To listen to Wall Street tell the story, Twitter is an abject failure. The stock is down more than 50 percent since co-founder Jack Dorsey took over as CEO last year. User growth and revenue prospects have stagnated, and investors see little chance of a major turnaround.
Yet only in the twisted logic of the startup economy could a company with around $500 million of revenue per quarter—and more, most recently—be called a failure. That’s half a billion dollars for a tiny application that simply lets people send out 140 characters to each other. The economic activity it has generated is nothing short of miraculous.
But that’s not enough for investors who expect to recoup 100 or even 1,000 times their original investment in the company. To do that, Twitter must grow. Somehow, it must turn itself from a simple, popular, and profitable way for more than 300 million people to broadcast messages into something still bigger—even if it has to risk killing what people love about Twitter in order to do so.
This is why I couldn’t help but grimace that morning I saw Twitter’s founders smiling on the floor of the New York Stock Exchange as the company celebrated its IPO and each of them became billionaires. Among them, these guys had upended journalism with Blogger, and credit with Paypal and Square. Here they were throwing in with the biggest industry of them all. When you get to ring the opening bell on the exchange and bask in the applause of the traders on the floor, it’s not because you have “disrupted” something. It’s because you have confirmed that—at least for a few—the game is still working. As the dealer is sure to cry out at the casino for all to hear, “We have a winner!”
But becoming such a winner—even playing the startup game to begin with—condemns the founders of a company to chase growth above all else. That’s the core command of the highly accelerated digital economy.
This is why a company like Uber can’t simply be satisfied helping people get rides. It must instead establish a monopoly in the taxi business so it can “pivot” to another vertical such as delivery services, logistics, or robotic transportation. Airbnb can’t just help people find places to stay, but must colonize city after city and deregulate its entire sector. A social-media platform like Facebook must pivot to become a data miner; a messaging app like Snapchat must try to become a news service; even a giant like Google must accept that its once-inspiring stream of innovations pales in comparison to what it can earn as a new holding company, Alphabet.
For Twitter, this command means finding a way to grow a business that may already be full-grown. What if half a billion dollars a quarter really is all the world wants to spend on tweets? But that is not an option. Instead, the company must pivot toward new potential growth areas, at the expense of the market it already has.
And so Twitter users are confronted with a news reader through which they’re supposed to glean the headlines. Or a new, annoying feature called “Twitter moments”—an algorithmically derived stream of greatest hits, which is little more than a thinly veiled opportunity to fold in “Sponsored Moments,” meaning commercial messages masquerading as organic content. Now the company is working on live-streaming video ads, again valuing growth over user experience.
Maybe it’s this very drive toward growth that is pushing users away. For the first time Twitter’s user base has begun to decline, from 307 million users down to 305. It’s just a tick, of course, but in the wrong direction.
If Twitter were to value the sustainability of its enterprise over the growth prospects of its shares, it wouldn’t have to invest so much of its revenue in new, outlandish features, and would have a lot more to show in profit. Heck, it might even be able to offer a dividend.
Last week, Dorsey told investors on his conference call that he wants Twitter to become “the planet’s largest daily connected audience.” That’s supposed to give them hope for the future. But when the hope of a company is based on it becoming the biggest thing in the whole world, chances are the opportunity for genuine prosperity has already been lost.
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