Around this time last year, the big question about Twitter was how much would the social network and the company’s culture change after going public. The answer, as we now know, is that it would change quite a bit.
Twitter enjoyed a honeymoon with Wall Street in its first three months as a public company, with the stock briefly soaring above $70 a share. That came to an abrupt end the day that Twitter released its first earnings report in February. Twitter beat Wall Street estimates for revenue and earnings, but user growth came in below estimates. The stock fell by more than 20% overnight.
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Some version of that episode has repeated itself after multiple earnings reports since then, forcing Twitter’s top execs to stress user growth above all else and prove to investors that it is a mainstream service like Facebook. Twitter’s CEO deputized and then replaced a series of execs to help reignite growth, but with minimal results. Meanwhile, execs pressed for more product ideas.
“We’ve always prioritized growth,” one former employee told Mashable for a recent story. “But there was more of a banging on the table situation [after the IPO].”
The result of those efforts will increasingly be seen throughout the next year.
The new Twitter
During Twitter’s first Analyst Day event this month, the company’s execs attempted to renew investor confidence by laying out plans to speed up product development and release a wide range of new features.
Twitter plans to introduce a curated timeline for new users to reduce the friction of having to find people to follow when first signing up on the social network — and perhaps for existing users who just haven’t found the most engaging conversations to follow. In that way, Twitter hopes to improve user onboarding and retention.
The social network will also begin highlighting tweets users may have missed while away, introduce native video editing and sharing features and more breaking news alerts, all of which may further boost user engagement and, certainly in the case of videos, pave the way for stronger advertising options.
Some inside Twitter have been frustrated to see the surge in popularity of messaging apps, which seemed to leave Direct Messages in the dust. At the analyst event, Twitter’s team said it plans to introduce “significant functionality to private messaging” soon.
It’s all part of Twitter’s strategy to expand on its service as much as possible without undermining the fundamentals of what makes Twitter Twitter.
“Obviously, Twitter will always be a real-time network. That is our No. 1 priority when we think about the user experience,” Anthony Noto, Twitter’s recently hired CFO, said during the company’s most recent earnings call. “But there are time periods when something incredibly relevant to you as a user could have occurred hours ago before you open up the Twitter app. And we will see unique opportunities like that to give you content that’s incredibly relevant, even if it’s not based on what happened most recently.”
Facebook has been pushing hard to release more standalone apps in order to be more nimble and better cater to specific use cases. Now Twitter plans to follow suit.
Dick Costolo, Twitter’s CEO, told analysts at the event this month that the company plans to introduce more standalone apps. He refrained from offering details about what types of apps there may be, though the team suggested some might make use of Twitter content framed in a different way. Some obvious candidates, based on pure speculation, might be messaging apps or news-focused applications.
“Like Vine, we believe there are complementary applications that can live outside of Twitter that will help us grow [to the] largest daily audience in the world,” Costolo said at the event.
So far, Twitter has had mixed success with its standalone apps. Vine has gained a strong following. Twitter Music, on the other hand, was killed off earlier this year.
More executive shuffles?
Twitter is now on its third head of product in less than a year. It has replaced its COO, CFO and its head of media, among others.
Some turnover is inevitable in the months after an IPO as employees cash out, but the executive shuffle at Twitter has been particularly noticeable. Reports suggest that part of the reason for the changes was politics, but part of it is also pressure from investor to show strong user growth.
“Each of the decisions about the changes to the team have been the right decision at the right time for the right reasons,” Costolo said at the analyst event this month. But, as he admitted, “I realize the optics.”
Twitter has an ambitious product strategy in place and Noto, the new CFO, appears to be better at communicating that strategy and Twitter’s strengths to investors. Until Twitter succeeds in demonstrating strong user growth, all the top execs will continue to have a mark on their heads. That includes Costolo.
Unlike the CEOs of Facebook and Google, Costolo is not a founder nor does he have a large stake. To put that another way, he is more at the whim of Wall Street. Multiple employees who have worked alongside him have wondered aloud to me how many more chances he’ll get before investors try to push him out. We may find out the answer to that in 2015.
As expected, Twitter made several notable acquisitions after its IPO, including social TV analytics companies, a commerce startup and an Android lock screen app. That may continue in 2015.
In September, Twitter raised $1.8 billion in a convertible debt offering, roughly the same amount it raised from its public offering a little less than a year earlier. The additional capital gives Twitter more cash on hand for future acquisitions, though still far less than the cash available to rivals like Facebook and Google.