Friday, November 28, 2014

Twitter: Going Nowhere

The Accidental Tweet From Twitter's CFO Reveals The Company's Biggest Problem

    Jim Edwards

    Nov. 25, 2014, 4:18 AM

Back in February, CEO Dick Costolo told Wall Street analysts that the company was going to make Twitter easier to use.

He may have failed in that task, judging by the accidental tweet sent out by Twitter CFO Anthony Noto yesterday. Noto appeared reveal the fact that the company is considering a new acquisition:

Noto tweet twitterTwitter

On the one hand, it's just a simple human error by Noto, and we can't read too much into it. Noto is new to Twitter, after all. But on the other, Twitter is a public company and news of impending acquisitions can move the stock up or down — Re/code has a list of some the companies Noto could have been referring to, which includes Storehouse, Shots, Secret, Prismatic, Drawbridge and Shopular. So this is serious — the company's CFO is having difficulty using his own product, and it may have consequences for investors.

Twitter has a longstanding problem with its confusing user interface that it has not solved. Plenty of people get the DM thing wrong: Anthony Weiner, the congressman who fell from grace after sending naked photos of himself on Twitter, made the same mistake.

In February, Costolo said Twitter would be redesigned so that users were less confused by its navigation and interface.

bii sai cotd twitter maus 2BI Intelligence

While Twitter is useful, the more you use it the more elaborate and complicated your dashboard can become, with separate streams for your home feed, sent tweets, direct messages, notifications and "activity."

As a longtime Twitter user, I can tell you that there have been only tiny, subtle changes to the Twitter user interface. It's still a complicated product that seemingly requires you to learn a separate shorthand of RTs, MTs, @, ".", #'s and bitly links in order to get the best from it.

And it is easy to confuse a private direct message, or DM, and a public reply tweet — which is what Noto seems to have screwed up yesterday. The litmus test: I still would not recommend that my mother begin using Twitter, but I've begged her to get onto Facebook so we can share photographs better. (My mum is a bit of a gadget nerd by the way — she's already got an iPhone 6 and Apple TV.)

This isn't trivial. Costolo believes that getting the user experience right is what will drive monthly active user (MAU) growth. Right now, that user growth is feeble. In Q3 it reported 283 million MAUs, up 21% for the year. That sounds like a lot but remember that Facebook has more than 1.3 billion users. Instagram overtook Twitter in popularity a long time ago. Snapchat probably has faster growth than Twitter, although fewer users overall.

There is a case to be made that Twitter should not, in fact, be a mass medium for every single person. The company has a lot of valuable data and does not need to be as big as Facebook to succeed. But as long as Costolo keeps telling investors that reaching everyone on the planet is achievable, then the company needs to make its product easier and simpler to use.

'People Are Losing Confidence In Him': A Brutal Takedown Of Dick Costolo's Reign At Twitter

    Jim Edwards

    Nov. 7, 2014, 10:05 AM

dick costoloGetty / Steve JenningsDick Costolo
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The Wall Street Journal has published a long, detailed and at times brutal anaylsis of CEO Dick Costolo's reign at Twitter. Seriously, go read the whole thing if you care about the fate of world's best platform for sharing news (and why it seems to be treading water compared to the meteoric rise of Snapchat and Instagram).

If you follow Twitter closely, you'll notice little in the story that is specifically new. What the article does instead is put together the entire jigsaw in one place: And when you see the complete picture, it's harsh:

• A vague and difficult to understand description of Twitter's audience as a series of "eccentric circles." (Does he mean concentric circles?)

• Costolo wants to emphasize Twitter's wider, non-logged in audience (i.e. on news pages that have embedded tweets) to avoid comparisons to Facebook. But talking about the larger size of the Twitter audience invites comparisons to Facebook's even larger off-platform audience.

• Endless management turmoil, much of it triggered by Costolo himself (especially when he hired one of his friends, Michael Sippey, to run the product team, who later left the company).

