TLDR: Twitter turnaround plan should focus on ARPU

by Tren Griffin (highlights provided for you by Annotote)

“ Twitter needs to become more of a platform and not less.

“ to be a better platform Twitter must let go of its worship of the monthly average user (MAU) metric and go full speed ahead on ending abuse, bots and spam.

“ For example, why don’t they reach out and offer a [verified badge] to the most valuable creators on Twitter [instead of just celebrities] … Twitter should do a far better job of making these people more discoverable and happy.

“ Twitter is a multi-sided platform linking advertisers on the first “side” of the market with [users] on the second side … Another third side of the platform is composed of businesses which pay for access to a Twitter API that gives them access to data that Twitter collects

#three-sided marketplace

“ To make the targeted advertisement valuable Twitter must “know you” in a deep way. What are the impediments to that? That should be the focus of work at Twitter.

“ Is it a good thing is MAU and DAU grow? Sure. But the more important question is: what is the highest ROI for Twitter

“ @chamath: you know what the single biggest thing we realized [at Facebook]? Get any individual to 7 friends in 10 days. That was it … It’s not just top-line growth. It’s acquisition, engagement, ongoing product value. It’s understanding the core value and convincing people … to use it.

#value proposition

“ The focus of Twitter should be on increasing average revenue per user (ARPU) which is driven by the ability to better target users.

‘ Twitter’s unit economics (mrq)…
 1/ MAUs: 317M logged-in + 500M unregistered
 2/ MAU growth (net): 1–4%
 3/ Churn: -4%/mo (est)
 4/ Revenue: $205M/mo 
 5/ ARPU: $0.64/mo
 6/ CAC: $8 (est)
 7/ COGS: $0.26/mo (mostly CAC)
 8/ Gross margin: 63.44%

“ if Twitter can get ARPU up to $3 a month [up from current ~$0.64 MRR] the operating leverage gets lots better [but] being a “media company” has significantly worse margins than a platform business

#user generated content

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