Twitter & ElectionsNovember 6, 2020
I’ve watched CNN for 38 of the last 48 hours. Some observations:
• Quinnipiac, Marist, Pew, and FiveThirtyEight should take a poll and stick it up their a$$.
• I hope someday someone will touch me the way John King fondles the Perceptive Pixel wall. Still time.
• If AT&T stock falls below $20/share, I will raise $2-3 billion, acquire >100 million shares, and advocate for a divestiture of Time Warner assets. It’s time to acknowledge this is a failed acquisition and the telco is now paying a conglomerate tax where the disposition of media assets would be accretive. CNN needs to command the space it occupies and be put behind a paywall. The nonstop barrage of reminders that my prostate is engorged and that I need to be more Calm is the wrong way to extract shareholder value from Anderson Cooper and Fareed Zakaria.
Use Your Words
Brevity can be the soul of wit. And competence. “Be sincere, be brief, be seated” was FDR’s advice. But brevity can also be a sign of nonchalance. In the opening statement of Twitter’s recent earnings call, CEO Jack Dorsey spoke for 17 seconds. Although Twitter beat EPS predictions by 280%, its market cap declined $8.5 billion the next day as investors realized Dorsey’s incompetence/disinterest. While other tech CEOs spoke 45% of the words in their earnings calls, Dorsey spoke 11% of the words — not exactly reassuring. For every word Dorsey spoke, Twitter lost $11.7 million.
When Dorsey did speak, he briefly acknowledged that Twitter had work to do on direct response advertising (they have been saying that for years). He then touted Topics, a one-year-old feature that helps Twitter users better curate what tweets appear in their feed. If not much for innovation, the executive who did most of the talking, CFO Ned Segal, reported a 29% year-over-year growth in daily active users.
Improved product features are overdue, but what Twitter needs is a different business model that reflects a glaring reality — the firm is a niche player with a high-value audience that feels remarkably 2015. At Snap, a firm with a full-time CEO, daily active users increased 19%, and revenue increased 52%. Facebook daily active users increased 12%, and revenues increased 22% (on a base 8x that of Twitter). Twitter is the only firm in its competitive set that grossly under-monetizes its users.
I’ve been telling Twitter a move to subscription would be the single most accretive action in the firm’s history, and the stock popped just on the announcement in July that they were exploring a subscription model.
Yet here we are, four months later, and what did Dorsey have to say in response to a direct question on this earnings call about new revenue? Nothing. He let Segal break the news: “There’s nothing new to report today.”
Jack had more to say a few days earlier when he appeared before Congress. In response to questioning from Ted Cruz, Dorsey denied that his platform has any influence on the outcome of elections in the U.S. — “We are one part of a spectrum of communication channels that people have.”
Yet in an October 9 blog post, Twitter acknowledged that it plays a “critical role” in democratic conversation, political debate, and civic participation. These are factors that determine elections. Either Dorsey has decided that conventional logic does not apply (insight gleaned on a silent retreat?) or he’s been too busy at Square to read the post.
Twitter is a publisher with massive reach and influence. Twenty-two percent of Americans use Twitter, and 70% of users get news on the site. That’s 52 million Americans. For context, the New York Times website reaches 76 million unique visitors per month, and the Wall Street Journal 20 million.
It’s never too late to do the right thing, and several weeks ahead of the election, Twitter and Facebook turned off some of their most polarizing features and amped up misinformation notices. (OK, maybe it’s too late for Facebook.) Trump’s Twitter feed was mostly hidden tweets on November 4, since he kept lying about election abnormalities. Yet will these features be turned off after the election? These are multinational platforms, and there’s always an election somewhere. Are platforms conceding that their algorithms are toxic? What will be the permanent fixes to these problems? Is it time to suspend accounts, no matter how prominent, after they’ve posted a certain number of misinformation posts?
On the night of the 2016 election, traffic to Twitter more than doubled. This likely happened again Tuesday night and the following three days as the time-space continuum warped — I never want to think about Pennsylvania or Georgia again. To suggest that Twitter does not have the ability to influence elections by escalating polarization and supplying 52 million Americans with false and misleading news is delusional.
Weapons of Mass Entrenchment
Media outlets were aflutter with the news that a board committee reviewing Twitter’s leadership and management structure concluded Dorsey should remain at the helm. This was the work of Twitter’s communications team, who are representing Jack, not shareholders. Trained at the Sandberg School of Distraction, Twitter’s comms hacks spend more time manicuring the image of leadership instead of articulating a vision. Similar to the Libra team, most insurance, and life jackets on Delta, the comms teams at big tech serve no real purpose.
What most business media missed: The board was de-staggered and Elliott’s standstill (agreement not to purchase more stock) will end soon. This means Twitter management no longer has two weapons of mass entrenchment. In addition, Omid Kordestani, former chairman and Dorsey apologist, has stepped down as chairman.
The reason I’m a Twitter shareholder is I believe the stock has a floor and a sizable potential upside easily realized if the CEO were to go on a silent retreat, for 30 years. Egon Durban (Silver Lake … and an awesome name) is on the board, ready to pounce and take the firm private should it fall below $30 per share again. The unlocks/upside are simple: a new CEO and any (I mean, any) progress toward a subscription model.
Prediction: TWTR is up 50% in the next 12 months.
Beyond the shareholder appreciation, I hope Twitter adopts a similar theme as the one the sublime, strong hands of John King are beginning to shape for us — repair. Some wonderful things have happened this election. A record number of voters, early votes that beat previous years’ total votes in several states, openly gay Black congressmen and a transgender state senator elected for the first time.
Also, a QAnon supporter, Marjorie Taylor Greene, was elected to Congress. It’s unlikely this individual would have had any chance to represent our country if Twitter and Facebook had not built businesses fueled by rage and conspiracy. TV brought Kennedy. Facebook and Twitter have yielded Ms. Greene, who believes Muslims should be banned from serving in government and that Oprah traffics children.
There is a sense, however, that Twitter realizes Mom and Dad are coming home early, the garage is on fire, and the dog is pregnant. The firm has a chance to use this election as an opportunity for redemption. There is evidence already:
Life is so rich,
P.S. On the pod, I spoke to GOP political strategist and Project Lincoln cofounder Steve Schmidt and Pod Save America cofounder Dan Pfeiffer. And … we’ve moved out of the advertising age and into the product age. Develop a foundation in product strategy with my colleague Professor Adam Alter — sign up for the Product Strategy Sprint, running Jan 12-26, 2021.