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Twitter's Analysis Paralysis Imperils a Nascent Turnaround

Published on .

Jack Dorsey, co-founder and CEO of Twitter.
Jack Dorsey, co-founder and CEO of Twitter. Credit: Michael Nagle/Bloomberg

Two years after returning as Twitter's CEO, Jack Dorsey has pulled the company back from the brink, persuading people to spend more time on the micro-blogging site and attracting more advertising. Investors ratified his efforts this week, when Twitter posted a surprise surge in revenue growth and a first-ever profit. The shares rose 12 percent.

Now the question is whether Dorsey can build on the momentum and turn his company into a true rival to Facebook. Twitter badly needs to attract new users—something it failed to do this past quarter. Facebook does it in part by innovating and rolling out a steady stream of new products. But Dorsey has struggled to unleash Twitter's creative spirit.

The social media company has dreamed up new product ideas aimed at broadening its appeal only to abandon them for fear of alienating users, according to current and former employees. A Facebook Groups-style product was embraced and erased; ditto for Snapchat-style filters for the Twitter and Periscope apps. For more than a year, the company has been working on a Snapchat-esque feature that makes it easier to post videos on the app, according to a person familiar with the matter. There's a working demo, but the design hasn't been finalized.

Dorsey has focused on core products, like making the timeline more "personalized and relevant" and doing a better job of matching people with their interests. He has cut deals with media partners such as Bloomberg, which produces TicToc, a global breaking news service for Twitter's site. In the fourth-quarter earnings call, he said Twitter would have "a much more cohesive strategy" around events, such as seeing sports scores during live games. But these mostly amount to incremental tweaks that make Twitter easier to use—not sweeping changes with the potential of attracting millions of new users.

A Twitter spokesman declined to comment but pointed to strong revenue growth and the first quarterly profit.

Dorsey's leadership style fosters caution, according to about a dozen people who've worked with him. He encourages debate among his employees and waits—and waits—for a consensus emerge. As a result, ideas are often debated "ad nauseum" and fail to come to fruition. "They need leadership that can make tough decisions and keep the ball rolling," says a former employee who left last year. "There are a lot of times when Jack will instead wring his hands and punt on a decision that needs to be made quickly."

By contrast, Facebook has moved quicker and hasn't been afraid to make drastic changes to its platform. There's been a cost to that approach too: Regular user backlashes and engagement with its newsfeed that declined 5 percent in the last quarter.

Since its founding, Twitter has made a religion of listening to users. After all, they came up with some of the company's best ideas—including the hashtag, reply and retweet. After the flow of good ideas from users stopped, Twitter was hard-pressed to come up with its own.

The company does give its engineers room to explore. Several years ago, Twitter instituted "Hack Week" during which employees got an opportunity to think big. The frequency of these events fluctuated from one to four times a year. Participants gather at Twitter's San Francisco headquarters and work in teams to develop their product ideas, but only rarely are they sufficiently compelling to be taken seriously by management, according to several people who have attended.

There's never been a shortage of ideas: the challenge has always been to balance what its 330 million monthly active users want, versus changes that could entice the rest of the global population to join. Debating that conundrum often means out-of-the-box ideas are shut down. It also means that the same ideas are often addressed over and over again, year after year.

One of those ideas was to create an entirely separate app that would be used simply for consuming content. The purpose was to attract people interested in seeing what was going on without feeling the pressure to tweet cleverly. Multiple versions were proposed, including ones that looked like Snapchat or Flipboard. Years passed until finally in 2015 the company rolled out a "Moments" tab on the app that included collections of curated tweets. That tab has since been replaced by an "Explore" tab, which brings together trends, tweets and live video in one place.

A couple years ago, then-Chief Operating Officer Anthony Noto pressed for a separate Twitter app for business, according to a person familiar with the matter. Twitter would work with its media partners to pull together market data for users to consume—sort of like a modern Yahoo Finance. Despite its provenance, the idea went nowhere. (Noto has left recently to run financial technology company Social Finance Inc.)

Another much chewed-over concept: a location feature stitching together tweets and content for events like baseball games or marches. The idea was to automatically notify people when they were at a location and provide a live newsfeed of the event. Different versions of the product were floated at various hack weeks, according to a person who attended. Today, no such narrowly focused product exists, although the company recently created a new feature that aggregates tweets across select events.

Twitter newbies often don't know who they should follow. So an engineer proposed creating something called "mixtape" that would let users share their follower list with others, much the way Spotify subscribers can share their music playlists. It died, as well.

Twitter's paralysis can be traced in part to executive turnover. The company has had more than half-a-dozen product chiefs in the past few years. They aren't in the position long enough to execute long-term plans, and short tenures make it hard to take risks, according to people who worked with at least one of them. "When you have a new head of product every year," says one, "you're re-making the same mistakes over and over again."

Former employees have publicly lamented good ideas that died at Twitter. Facebook has been testing a feature to show more local news—along with local groups and events—in users' news feeds. Josh Elman, a partner at Greylock Partners and former product manager at Twitter, tweeted last month that "it kills me that Facebook is ahead at getting to local news than Twitter," adding that in 2010 he had built a product at Twitter to help users find local Twitter accounts.

Perhaps Dorsey & Co. should take their cues from the rollout of Twitter's biggest change in years: the doubling of the 140 character allowance to 280. The company debated that step internally for much of its existence before finally rolling it out late last year. Far from revolting, users have visited more often and stuck around longer.

-- Bloomberg News

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