Demonstrating Responsibility to Users is Apparently Bad for Business

If you still require proof that the financial community is completely uninterested in the long-term health of businesses – much less the customers and users of those businesses – you need look no further than last week’s headlines regarding Twitter’s latest earnings report. Some examples:

Reuters: Twitter beats estimates on revenue but monthly usage falls

Quartz: Despite record profit, Wall Street won’t reward Twitter unless it keeps growing

Recode: Twitter is prioritizing its network ‘health’ over adding new growth features. Is that the right move?

Bonus points to Recode for the rhetorically unnecessary question at the end. Nice touch.

To be fair, most stories did out in the body that Twitter CEO Jack Dorsey identified the clean-up efforts the company is engaged in as a program to ensure the long-term health and viability of the platform. Also mentioned were that daily active users were up 11% over the last quarter, continuing growth that’s lasted almost two years now, and that revenue was up 24% over last year’s. Those both should have been good news.

All Wall Street wants to see is growth, though. It doesn’t seem to care how it gets there, it just wants Twitter to be bigger. Presumably that’s because investors see unencumbered increases in numbers, no matter how meaningless, as the single most important gauge of success.

That’s rooted largely, I think, in a mindset that still believes in the retail model, specifically one where scarcity is a bug, not a feature. If there are 10,000,000 people in the world but only 50,000 of them live in an area where your product is currently available, the best way to grow the number of potential customers is by expanding your market availability. That takes time and money, though.

Neither of those are serious impediments to online companies. Yes, they have to deal with local regulations and laws about speech, access and more, but Facebook and others have successfully navigated those and other waters to the point where, with very few exceptions, the entire world is using their product. Twitter has never been and likely will never be as big as Facebook for various reasons.

That focus on growth uber alles puts us in the following position:

First, that the CEOs of many of these companies exercise outsized control over their operations due to the issuing of preferential stocks, lack of independent board oversight and more. They *are* the company for all intents and purposes.

Second, that after years of neglect and naivete, these CEOs are beginning to wake up to the issues plaguing their products. The decreased usage and other numbers on Facebook were due to the company cleaning up bad accounts, reducing the visibility of some pages and more. Twitter recently announced an initiative to measure and improve the “conversational health” on the site.

Third, that the fates of these companies is largely in the hands of shareholders and investors, which now are on record as punishing them for taking these measures, half-hearted and wishy-washy as they are.

In short, the health of these platforms and the people on them is being decided in part by people who see clean, responsible networks as detrimental to their wealth.

It seems investors are fine with Twitter being filled with Nazi trolls, gamergate incels and Russian bots so long as it means an increase in MAUs and pageviews. That such an environment will push even the most patient, dedicated person off the platform isn’t important because that’s a long-term problem and the entire financial community is only interested in “shorttermism,” or the view that anything beyond the next quarter doesn’t really matter.

They will accept their quarterly profits now, and when the company shuts down because real people are abandoning it in droves they’ll just move on to the next investment. It’s not their problem and they feel no accountability to fostering a healthy conversational community.

The problem doesn’t just exist in the technology world, of course. Private equity investors bear a fair amount of responsibility for the decimation of the retail and media worlds, as well as manufacturing and other industries. They came in, recouped their initial outlay and left the company on the firehouse steps.

Back to the headlines shared above, they are all accurate, so I can’t fault them for how they worded the news. They might have been more accurate, though, if they more clearly communicated the mindset behind the fall in stock prices.

Instead of Twitter beats estimates on revenue but monthly usage falls, how about Twitter logs increased revenue and daily active users, investors punish success in clean up? That makes it clear that investors are signalling they have a vested interest in the platform being a complete unusable mess. And it communicates how unchecked capitalism is increasingly, especially when you consider the fates of The New York Daily News, The Denver Post, DNAInfo and other media companies, hostile toward the free flow of information and news.

That’s a big story.

Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.

Author: Chris Thilk

Chris Thilk is a freelance writer and content strategist with over 15 years of experience in online strategy and content marketing. He lives in the Chicago suburbs.

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