In the past year, there has been an enormous amount of coverage on Twitter and the struggles the company is facing.
These struggles have included, but aren’t limited to low engagement, difficulty monetizing the platform, internal disputes regarding CEO succession, employees leaving the company in droves, and questioning of Twitter’s core product.
That being said, it is important we ask ourselves one very important question when it comes to Twitter:
Are we holding it up to a standard it was never meant to be held up to?
Was Twitter meant to be the next Google? Meant to be Facebook’s arch enemy? Meant to be a company as big as Walmart?
The way things are going, the obvious answer seems “no”, but let’s take a step back here. Before we hold Twitter up to the same standard as Amazon or Uber, let’s keep a few things in mind before throwing in the towel…
Let’s not forget in 2015 alone, Twitter reeled in $2.2 billion in revenue. That’s more than Wendy’s, Taco Bell, and Peet’s Coffee!
We don’t bat an eyelash when Taco Bell brings in $2 billion in revenue, but since Twitter, in the eyes of investors and the public, was supposed to be the next $30 billion social media giant, $2.2 billion might as well seem like a couple pennies and shiny rock.
The value Twitter provides is undeniable. Whenever anyone needs breaking news — whether that’s checking in on the Turkey coup or checking in to see if Future dropped his mixtape yet — Twitter is where you go to.
Now, with Twitter’s partnership with the NFL, you get to experience live football games on the platform with thousands of other individuals, you get to watch the presidential debates live with one another, and more! All in real-time.
“We’re not just a push-live broadcast mechanism; we’re a conversation” — Jack Dorsey.
There are even people who believe Twitter is so valuable that it should be a public utility, free of any monetization expectations. At the Mobile World Conference back in 2011, Dick Costolo went as far to say Twitter should be like “running water”. The Library of Congress has pledged to document every single Tweet ever published (although they’re taking forever to accomplish this project, as the American government does so well).
Whether or not they are successful, the fact the government thinks a platform is important enough to archive, it’s safe to say the service has incomparable value.
Yet, what makes Twitter unique is exactly what has bit it in the ass time and time again. In high school English class, we would call this the “fatal flaw” of Twitter.
It’s succinct, 140-character limit was one of the assets that set it apart from other long-form platforms where posts were premeditated and inorganic. With 140 characters, you are limited to posting content that is off-the-cuff and stream of consciousness. Yet, the very same 140-character limit was exactly what has made ad space limited, and native advertising difficult.
It’s fleeting, time-sensitive feed (before it went through an identity crisis and tried to be like it’s brother, Facebook), allowed it to truly be real-time, facilitating conversation and viral content. Yet, the very same feed was one of the reasons advertisers didn’t trust users would see the paid content.
The very same swarm of information, rich with relevant news and more updates than we can comprehend, is one of the reasons users may not engage as much with Tweets relative to other social media content. Scarcity creates value, and scarcity is certainly something Twitter will never possess.
3. Role of Investors & Media
Are investors, the media, and the tech community responsible for fanning the flames on Twitter’s exorbitant expectations? Partially, yes. And why shouldn’t they be? Most of us — at least the optimistic ones — believed the company would be able to seamlessly monetize by 2016. We thought Jack Dorsey and his 4,000 employees would be riding 24 Karat chariots all across San Francisco by now.
Virtually nonstop media coverage does not help when it comes to raising Twitter to an unrealistic standard. Jack Dorsey initially being told he‘d need to give up Square, the mass exodus of Twitter VCs, trouble finding a suitor for acquisition, and more. These are all stories we see on a damn-near daily basis.
And, not only is public perception skewed as a result of this, but the stock market is too! At the end of the day, the stock market is almost entirely perception.
Again, the question arises: Are we holding Twitter up to a standard it was never meant to be held up to?
For God’s sake, the company went public before it had a sound business model. What did we all expect?
In hindsight, critiquing is simple, but there were a lot of factors at play here.
After the momentous ascent of Google —a search engine who now operates everything from autonomous cars to interactive maps —and other amoebic companies, investors did not want to miss out on the “next big thing”. Thus, betting for Twitter, a company whose user base was healthy and growing, seemed like a promising gamble.
But, now a lot has changed…
More than anything, Twitter stands as the symbol of where we are in the tech industry: a period of correction and consolidation in the wake of overvaluation.
Vine has already paid the price of this overvaluation. With Facebook Live going full throttle, Periscope might be next.
Twitter has been operating like a $100 billion company would when it is a $2 billion company. With the high-risk/high-reward industry we’re in, there are going to over-estimations. It’s inevitable.
Yet, if your costs consistently outweigh your revenue, one day you will have to make a change or close your doors. And the road to making a change starts with asking ourselves a simple question: Are we holding it up to a standard it was never meant to be held up to?
I guess we’ll just have to wait and see…