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”,

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