In case you haven’t heard yet, Dick Costolo is out as CEO at Twitter. I’m an outsider, so I have no idea whether this is deserved or not, but when analysts question a CEO’s tenure publicly, it can easily undermine their stature to the point where it becomes a self-fulfilling prophecy. In this case, it wasn’t unexpected.

Twitter isn’t profitable, and has lately shown signs of stalling growth. Whoever takes over the reins there (Jack Dorsey is stepping in as interim CEO) is going to be under pressure to “fix” whatever is ailing the company, and fast.

The problems may only have manifested since the IPO, but they aren’t really new though. Here’s something I wrote (I was talking about a spate of Twitter-imitators at the time) four years ago:

I always wonder about sites that are focused on Twitter-like feeds though. To my mind, that functionality basically forms the same purpose as RSS feeds. Its just crying out to be aggregated, and then where does that leave the feed sites, or the individual content creators?

They’ve clearly realized for a while the danger of fading into the background and (effectively) becoming internet infrastructure. Some of the tactics that they’ve attempted over the years (some of which had the nasty side-effect of permanently alienating their platform ecosystem) include:

• Making it difficult for external developers to work with their APIs, including constant changes to the terms of service, and restrictions that effect functionality of apps relying on them.
• Buying out key players in the ecosystem (and then making life difficult for competing products).
• Adding photos and videos, in order to appeal to content creators (this is a good idea, although others have implemented better).

In addition, they’ve attempted to monetize in a number of ways, including advertising (often inline in streams, sometimes in intrusive ways), and adding (I haven’t seen them, but I understand that they may already be out there) “buy now” buttons for products.

Clearly these aren’t working (or at least not quickly enough to support the share price).

The superficial solutions include cutting costs (i.e. headcount), which will inevitably backfire, and selling the company to the highest bidder (which could work with the right partner, but which isn’t interesting from a strategic perspective!).

Here’s my take.

1. Improve existing user retention

I log in and out of Twitter, but I stay logged in on Facebook, LinkedIn and news sites. Why? Because it is impossible to maintain a substantive conversation on Twitter. The threading doesn’t work well, drilling down into responses to a tweet takes too many clicks, and 140 characters isn’t sufficient for anything more complex than snark. Because items move down rapidly in feeds, conversations also die off quickly. As a result, I may use Twitter to locate current events, or to interact briefly with interesting people, but it never retains my attention for long.

Some potential solutions:

• Improve threading. It takes multiple clicks (web) to even open up a tweet in order to comment. If there’s a lot of responses, it is extremely hard to coherently parse as a conversation. I love back-and-forth discussion, and it is too hard to go more than a couple of rounds.
• Find better ways to accommodate longer length content. Yes, I can write a post on a WordPress blog (hi there!) and link to it on Twitter, and yes you can open up a preview there, but how does that help Twitter? I’m not saying that they should increase the 140 character limit necessarily (it would change the nature of the site), but they should look into some sort of forum for handling longer content within the site. For goodness sakes, just clone or buy Medium.com. Provide an integrated platform for people to create substantive content and promote it, without leaving the site.
• Fix photographs and videos. If I upload a big photo, the preview shows a useless (and apparently randomly cropped) section of it, and I have to click to view all. That’s all very well, but half the time the section that shows isn’t the interesting part of the photo. Why not just resize down the whole thing, like everyone else does?
• While they’re at it, the interface is incredibly cluttered. There’s little icons that mean nothing to me, all over, and a large part of the functionality folds out in random places. I know you’re going to say that I should just use it on my phone, but I’m in front of a computer screen all day and prefer web. The web interface is stressful to use.

2. Get more users

Some of this is going to happen naturally. The upcoming US elections will undoubtedly drive traffic to Twitter. They’ve also done a great job in the past of tying in to major sporting events. They should obviously continue to do this in the future. Growth has stalled though. Something else is needed.

• They used to derive a portion of their growth from their ecosystem. They need to rebuild trust if they want to regain that. That will take a concerted effort, over a lengthy period of time.
• Fixing some of the content issues, as I described above, may help as well. I’m not sure if content is king, but even lousy content can make like the court jester.

3. Then monetize

Shoving more advertising into the feed is going to drive users away, not increase profits. Monetizing Twitter was always going to be a tricky problem – and it needs to be done delicately.

Some of the things they should look at (if they aren’t already):

• Partnerships are going to be key:
  • The API terms of service are excessively restrictive; that might actually provide an opportunity for a paid tier (which might not even be advertised anywhere) that allows specific high-traffic partners higher-end access, for a price. All it takes is a handful of paying companies to add a few more digits to the left-hand column of the bottom line.
  • Some forms of content could be licensed. Everyone else (Facebook and LinkedIn are good examples) is getting into the news game. Why not compete? People go to Twitter looking for stories anyhow.
  • Infrastructure (software or hardware) could be monetized via SaaS, PaaS etc. This is a relatively hard sell in the AWS universe, but it isn’t impossible.
• Slack and Yammer have proven the business model for private corporate social networks. It might be a distraction, but Twitter could feasibly do the same, particularly if they were willing to open up their API restrictions to allow software integration (example: Twitter doesn’t permit multiple identical posts within a particular time frame, from a single user; this makes it hard for a code repository, for instance, to broadcast updates to a network; this is probably the single “killer app” that allowed Slack to gain so much of that market).
• Find unique new ways for large consumer corporations to advertise. I think everyone accepts that content advertising is likely part of our future, given the way in which people filter out many traditional types of advertising. Twitter could be an immensely powerful platform for new forms of interactive, content-driven campaigns, that actually engage customers all along the way.
• Allow games back in. Twitter banned them. They need to take themselves less seriously, IMHO. People will pay for certain kinds of games. Obviously graphically-driven ones won’t work well here, but what about story-driven, locale-driven, interactive ones? People will pay to play good ones, and companies will pay to sponsor them (see the previous point).
• Build out their ad network for third-parties, following the trail blazed by so many others.
• This is a harder sell: a paid user tier; this could apply to corporations that use their accounts for interacting with consumers (i.e. provide additional functionality for a fee), or for other purposes like recruiting (if LinkedIn can do this, why not others?)
• etc. I can go on all day, but you would fall asleep.

Obviously all of the above need to be done carefully, to avoid further alienation of users, who truly are key to success here.

I’ve been ignoring the strategic potential of Twitter for a while. I think I might have missed an interesting topic. It’s going to be fun watching what they do over the next year or two…