Are Twitter's dreams of independence over?

Are Twitter's dreams of independence over?

Author | Abhinn Shreshtha | Monday, Jun 29,2015 7:50 AM

Are Twitter's dreams of independence over?

When Twitter announced that it would be filing a IPO back in 2013, it never thought it would be in for such a rough ride. Over the last 18 months, the company has seen high-profile exits, which include product chief Daniel Graf, COO Ali Rowghani, CFO Mike Gupta, M&A Head Rishi Garg and, which, saw its climax with the departure of CEO Dick Costolo, who “voluntarily” resigned last month.

On the financial front, the microblogging network has been under pressure from investors after reporting that it would be lowering its FY 2015 expectations due to the lack of performance of new product launches.$162-million_59915.html

Investors have been piling on pressure over the last few quarters as the company still flounders way behind Facebook in the social media space; both in terms of active user base as well as revenues. This also probably led to an acceleration of Costolo’s departure. To be fair to the former CEO, he did have a lot of positive impact on the company;  taking a company that had no revenues and not even the hint of a revenue strategy and helping it achieve multi-million revenues, guiding it through a successful IPO and overseeing the launch of a slew of advertiser-friendly products.

Perhaps, unfairly, any success that he had at Twitter would always be overshadowed by the behemoth that is Facebook. But leaving the past aside, the question investors and analysts want to know is what is the way ahead for the company. There has been no secret that Twitter is seen as a potential M&A target by a number of internet giants, including Facebook, and if Twitter has to maintain its independence, there are a number of things it will have to do as swiftly as possible.

Appoint a long-term CEO quickly

Dick Costolo’s resignation might have come as a surprise but the company must now ensure that it appoints a suitable replacement with a clear-cut strategy for at least the next 5 years as soon as possible. Co-founder Jack Dorsey will be taking over the reins after Costolo steps down on July 1, 2015 as interim CEO. However, Dorsey is also involved in running Square, a mobile payment company that he co-founded and Twitter will not want the attention of its top executive divided. This was made clear after Twitter announced last week that it would only consider candidates who can offer a "full-time commitment". The company is currently working with Spencer Stuart, a consulting firm, to identify candidates “internally and externally”.

Concentrate On Increasing User Growth Rate

One of the peeves that investors have had with Twitter is that its user base has not been growing at the rate of rivals like Facebook. For example, according to media reports, Twitter accounts for just 17 per cent of India’s social media users. These are really low numbers for a lucrative and high-potential market, which is already the second largest user base for Facebook in the world.

According to its latest revenue figures, Average Monthly Active Users (MAUs) were 302 million for the first quarter, up 18% year-over-year and compared to 288 million in the previous quarter. To put things into perspective, Global Web Index's annual report, Pinterest and Tumblr are increasing their active user base at the rate of 97 per cent and 95 per cent respectively.

More than revenues, what is important for the company is to prove to investors that it still an attractive product for users and has potential to grow in the future.

Speed up product evolution

One area where Twitter clearly lags far behind the likes of Facebook is when it comes to taking decisive steps for the growth of the product. It takes its own time to launch new features and is notoriously slow in releasing updates or improvements. If Twitter wants to maintain an effective competitiveness when surrounded by a number of more nimble platforms, it is time it drops this tentative approach to product evolution. Users, and even clients, will forgive the odd attempt that goes awry but they want to be on platforms that are dynamic and constantly adapting to new needs.

Have a proper strategy for advertising products

Twitter’s new direct products might have let them down in 2015 but as the company admits, it is too early for them to have an impact. With a change in management, it is important that the vision behind these launches does not get dropped. Twitter’s advertising product line will have an important part to play for the company in coming years and it is time there is a dedicated approach towards it.

Twitter has launched a number of products for advertisers over the last few years though their success might be debatable. This could be due to a variety of reasons, most importantly, as Twitter executives love to say, the focus is on increasing the user base and not revenues. It is a noble sentiment and has some merit but it does not have to be an either/or situation and events of the last few weeks might probably cause Twitter to take a more balanced stand towards this issue.


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