5 things that Twitter's CEO needs to do now
- 06 October, 2015 15:14
Jack Dorsey, co-founder and former CEO of Twitter, has become CEO of the social network once again. He has some big challenges ahead of him.
"There's a lot of pressure on Twitter now," said Jeff Kagan, an independent industry analyst. "We think of Twitter as a way celebrities communicate with their fans, but it's much deeper than that. Twitter has strength in news, politics and world affairs. Whenever there is breaking news, we all turn to Twitter as one of the sources of information."
The issue for the micro-blogging site is how to harness the network to boost Twitter's growth and its bottom line. The micro-blogging site isn't profitable, users aren't as engaged as they used to be and the its user base is showing slowed growth.
All of this falls on the shoulders of Dorsey, who also is the CEO of Square, a mobile payments company. That means Dorsey will split his time between both companies.
So what should Twitter's CEO focus on? Analysts take on what they generally agree should be his top five tasks.
1. Where's the money?
Twitter has to start making a profit.. The company reported that for 2014, it took in $1.4 billion. Despite that flow of cash, Twitter still lost $539 million. In its last reported quarter this year, Twitter again lost money - this time leaking $137 million.
The problem, though, isn't exactly about how to bring in revenue, said Brian Blau, an analyst with Gartner. It's partly about spending.
"Twitter has actually done OK on advertising," Blau said. "But Twitter has a big operation to run. Twitter had problems and performance issues and they had to spend a lot of money re-architecting and making sure they could scale. They've had acquisitions. They've had to field a bigger sales force. All these things are a drain on money. The resource drain is just not keeping up with revenues."
Rob Enderle, an analyst with the Enderle Group, said if Dorsey doesn't find a way to fix this financial imbalance, or at least explain how he's going to deal with it, investors and advertisers may "flee the firm."
2. Re-engaging users and bringing in new ones
While people may flock to Twitter when Facebook crashes or when tragedy strikes, the social network isn't pulling in new users like it used to and the users it already has aren't as engaged as they used to be.
Could tweeting be losing some of its gloss? As Kagan said, "They've got the cake. Now they need to whip up some frosting."
Blau added that this could be Twitter's biggest problem Twitter and it's going to be a long-term issue.
"It's not necessarily user growth," he said. "That's the symptom that's indicative of problems with the service itself. It's not appealing to the mass-market user. It's the way you have to smash your thoughts into 140 characters. It's a public forum, so you're open to reaction from everybody. Some users have a hard time finding value in the information they're seeing on Twitter.
"All those things put together make up a bigger problem than any one individual issue," Blau added. "These are endemic problems with the Twitter service... The Twitter audience seems to be broken into people who log in to look around, and then there are the active tweeters. The lurkers are a large majority. Twitter needs to figure out how they're going to drive the service forward."
3. Does the 140-character limit need to go?
Twitter made its name as the service whose users could communicate with a worldwide audience using only 140 characters.
Want to talk about last night's episode of Homeland? You get 140 characters. Want to talk about political unrest and violence in your country? You too get 140 characters.
Now, some say it may be time for a change.
"It is tough to put your thoughts into 140 characters. People find it restrictive," said Blau. "From what I've seen, it doesn't seem like that is a sacred cow they'll hold onto forever. We might very well see a different style of tweet in the future. But it's more than that. What are the behaviors of that tweet? How can we interact with it? I think we'll see Twitter change the formula of tweets."
4. Dealing with those hot upstarts
Within the last month, Instagram surpassed Twitter in number of active monthly users.
Twitter slipped to the third spot after Facebook and Instagram in the world of social networks. And Instagram isn't the only competitor Twitter needs to keep its eye on. Younger users are finding other options for communicating with their friends.
There's Snapchat, Vine, Yik Yak and other hot shots apps popping up on every social corner. Twitter has a lot of competition and that's not likely to change.
According to Enderle, slipping behind Instagram is hurting Twitter's image and doing something about that should be at top of Dorsey's to-do list.
Blau agreed that it's a big issue for the company. "It has been a slew of these other apps that are gaining ground on Twitter. It's not just Instagram," he said. "If they're stagnant and others are growing, then people are turning to something else. Is there a bigger problem than when users are leaving you? How do they capture those users back? How do they reactivate those logins when people haven't used Twitter in a while? How do you get people to buy things on Twitter? This has to be a big issue for them."
5. Can Dorsey handle Twitter as a part-time job?
With Dorsey at the helm of both Twitter and Square, will Twitter be a part-time job for him?
Dorsey needs to decide if he's going to lead both companies, and if so, how.
"Dorsey can't be "all-in" on two companies at the same time," said Patrick Moorhead, an analyst with Moor Insights & Strategy. "I could see if one of them was in cruise control mode, but both Twitter and Square need hands-on CEO attention."
Blau said it's unlikely that Dorsey will have two part-time jobs, but rather two full-time jobs.
"The matter is even more pressing for him. How does he manage two full-time jobs?" asked Blau. "A lot of this will be about his team. Who is he going to surround himself with? If he can attract the talent, then he will be successful because those folks will manage the company's day-to-day operations and manage the partnerships. They will be making sure his vision is going the right way, but he will have to turn over that responsibility to others."