Paul Wallbank – Communications Professional
Comms, journalism and writing
The story of how hashtags came to Twitter shows the greatest barrier to the company’s success is its management.
Today Twitter celebrates the tenth anniversary of hashtags.
What’s notable about the story is how Twitter’s management thought hashtags were a ‘nerdy idea’
Twitter has been consistent in ignoring its user community despite every successful feature of the service coming from the platform’s grass roots.
It’s hard not to think Twitter’s greatest barrier to success is its leadership.
Medium’s Ev Williams finds online advertising isn’t enough to sustain a hundred million dollar publishing company. The rest of the industry is not surprised.
How do you make money from online publishing? Medium’s Ev Williams shows he is as far away from the answer as the rest of us.
In a blog post yesterday Ev announced his company is firing fifty staff as online advertising revenues fall short.
Online advertising’s disappointing revenues are no surprise to pretty well anyone observing the online publishing industry for the past five years, it seems to have come as a revelation to Ev and the investors who’ve staked an estimated $140 million in the venture.
That money, which most online publishers would gag for, seems to have gone on a bloated headcount given the company can afford to fire fifty people. It’s a shame the company’s investors didn’t appoint a board that checked management’s hiring practices.
Something that should worry other publishers is the organisation’s Promoted Stories division is being shut down as part of the restructure. This underscores how branded content doesn’t scale the same way traditional advertising does and won’t represent a major revenue stream for online publications.
It isn’t the first time Ev Williams has got it wrong, in founding Twitter he and his team turned their back on ordinary users and developers to focus on courting celebrities in the hope big brands would pay large amounts to be associated with them. It didn’t work.
Contrasting Ev’s Twitter and Medium experiences with that of Buzzfeed founder Jonah Peretti is interesting. While Buzzfeed still hasn’t found the formula for profitability, Peretti and his team have gained a deep understanding of what works in online publishing.
To be fair to Ev, we’re all trying to figure out the revenue model that will work for online media, his travails with Twitter and Medium show just how hard it is to find a way for publishers to make money from the web. What is clear though is burning a lot of cash on sales staff is not the answer.
Twitter lost half a billion dollars last year. An inconceivable sum that shows management’s incompetence.
Last year Twitter managed to lose five hundred million dollars in losses.
It’s possible to see how a car manufacturer, steel maker or airline runs up a half billion dollars loss. But a social media company?
Twitter has lost its way and a complete change in management is needed. Maybe it’s time to time to turn the company into a user co-operative, at least the subscribers have an idea of how the products works.
Twitter could be condemned by the impossible expectations of investors, founders and shareholders
Poor Twitter. Today’s earnings report showed what everyone knew, its user growth has stalled with the number of active participants – Monthly Active Users as the company calls them – didn’t grow in the last quarter and are only up nine percent on the previous year.
The good news for shareholders is advertising revenue grew 48% with both US and international markets showing strong increases. Despite user growth flatlining the company still remains on track to becoming profitable.
As Farhad Manjoo argues at the New York Times, maybe the service needs to focus on more modest ambitions. The company’s dreams of competing with Facebook or growing like Google are never going to be achieved.
We’ve argued at this blog for a year that Twitter’s management and investors should accept the market’s expectations of the business were too lofty and while there’s no reason the company can’t be profitable, it’s not going to be a massive river of gold like Google.
There’s nothing wrong with being a healthy billion dollar business. The risk for Twitter is the greed and ego of investors, founders and shareholders could condemn the company in trying to meet impossible expectations.
Twitter needs focused management that understands the service if it is to survive
Twitter is in trouble, its share price has fallen 70% in the past two years and the service is not gaining new users. To halt the stagnation, CEO Jack Dorsey is reportedly considering ditching the 140 character limit.
Commentator Josh Bernoff suggests playing with character limits will do little to address Twitter’s lack of momentum which is almost certainly correct given the underlying problems at the service.
The one most desired feature by Twitter users is the ability to edit their posts, although the New York Times points out this may not be a good thing, another popular change would be for the service to crack down on abusive behaviour.
It seems however that Twitter’s management can’t make those changes and this is understandable given the company’s executives not understanding how the service is used and their desperate obsession to justifying its stock valuation which, despite falling 70% over the past two years, is still $14 billion.
