What matters most in future-gazing Silicon Valley is rarely profits or revenues. It is the holy grail of growth.
While companies in many industries make protecting their existing business a priority, stasis is repellent to technology investors: if you’re standing still, you may as well be going backwards.
Take Twitter. For almost two years the company has, for all its executives’ efforts, appeared to be in a state of suspended animation.
It was once the app that was going to kill Facebook, but for almost two years its all-important monthly user numbers had been flat. Either nobody was joining, or users were leaving in vast enough quantities to match those coming in.
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Even Jack Dorsey, the founder who returned to run Twitter in 2015, seemed unable to do a Steve Jobs and save it.
One of the shareholder proposals at its annual meeting this month is to de-list Twitter and turn it into a co-op; the idea being that the company bears a greater resemblance to non-profit enterprises like Wikipedia than cash-printing giants like Facebook.
Twitter is non-profit in the most literal interpretation of the term, of course. Since its inception it has lost more than US$2.5 billion. But against all odds, it is turning itself around.
Last week, the company revealed that monthly user numbers – an all-important metric for tech companies – had increased by 9 million in the past three months.
This is unimpressive growth compared with its peers (Facebook consistently adds about 70m users every quarter, and Instagram has signed up 100m since December) but by Twitter’s standards it was positively breakneck: the fastest growth for two years and as much as in the previous nine months combined.
The number of daily users increased by 14 per cent, a critical increase because making the most of a service like Twitter requires people to log in every day, and advertisers are increasingly demanding evidence that users are engaged with a service, rather than simply passing through every now and then.
And while much has been made of the impact that Donald Trump’s incessant tweeting has had, Twitter executives put it down to less obvious changes to the service, such as a new homepage that organises tweets using an algorithm instead of merely by time, and tools to help curb the spread of online trolls.
The financials themselves were a bit of a black spot. Revenues actually declined by 8 per cent, the first drop on record, and investors would prefer to see losses shrinking a bit faster than they are: the company’s US$61.6m deficit is only a slightly better score than the US$79.7m recorded a year ago.
Bosses painted this as the result of an overhaul of its advertising systems, and promised that revenue growth would come eventually.
The bump in the share price last week merely put Twitter back where it was three months ago: there is still a lot further to go. But investors might also remember Facebook’s first months as a public company, when its share price halved before proceeding to soar in the five years since.
Twitter’s problems have been more deeply ingrained, and it has taken much longer to turn it around: it is almost two years since Dorsey returned. But finally, it looks like it is on the up.