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.
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.
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.
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.
“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.