After Facebook’s crush job on earnings Wednesday night, Zuck might as well just have walked into the Twitter headquarters and dropped the mic.
However, he didn’t, because he is an awesome CEO who is focused on his company, and Jack Dorsey wouldn’t have gotten the message; he was probably vegging out with a sherpa finding his inner consciousness.
Before I get all high and mighty, let me say that I have invested in Twitter before. Facebook has been a holding of mine for a while and will continue to be, but as a refined millennial, I conceptualized the POTENTIAL value of Twitter.
After Facebook’s earnings release last quarter, I posted about why Facebook is still a buy. I do not intend to change that thesis. One of the reasons I said FB was still a buy was its focused company leadership, especially Mr. Zuckerberg.
When I first started investing, the whole idea that the CEO and executive leadership made such a strong impact was a bit romanticized and overblown, and nebulous at best. After studying and reading about successful companies, it’s clear that leadership is key. The problem is that leadership is extremely difficult to gauge.
It was a lazy thought of mine to underestimate what a CEO brings, because in hindsight, it’s a tough characteristic to measure. There’s no P/E, cash flow, or public comps. As I’ve learned from Jeff Macke, someone who is widely recognized and respected in the financial world, some CEO’s just have “it.”
As I said in my prior post, Facebook has focused on mobile and now is champion of that domain. Messenger increased Facebook users increased by almost 50M and Messenger by 100M. And they’re still growing.
After some quick searches and calculations, with a global population of around 7.4B and internet users coming in around 3.1, Facebook has about 51% of the world’s internet population as a monthly active user. That’s mind boggling. However, their potential market is still 49% un-captured and perpetually growing. Zuck has a plan to expand that market size.
This is the important part of the post where I compare the King and the Hipster Doofus.
Zuckerberg’s pet project is internet.org. That’s his plan to get everyone in the world on the internet. Do you know why he wants to do this? Yes he wants to come off as a humanitarian, but this guy is not altruistic. It’s because everyone in the world is a potential customer!
Dorsey’s pet project is trying to run two separate companies. I should stop here and point out that I admire him and could only dream of the achievements Jack Dorsey has had. He has created and founded two tremendously innovative and successful companies that offer unique products.
The problem here is that he doesn’t focus and obsess over one or the other. How is that Twitter still only has 300M users, and Instragram already has 400M and growing? Laughably, you can use Instagram as a platform to get on Twitter, which would piss me off as Twitter’s CEO.
Also, let’s look at the social media ecosystem Twitter has acquired. They got ahead of the video game with Vine, only to let SnapChat to organically grow faster and have much more mass appeal, despite Twitter’s user base advantage. Additionally, what have they done with Periscope? That fad lasted about 10 days.
A quick breakdown of Facebook’s ecosystem:
And don’t get me started on monetization. When you compare Facebook’s and Twitter’s earnings and revenues it resembles Frost’s “The Road Not Taken” (hint: Facebook’s made all the difference). If you don’t understand that metaphor, for the love of whoever you pray to, pick up a book.
Here’s a free suggestion for Twitter on how to make money, and barely do anything. Act as an advertising platform between a spokesperson and their followers.
Example: If Nike pays LeBron James $50M a year for endorsing their shoes, have him send a Nike Tweet his followers. Once LeBron does this, Nike pay Twitter a small % of whatever. That’s much more targeted advertising, and you don’t need a fancy algorithm.
What it comes down to is laser focus (extra Adderall) and freakish obsession with your company; Zuck sees Facebook as his one and only true love and Jack views Twitter as a fling he wouldn’t even give Uber fare to.
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Long diatribe. Upset with $TWTR? I think your final determination is backward. Twitter is Jack’s precious baby; Facebook is Zuck’s whore and she is one popular bitch. Ouch!
Vampyr, I wish you the best of luck in $TWTR. As mentioned in the beginning of the post, at one point, I was invested in them but that is no longer the case. I don’t believe in Dorsey as a CEO, especially because of Twitter’s lack of ability to execute on their ecosystem of apps in social.
Look how Facebook has grown Instragram and What’sApp. Twitter made intelligent acquisitions of Vine and Periscope, but has displayed no ability or vision in incorporating them into it’s strategy or operations.
boyaj,
I agree. I just hope $TWTR isn’t going the way of Betamax as a platform. But then, Betamax would have had a finite lifetime anyway. Remember how hot RIMM was? By the way, I’ve lost 59.84% of my investment in $TWTR so far. Timing, timing, timing… and my emotional brain resists the idea of making money on something as it fails. Stupid?
I’ve asked this question before but it requires a software engineer/architect to answer; What is $TWTR as a platform? How important is a platform? How is it different from the “chat” rooms from 20 years ago and $FB of today? I still say $FB is nothing more than e-scrapbooking. Children use Snapchat – – OK they are an important marketing demographic ; can you sense my disdain?
I remember when I had my first job working with software developers. I admitted to my boss that I had no vision with regard to this stuff. He just laughed but he was glad that I could appreciate electronic access to curated data, etc. – – which many of his programmers did not. The insurance and benefits consulting firm that I worked for was just moving to the MS GUI platform and looked to the Bloomberg Terminal as the ultimate model but once everyone had a PC on their desk, and then a laptop, there were whispers of going back to dumb terminals for processing centers. This was about 18 years ago. LOL.
Working in IT Admin, I was already aware of the HSLC and MEDLINE/Pub Med Resources Guide (accessible via dumb terminals by way of a Unix based server and phone line modems). I worked for a small antiquated medical library/museum.
Sometimes I think Jack Dorsey regrets that it was taken public in the capitalist sense. Maybe he is more of the mercenary than I realize. Maybe he’ll let TWTR die but he has what he needs to move forward.
I like TWTR but I have a gut feeling that I may lose my investment unless the question of further monetization, utility and then its deployment are accomplished.