Specialist
Former Client Partner Lead at Twitter Inc
Agenda
- Pending agreement to sell Twitter (NYSE: TWTR) to Tesla (NASDAQ: TSLA) CEO Elon Musk and potential benefits of private company status
- Implications of new free speech focus following past emphasis on and investment in health and safety
- Potential shift to more of a subscription emphasis and away from advertising
- Perceptions around lack of company innovation and possible product shifts and changes
- Impacts on employees and morale
Questions
1.
There’s been a lot of news flow and important developments around Twitter over the last 4-6 weeks and I want to focus on Elon Musk’s planned purchase of the company. What did you think when you heard about Musk’s takeover offer? What do you think Twitter’s employees thought?
2.
What do you think are the implications of Twitter becoming a private company again? What are the potential benefits of being privately held vs a public company?
3.
Why do you think being public might have hampered Twitter’s ability to innovate with new products and features so significantly? As you alluded to, part of that has almost become a narrative associated with the company. Do you think that’s a legitimate perception and to what extent would being private help it in that regard?
4.
I think Musk has indicated a strong interest in making Twitter a platform that more comprehensively and consistently embraces free speech, and mentioned more of an open-source algorithm. What do you think are the implications of this kind of aspiration or goal? People are trying to figure out not just what Musk’s priorities will be, but how practical the implementation of means to achieve those goals really is, which is why the Twitter conversation isn’t just topical but important. You seem to be alluding to the fact that Twitter users have a lot of leeway around being able to post certain things, and removing or relaxing some of the safeguards could make it more of an “unsafe” place. How do you think about that and how should Elon Musk try to strike that balance?
5.
I think of open-source algorithms almost like a crowdsourced set of rules, and presumably something like that would take more of the human element out of determining what content is appropriate and what users have been adhering to the rules. Is that the right way to think about it? What are some implications here?
6.
How is Twitter’s health and safety team actually structured and how does it operate? Does it take responsibility for content moderation and other things? You mentioned health and safety has been growing there, and I think it’s a fairly substantial team that engages in a lot of activity.
7.
How many of Twitter’s employees would you estimate are on the health and safety team or involved in those efforts? I think the company indicated it had about 7,500 total employees at the last update.
8.
Can you give some context around the growth of Twitter’s health and safety team? I think these efforts and the team were more nascent 3-5 years ago. What increase do you think we’ve seen?
9.
You think we’ve seen a size increase of roughly 3x in Twitter’s health and safety team over the last 3-5 years. Do you have a sense of the spend on or by this team? You mentioned the investment, obviously a lot of which is associated with the employees, but I imagine other, related spending takes place.
10.
To what extent has Twitter relied on third parties to help with content moderation, whether because the company wanted to invest more there or because of the substantial challenges around retaining talent on the health and safety team, meaning a third party can help with stopgap solutions? You mentioned the team tripled from around 200 to 600 employees, as an estimate.
11.
What are some implications of significantly reducing the health and safety team’s size and efforts? I think you said 80% of tweets come from 15% of users, and implied that could be skewed even further if health and safety activity came down. Some suggest that easing restrictions on users and activity could actually drive more users and activity. Are you saying easing restrictions could be disruptive or unwanted, not just for other users but also for advertisers?
12.
People have been talking about Twitter already relaxing some approaches and practices around free speech as we potentially get closer to Elon Musk’s acquisition. How do you think advertisers will react here and how easy it is to pull out of prior commitments from the perspective of spending and associated revenue? You used the example of companies that are conservative with their advertising spend and don’t want it associated or aligned with certain interests.
13.
While leading Fortune 500-type companies and brands are part of Twitter’s advertising mix, the company is increasingly working with direct response advertisers as well. Does this mean we would see a shift from more brand advertisers and advertising to direct response types? Could that fill the void, to some extent? Or is this not a zero-sum game, and a decline in advertising will result not only in a decline in advertising revenue, assuming no other related changes, but a substantial decrease, even with perhaps more direct response advertisers coming on?
14.
