BIRD BRAIN
Despite its uptick in financial and share price performance, it’s clear that Twitter is the guy at sea who’s drowning – not waving for help. Its second-quarter shareholder letter reads like a company that’s focused on doing the same thing: selling advertising. It’s squeezing the advertising lemon and making a few more drops of lemonade. But there’s no new thought or innovation about how such a powerful platform can dominate its space – rather than shrink into a small corner of it, as it’s doing now. “If Twitter has any sense of its future, it seems to lie in doubling down on targeted advertising and copying features from competitors,” New Republic wrote in February. What’s more – maybe most important for the company’s long-term survival – it hasn’t come up with a plan to address harassment and content moderation on the platform.
THAT’S DROWNING... NOTWAVING
Some change has been afoot at Twitter. In March 2020, boldface tech investment firm Silver Lake announced that it was putting $1 billion (at the time, equal to around a 4% stake) into Twitter. It also said that it was linking up with activist investment company Elliott Management, which at the time also held a 4% stake in Twitter, in part to take some seats on the company’s board. “This is a great day for Twitter shareholders and the commonwealth,” Galloway wrote about the deal, predicting that the stock would hit all-time highs by the end of the year. (He was off by two months, as the shares more than tripled from March 2020 lows to hit highs in February 2021.) Despite its uptick in financial and share price performance, it’s clear that Twitter is the guy at sea who’s drowning – not waving for help. And recently the company has posted solid results. Second-quarter revenue was up 74% to $1.19 billion. (It’s not a fair comparison... but during the same period, Facebook posted net income – not revenue – that was eight times bigger than Twitter’s revenue.) As a nice change of pace, it actually made money, with a 6% net margin. (That means that for every $1 in revenue, the company made a profit of 6 cents.) Facebook, by comparison, had a 36% net margin.
HOWCAN TWITTER SAVE ITSELF?
1. Get rid of the CEO.
Get a full-time manager/visionary who is incentivized to make Twitter something much, much bigger. Don’t let Dorsey’s empty virtue signaling (quarantine beard, showy 10- day retreats to Myanmar, black turtlenecks... yes, all part of the schtick) distract you. And then – once Twitter has some time to get over its inferiority complex, and its employees no longer feel like they can duck out early since, hey, the boss does it every day – maybe it can focus on the matter at hand: making something big.
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August 2021
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