Tuesday 26 September 2017

Twitter critics missing the point

Twitter boss Jack Dorsey, who nearly always faces all the same questions
Twitter boss Jack Dorsey, who nearly always faces all the same questions
Adrian Weckler

Adrian Weckler

He sat, shoulders slightly slumped, speaking in a quiet voice. On a flash visit to Dublin last week, Twitter boss Jack Dorsey faced the same questions from journalists that he always gets.

"When will Twitter make a profit?"

"What are you doing to combat abuse online?"

"Are you worried about user growth on the service?"

I was one of the journalists. And, yes, those questions were all on my list.

But I felt as if I was watching a man who has been beaten down by relentless one-sided coverage. These days, Twitter is painted either as a problem social media platform or a financial basket case. While the harassment issue is complex, the financial failure tag is lazy and shallow.

Twitter is still growing (its last earnings report cited an extra 10 million monthly users) and is singularly relied on for breaking news in large parts of the world.

It's also ridiculous to base its performance on comparisons with Facebook, a commercial juggernaut that has almost no historical precedent and which makes any rival (bar Google) look weak.

So when Dorsey came to answer these same old questions last week, he looked a bit weary.

"Does Twitter need to charge subscriptions to make ends meet?"

"How long can it go without becoming profitable?"

What must this be like for Dorsey? For people to come up and tell you 'what the problem is with Twitter'? For the company's value constantly to be reduced to comparisons with Facebook or the next financial quarter?

Given that I was there, I asked him exactly that.

"I always look for the upside," he told me. "A lot of it actually comes from Twitter. That speaks to passion. People want us to do the right thing, they want us to fix it. People want us to be around and not to disappear. People just react. Sometimes it's seen as negative, but I see the positive in it. It's form of caring. It's a desire for us to stay around and endure."

That's a fairly diplomatic way of answering it.

If I were him, though, I might have pointed out some of the gaps in the way Twitter gets reported, particularly in the financial press.

The biggest one is the narrative that Twitter is somehow failing.

To my mind, there are many definitions of 'failure'. But including Twitter in that definition stretches its meaning to an unrealistic degree.

Bebo ended up in ultimate failure. So did MySpace. One might even argue that Nokia and BlackBerry have associations with the word 'failure' to some degree. All of those services are either gone or a tiny shadow of what they once were.

But Twitter? Twitter is surely one of the most successful tech companies in the past decade. Without needing to advertise, it's a household name. It is utterly relied upon by tens of millions (perhaps hundreds of millions) for critical information.

And this is a failure?

"Yes, but its user growth has stalled, unlike Facebook."

Yes, Twitter isn't growing its user base at breakneck speed like it was before. But it's still adding them. Just as importantly, its user numbers aren't falling: it is holding steady at over 300m monthly users. That is no mean feat. Ask Google or Yahoo how difficult it is to maintain a thriving, engaged social media base. It's almost impossible. Nine out of 10 companies that try it flame out.

Is Twitter less popular today than it was a year to three years ago? Does anyone believe it may dramatically lose popularity or usage in the next year?

It's probably the opposite. Twitter's utility in mainstream news and live events is deepening rather than waning. Say what you want about Donald Trump, but he hasn't hurt Twitter's prospects of short to medium-term relevancy.

"OK whatever, so people are using it. But it's losing money," continues the criticism.

Yes it is. Its last earnings showed a loss of around $160m. And it hasn't made a profit in its 11 years.

But that being the case, why is it that Twitter is still a traded stock with a market capitalisation of almost $11bn (€10bn)? Could it be that, despite all the cribbing, the market thinks it's a reasonable bet for the future?

Here's the thing about a publicly-traded company. If the market and its investors think it's done, they can sell the stock. At any time. But Twitter's share price is actually trading at around the same level now as it was this time last year. Yes, it's a lot lower than its IPO level three years ago. But it's still an $11bn company according to the unemotional, hard assessment of the market.

As for comparisons with Facebook, they're ludicrous. The only companies in history comparable to Facebook's time-compressed success are Google, Microsoft and Apple (with the latter almost collapsing in the 1980s). By any other standard, including Snapchat, Twitter is doing just fine.

As for demanding a profit right now, Twitter could probably deliver it in the next six months if it simply laid off a bigger chunk of its staff. It could say: 'Fine, we'll keep the product as it is, keep most of our sales and marketing, lay off lots of development staff and maybe try to rehire them in a year or two when we're profitable."

Dorsey knows this. Indeed, he alluded clearly to it when I asked him about profitability last week.

"Profitability is a choice," he said. "It's a choice between investment or driving profit. We believe that there's massive opportunity in continuing to grow and invest in the business… So we're going to take the time necessary to do the right things for the people using the product and also for our advertisers. And the revenue will follow."

Twitter has a lot of challenges. But relevance isn't one of them. The company and its offering will be around for many years to come.

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