Thursday, July 30, 2015

(The Big Disrupt) Twitter: Anaemic User Growth isn’t Twitter’s Only Problem

Despite Twitter beating wall street’s expectations by posting impressive revenue numbers and even a profit in its 2nd quarterly report, the social networking company was punished by Wall Street as Twitter’s stock dropped 11% with investors less than impressed with its slowing user growth.

User growth has been a constant thorn in the side of Twitter’s executive team and has seem the company’s stock backslide an incredible 34% in last the three months[1]. This really shouldn’t be surprise as investors have consistently shown concern about Twitter slower user growth and the company’s senior leadership appearing to be short on ideas on how to tackle a problem that threatens its business.

What also maybe rattling investors is the company’s shrinking ad revenue growth which was at 72% in Q1 but is now 63% in Q2. It’s been pretty much downhill for the company since they went public as their Wall Street investors have been dismayed by Twitter’s ineffective product strategy and generally how the company has been managed which sealed former CEO Dick Costolo’s fate last month. Twitter is showing all the signs of a company in trouble with its high employee turnover among senior management as, according to the Financial Times, Twitter has lost “more than 450 employees -- 12% of the company's staff “

Any company that reports a turnover that high over a year signals that even Twitter employees aren’t sold on the executive team’s plans to turn the company around and was clearly under the impression that they were on sinking ship. Just yesterday Twitter lost two executives to Dropbox and Google which clearly shows that former and now current interim CEO Jack Dorsey clearly wasn’t happy with his product management staff but it’s hard to tell whether he wanted to show Wall Street that he’s taking action to fix company’s forlorn product strategy or the continuing brain drain that is their employee turnover.   

Nonetheless, it seems Dorsey is knows that Twitter has failed so far to market itself effectively and is currently looking for a Chief Marketing Officer to drive home Twitter’s value proposition to capture in key markets. However this only brings to light the state of the company as the Chief Marketing Officer role is currently filled by their Chief Financial Officer Anthony Noto. Why a company that struggles to market itself would let their CFO moonlight as their CMO is a mystery and gives credence to Peter Thiel’s well held opinion that Twitter is “horribly mismanaged”[2]. Twitter have been looking for a CMO for months now with no luck which suggests that the company is struggling to attract talent maybe because candidates take a look at the high turnover rate among senior executives and get the sense that they won’t get enough time to address the company’s user growth problem.

In sum, Twitter is not in good shape and whoever eventually takes over the reins from Dorsey is going to have his or her work cut for them.

[1] R.Borison, 2015, Twitter Reputation for chaos is costing it employees,
[2] S.Gray, 2014, PayPal co-founder Peter Thiel: Twitter is “horribly Mismanaged”,

Saturday, July 25, 2015

(The Big Disrupt) Why are Pearson selling the Financial Times when it makes money?

The decision to sell the Financial Times seemed strange as it boggled the mind as to why Pearson would want to sell a famous and respected British media institution it’s owned for 58 years that’s making money in an age where most media entities are bleeding money. The only reasoning behind the FT sale that makes sense is that the education and publishing giant is looking to focus more on its profitable education business and slowly wind down its media publishing business which might also explain why Pearson is also looking to let the publishers of The Economist buy them out of their 50% stake in the magazine.

While it is jarring to see Pearson effectively wash its hands off two famous and respected British economic and financial magazines, Pearson have not been shy in stating its ambition to transition from its roots as a publisher into, in its own words, a “learning company”. In truth, the sale of FT was no surprise as the moment John Fallon became CEO of Pearson, the company’s transition into a full fledged learning and education company was a done deal. There was speculation even back in 2012 about who will buy the financial Times from Pearson with news media giants such as Bloomberg, Thomas Reuters Group and Rupert Murdoch rumored to be frame of to take the FT off Pearson’s hands.

The only real surprise is that Nikkei ended up buying the FT. A suggestion mentioned by the guardian suggests that the FT sale was based on the incredible circulation numbers in japan as “the Nikkei newspaper, Japan’s equivalent of the Financial Times, sells 3m broadsheet print copies a day – compared with 2m for the tabloid Daily Mail in the UK and a mere 200,000 for the FT itself”[1]. While this represents a great opportunity for Financial Times, it only begs the question why Pearson sold the Financial Times as it’s one of the few media operations that makes money mostly from its content thanks to strong subscriber base.

But looking at Pearson’s recent financial performance, the real reason Pearson sold the Financial Times becomes clear. Pearson suffers from growing net debt and a serious contraction in returns as Pearson was making 10.3% on invested capital in 2010 but only saw a 5.6% return in 2014. Pearson clearly didn’t see the Financial Times or the media business in general as ripe for growth which is evident in Fallon’s blog post as he noted:

“We are at an inflection point in global media. The pace of disruptive change in new technology — in particular, the explosive growth of mobile and social media — poses a direct challenge to how the FT produces and sells its journalism. It presents the FT with a great opportunity too — to reach more readers than ever before, in new and exciting ways”[2]
Fallon citing disruption on the media industry as a rationale for selling the FT doesn’t make sense as the FT, as mentioned earlier, are one of the few media companies that have weathered the storm and even thrived in the winds of change that has changed the media landscape over the last decade.

