(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 2^nd 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.

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[1] R.Borison, 2015, Twitter Reputation for chaos is costing it employees,  http://www.thestreet.com/story/13233668/1/twitters-reputation-for-chaos-is-costing-it-employees.html

[2] S.Gray, 2014, PayPal co-founder Peter Thiel: Twitter is “horribly Mismanaged”,  http://www.salon.com/2014/09/17/paypal_co_founder_peter_thiel_twitter_is_horribly_mismanaged/

(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.

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[1][1] The Guardian, 2015, The Guardian view on media globalization: good news for the financial Times, http://www.theguardian.com/commentisfree/2015/jul/23/the-guardian-view-on-media-globalisation-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”, http://www.niemanlab.org/2015/07/citing-an-inflection-point-in-global-media-pearson-sells-the-financial-times-to-nikkei/

(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

(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.

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[1] J. Martinson, 2015, BBC Fights back against Tory assault on waste and right to make popular shows, http://www.theguardian.com/media/2015/jul/13/bbc-fights-back-against-tory-assault-on-waste-and-right-to-make-popular-shows

(The Big Disrupt) Facebook: Facebook Squares Up Against YouTube As Its Plan To Consume Our Time and Attention Takes Shape

It might sound obvious to say that we live in a world where time and data have because just as or even more important to businesses than their bottom line but looking at Facebook’s recent moves to offer publishers and video content creators a share of ad revenue derived from their content and the rumors of the social media giant talking to record labels about video content, it’s clear that Facebook has taken this observation to heart more than most.

Facebook plan to get content creators on side is obvious as Facebook makes its money off the time and information their users spend and share on their site and partnering with publishers and video creators to post content on their site directly helps Facebook sell its ad inventory to advertisers as their users spend and share more time and information on consuming the content they love.

Facebook’s strategy puts them in direct competition with YouTube, who are owned by Facebook’s real competitor, Google. It’s long been predicted that Facebook would at some point go up against YouTube but it’s a lopsided match up as Facebook has the huge advantage of not being as dependent on content creators as YouTube is as Facebook users engage with other as well the content. YouTube does have a comment section but it’s notoriously hostile and troll friendly.

Entrepreneur and investor Jason Calacanis was one of the few who saw this coming and right now must be rejoicing that Facebook is wooing content creators. Calacanis has been a long standing critic of the Google owned company’s attitude towards content creators from its revenue stunting 55/45 split to its tendency to favor its own key metrics over the key metrics of content creators.

Calacanis has also been particularly critical of YouTube’s reliance on Google regarding attracting advertisers and because of this, content creators are hit with the double whammy of having no real relationship with either advertisers or consumers as according to Calacanis ““You don’t own your customers. YouTube does,””[1].

While Facebook are offering video creators the same 55/45 split YouTube is offering, Facebook can offer more money despite the split to due to their reach. Facebook could offer a better user experience and make videos easier to find as according to Re/code “People don’t have to hunt to find your video — Facebook will show it to them. And those people don’t need to be following your Facebook Page, either”[2].

With its deal with HBO, it’s only a matter of time before Facebook make deals other cable and broadcast networks that see the promise of exposing their content to the company’s 4 billion a day audience.

In sum, if YouTube executives aren’t scrambling their brains attempting to come up with ways to compete with Facebook, it better start brainstorming and quickly as Facebook are clearly coming for blood.

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[1] Quote by E. Vlessing, 2013, Inside.com’s Jason Calacanis On Why He Turned Down YouTube Funding, http://www.hollywoodreporter.com/news/insidecoms-jason-calacanis-why-he-562700

[2] K. Wagner, 2015, YouTube Beware: Facebook Will Start Sharing Ad Revenue With Video Creators, http://recode.net/2015/07/01/youtube-beware-facebook-will-start-sharing-ad-revenue-with-video-creators/

(The Big Disrupt) Interview: This Week In Startups Talks To Bestselling Author Steven Kotler

Check out this great interview by This Week In Startups as founder and host Jason Calacanis talks to bestselling author, journalist, and founder of the Flow Genome Project Steve Kotler as he talks about science fiction becoming fact, entrepreneurship, and the future of technology.

