Twitter’s curse of management

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.

 

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Medium and the broken media model

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.

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Twitter’s inconceivable losses

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.

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Rescoping Twitter

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.

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Saving Twitter

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.

Stagnant management

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.

Making Twitter useful

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.

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Twitter’s chairman finds the service intimidating

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.

 

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Twitter could be about to go Google

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.

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