Empty Nest: Twitter’s Uncertain Future
Twitter is perhaps the greatest symbol of the millennial generation: it not only satisfies the demographic’s interest in live-updates from every corner of the globe, but does so in 140 characters or less, ideal for a generalization constantly criticized for its slactivist approach to social justice. Since it began in 2006, the social networking site has gained more than 300 million users across the globe and all social strata. From President Barack Obama to the New York Times, from Donald Trump to Grumpy Cat, it seems Twitter’s reach extends into every nook and cranny of the planet. At one point, it seemed that Twitter was poised to take over–that time has, however, passed. Stock prices for the company have fluctuated wildly, with Google, Apple and Disney refuted rumors that they were interested in purchasing the site. Sales force, a relatively new customer service platform, announced that it was considering bidding on the company in early October 2016. Sales force CEO Marc Benioff has discussed the potential for monetizing Twitter despite his own shareholders open pessimism about the deal.
Today’s Gossip, Tomorrow’s Headline
Twitter is now worth about $11 billion although its stock prices have spiked and dropped as different rumours come to the surface. The shares rose from $18 to $25 a share, when whispers about Google, Disney and Apple’s appeared, and fell 20% just a few days later as all three companies announced they would not even place a bid. Acquisition rumors have not only had a negative impact upon share prices, but upon staff morale.
An acquisition by any company would likely result in staff layoffs at Twitter and its subsidiary businesses, such as the struggling video clip sharing app Vine and floundering platform developer, Fabric. Twitter’s C.E.O. Jack Dorsey did little to placate rumors with a falsely upbeat memo sent around to all staff members: “We’re only limited by our sense of urgency…Life is short. Every day matters. And the people who use Twitter every day deserve our best. They are why we’re here. So let’s show them what we’re made of and deliver a better Twitter faster than they thought possible. We can do this every day. We can do this!”
While Twitter, and its Silicon Valley brethren, is known for fuzzy, feel-good environments, such a memo sent at what can only be described as an anxious time for Twitter employees, would do seemingly little to reassure staff members.
The Let Down
As of October 24th, however, all rumors were laid to rest as Sales force walked away from the potential deal. This means that Twitter’s future lies solely on the shoulders of Dorsey, who has thus far failed to turn the company’s plunging profits around since he resumed primary control in 2015.
According to the Wall Street Journal, employees are understandably distraught. Despite Dorsey’s attempts at improving sentiment through upbeat memos and announcements, staff is interested in hearing a more concrete plan–one that, ideally, does not rely upon massive layoffs, as has been Dorsey’s approach in the past. When Dorsey became CEO, he cut off 8% of Twitter’s staff and recruited for more middle and senior management positions. The company is struggling to retain staff for longer than a year and is desperately searching for a Head of Product, a vital position that has remained vacant for a conspicuously long period of time.
Unfortunately, it seems unlikely Dorsey will be able to move forward without making drastic cuts. Experts predict that the company could save $100 million per year by reducing employee benefits, including stock compensation. Of the 190 American tech companies valued at over $1 billion, Twitter has the second-highest stock-based compensation at 26%.
These types of fears, experts say, may snowball into disaster for the company. Recruiting employees and securing long-term deals may become next to impossible should the company fail to increase its profits in the next quarter.
Twitter’s profit revenue has fallen as membership subscriptions have slowed. In the third quarter of 2016, the company added just 1% more to its users and its revenue shrank for the eighth quarter in a row to under 20%.
Full Tweets Ahead?
Twitter is in a tricky situation. How can more followers be attracted to a company little more than a decade old, when it seems unlikely that there will be another surge in memberships? Presumably at this point, everyone who wants a Twitter account has one (unless, of course, they live in China, North Korea or Iran).
Dorsey may have been one of the few people filled with joy on November 8th, when his company was the “big winner” in terms of news coverage, propaganda spreading bots and views. In fact, the surprise election results may prove to be a boon for the company. Donald Trump, perhaps Twitter’s biggest fan and loudest spokesman, shows no signs of bringing any semblance of professionalism to his elected office, nor does he seem to be showing restraint in the aftermath his own campaign revoking his Twitter account.
All bets are off at this point. Twitter is stuck at a troublesome fork in the road, and it does not seem like a benevolent fairy god-company will be bailing it out anytime soon.