(The Big Disrupt) Uber: Uber’s Californian nightmare

With Uber closing down operations in France and two of its executives being held under arrest, it’s surely time for the Google backed car hailing company to review its ill-advised strategy of getting under the skin of governments and taxi drivers across the planet.

Uber has been harassed, harangued and protested by governments and taxi drivers against in just about every country it’s operates in as the company has launched operations in countries with the truly naïve notion that the disruptive and regulatory implications of their service wouldn’t garnered them the attention of both governments and taxi drivers despite the vitriol and legal drama the company has faced wherever it went.  

Governments and taxi drivers have been all over Uber like a hot rash for a number of reasons but the main contention has been over Uber’s reluctance to be pinned down as a taxi service and therefore avoid dealing with the burdensome regulations that come with it. Uber have consistently described themselves as an app service which largely doesn’t wash with either governments or taxi drivers who have to compete with a popular and cheaper service that’s not beholden to the regulations they are.

Taxi drivers everywhere have cried foul over Uber’s ability to flout regulations and have taken to the streets as the California based company represents an extinction level event to their industry. While characterizing Uber as an extinction level event for the taxi industry might sound hyperbolic, tell that to French taxi drivers whose protests against Uber turned violent as, according to The Hamilton Spectator, “100 Uber drivers ha(d) been attacked, sometimes while carrying customers”[1].

Taxi drivers and fleet around the globe would probably take Uber’s disruption on chin if Uber played but rules of the road but Uber, intent on arguing its status as merely an app service that simply connects consumers with drivers, have other ideas. The reason Uber make this argument beyond actually seeing themselves as an app service is that Uber don’t want to insure their drivers as doing so will make insurance costs one of the company’s largest expenditures and fast. It’s why Uber has had to brave legal battles, bans, and protests in every country it operates in and the bad press that comes with it as Uber simply doesn’t want to take on a very large liability.

So far, it’s been Uber’s drivers taking on the insurance liability forcing drivers to lie to their car insurance providers who’ll likely raise their rates or potentially drop them altogether. However, Uber will no longer be able to have their cake and eat it in California at least as thanks to recent changes in the law, Uber now have to cover their drivers from the moment they use Uber’s app to the moment drivers turn it off.

Insurance company executives must be jumping for joy in their boardrooms upon hearing the news of the California law change as it part of a growing trend of states in the US changing their laws to make sure that Uber insures their drivers. Uber executives however are likely to have their heads in their hands wondering why California of late has been tough on them as the Californian labor commission ruled that Uber drivers were employees as opposed to contractors.

It’s one thing that states are pushing to make Uber insure its drivers but recognizing their drivers as employees is literally Uber’s worst nightmare as insurance is merely a drop in the pool compared to the costs the company will incur if its drivers are ruled as employees as rulings like this “opens Uber up to higher costs, including Social Security, workers’ compensation and unemployment insurance”[2]. Should more states in the US and countries across the globe make similar rulings, Uber’s business model will be seriously hobbled by onerous obligations and raise driverless cars a rungs up Uber’s corporate agenda from a far flung ambition to the organizations top business priority.

In sum, Uber, despite the bad press, protests, and legal battle have largely had their own way but with the double whammy served up by their home state in making them cover their drivers and, more importantly, recognizing them as employees, Uber could find themselves in real trouble should other states and countries follow the Californian example.

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[1] The Hamilton Spectator, 2015, French taxis strike after weeks of rising tension over Uber, http://www.thespec.com/news-story/5695185-french-taxis-strike-after-weeks-of-rising-tension-over-uber/

[2] C. Johnson, 2015, Uber drivers are employees not contractors, California rules, http://www.theguardian.com/technology/2015/jun/17/uber-drivers-are-employees-not-contractors-in-california-ruling

(Movies) Steve Jobs - First and Official Trailer (HD)

Check out this brilliant first and official trailer of the Danny Boyle directed and Aaron Sorkin written self-titled biopic of Apple founder and CEO Steve Jobs starring Michael Fassbender.