The confirmation of co-founder and interim CEO Jack Dorsey as the new CEO of microblogging platform Twitter ended months of speculation about who would take the reins of one of the internet’s biggest companies. Twitter, for all its promise, has still to make good on its potential. With the company now listed on the stock exchange, the pressure to perform is even more intensive; something that cost Dorsey’s predecessor, Dick Costolo, his job in June.
Costolo, to be fair, does not deserve to take the entire blame for Twitter’s troubles over the years. He guided them through the tricky period when they came out with their IPO in 2013 but stagnating user growth and less than spectacular financial performances sealed his fate.
It is perhaps surprising that the Twitter board selected Dorsey, who also is the CEO at Square, a company he founded after leaving Twitter and, despite, their earlier insistance of not hiring anyone who could not dedicate 100 per cent to the company.
Nevertheless, the new CEO has given a glimpse in the last three months of some of the things that we can expect to see from the Twitter team going forward. Let’s take a look at some of the key priorities before Dorsey.
Make Twitter more appealing for new users
It is something spoken about by every former CEO. Dorsey, himself, alluded to this in the Q2’15 earnings call, when he called for simplifying Twitter. In an age when social networks are a dime a dozen, Twitter tends to alienate itself from the masses. As one commentator noted, Twitter is basically the same as it was when it launched 9 years ago. This might take some doing for the CEO and his team. Not only will they have to make the interface more visually appealing and easy to use, they also need to make it less confusing for new users and non-tech savvy audience.
Twitter’s growth rate has not been as impressive as its rivals and this was another factor that has lead to so much investor dissatisfaction. Its monthly user base was just over 300 million in Q2’2015, growing at less than 3 per cent. Getting the growth trajectory back on track will be a top priority for the company’s new CEO
Speed up development
Facebook sees more users because it is easy to understand and it has tonnes of new features. Because it has more features, and, hence, more users, advertisers flock to it with their ad dollars; it is a simple formula and one that Twitter has yet to get right.
Under Dorsey’s three-month period, product development has been given top priority. In the investor call yesterday, Dorsey pointed out some of the progress, “The pace and quality of product launches is up. Our product team has spent the summer shipping improvements to our offerings.” These include longer direct messages, TV and event timeline experiences and enabling the “Buy Now” button, allowing users to purchase products easily. He also spoke about “plotting ambitious roadmaps for 2016 that will see dramatic evolutions across Periscope, Twitter and Vine.”
However, as one Twitter user pointed out, some projects seem to have been left on a backburner. Project Lightning, a product that investors and users have been waiting for since its announcement earlier this year had gone MIA all this while, though yesterday Twitter actually announced that Project Lightning or Twitter Moments would be going live as of today. It does feel like the new Twitter is taking product development very seriously and it is only going to help the company. Twitter needs to ensure that this renewed focus on getting products out quickly does not slow down.
Ensure stable revenues
Most of the Twitter executives you would speak to will stress that the priority right now for the company, especially in high potential regions like Asia, is to increase user base and not revenues. This is well enough, and Dorsey, too, in his first outing as CEO, subscribed to this viewpoint. But the environment has changed now with rivals increasingly picking up social/digital media ad dollars. Twitter does not want to be in a situation where it finally starts focusing on revenue only to find out that there is none to be had.
The company has been suffering some hiccups on the financial side this year. In yesterday’s call, Dorsey said it was on a “$2 billion run rate”. Q2 ’15 revenues, though higher than analyst predictions, were still the weakest since its IPO in 2013, according to the Wall Street Journal.
The company is yet to post profits and it does not seem likely that it will be doing so any time soon, with investments outlined in new projects and infrastructure. The problem here is that Twitter, despite new products, still lacks a highly compelling business case for advertisers.
For example, in India, Twitter works on a minimum guarantee system that is worth around Rs 6 lakh. This makes it a difficult proposition for SMBs which make up the bulk of the country’s industry. On the other hand, a basic campaign on Facebook can start as low as a few hundred rupees. A self serve advertising model that is available in countries like the US was introduced to India just this September. This will help it tap the SMB market. Introducing it to other geographies would help Twitter tap the vast digital advertising market globally.
This is not to say that ad revenues have not been increasing (they have), just not as quickly as investors would like. Newly appointed COO, Adam Bain, who was earlier President for Revenues, is sure to have his work cut out for him, especially in the next couple of years.
This might be an arguable point, but Twitter is not seen as a key part of the average internet visitor’s life. Where Facebook, Instagram et al have managed to become an integral part of their user’s life, it is still a bit of challenge for Twitter. In its Q2’15 results, CFO Anthony Noto admitted that daily active users dropped to 44 per cent. Meanwhile Facebook reported 65 per cent daily active users for the same period.
Reigniting interest in existing users while simultaneously attracting new users to the platform is just not about improving the user interface and adding new features, though that is doubtlessly important. It is also about changing the perception of the brand. For example, ironically enough, it seems that Facebook’s efforts at becoming the No.1 source for news are actually more successful than Twitter, which prides itself as real-time delivery platform.
Dorsey has said that Twitter will embark on an integrated marketing initiative around the launch of Project Lightning, it would be a good time to also educate the masses on what else Twitter has to offer.
Hero or Villain?
It is also a second chance for Dorsey, who co-founded the company way back in 2006, along with Evan Williams, Biz Stone and Noah Glass, having served as the company’s first CEO between 2006 and 2008. He lost his executive position at Twitter due to, it is alleged, an inclination towards other interests rather than the running of the company. For example, it is said that he used to leave work early to pursue yoga.
It is a Steve Jobs moment for him; recalled from the wilderness to be his company’s messiah and he would hope that he can emulate this Silicon Valley icon’s legendary career. The challenges in front of him are many but he has got the support of his co-founders and board and there have been some positive developments in the three months that he has been interim CEO.
“….Jack has already demonstrated the ability to inspire the team and think boldly about the next phase of Twitter. His connection to its roots informs a depth of vision and authenticity of voice, which I’ve been excited to hear,” wrote Evan Williams in a post on Medium yesterday. He will need to dig deep and muster all his pluck and inspiration to guide Twitter through the next phase of its journey.