I love Game of Thrones.
Mostly because I can’t follow it no matter how hard I listen. The creators/producers/HBO can’t possibly please everyone. The stories get deeper (for Twitter it’s the network). The gore, drama and fighting are also fantastic. If you spend some time with the show it draws you in.
It’s pretty much the same with Twitter.
As a founder, entrepreneur and investor I dream of having all Twitter’s problems. Twitter is like a professional sports team that is local for every user. We want to be the GM of the team.
This brings me to Chris Sacca’s ‘New Testament‘ he wrote for Twitter (not that they asked for it). Chris does not want to be wandering in the desert for 40 years with a stock that goes sideways.
I get that. I have investors and I am an investor. We are impatient (the ones that blab about their patience are usually the least patient by the way).
I like Robert Peck’s cliff notes. Robert sits on our Stocktwits board and also leads internet research at Suntrust. Robert pulled his buy rating on Twitter just before earnings and the 30 percent stock crash. In short:
Product Suggestions Are Logical & Would Increase Utility. While Mr. Sacca makes many thoughtful suggestions, he centers them around 3 themes that should ultimately increase the utility of Twitter: 1) Make Tweets effortless to enjoy; 2) Make it easier for everyone to participate; 3) Make each of us on Twitter feel heard / valuable. Addressing the difficulty of use of Twitter for some, he suggests 3 areas of product innovation: “Live, Channels, and a Save Button”. Addressing how intimidating Twitter can be to a new user, he makes several pertinent suggestions: a. Nudges (prompting users); b. Questions; c. Polls and other ideas to encourage engagement by users. Lastly, addressing users “feeling heard”, Mr. Sacca points to potential new functionality like: “Hearting” content; read receipts from celebrities; celebrity “thank you bombs”; and archiving Periscope content. Noteworthy, Mr. Sacca thinks Periscope may be the best acquisition the company has ever made.
Robert than puts his Wall Street hat on with this conclusion:
2Q Results Paramount & At Risk? While we share the optimism about Twitter over the long term, we also keep an eye on the shorter-term trends to see how the company is doing in executing against its opportunity. We point out that while we agree with Mr. Sacca’s suggestions, many of them would take some time to implement and hence may not necessarily inflect near-term trends. We center the near-term risks around 3 main areas: User growth trends, potential advertiser pullback, and advertiser budget shift. We think its possible sequential “core MAUs” (i.e. Ex “SMS Fast Followers”) could decline for the first time ever (Street at 11M net adds). The company did state that April didn’t start off strong, which doesn’t help the 2Q sequential compare, and we think May has continued April’s weakness. If Twitter were to miss its 2Q expectations because of these challenges (its third consecutive quarter: Q4 missed on MAUs; Q1 missed on revenues and guidance), we think it’s possible that the company may look to make some changes.
As CEO of Stocktwits now for 6 plus years I have a pretty great understanding of Twitter internal concerns. Stocktwits has the same type of opportunities and problems just narrower in breadth.
The pressure is greater at Twitter because of all the money they raised. The insiders are wealthy and the buck has been passed on to the common shareholders. The only thing that pleases common shareholders is a rising stock price.
The pressure Twitter feels shows up in everything from the product to op-eds and firings…a real life Game of Thrones.
I use Twitter a lot so would like for it to be my ‘mobile content/news operating system’. I am not sure how to explain it quite yet, but I am not a shareholder these days so I don’t care as much as I did before earnings.
Back to the markets.