Twitter, originally twttr, was started by Jack Dorsey, Evan Williams, Biz Stone, and Noah Glass. They chose this name both because it followed the concept of an SMS-like service and Twitter.com was taken. They later purchased that domain and renamed the company accordingly.
The company’s revenues are growing but net income is still negative. For the fiscal year ending 2015, revenues grew to $2.2 Billion, which represents a little over 36% increase from the year before. According to Wikipedia, in May of 2015, Twitter had 500 million users of which 332 Million were active.
Twitter is in a class of its own. While loosely called a social network, many refer to it as more of a micro-network. There isn’t any other type of service that compares to date. It can be difficult for newcomers to follow the ever-moving feed but over time, people get used to it.
How the Company Started
The network and company are one in the same. The network got its start as a means for employees of Odeo to communicate with each other in an SMS-like manner. As they expanded to the general public, the concept caught on quickly. Celebrities jumped fully on to use as a way to communicate with fans. This is one of the key aspects that has made the company a success.
Like several other major social media platforms, Twitter was well-funded right from its inception. Much of the earlier funding was not disclosed although rumored to have been close to $5 Million. It continued to receive various classes of funding over the next several years.
Twitter followed Facebook’s lead in 2013 when it announced its IPO. Unlike Facebook, however, Twitter’s IPO was not as successful. Even though Facebook had some technology hiccups during its IPO, the price of the stock is still up from its IPO. The same is not true with Twitter. As of this writing, the current price of the stock is around $14.38 which is more than half of its IPO price of $26. Many blame slowing memberships for its stalling stock price.
The company’s earliest problems were technology-related. They stored all tweets inside of an SQL database which was fine when membership was small and manageable. Although there are plenty of SQL engines that can handle large transactions, the company decided to re-engineer the way it stored tweets. It has gone through several iterations and technology to come up with the methodology used today.
Other problems were internal management egos trying to fight for control of the company. If you look at the history of CEO’s you will notice it is like a revolving door. This does not instill any confidence for the employees of the company nor future shareholders. It could be another reason why the stock is trading at its current level.
By any other companies’ measures, Twitter membership is enviable. However, it is very tiny when compared to Facebook. This presents a huge problem when trying to attract advertisers. Smart advertising goes where the people go, and that is Facebook. Besides, Facebook advertising has demographic targeting options second-to-none.
Why it Works
Celebrities and high profile people made Twitter a success. They can reach a large fan base in practically real time. Famous people can use this to get the word out about new developments in their professional and even personal lives.
Large companies have gotten involved with the platform knowing how well received it is with celebrities. However, these companies realize that followers don’t want to be sold to. They need to connect with followers in a personal way and offer valuable information. It is just as easy to hit the unfollow button as it is to hit the follow button.
Individuals are learning that by pumping up higher profile people (influencers) using Twitter, they get more recognition. Therefore, Twitter is not just for celebrities and big businesses to become well known. When done correctly, anyone can gain status via this network. It’s all about working interrelationships and offering valuable information.
Twitter continues to be considered part of the big three social media platforms. They share this with Facebook and Pinterest. As long as they can retain that status, they will continue to draw members into its base. But just having members is not enough. They need these members to be active.
As mentioned previously, high profile people and celebrities helped to make Twitter the powerhouse it is today. They still do not have the following of networks such as Facebook and Pinterest. The following they do have, however, is rather extensive by most measures.
The company has recently introduced Promoted Tweets, which can help users get their message to more people. This is a decent income generation vehicle for Twitter.
Internet Marketers use the platform as part of their promotional activities. While this can be a double-edged sword for many social media companies, it is clear that this group can help expand any network. The key is to balance the promotional aspects with the terms and service of the platform. A big risk is for Twitter to bite the hand that feeds them by becoming too restrictive. Another risk is when other social media platforms become more business-friendly, marketers will jump ship quickly.
People can share, like, and retweet posts (tweets) made by other users. Twitter has also opened up commenting as part of the platform, so minimal communication is now possible.
Tweets are often the first line of information that average people see, especially when the information is newsworthy. It’s not uncommon to see a popular tweet get millions of shares and retweets in a matter of seconds.
Lessons Learned by The Business
- When Jack Dorsey first ran Twitter back in 2008, many internal people felt his heart wasn’t in it at that time. He had too many side interests including being the CEO of Square. Dorsey stepped down as CEO but stayed with the company. In 2015, he was asked to become the CEO again. This time, the lessons he learned about focus are key to the company’s decision to reenlist him as CEO. He is still the CEO of Square but with his new focus feels he can do both.
- Twitter product development stated that you couldn’t make major changes on a platform like Twitter. You need to integrate small changes over time. Otherwise, the whole house of cards can come crashing down on you.
- Live services such as Twitter are at the mercy of the internet and the technologies that comprise the internet. That is something they have to think about every day.
How Other Businesses Can Learn from This
The founders of Twitter were friends before they started the venture. When Twitter became the real deal, they fought for control and lost their friendships. If you want to remain friends with people, never go into business with them.
As mentioned, when a business grows to the size of Twitter, it pays to make small, incremental changes. Some businesses can make major changes successfully.
Social media has a fickle audience and doesn’t take much to switch from one platform to the next. It’s important to play nice with influential players and be willing to do what others won’t.