, giving up on idea that their direct messaging would be able to keep pace.

And now they would be crazy not to make a run at a messaging app like Kik, even if it meant giving up a significant portion of their shrinking in value shares.

Twitter as a company is still valued at $28 billion.  That’s 33% below its all time highs around $70.  But, to me, it’s still wildly over-priced, given their stagnant growth.  Twitter would do well to use that currency to pick off an emerging giant like Kik with that stock — even if it had to do it at a huge price relative to the traditional Twitter business.

Costolo needs to skate where the puck is going – not where it’s been.

Allowing Twitter users to photo-tag each other?  Please.

Let Twitter remain a niche – but a wonderfully rich and unique niche that no one else can imitate.  Don’t turn it into some milquetoast version of Facebook.

[No positions in any of the stocks mentioned]

Source: Forbes Business

 
Update
2

2 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 by 30 per cent. ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

2 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

World Bank warns Ebola's economic impact in West Africa
Washington, Sep 18 (IANS) The Ebola virus that has become rampant in West Africa will enormously hurt fragile economic growth of the three hard-hit nations of Guinea, Liberia, and Sierra Leone if it goes unchecked, the World Bank warned Wednesday.
 
 
34 kids died of contaminated measles vaccines: Syrian rebels
Damascus, Sep 17 (IANS) At least 34 children have died in rebel-held Syria after being injected with contaminated measles vaccines, the rebels have claimed.
 
 
Travel bans complicated Ebola fight: WHO official
Nairobi, Sep 17 (IANS) Travel prohibitions to Ebola-hit West African countries have undermined the fight against the pandemic that has claimed 2,500 lives, a World Health Organisation (WHO) official said Wednesday.
 
 
Turkish president slams New York Times over IS charges
Ankara, Sep 17 (IANS) Turkish President Recep Tayyip Erdogan Wednesday slammed The New York Times for its report claiming that Turkey is one of the major sources of recruitment of the Islamic State (IS) terrorist group, saying that some foreign media outlets are trying to depict Turkey as a country that supports terrorism.
 
 
 

Latest from the Network

20 killed in Nigerian college attack
Abuja, Sep 17 (IANS) At least 20 people were killed following an explosion and sporadic shootings that rocked the premises of a college in Nigeria's Kano state Wednesday, hospital sources said. The incident occurred...
Read more on Politics Balla
 
Kosovo police arrest 15 suspected Islamic extremists
Pristina, Sep 17 (IANS) Kosovo police arrested 15 alleged Islamic extremists, including twelve imams, early Wednesday in a massive anti-extremist operation. The imam of Grand Mosque in capital Pristina, Shefqet...
Read more on Politics Balla
 
India-Nepal relationship unique: Nepal vice president
Kathman Sep 17 (IANS) Nepal's Vice President Paramananda Jha Wednesday said the relationship between India and Nepal was unique and extraordinary, rooted in the shared history and culture of the two countries. Jha was...
Read more on Politics Balla
 
34 kids died of contaminated measles vaccines: Syrian rebels
Damascus, Sep 17 (IANS) At least 34 children have died in rebel-held Syria after being injected with contaminated measles vaccines, the rebels have claimed. They also warned that the deaths might be caused by...
Read more on Business Balla
 
Travel bans complicated Ebola fight: WHO official
Nairobi, Sep 17 (IANS) Travel prohibitions to Ebola-hit West African countries have undermined the fight against the pandemic that has claimed 2,500 lives, a World Health Organisation (WHO) official said Wednesday....
Read more on Business Balla
 
The Apple Watch Gold Edition Reportedly Costing $4,999
The consumers will have to spend a big amount of money to buy the Apple Watch Gold Edition, as an analyst claims that the device can cost as high as $4,999.According to the Business Insider, the prediction has been made...
Read more on Apple Balla
 
The Apple Watch Gold Edition Reportedly Costing $4,999
The consumers will have to spend a big amount of money to buy the Apple Watch Gold Edition, as an analyst claims that the device can cost as high as $4,999.According to the Business Insider, the prediction has been made...
Read more on Apple Balla
 
Bravo fined by ICC
Dubai, Sep 17 (IANS) West Indies player Darren Bravo has been found guilty of breaching the International Cricket Council (ICC) Code of Conduct during the fourth and final day's play in the second Test against...
Read more on Sport Balla
 
With better understanding, US ready to engage Modi's India
Washington, Sep 17 (IANS) Ahead of Indian Prime Minister Narendra Modi's first visit, the US says that with a better understanding of each other's systems, it's looking forward to engage with India putting behind the...
Read more on Politics Balla
 
Saudi Arabia launches website for expatriate workers
Riyadh, Sep 17 (IANS) Saudi Arabia's labour ministry has launched a website to educate expatriate workers about their rights and ways to avail them, a media report said Wednesday. The website www.laboreducation.gov.sa...
Read more on Politics Balla