Nonetheless, expect Pearson to focus on it growth markets for its education business in Brazil and China as the North American market ( by far Pearson’s biggest) is showing signs that has peaked and is set or either stagnation or even decline. In sum, Pearson is looking become a learning company but flogging off the FT clearly was unnecessary and is a sign that the company may be moving too fast.

[1][1] The Guardian, 2015, The Guardian view on media globalization: good news for the financial Times,
[2] L. H. Owen, 2015,  Citing “an inflection point in global media,” Pearson sells the Financial Times to Nikkei”,

Saturday, July 18, 2015

(Movies) The Hunger Games: Mockingjay - Part 2 Official Sneak Peek

Check out this great epic trailer for the fourth and last installment of "The Hunger Games" franchise "The Hunger Games: Mockingjay-Part 2" directed by Francis Lawrence and starring Jennifer Lawrence, Liam Hemsworth, and Julianne Moore.

(The Big Disrupt) Interview: This Week in Startups Talks to OpenBazaar

Check out this great interview by This Week In Startups as founder and host Jason Calacanis talks to Brian Hoffman, founder and lead developer at P2P bitcoin marketplace OpenBaazar and talk about getting backing from Andreessen Horowitz and Union Square Ventures and much more

Wednesday, July 15, 2015

(TV) BBC: Why Are The Tories Trying To Strangle The BBC?

While it’s no surprise that the Conservative party aren’t fans of the BBC (British Broadcasting Corporation) and are trying make cuts to the BBC wherever they can get them, it’s quite a surprise to see how brazen the Conservatives are in doing it.

Appointing an outspoken critic of the organization in John Whittingdale MP as the culture secretary two months ago sent a clear message that the conservative government are planning to gut the BBC and take no prisoners while they do it.

The BBC is arguably the most popular public institution in the UK save the NHS and the conservatives are already experiencing backlash as British starssuch Daniel Craig, Dame Judi Dench and Rachael Weisz sent a letter to Downing Street imploring the government not to attack and weaken the BBC.

Their pleas however are likely to fall on deaf ears as the BBC may a long term casualty of a Conservative Party emboldened by a stunning election victory and solid majority in the House of Commons which puts them in a position to take on and win public battles to cut popular institutions such as the BBC.

The conservatives have made no secret of their plan to gut the BBC and even privatize parts of the organization as they see the BBC as wasteful and inefficient. However, in their luster to cannibalize the BBC, they end up making arguments as to why the BBC should be left well alone. Whittingdale made the argument with a straight face that the BBC has no business making popular programs such as Strictly Come Dancing and The Voice when its competitors in the private sector could produce them which, needless to say, doesn’t make sense.

It’s no fault of the BBC that it makes shows the public love and if it couldn’t make shows the public loved, why would there be a need for it? While there is a solid argument that the BBC has exceeded its public service remit, if Whittingdale’s argument gets taken seriously the BBC will be reduced to a British version of PBS which would make the BBC culturally irrelevant and would rightly justify calls from Conservatvies to liquidate the beeb altogether.  
However, this argument will likely be the one repeated again and again on Newsnight’s,  Question Time’s, parliamentary committee hearings and every right wing newspaper or blog you can shake a stick at for months to come until the BBC’s Royal Charter is up.  Executives at the BBC see the writing on the wall and have already agreed to take on extensive costs at the hands of the Conservatives as according to the Guardian “BBC agreed to pay for free license fees for the over-75s from 2020 at a cost of £700m a year.”[1]  While the BBC has the public (who pay for BBC), the Labour opposition and just about every creative industry you can think of in its corner, there will be little in the way of organization’s powerful enemies taking it apart piece by piece as there will be nothing democratic about how one of Britain’s most loved institutions will be brought to its knees by a government dead set on weakening the BBC until it breaks.

The real question would be to ask why the conservatives are trying gut and raid the BBC despite it being one of the few public institutions that meets its stated ambitions and the answer is simple, the Conservatives are targeting the BBC because it is one of the few public institutions that meet its stated ambitions. The BBC has served as a public reminder that public institutions can be as good and, in some cases, better than their private sector counterparts and the Conservatives hate the BBC bitterly because of it. They’ve hated the BBC for the lion share of its 93 year insistence and will continue to hate it until they turn the BBC into a slightly better version of C-Span.

Because of this, the BBC is in serious danger and there’s not much anyone can do as the BBC’s leadership are fully aware of why the Conservatives are after them and are fighting as hard as they can to keep the BBC as it is. The BBC has the winning argument and the public at large on their side as Lord Hall, Director General of BBC, rightly couched the debate about should decide the fate of the BBC: politicians with their agendas or the public who keep the BBC alive and who the BBC was created for in the first place.

In sum, the BBC can only hope that the latter gets involved in the fight for the future of the BBC before the former get their way.

[1] J. Martinson, 2015, BBC Fights back against Tory assault on waste and right to make popular shows,


Related Posts Plugin for WordPress, Blogger...