I was on CNBC on Monday talking about who would be the next CEO of Twitter. On that hit, I explain why Adam Bain is the next CEO. I thought I would expand upon my thoughts on Twitter in this 2,000 word essay, because it seems no one else has any thoughts.
At the end of the day, Wall Street ran Twitter’s CEO out despite my piece explaining why this would be a mistake back in January.
[ Click to Tweet (can edit before sending): http://ctt.ec/Y4lTQ ]
Technically Dick resigned, and is leaving next month, ending his five-year run as the CEO of one of the five greatest Internet companies ever created — Google, Yahoo, Facebook, and Amazon lead that group.
Here is what I would do if I were CEO of Twitter. Or, said another way, here is what Adam should do:
Explain to Wall Street explicitly that Twitter is Not Facebook
Wall Street keeps comparing Twitter to Facebook, hoping that Twitter will become less complex, less intimidating, and more accessible to common folk. These analysts on Wall Street are wickedly smart when it comes to grouping and analyzing things, but in the case of Facebook and Twitter, this is a huge mistake.
Twitter’s users, the ones who are logged in and contributing content to the service, are the politicians, celebrities, business leaders, and journalists in the world who drive massive consumption of culture by passive, non-logged in users.
On Facebook, everyone is the celebrity of their own lives, which is exceptionally boring to everyone on the planet, except maybe the dozen or so people who are part of that life. That’s why, on Facebook, the trending stories in your feed are birth announcements, and on Twitter, it’s what you’re going to read in the New York Times and TMZ tomorrow.
Steady Growth is Good Growth & The Reddit Paradox
Twitter has grown exactly 5-10% quarter over quarter since inception. The fact that it has not tanked, been disintermediated, or otherwise copied is due to the small miracle of network effects and Dick’s steady hand.
While the analysts might want to see dramatic action to run Twitter from 300m to 1b users, there is a strong case that doing so would drive away Twitter’s already brilliant community.
This is the so-called “Reddit Paradox” in full effect: live by your core community, die by your core community. In Reddit’s case, they’ve built a huge, engaged community of primarily highly intelligent, technically savvy, and frequently precocious boys (it’s mainly male) to a scale no one believed would ever be possible — and then you put the most polarizing female figure in Silicon Valley in charge of it! In the middle of the highest profile sexism case in our lifetimes!
How is that working out for Reddit? Can Ellen Pao convince a large portion (but not all) of the core users, who have defined Reddit for the past decade, to stop their gallows humor in the comments, their politically incorrect pugnaciousness, their hilarious-and-sometimes-scary criticism of people and their obsession with p0rn?
Sure she can!
[ insert Facepalm meme here saying “Ellen Pao, the fearless leader Reddit wants!” ]
Now, I’m not saying all Reddit users are angry young men, but those folks sure do dominate the conversation and create, for better or worse, the backbone of the system. I’m not endorsing these folks or any of their behavior, but on a pragmatic business basis, if you drive out this fiery contingent I think the whole system collapses.
Everyone knows that “Game of Reddit” is in a never-ending struggle to deal with how far anonymous users can push freedom of speech and offensiveness (don’t search for “dead baby” on Reddit).
Racism? Easy to ban in a conference room.
Now explain to the customer support team how to deal with jokes by Chris Rock and Louis CK about race.
Dead babies? Easy to ban in the conference room.
Now explain to the customer support team how to deal with the REAL EMS subreddit, where folks on ambulances deal with horrible moments of death — including babies.
Bottom line: Building communities is hard, killing communities is easy.
In Twitter’s case, you have the most important and powerful people in the world in your network, geeking out all day long. These same people do not participate in Facebook at all. (Case in point: Facebook board member Marc Andreessen, who does 140+ tweets per day — 10x my insane average — and who you never see on FB).
If your plan is to out-Facebook Facebook by dumbing down Twitter, well, you’re an idiot who doesn’t understand Twitter. This doesn’t mean that Twitter can’t make it to 1b users or that Twitter can’t be easier to use. It just means that Twitter’s complexity, in the form of having to curate your feed, is necessary to get the result: a perfectly tuned feed by you — not Mark Zuckerberg.
Singles and Doubles by M&A, All Day (this will add 25-100m+ users per year)
Vine and Periscope have been material acquisitions for Twitter. These two products are driving tens of millions of users per month. These two startups were certainly not billion dollar acquisitions, they were not even hundreds of millions — they were probably tens of millions.
Twitter is awesome at buying stuff because founders love Twitter. Selling your startup to Twitter is super exciting, and when you do, you get a massive lift from Twitter’s ability to integrate you with a network featuring the MOST POWERFUL PEOPLE IN THE WORLD.
In the weeks after Vine and Periscope launched, you have massively important people like, say, Hillary Clinton and Obama, creating accounts.
Now, you’re probably asking, “You keep talking about important people being crucial to Twitter’s success, but Twitter shouldn’t be successful with only them — isn’t that why the CEO was pushed out?”
That’s correct, and the issue is two-fold: First you must recognize that breaking Twitter would be a huge, huge misstep. So, success is defined not as growing Twitter, but as “growing Twitter without breaking it!”
Second, video is primarily a passively enjoyed phenomenon. Most folks have never uploaded a YouTube video, yet 1b+ folks watch videos on YouTube each month. So, getting video cranking at Twitter could propel the service to 1b members.
