Twitter… big or small?

Two articles by reputable commentators, Farhad Manjoo in The New York Times and John Naughton in The Guardian, have suggested that Twitter’s only hope for survival is to accept that it isn’t a global platform, and that to genuinely be of use it will need to stop trying to attract new users and focus on making money from a smaller client base.

The loss of two million active monthly users, from 307 to 305 million has hit Twitter’s share price hard, sending it down to its historical minimum and lowering its market cap to $12 billion, making it easy enough for a cash-rich company to snap it up. The financial markets only respond to growth, particularly when it comes to the social networks, using the famous MAU (monthly active users) measure to gauge its value.

But the obvious paradox here is that despite this lack of growth and its clear inability to convince more people to sign up, Twitter is a platform that a lot of people still use to find out what is going on in the world in real time, is rarely out of the media, and is something that vast numbers of us would miss were it to disappear tomorrow. It’s not easy to calculate the value Twitter generates, even if we ask businesses, the media, or celebrities, but it certainly seems impossible to get the general public to see its worth.

The problem with Twitter is that nobody quite seems to know how to define it. When it first appeared, the company had no idea what its business model was. This confusion now seems to include the public and the analysts. Many people still see it as a social network, something that in my opinion, it has never been. Wikipedia describes Twitter as “an online social networking service.” A social network is an environment where relationships are the important thing, along the lines of “I follow this or that person because I have a relationship with them.”

But in the case of Twitter, we follow people because they they have something to say that we want to hear. This emphasis on content rather than the person is what makes Twitter different to the social networks, making it a communication channel, an information tool. I have been telling my MBA students not to use Twitter to follow their friends — that’s what Facebook is for­ — but instead to follow businesses or people in the sectors they will want to work in when they go out into the world of work.

Last week, for the first time I visited Twitter’s offices in Spain, and this despite having garnered a significant number of followers since 2007, as well as having met country manager Pepe López de Ayala on several occasions at conferences, and having invited a number of its directors to talk to my students. I asked López de Ayala if he was worried that most of the people signed up to Twitter had no real idea about how to use it, and at most simply listened in to other people’s conversations, a practice known as lurking.

Can Twitter continue, and I’m not saying can Twitter continue growing, if a large number of its users simply listen in, using it as a kind of news feed? Twitter has shifted from “what are you doing?” to “what’s going on?”, and now has to make the move to “if it’s not important, don’t bother me”. What would happen if we all woke up one day and realized that Twitter isn’t the place to have a conversation — there are plenty of better apps for that — but was instead a site for finding out about major events? Reducing its customer base could give it greater value; it might even make it more interesting to advertisers.

A recent article outlined what Twitter needs to do to be ten times bigger, a hundred times for profitable, and a thousand times better. What would happen if the size of its customer base was no longer the big issue?

All this speculation is fine, but of course we shouldn’t forget that it isn’t quite as simple as Twitter making a strategic decision. Changing market perceptions is no easy task and there would be no guarantee of success. It isn’t enough to say what you want to be, you need the people at the other end to understand, accept, and adopt.

But there is something appealing about a Twitter that depends more on its value proposal than on pressure to grow at all cost, on a company that is able to generate advertising revenue and that is arguably more sustainable. Whether the markets can get their head round this is another matter.