There has been a lot of rumbling about firing Dick Costolo from Twitter … on Twitter. While the company continues to become more and more culturally important (think: police protests) and their revenue soars, they’ve had a bit of a problem with user growth.
Caption: Steady user growth isn’t enough for some investors. Sit tight, video will make this go supernova.
Prediction: Within 18 months of releasing their YouTube competitor (coexister?), Twitter will at least double their monthly users, double their time per user, and triple their revenue.
[ Click to Tweet (can edit before sending): http://ctt.ec/jCoic ]
I know, it’s a big claim.
For background, I know the video space very well. Here are the credentials — and conflicts of interest — to get out of the way up front:
- I’ve been playing with Twitter’s new video product for the past month for my podcast This Week in Startups. That podcast has over 100,000 downloads per episode, has $500,000 per year in revenue and a staff of three full-time people. We’ve done 500+ episodes over five years. I’m thinking about putting 100% of my team’s effort into the Twitter platform — and essentially turning off our YouTube channel by putting on promos pointing folks to Twitter.
- I was one of YouTube’s funded partners over the past couple of years (they gave us low seven figures a couple of years back to make content). My company Inside.com owns dozens of channels on YouTube collectively with millions of subscribers and thousands of videos. I stopped working with YouTube because I felt the 55/45 revenue split was not sustainable (see: I ain’t gonna work on YouTube’s farm no more).
[ You can see some of those channels at youtube.com/mahalodotcom, youtube.com/xhit, youtube.com/mahalovideogames and youtube.com/watchwellcast. I’m planning on selling these assets in 2015, as I’m focused on news right now with Inside.com. These channels need a better home. ]
Why will video solve all of Twitter growth problems — and make revenue go supernova — in the second half of 2015 and into 2016?
7 simple reasons:
A. Most celebrities, influencers, journalists, business leaders, and world leaders do not have YouTube channels. If they happen to have a YouTube channel they probably never log into it personally, and they probably update infrequently. In other words, the most powerful folks in the world are not active on YouTube.
B. The most important people in the world — the influencers referenced above — are personally hyperactive on Twitter. When given the ability to upload videos natively from their phone — and have them play in the Twitter stream — they will experience the tsunami of attention that YouTube stars have been addicted to for the last five years.
C. When celebrities and influencers realize their followers on Twitter — the most loyal ones in the world — are rapidly consuming their videos they will become inspired to post more videos. These videos will be cross-posted to Facebook, played on CNN, and shared via the dark web (think email, SMS & message boards). When that happens Twitter will experience a second coming of user growth: people coming to passively watch videos!
D. When influencers realize that they can get 70% of the revenue from their videos posted on Twitter vs. 55% on YouTube, they will flock from YouTube to Twitter — where they already have a massive following. Now, Twitter has not announced their revenue split plans, but I’m 100% certain that they have been following my writing and that they know the most controversial issue for YouTubers is the abusive revenue split Google has forced on them. Twitter will do just fine with 30%, and they will make a huge “pro-content creator” statement by giving up those 15 insignificant points that Google extracts due to their monopoly in video.
E. Most influencers have MORE followers on Twitter than YouTube. If you had a choice of where to put a video as an influencer, you would obviously put it on Twitter instead of YouTube because: 1. you have more followers on Twitter, 2. Twitter will give you more of the revenue share (I assume), 3. you are already logged into Twitter and using it and, 4. you can have a dialogue with other important influencers about your video (not possible on YouTube, where commenters are a complete cesspool of trolls and children).
F. Most brands are hyperactive on Twitter and have little or no presence on YouTube. When folks want customer support they don’t go to YouTube and talk to a brand — they RACE to Twitter. Brands are 100x more invested in Twitter than YouTube. When brands can start hosting native videos they will go absolutely NUCLEAR on Twitter.
Imagine these tweets from brands that contain videos:
“Oh, we’re sorry you had a bad experience @jason, we’re working on the Wifi System, watch this video for the 2.0 version coming next month! “ from @virginamerica
“Thanks to everyone who watched season five of @thewalkingdead, here’s a behind-the-scenes look of next season brought to you by @pepsi!” from @amctv
“Here is the prototype of the Model S robotic octopus arm charging my Tesla!” from @elonmusk
G. Video that auto-plays in your stream (sound off) are 10x more effective at drawing folks in. As such, the time on Twitter will at least double or triple in the coming 24 months for average users.
If you’re an activist investor and you think Dick isn’t doing an outstanding job you’re a total idiot. Growing a groundbreaking service like Twitter — with the world’s most important people engaged — takes time. Like years.
You have to be very careful not to alienate uber-influencers like Marc Andreessen, a board member of Facebook who spends at least three to six hours per day tweeting.
[ Sidenote: when a board member of Facebook spends three to five hours per day tweeting — and no time on Facebook — that alone tells you that Dick is doing a flawless job maintaining the integrity of the service. ]
If Dick wanted to play games with Twitter he could spike the traffic. However, those games, like say putting weddings and Bar Mitzvah photos at the top of your feed, would alienate the power users who have defined the services relevant in the world.
This sh$%t is hard to get right and easy to get wrong. You want a hyper-considerate guy like Dick in charge of a service like Twitter — not a desperate, traffic-mongering idiot.
Sidenote: Did you know that Facebook actually has two dedicated teams to try and solve their “news” and “celebrity” problem? It’s true, I’ve heard from countless celebrity friends and journalists that FB has been making the rounds for two years BEGGING influencers to use Facebook more.
If Facebook can’t get their board members to use Facebook as their default communication platform, that shows you what an amazing job Dick is doing.
Revenue, stability, M&A, and influencer engagement are all off the charts with Twitter.
User growth needs work. OK, fine.
When someone is doing four out of five things exceptional and you’re thinking of firing them because you don’t understand the massively complex dynamics of how to improve the fifth item, well, you’re too f@#$ng stupid to own the stock!
Seriously, sometimes I think ‘Activist investor’ is French for “has no f-ing clue how complex this sh@#4t is.”
These short-term, activist investors — looking to maximize their investment in weeks not years — is why companies are staying private as long as they can.
If activist investors want to keep riding CEOs to do short-term tricks like this, they are going to find themselves not able to invest in groundbreaking companies — because they will stay private!
best @jason
PS — I have no idea if I own any shares in Google, YouTube, Facebook, etc., as I only invest in low-fee funds via my Wealthfront.com account (I’m a shareholder of Wealthfront). I don’t actively trade stocks, I actively invest in world-changing startups like Thumbtack, Uber, Chartbeat, Tout, Mouth, Boxbee, Brilliant.org, AdStage, RedClay, Calm.com, VideoPixie and 90 others (angel.co/jason for list). Lest anyone is thinking I’m trying to trade stocks based on my blog posts or (minor) influence. If a company is public there is no way for me to make 50–5,000x on my investment — which is my stated goal. I like to make insane bets on crazy founders and get 50–5,000x back on my money … because I’m a compulsive — but at least a self-aware — gambler.
PPS — I’m going to be on CNBC tomorrow at around 8:45am PST to talk about Yahoo. I’m betting Twitter and Uber might come up as well. I’m going to wear a black t-shirt, not a suit. I’m done wearing suits, I want to be authentic and wear my Mack Weldon black t (not a shareholder!).
PPPS — I’m f@#$king furious about the Charlie Hebdo murders. My thoughts are with the families and friends of those murdered for nothing but a couple of clever cartoons.