Justifying that stock valuation with no clear path to monetising the service is a paralysing problem which means other useful changes aren’t being made while the company still embarrassingly cosies up to sports, pop and movie stars in the hope their fame will bring advertiser dollars to the platform.
For Twitter the solution is to accept they aren’t a fourteen billion dollar company which would take the pressure off the executive team to find unsustainable ways to justify that valuation and instead focus management’s efforts on improving the user experience.
To make the service more useful, management has to understand how Twitter is used which means finding experienced and capable leaders who also use the service.
Adding features that allow users to make some changes to tweets and lists would be a start and clamping down on the bullies, trolls and frauds to make it more friendly to new entrants would be a start. Creating an easy way for new users to find useful information would also help engagement and retention.
The most important task though is finding executives who actually use Twitter and have an understanding of social media instead of hiring from the tech, advertising and broadcasting industries without any regard of whether those individuals have ever used the service.
Twitter is a valuable service but it’s dying as management play games. If it is to survive, accepting it isn’t as big as it wants to be and finding leaders who understand why its users find it so useful is essential.
It looks like Twitter won’t get the focused professional management it desperately needs.
Twitter’s new Executive Chairman finds the service intimidating to use reports the Wall Street Journal.
With a distracted CEO juggling the Initial Public Offering of his other business, it’s hard to see how Twitter is going to get the focused management and supervision it desperately needs to maintain its valuation.
Amid layoffs and management disinterest, it is likely Twitter could be drifting into Google’s arms.
The turmoil at Twitter continues with the directionless service announcing they will lay off eight percent of its workforce – over 300 jobs.
At the same time, the company also announced Google’s Chief Business Officer,Omid Kordestani, would become Twitter’s Executive Chairman.
To compound Twitter’s problems payment system Square announced it will have a stock market IPO, given the two companies share the same CEO and co-founder it’s hard to think Twitter will get the management attention it desperately needs.
It’s hard not to think that Twitter is going to be absorbed by Google, certainly the search engine giant can afford it and they have struggled with social media – although it’s questionable how much Twitter’s star struck management understands its own users, let alone social media in general.
A combination of Twitter’s ineffectual management coupled with Google’s which has consistently shown it struggles with the concept of social media and has a horrible habit of neglecting then shutting down services it loses interest in would probably prove fatal for the service.
Should Twitter fall into Google’s arms and then die of neglect it will be the case of a good idea that was monetized too fast and a management that never quite understood what it was doing.
Facebook and Twitter are proving to be very different business model
This week showed the disparate
At the time of its IPO in February 2012, Facebook claimed to have 845 million active monthly users. Eighteen months later at the time of their stock market float, Twitter boasted a more modest 232 million.
This week Facebook reported 1.19 billion monthly active users while Twitter still languishes at 300 million, a number that disappointed the market and saw the smaller company’s shares drop 11% after their quarterly earnings announcement.
Even more worrying for Twitter, and competing networks like Google, is Facebook’s success in mobile services with 874 million people accessing the service through their smartphones every day last quarter.
So successful is Facebook in engaging roaming users that some pundits are predicting the company’s Instagram product may well overtake both Twitter and Google in mobile advertising revenues over the next few years.
More concerning for Twitter is the company is still not profitable – of the business’ $957 million gross profit, an astonishing $854 million was eaten up in administration and sales costs which indicates their overheads are in need of some dramatic pruning.
What is clear that Facebook and Twitter have very different user behaviour and, as a consequence, the revenue models are not the same. Twitter is never going to be Facebook.
So the question for Twitter is what does it want to be? Certainly the current quest to drive up revenues seems doomed. Perhaps it’s time to accept the company is a smaller operation and start to plan accordingly.
Twitter needs more relevant directors as it searches for a new CEO
New York Times writer Nick Bilton delves into Twitter’s search for a new CEO and comes up with a left of field conclusion – the company doesn’t actually know what it is.
Twitter has certainly been casting around to define itself, particularly after its stock market listing that saw it valued at over twenty billion dollars.
Bilton flags one reason why management is so uncertain about their company’s identity, that it’s directors don’t use the service themselves.
As I see it, the problems at Twitter come down to a lack of leadership and a micromanaging board.
