The San Francisco Report

11/14. Twitter is stuck between Quality and Facebook

Twitter is trying hard to explain what it’s role on earth should be. But the message just doesn’t resonate. CEO Dick Costolo is amazing. He is a rare combination of business acumen, software expertise, testosterone fueled mussel and verbal skill. His CFO is a modern Rambo with suit. Together they seem a great team. Nevertheless, something rubs me off the wrong way when I listen to the Twitter story. They are stuck between the desire to deliver high quality content to millions of users and the need to be more like Facebook.

Their message is confusing. They want to be high quality, but they also want millions of users, millions of Tweets which are accompanied by millions of ads. The problem here is that quality and millions usually don’t mix well. I see where they’re coming from. If Arab Springs can happen with Twitter, why not Football Mondays, Netflix Fridays and what not. What’s preventing them from exciting millions around the world with the platform that excited thousands in suppressed people around the Arab world.

I think they are making a cardinal mistake. Instead of building Twitter from the ground up, they are constructing it top down. Arab Springs start from the ground up. Instead of carving out special occasions where real time communicatino at scale really matters, they are squeezing old world events such as soccer, football or TV shows into the 140 character regime, hoping that something great comes out of that. Sometimes it does. But Twitter could be much more.

At their recent analyst day I missed the bottom up thinking which made Twitter what it is. They should spend much more time thinking about special occasions where communication at scale matters, not where it happens to happen. Facebook thinks like that. For example, if I go to dinner with friends I share pictures. That is communication, but it doesn’t matter. If I want to start a revolution, communication matters. That’s the differentiating factor, Twitter should focus on. Instead they are chasing the dinner table picture with friends, a market, Facebook dominates.

Why not say, “we are about relevance, not time kill”. Or, “we care about why you actually communicate”. No. Instead they play the same tune Facebook plays. Just post, engage, share, do whatever. This is a dangerous path. Facebook is much better at enticing people to do stuff they actually don’t need to do. Why post a picture of sunset on the Golden Gate Bridge. Or why share a picture of a birthday cake. Who cares?

The Twitter playbook is not written well. Costolo should know how dangerous it is to work with the wrong script. He started as a comedian. They should go to the Ritz Carlton in Half Moon Bay and spend three days brainstorming what they actually want to be. How they can foster relevance on their platform and how to organize the company so it can deliver on those goals.

I like Twitter a lot. But in the mid 40s the stock is pricing in a Facebook like scenario which I think Twitter neither can nor should pursue. They might succeed and eck out another time wasting platform. Maybe the world needs two. But more realistically they will show quarter after quarter that people really only need one time waste app. Their user numbers will disappoint and the stock will go the 20s, where it belongs. Then management might take the trip to Half Moon Bay and write a new script. That’s when you buy this stock and get rich with it.