To what extent would you expect advertisers to start extricating themselves from Twitter and looking for alternatives now, given the news flow and the increasing likelihood that the transaction will close and do so in the contemplated timetable, around Halloween 2022?
15.
Musk has publicly indicated a preference for subscription vs advertising offerings from Twitter, and there would presumably be a need for more revenue if he makes some of the contemplated changes. To what extent is there a real opportunity to accelerate the subscription business? People have been asking for subscription offerings at Twitter for some time, and Twitter Blue, introduced in 2021, has gained very limited traction at this point.
16.
You don’t necessarily see the elements in place to drive the necessary new user growth to achieve the scale success you’re talking about with the subscriptions. Is that a fair assessment?
17.
Is it fair to say you’re more optimistic about Twitter’s potential to shift its resources and improve mDAU [monetisable daily active users] growth?
18.
Could Twitter’s user growth accelerate if Elon Musk owned and led the company? It had 16% mDAU growth in Q1 2022, which I think was a pretty big number. Could what we’ve discussed – a potential focus on new user sign-ons and making it easier for people to engage earlier on – accelerate growth over the next 1-3 years?
19.
It sounds like one of the ways to accelerate traction in subscriptions is to get more people joining and more DAUs [daily active users] and look to convert those users over time. Should there be a different approach for subscriptions? Could you have different Twitter Blue tiers where it’s not really a subscription but you could pay for certain features and functionality? Could you pay to be verified without the subscription? What about business subscriptions? I think Musk has said that businesses perhaps should have to pay for subscriptions to be on Twitter. Do any of those ideas or others around subscription-related monetisation make sense as strong new opportunities for the company?
20.
Do you think the combination of Musk’s interest and proposed acquisition along with some of the expected changes could drive 30-40% growth?
21.
I think Twitter was ahead of many competitors in identifying Vine and Periscope in the short-form video area, but on the flip side, the company essentially got rid of those products and ended up way behind social media in this area. It also introduced something called Fleets, which was mothballed after a couple of months. Why do you think it’s been so difficult to follow through on these ideas and deals and to make them more than they ended up being?
22.
You could argue Twitter was ahead of the game on Vine and Periscope – Vine being short form and Periscope live streaming – but isn’t anywhere compared to some competitors in those areas now. Is that fair?
23.
A specialist in a previous Interview [see Snap Inc – Design Orientation, Product Differentiation & Global Opportunities – 3 May 2022] indicated that many Web 2.0 platforms – including Snapchat – are focused on Web 2.0 innovations and not looking forward enough to Web3. That might be the case for Twitter’s current management, but I would imagine Elon Musk has already talked about innovations that could incorporate cryptocurrency, for example. Do you think there are real opportunities to move forward there?
24.
This is a period of pretty substantial uncertainty for Twitter, as you said. Will the company be acquired? What changes will be made? What does that mean for certain teams and employees? What do you think employees’ overall mood is there? Are most of them aware but indifferent? Do you think many of them have started LinkedIn profile updates and outreach? We have a very tight job market, and I think people at Twitter probably have many options if they wanted to pursue them.
25.
Do you think Twitter’s employee turnover adds to margin until there are further details on what the plan consists of? The company has experienced significant turnover, both in management and rank-and-file employees.
26.
Could there potentially be a benefit to Twitter’s increasing voluntary attrition? I think a lot of people expect those changes to result in lay-offs, but could there be a silver lining to the financial implications associated with such changes, whether that’s in the health and safety areas we mentioned or other segments?
27.
Twitter doesn’t measure up if you look at revenues per employee, even though it has fewer employees than some competitors. Do you think the company will pull a lever on revenue or employees, as I think many people expect the latter? It’s also interesting that Musk tweeted a Fortune story referencing the very data point – I think you said it was from Glassdoor’s senior economist – that was posted appropriately on Twitter. Do you think external interests are legitimately real and sustainable, not just from a Twitter user and engagement perspective, but also for employees?
28.
What’s your 1-3 year outlook for Twitter, assuming the acquisition is consummated?
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