“We’re not here to provide something that people use once a month; we are here to provide something that provides daily utility, people checking multiple times a day to figure out what’s going on. So we re-cast how we measure ourselves internally, around providing daily utility to people. And as a daily utility to [not only] people on the service but also this massive audience [who see tweets outside the product]—we have one of the biggest audiences in the world through the syndication audience. If we serve those people better, that audience naturally grows.”
Revenue fell because they are basically blowing up the current product landscape as it is based on old thinking. Twitter’s ultimate goal is to air live content on the platform 24/7/365. Is this the right move? I have no clue. But consider one of its biggest weaknesses from a monetization standpoint: its fast and free flowing nature is not ideal for advertisers. Shit just happens too fast for it to have a meaningful impact. Changing things up a bit and diving head first into video is about as sensible a thing as I can imagine given the fact that what they’ve been doing to date hasn’t seemed to work. And with the secular move to mobile video and alternatives to traditional cable bundles, hey it’s worth a shot.
Video is a way for Twitter to gain more eyeballs for more sustained periods of time which is what advertisers want. This enables Twitter to at least go back to the table to their ad partners and demonstrate a potentially better ROI picture than before. Assuming they can prove this out (and they seem to think they’ve hit upon something) then this makes Twitter a more attractive ad platform. Again, this is all theoretical. Until it actually happens it hasn’t happened. I’m just telling you what my pea-sized brain is thinking based on what I’ve read.
The burden of proof is squarely on Twitter. They need to be able to say to their ad partners, “Hey we’ve got all this great video content playing on our platform and our users love it. And you can tell they love it because we have a pretty decent size user base that is coming back for more on a daily basis.” Show your partners you have engaged and sustained eyeballs and those partners will start to dip their toes in the water. This is why revenue necessarily must lag user growth and engagement. All year long. There is no other way. And I give management credit for setting appropriate expectations this time around. Wall Street won’t be expecting much in the way of revenue growth this year at all because they’ve been told not to.
Twitter has been an extremely emotional stock for many since its IPO. It would be very easy to just cut ties with this one and move on based on principle alone. But it’s a strong network and there’s value in there somewhere. If they don’t realize it then eventually someone will; it’s not a network in decline. At least not yet. Maybe cutting ties now is the right move. We won’t know until hindsight tells us so. But I’ll hang onto my shares. I don’t need the money now anyway and I told myself when I started the position this was a ten year (if not more) holding. Sometimes in investing patience does pay off.
I continue to be intrigued by Jack Dorsey. I know a lot of people think he needs to go (I’m not one of them), but I must say if there’s one CEO I’d like to meet he’s right up there at the top of the list. He’s clearly a very bright and driven individual and he strikes me as a really good person.
I hear/read him say somewhat frequently that the team there at Twitter is “focused on what matters.” It’s abundantly clear now (to me at least) that in his eyes Twitter is becoming the platform and the utility that he believes it needs to be. I agree with him, the world indeed needs Twitter; there is nothing else like it. And he doesn’t give one f*** about catering to Wall Street’s quarterly demands. I gotta say I admire that about him. This is going to be a very fascinating story to look back on years from now, one way or another.