• This bit is especially worrying: "In all, the CEO has replaced or lost five direct reports since the IPO. Last week, he named Twitter’s fifth head of product in as many years. Its most recent vice president of product, Daniel Graf, who came from Google Maps and was handpicked by Mr Costolo, lasted less than six months in the post."

The stock has fallen from around $55 in September to around $40 now. So the scrutiny is warranted. Walter Price of Allianz Global’s Technology Fund has reduced his position in Twitter, he told the Journal: “People are losing confidence in him.”

In the meantime, here's my take on the way people mostly misunderstand why Twitter is so interesting and so important.

Disclosure: The author owns Twitter stock.
Twitter CEO Admits The World Cup Was No Help To User Growth

    Jim Edwards

    Oct. 28, 2014, 6:53 AM

Twitter's stock was down nearly 13% in pre-market trading, after CEO Dick Costolo admitted yesterday that the company's efforts to gain new users through the World Cup didn't have much of an effect.

As Business Insider reported back in July, Twitter quietly launched a special on-boarding program for new users arriving at the service during the planet's biggest sporting event, to help them find cool soccer-themed Twitter users to follow.

"But we didn’t see an impact on monthly active users," Costolo told analysts on his Q3 earnings call. To be clear, Twitter is still growing, it's just growing more slowly now. It added only 13 million users in Q3. Only 3 million of those were added in the US — Twitter hasn't added more than 3 million Americans since 2012 at least.

Costolo had previously said he expected the World Cup to increase engagement with users, which is different from adding new users. But monthly active users (MAUs) are what's driving the stock right now, and MAU growth is slowing. Here is Twitter's sequential growth in MAUs this year:

• Q3 2014: 4.8%
• Q2 2014: 6%
• Q1 2014: 4%

That decline, from 6% to 4.8%, came despite a World Cup final — the type of massive global event that Twitter believes is its natural environment.

Worse, Costolo says, "in Europe there was no change in monthly active user growth over the time of the world Cup. In fact monthly active user grow slowed in line with expected seasonality in each successful month of the World Cup." If you can't add Europeans during a World Cup, when can you add them?

bii sai cotd twitter mausBI Intelligence

The year-on-year growth tells a more depressing story, and you can see it in that downward-pointing line on the chart. Users rose 23% in Q3 2014. In Q3 2013, the previous year's growth was 39%.

So now comes the real test: Q4 2014. The World Cup was actually split evenly across Q2 and Q3, so Twitter got a bump in users and engagement in both quarters. That all goes away in Q4. By that time, Costolo's reforms — new management across the board and a simplification of the user interface — should have kicked in.

If Twitter continues to grow MAUs, even at this anemic pace, we'll know those changes worked. The worst case scenario, however, is that growth dips below 4%.

Here are Costolo's comments on MAUs and the World Cup in full:

Yeah, so the one thing I’d like to make clear is when we did World Cup last quarter it was an experience that was focused on monthly active users and was not broadly advertised to nonusers and we saw nice engagement with the product, but we didn’t see an impact on monthly active users.

And we’ve gone back and looked at the numbers a number of times now that we’re in the second quarter and want you have the same confidence that we have that the World Cup did not have an impact on monthly active users in the second quarter and then I’ll give you a sense for what we’ve done in the third quarter as it may have been similar to the World Cup.

As it relates to the second quarter monthly active users contribute to the World Cup, what we would say is the following; in Europe there was no change in monthly active user growth over the time of the world Cup. In fact monthly active user grow slowed in line with expected seasonality in each successful month of the World Cup.

In Latin America there was a slight acceleration of net ads on the World Cup, but at most of the World Cup added 600,000 users which is immaterial and quite frankly we probably saw a derogation of those users in the following month before the quarter ended. The U.S. actually added more net ads this quarter than last quarter which is interesting on a sequential basis.

Disclosure: The author owns Twitter stock.

Source: Business Insider

...and I am Sid Harth

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