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Twitter CEO Dick Costolo announced today that he will step down. His replacement, not yet announced, will face some difficult choices, since user growth is slowing and the company lost $578 million in 2014.
Here are four strategies Costolo's successor could pursue to turn Twitter around.
1) Focus on being more accessible to ordinary users
A lot of ordinary users find today's Twitter confusing and overwhelming. Under this strategy, Twitter would look for ways to make its wealth of information more accessible to casual users. For example, investor Chris Sacca has urged Twitter to build a series of channels that allow people to quickly find information about particular topics, like a sports team, TV show, or election. These channels would display tweets related to the topic that have been carefully curated by Twitter staffers.
Right now, Twitter displays tweets in strict reverse chronological order, but Sacca encourages Twitter to relax this assumption. Instead, when a user logs in, the platform should show a selection of the most interesting and insightful tweets that would have appeared on the user's timeline since the last check-in.
The counterargument here is that a more accessible version of Twitter already exists. It's called Facebook, and it's wildly popular. The danger is that aping Facebook might alienate existing users more quickly than it attracts new ones.
2) Refocus on third-party apps
Another option, promoted by analyst Ben Thompson, would be to build lots of different apps that allow people to interact with the Twitter platform in different ways. Different apps could target different types of users, with some offering advanced features to power users, while others provide casual users with simplified ways to extract value from Twitter's firehose of information.
The best way to do this would be to encourage third parties to build Twitter apps. But that's tricky because Twitter has burned a lot of bridges with developers since 2012, when it effectively killed off many third-party Twitter apps.
This is one reason Thompson called for called for Costolo to step down back in April. Now that Costolo is out, Twitter's new CEO might have a better shot at convincing third-party developers to give Twitter's platform another shot.
3) Sell to Google
One of Twitter's most valuable assets is an unrivaled view into what's happening at this very instant. That knowledge could prove very useful to Google, whose mission is to "organize the world's information." Earlier this year Google and Twitter signed a deal to make it easier for Google to index tweets in real time. But if Twitter were a Google subsidiary, the search giant might find even more ways to extract value from this data — without requiring significant changes to the primary Twitter app.
The big problem here is that Twitter is probably too expensive. Twitter is currently worth $23 billion, which is a lot of money even for a behemoth like Google. And Google may be able to accomplish many of the same goals at a small fraction of the price with the kind of strategic partnership the company signed earlier this year.
4) Focus on power users
A final option, advocated by Vox's Matt Yglesias, is to simply accept that Twitter is never going to be a mass-market product on the scale of Facebook, and focus on serving the 300 million passionate users it has now as well as possible. This option would entail cutting back dramatically on research and marketing spending so that Twitter could earn a profit with limited revenue. The company might also focus more on selling premium ads targeted at its highly influential user base.
The problem with this option is that Wall Street would hate it. The company's current valuation of $23 billion is based on an assumption that the company will be dramatically larger. Admitting that this won't happen could precipitate a crisis and lead to pressure for the current leadership team to step down.
