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Despite Business Struggles And A Messy Quarter Twitter Is At Its Most Vital

Twitter CEO Jack Dorsey

Drew Angerer / Getty Images

Twitter is living a fascinating contrast. Its business, following a botched sale, is in a state of terrible mess. Its product, now at the heart of a number of major world events, is more influential than ever. The company's business troubles are driving yet another cycle of deep pessimism, but in the big picture, they matter little to its centrality on the world stage.

Consider Twitter's last three months: Twitter CEO Jack Dorsey first lost a power struggle with his board and co-founder Ev Williams, according to Bloomberg, and was forced to explore a sale. Google, Microsoft, Disney and Salesforce and others were reportedly interested in buying it. Yet each one of these potential suitors then either walked away from Twitter — in some cases due partially to concerns about Twitter's inability to curb trolls — or denied having any interest whatsoever. The coup de grĂ¢ce was Salesforce CEO Marc Benioff's sheepish withdrawal due to investor pressure and a precipitous stock decline coinciding with his "I may be interested, I may not be" media tour. And in the end, Twitter didn't sell. The company is now expected to lay off around 300 employees. Some analysts say its premium video push won't generate meaningful revenue. Its user numbers appear stagnant. And adding insult to injury, it's considering selling off the once-popular Vine.

This all sounds brutal. Until you consider how Twitter, the product has performed over same time period.

To recap the same three months: Twitter emerged as the most significant social platform in the U.S. presidential election. It was the essential media service during the debates, providing a waterfall of commentary, fact-checking and meme-making as candidates traded barbs. It was so much the hub of conversation that even tweets presented with no real clarifying context could be parsed, and even went viral, because seemingly everyone was tuned into the same thing at the same time int he same place. It served as the medium of choice for Donald Trump's predawn Twitter attack on beauty queen Alicia Machado, a tweetstorm that became a central issue to both campaigns for days. In the weekend following the release of the "Trump Tape," Twitter's app was impossible to close as Republican after Republican tweeted updates on their support from Trump (or lack of it). In the days that followed, it was Twitter where women turned to share share stories of their own sexual assaults. And it was also Twitter where Donald Trump turned in an effort to defend himself.

The platform similarly became a critical source for updates on the Brexit fallout, the invasion of Mosul, along with the usual celebrity spats and sports commentary. No other service possesses the fast-moving, real-time environment of Twitter, and the platform provides an unparalleled window into unfolding world events. The worst corporate turbulence, it seems, can't shatter the glass around the lightning it caught in its bottle a decade ago now, which no other company, service or product has been able to duplicate.

Tomorrow morning, and really in the middle of the night, Twitter will report third quarter earnings results, which cover most of this three month period. Its subsequent call with analysts could quickly take on the tone of a funeral if things have not significantly turned around — which seems unlikely given all indicators. Dorsey and his lieutenants COO Adam Bain and CFO Anthony Noto will likely be asked about the failed sale and the layoffs, and then will field other questions about user growth and revenue. Even the slightest miss will likely spark the quarterly ritual of "Twitter is dead" reactions, whose writers usually follow the three-step ritual of 1) Publish the Twitter is dead story 2) Tweet the Twitter is dead story 3) Engage compulsively on Twitter about said story.

The parade of these pessimistic reactions has been going on some time. You could have read about The Decay of Twitter in the Atlantic in November 2015, The End Of Twitter in The New Yorker in January 2016, and about how Twitter Is Finished from Seeking Alpha the following month. Despite the obituaries, the platform thrives.

It is bizarre and disorienting to witness the height of a product and the depth of its business occurring so simultaneously. This isn't how things usually work. If you build a great product that hundreds of millions of people use, you will generally make a lot of money. But the economics of an ad-supported online business are screwy. Twitter faces the unenviable task of competing with Google and Facebook for ad money, and the two companies, thanks to their size and data capabilities, capture 85 cents out of every incremental online ad dollar. It's tough to build a high-growth business on the remaining 15 cents. Twitter still has 313 million monthly active users (with an unusually high percentage of them being celebrities, musicians, journalists, politicians and other media figures) a business that rakes in over $2 billion each year and, most importantly, influence that extends far beyond its walls. But for investors expecting Facebook-like growth and Google-like ad sales, that's not enough.

Twitter has gone through the a version of the various stages of grieving over the past three years, and it's done it in public. When Twitter went public in 2013, it was in denial, not seeing the natural ceiling to its ad business that would soon become apparent. Then Twitter experienced the anger stage, where quarter after quarter it would deal with the unnerving question "Where's the user growth?" Next came bargaining, where Moments and live streaming, Twitter argued, could finally help it break the 300 million-ish user plateau. After the failed sale, maybe Twitter and its investors will now finally move to the acceptance stage, and come to peace with its place in the universe. Twitter may not be for everyone, but it is in position to be the beating heart of the internet for a long time to come. And if it can figure out how to keep the lights on, it will be.



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Despite Business Struggles And A Messy Quarter Twitter Is At Its Most Vital Despite Business Struggles And A Messy Quarter Twitter Is At Its Most Vital Reviewed by admin on 18:46 Rating: 5

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