And the churn is constant: many of its founders, chief executives, numerous product directors and other top brass have been fired or pushed out. Three of the eight positions on the current board belong to Mr. Dorsey and the former chief executives. About half of the board barely tweets.
The lack of social media credibility on the board raises another issue about how much direct industry expertise should a company’s directors have. While it’s almost certainly not desirable to have insiders dominate a board certainly some, if not the majority, of directors should have some experience in the industries the company operates in.
For Twitter though they desperately need to define the business and what its valuation really is. Even more pressing is to show how the platform differs from Facebook as the confusion of investors, users and advertisers isn’t helping.
Ultimately as Bilton suggests the direction of a business is determined by the board, it’s time Twitter found at least a few directors who at least use social media, if not have some understanding and experience in the business.
A Reuters report looks at the changing media landscape and how the older news industries’ decline has some way to go yet.
“We seek news on Twitter but bump into it on Facebook” points out the Reuters’ 2015 Digital News Report in its analysis of global media consumption.
The broad trends from surveying over 20,000 online news consumers in the US, UK, Ireland, Germany, France, Italy, Spain, Denmark, Finland, Brazil, Japan and Australia are clear – social media is becoming the main way people are finding their news while television is slowly declining.
Probably most concerning for the television networks how younger viewers have turned away from TV with only a quarter of those aged between 18 and 25 tuning in as opposed to two thirds of those aged over 65.
Given the aging of television network audiences it’s not surprising that last week Australia’s Network Ten, part owned by Lachlan Murdoch, found a lifeline from the country’s main cable network as the broadcaster is finding revenues declining.
The question is how long advertisers are going to stick with television as audiences increasingly move online creating a revenue gap estimated by analyst Mary Meeker to be worth around thirty billion dollars a year.
For the moment, the great hope for the online world is Facebook with Reuters finding the service is dominating users’ time. In that light it’s not surprising the company has such a huge market valuation.
The competing social media services are still facing challenges, particularly with Twitter showing a far lower level of penetration with the general public, leading Harvard professor Bill George to speculate the company risked becoming the new BlackBerry.
While the online services struggle for supremacy and television slowly declines, the real pain continues to felt by the newspapers who continue to find their relevance erode and few of their readers prepared to pay for their content.
The Reuters report confirms the trends we already know while giving insights into the unique peculiarities of each market.
Twitter’s decision to restrict access to its data has cost them dearly
It’s been a bad week for the social media service Twitter with its stock pounded after the leak of poorer than expected results.
Writer Matthew Ingham says Twitter lost its way five years ago when it started closing down access to third party developers, a move that hurt the service’s growth and user adoption.
Twitter’s move was greeted with disappointment at the time and many developers gave up working on the company’s APIs.
With the growth of third party applications stunted, there was little reason for new users to come on board and so Twitter is now disappointing the market with its results.
Basically Twitter CEO Dick Costolo and his team reaped what they sowed in restricting access; they kept control of their data but it’s cost them users and hurt their share value.
Twitter’s woes show that the economics of cloud and social media services reward business that share data. While there may be some commercial and legal limits to what information can be shared, the default position should be to make data available.
In an information rich society, those who contribute the most get the rewards. This is the point Twitter’s management missed.
Social media services like Facebook and LinkedIn are building API walled gardens that will change how online services work
One of the great strengths of the social and cloud business model was the idea of the open API, recent moves by Twitter and LinkedIn show that era might be coming to an end.
This week Nick Halstead, the founder and CEO of business intelligence service Datasift, bemoaned his company’s failure to negotiate an API access agreement with Twitter that restricts their ability to deliver insights to customers.
Earlier this year LinkedIn announced they would be restricting API access to all but “partnership integrations that we believe provide the most value to our members, developers and business.”
Increasingly social media and web services companies are seeing access to APIs as being a revenue opportunity – something many of them are struggling to find – or as a way of building ‘strategic partnerships’ that will create their own walled gardens on the internet.
For developers this is irritating and for users it restricts the services and applications available but it may turn out to backfire on companies like LinkedIn and Twitter as closing down APIs opens opportunities for new platforms.
A few years ago industry pundits, like this blog, proclaimed open APIs will be a competitive advantage for online services. Now we’re about to find out how true that is.
One thing is for sure; many of the companies proclaiming their support for the ‘open internet’ are less free when it comes to allowing access to their own data.