Hail Mary M&A, that’s OK (this will add 100m+ users in a quarter)
There are a dozen companies you could make a run at that might — keyword: might — make sense to Twitter. Snapchat would be very hard to make work, but boy, would a merger of these two brands be powerful. You get Generation-C and half the millennials with Snapchat, and you get the other half of the millennials, all of Gen-X, and half of Boomers with Twitter.
A full-generational stack across two nine-figure social networks! Twitter’s massive head start on monetization and Snapchat’s massively clever product chops. Wow, that would be a very, very powerful combination. And you don’t have to combine these businesses (see point five: a house of brands).
Sites like Reddit and Pinterest, which have monetization and strategy issues of their own, would also make sense.
The chances of any of these three cutting a deal would be in the low single digits — which means you should explore it! What if Evan from Snapchat decides, “Frack it, let’s go bigger,” or the Reddit board says “Frack it, we’re not gonna grow this much bigger without professional management. Let’s take Twitter stock and move on.”
These type of moments happen (see AOL and TimeWarner, YouTube and Google, etc.). People make rash decisions all the time — for better or worse.
A House of Different Brands — Sharing the Same House
Twitter should be a house of brands that share the same infrastructure, like publishers Conde Nast and Hearst, or media companies like Disney, Viacom, and Comcast. These “collections of brands” are able to manage diversity in management and process, while getting some level of collaboration and shared services across businesses.
Google is perhaps the master at this, having integrated YouTube into their massive ad network with great success.
It’s not easy, but it’s not that hard. You just need to have the headspace and tolerance for ambiguity that managing many brands requires, something Conde Nast is great at. (AOL under Tim was bad at it and Google is getting good at it).
Triple down on Video (this could add 50-100m+ users per year for the next 10 years)
Right now, Twitter is letting folks load videos natively to the platform (finally!!!), and they have Periscope, Vine, and unique video experiences. What Twitter doesn’t have are robust permalink pages for video. Luckily, they can build these in a month by simply copying YouTube’s already optimized platform.
When you load a Twitter video landing page, it looks sparse, with no related videos, no subscribe button, and no comments/replies. When they add the basic video features like this, and other blocking and tackling items like playlists and easy syndication, they will see a huge lift.
YouTube’s landing pages are not creator friendly it turns out, with access to your own subscribers being obscured by Google’s algorithms. Not to mention no ability to interact with your fans — which is Twitter’s strength!
Not to mention if they start sharing revenue at a better deal than YouTube’s 55/45 split … which leads to point seven.
Sharing Revenue: Let’s all get paaaaaaaaid! (this could increase video content by 100x)
Twitter has yet to share revenue with their influencers. This is a huge mistake and it would drive the service to heights no one can imagine right now. If Adam Bain lets Justin Bieber, Ellen, and the NBA keep 70% of the revenue from ads on their Twitter profile pages and native videos, the whole revenue picture changes.
Worth noting, many celebrities are already monetizing Twitter through the side door, by cutting deals with brands to hawk their goods. Imagine this was done by 1,000 sales people at Twitter meeting with Madison avenue, selling “100 of the most important finance journalists / rappers / makeup artists in the world.”
Indie podcasters, YouTubers, and professional rights holders would spend 100x the effort putting content onto Twitter if they split revenue.
Getting YouTubers 70% of revenue would create the first viable competitor to YouTube ever — finally! Now, you’re probably wondering, “How is Twitter going to make money if they give away 70% of it?”
Great question, easy answer: this is revenue that Twitter is not making yet! YouTube stars and most video creators are simply dropping their YouTube and Wistia links into Twitter — not uploading them to Twitter. This is 100% accretive revenue.
Adam Bain is going to do this, and when he does it’s going to be huge. This is the main reason why he is the best CEO candidate: he can make the revenues go 20x and content published to the platform go 100x — just by sharing.
In Closing: Adam is the man for the job
While I playfully named this piece “What I Would Do” in order to get you to read it, the truth is, this piece is “What Adam Bain is Going to Do.” He’s the obvious best candidate for the job, given his fingerprints are all over video, M&A, and the brilliant ad network Twitter has created.
Twitter is a fantastic product and company. It’s just not dialed in like Facebook yet. Setting Facebook as your competitor is like some skinny jump shooter picking LeBron James as his competition — it’s laughable!
However, the skinny jump shooter just sent the self-proclaimed, world’s greatest player and his talents on vacation and collected his first championship.
Teams win championships, not individual players. Jordan had Pippen, Duncan had Parker, Curry had Iguodala and … well, now it’s Bain’s turn to build his team.
PS – I’m hosting a Bastille Day/Demo Day Party on July 14th in San Francisco’s beautiful Presidio with music, drinks, and a Petanque tournament! If you’re an active angel investor or member of the press, join us! More info here.
PPS – We are hiring an audio/video/director here in San Francisco to work on my podcast This Week in Startups. It’s literally the greatest job in the Bay area if your passion is video, podcasting and/or startups. You can apply here!
PPPS – We’re hosting our SCALE conference this year on October 13-14th at Fort Mason in SF. You’ll learn how to grow your startup from experts who have already scaled their own company. If you are the founder of a startup apply for a free ticket here. Anyone else (lawyer, investor, big co) buy your ticket here.
PPPPS – Yesterday on This Week in Startups we had an EPIC news roundtable with Benedict Evans of Andreessen Horowitz and Molly Wood of APM’s Marketplace. A rip-roaring discussion of IPOs, unicorns, Apple news, VR, Twitter, Mad Max, and donuts. Watch it here.