Yesterday, Twitter released financial results that beat Wall Street's expectations. The company is still losing money, but its losses were smaller than many feared. Today, Twitter's stock plunged by 13 percent anyway.
The problem: Comments by Twitter executives in the earnings call set off alarm bells for investors. "We don't expect to see sustained, meaningful growth until we reach the mass market," said chief financial officer Anthony Noto. "We expect it to take a considerable period of time."
Noto spoke alongside Twitter co-founder and interim CEO Jack Dorsey. Both men believe that Twitter's complexity has become an obstacle to further growth. Twitter has about 300 million users, less than a quarter as many as Facebook. Twitter's top brass think 300 million users isn't good enough; they want to revamp Twitter to make it easier to use, allowing it to reach a Facebook-size audience in the coming years.
That sounds good in theory, but it could be disastrous in practice. Twitter is the power users' social network. It demands more from users of Facebook or Instagram, but users who master its complexities are able to sift through large volumes of online information more efficiently than they can with other social media tools. If Twitter tries to simplify its product, it risks alienating its existing users without attracting many new ones.
Popular technologies demand less of their users
If you walk by the desks of software developers here at Vox — or at virtually any other company — there's a good chance you'll see them using a Unix command-line interface that dates back to the 1970s. Geeks continue to use the Unix command line because — once you know how to use it — it's a powerful way to perform complex computing tasks.
But most users don't need the power, complexity, or hassles of using a Unix command line, which is why it never caught on with ordinary users. Until recently, most people used Windows PCs or Macs with a more user-friendly graphical user interface. Lately people have been shifting toward even simpler computing technologies: smartphones and tablets. These mobile platforms provide fewer capabilities than a conventional PC — it's hard to write a blog post or manage a complex spreadsheet on an iPhone — but they're also easy to learn and demand little of users.
The older, more complex computing platforms didn't die. Programmers still use Unix-based operating systems. Many white-collar professionals still use PCs. But for the average person, the complexity of a PC is more trouble than it's worth. So smartphones are becoming the most popular category of computer.
Facebook demands less of its users than Twitter does
A similar principle applies to social media technologies: The most popular services tend to be the ones that demand the least from their users. And Twitter demands a lot more of users than Facebook does.
To make Twitter manageable, you have to carefully curate the list of people you follow to avoid being overwhelmed. The rules for Twitter conversations — for example, the fact that starting a tweet with someone's username will hide it from anyone not already following that user — are not intuitive to someone dropping by the site for the first time, or even the 10th. And many users find it intimidating to write tweets that anyone in the world could read.
Twitter helps users sift through a lot of information efficiently, which makes it invaluable for a media professional like me. But most people don't want to sift through large volumes of information. They just want to look at pictures of their friends' weddings, vacations, and babies with a minimum of hassle. And Facebook makes this really easy.
Why Twitter shouldn't try to become Facebook
Twitter is under pressure to expand its audience so it can generate the kind of revenues and profits Facebook does. But there are good reasons to think this won't work — and that trying to make it work might destroy the site in the process.
Microsoft's struggles to adapt to the mobile revolution provide an instructive analogy. For years, Microsoft has been struggling to produce a version of its Windows operating system that works well on tablets. The result has often been products that occupy an awkward middle ground — neither as powerful as a full-scale Windows PC nor as user-friendly as an iPad. It's hard to reduce the complexity of a Windows PC without simultaneously eliminating features that make it useful. After several flops, Microsoft has finally achieved modest success with the Surface Pro 3, but Windows-based tablets are still a lot less popular than iPads and Android tablets.
A similar point applies to social networks. Twitter's complexity isn't just a problem the company needs to eliminate, it's an essential part of what makes the site useful right now. Twitter facilitates a type of rich, open conversation that's much harder to have on a more restrictive platform like Facebook or Instagram. It's why its most committed users are so incredibly committed, and why they create so much valuable, free content for the service.
While more complex products tend to be less popular in relative terms, they can still be huge markets in absolute terms. Microsoft is a hugely profitable company because it can continue selling its products to businesses that need the power of a full-scale PC. Similarly, the rapid growth of Facebook and Instagram doesn't mean that Twitter is doomed; there will continue to be tens or even hundreds of millions of people who want to use Twitter.
Twitter's problem is that it hasn't found a way to monetize its relatively small but highly engaged and influential audience. Microsoft makes a lot of money from every Windows license it sells, so it doesn't matter that people buy fewer PCs than mobile devices. But advertisers don't seem willing to pay more to advertise to a Twitter user than a Facebook user. So Twitter's smaller audience has translated to a lot less money in the bank.
But 300 million users is still a lot, and it includes a lot of prominent and wealthy people. Rather than risk alienating its existing users in an effort to become more like Facebook, Twitter might want to focus on generating more revenue from the users it has.