Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

SCOTT GALLOWAY: Removing Jack Dorsey as CEO should be the first step in Twitter's path to redemption

SCOTT GALLOWAY: Removing Jack Dorsey as CEO should be the first step in Twitter's path to redemption

Galloway says replacing the absentee leader will lead to a desperately needed top-down overhaul of Twitter's business model.

Every day, 187 million people open Twitter for news, entertainment, and a social connection. It is the real-time global communications network that sci-fi novelists envisioned. It is also a catalyst for conspiracy theories, a forum for hate speech, and a surprisingly lousy business.

In this week's issue of New York Magazine (February 1, 2021), I make the case that Twitter's toxicity and subpar financial results are one and the same problem, amenable to one and the same solution. Fixing Twitter starts at the top — replacing an absentee CEO — and from there, changing the company's business model. The potential rewards are worth it, both economically and socially.

The capitalist case


Since its IPO in 2013, Twitter has underperformed the market, growing its share price at just 2% per year. For years, I've advocated for a change in Twitter's business model for both the good of the commonwealth and benefit to shareholders (Disclosure: shareholder). The need for this change is greater than ever.

Donald Trump's election — and his prolific use of the platform — smeared Vaseline over the lens of this chronic under-performance. The traffic and engagement that Trump brought to the platform (26,000 tweets and 1,000 tags per minute) helped to reverse the 63% downward slide in Twitter's stock price since its public offering. Tellingly, when Twitter banned Trump's account, the stock immediately fell, shaving $5 billion off the company's market cap, before slowly regaining ground.


This one-term "fix" came at great cost: The platform has become what political philosopher Hannah Arendt described as a "temporary alliance between the elite and the mob." Arendt was talking about the rise of totalitarianism, but she could have been talking about the attack on the Capitol on January 6. All of this — Twitter's weak financial performance and its toxic content — is the result of a broken business model.

What should Twitter do? Own the space it occupies


Twitter has let toxic content run amok because doing so is in its interest: The company depends on the engagement it generates. Its advertising-driven model prioritizes time on the platform at all costs, and produces an algorithm that amplifies enragement and polarization. Anyone who has been on Twitter will recognize the compulsion to refresh the page just one more time and get that dopamine hit, hate-reading enemies and enjoying the glorious dunks on everyone else. The algorithm knows it, too: It learns from our every tap and dials up the doom.

Even if an ad-based model did not produce this kind of digital exhaust, it would still be destined to fail by Twitter's insufficient scale. While the company's reach is large compared to that of traditional media, it is dwarfed by that of Google and Facebook, which dominate digital advertising. Choking on the dust of a duopoly is a difficult position from which to build a business.


Twitter needs to move from an ad model to a subscription model, with subscription fees for accounts of a certain size. The platform would still be free for the majority of users, but accounts over 200,000 followers (or even 50,000 followers) should pay for the audience that Twitter provides them with. This would lead to better financial results because recurring revenue is reliable, profitable, and earns a higher multiple than transaction revenue.


A subscription model would also orient Twitter around its users (rather than its advertisers) and incentivize the company to improve its product. For example, it could provide creators with tools to capitalize on their influence, something an annual development budget of roughly 800 million has thus far failed to accomplish. As a result, other platforms have moved in, such as Substack and Clubhouse.

A payment system is another obvious innovation for Twitter. Recently, Clubhouse announced it would be adding payment processing, and TikTok said it had formed a partnership with Shopify that will eventually allow merchants to sell products directly through the app. Why hasn't Twitter done this? For one thing, its CEO also happens to be the CEO of a payments company, Square, where roughly 90% of Jack Dorsey's wealth resides. This fact highlights not only a distraction, but also a conflict of interest.

As it builds a business around its users, Twitter should acquire or create its own content. Both Spotify and Netflix's stocks accelerated once they began investing in their own programming. Twitter is already a destination for news and entertainment content, and if it added its own vertical — high-quality political journalism, for example — it could establish itself as the first truly hybrid social platform, blending user-generated and exclusive material. The company has dipped its toe into these waters before: It aired NFL games in 2016 and pursued a broader array of partnerships with Disney in a 2018 deal. Unfortunately, as investors have come to expect from Twitter, these forays have gone nowhere.



The transition to a new model should not be done under Dorsey's watch. He has repeatedly demonstrated his lack of engagement with Twitter — on the company's most recent earnings call, he spoke just 6% of the words in the meeting. According to the New York Times, Dorsey oversaw Twitter's response to the Capitol insurrection from a private island in French Polynesia frequented by celebrities escaping the paparazzi. Well, isn't that nice? I wonder if he splits his time between two archipelagos as well as two companies?


Mr. Dorsey's insistence on managing (or not) Twitter from far-flung retreats should alone make the case for his removal as CEO. I can't believe I even have to say this: We should remove a part-time CEO.

Twitter's management, enabled by legacy board members, has demonstrated an alarming disregard for the commonwealth, weak strategic thinking, and an inability to create a fraction of the shareholder value that is possible for the platform. Twitter's financial weakness gives it a chance for redemption. It's time.

For the full version of my argument for overhauling Twitter, see my article in New York Magazine and watch the latest episode of the Prof G Show.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
×