- Establish current mission, objectives, and strategies of case study.
- Create a new mission statement defining these 9 components: customers, products or services, markets, technology, concern for survival, growth, and profitability, philosophy, self-concept, concern for public image, and concern for employees.
- Give an analysis of the firm's existing business model.
- Create a SWOT matrix and analysis.
- Construct a Bivariate Strategy Matrix (TOWS).
CASE 13 Twitter Inc. in 2018: Too Little Too Late? David L. Turnipseed University of South Alabama ack Dorsey. CEO of Twitter Inc., breathed a slight Reddit and Quora. Many of these competitors were sigh of relief as the fourth quarter, 2017 financial growing at a multiple of Twitter's growth-over the two- results showed the first profitable quarter since year period third quarter 2013 to third quarter 2017. the company went public in 2013. Twitter had experi- Facebook had an increase of 461 million monthly enced rapid growth since its founding and by January active users, and both Whatsapp and Instagram 2018 there were more than 330 million active monthly had increases of 400 million. Over the same period. users, Notables with Twitter accounts included U.S. Twitter increased only 23 million monthly users, and President Donald Trump, Justin Timberlake, Pope its share of worldwide digital ad revenue dropped Francis, Katy Perry. and Turkish President Recep to. 0.8 percent in 2018 (compared to Facebook's Erdogan, However, despite the number of users and 18,4 percent and Instagram's 3.0 percent). the volume of use, Twitter had failed to provide any Although Twitter had made a small profit, was it financial gains until the fourth quarter of 2017, and too little and too late? Twitter's CEO and its Board this profit had come as a result of cutting costs, not were faced with two daunting questions: 1) what growing the business. Research and development, and could they do to assure Twitter's survival with its ane- sales and marketing expenses had been cut by 24 and mic growth, marginal revenue increases, unreliable 25 percent, respectively, and the company's annual net profitability, and 2) was the company an attractive revenue for fiscal 2017 was down over three percent take-over candidate? from 2016. Twitter discovered in the third quarter of 2017 that it had been miscalculating monthly user numbers since the fourth quarter of 2014, and con- HISTORY OF TWITTER sequently was forced to lower the previously reported Founded in 2006 by Jack Dorsey. Noah Glass, Biz numbers. Even more problematic was an accumulated Stone, and Evan Williams, Twitter was an online micro- deficit of over $2.6 billion, and the March 2018 depar- blogging and social networking service that allowed ture of Anthony Noto, the company's chief operating users to post text-based messages, known as tweets, and officer, whose leadership had been vital in Twitter getting rights to the NFL Thursday night football status updates up to 40 characters long. Jack Dorsey, a games, Twitter Inc.'s consolidated income statements cofounder of Twitter, sent the first tweet on March 21, for 2013 through 2017 are presented in Exhibit I. The 2005: "just setting up my tour"- Jack(@jack) 21 March. company's consolidated balance sheets for 2016 and 2005. By the first of January 2018. Twitter had more 2017 are presented in Exhibit 2. 330 million monthly active users. Twitter was a giant in the industry, however, The history of Twitter began with an entrepreneur it faced serious competition from companies such named Noah Glass who started a company named Odeo as Facebook. WhatsApp. SnapChat, Instagram, in 2005. Odeo had a product that would turn a phone LinkedIn, and Pinterest, plus several others such as Conneto Cools by David L. Turnipiced. AT rights reserved.-139 CASE 13 Twitter Inc. In 2018: Too Little Too Later EXHIBIT 1 Consolidated Statement of Operations: Fiscal Years 2013-2017 (in thousands, except per share data) Year Ended December 31, 2014 2013 2017 2016 2015 (in thousands, except per share data) $2.443.209 $2,529,619 $2.218,032 $1.403.002 $ 664.890 Revenue Costs and expenses 729.256 Cost of revenue 861.242 932.240 446,309 266.718 542,010 713,482 606,648 691,543 593.992 Research and development 871,491 614,110 316.216 Sales and marketing 717.419 957.820 General and administrative 283.888 293.276 240.673 189,906 123.795 Total costs and expenses 2 404.559 2.896.827 2.663.068 1.941,868 1.300,721 Income good) from operations 38.740 (367 208) (450,036) (538,866] (635.831) Interest expense (105.237) (99 968) (18. 178) (35,918) (7.576) Other income (expenset, net (28.021) 26,342 14,909 (3.567) (3.739) Loss before Income taxes (05.4181 (440.8341 (533.305) (578,351) (647.146] Provision [benefit for income toys 17645 16.030 (12 274) (531) (1.823) Not loss $ (108,063) $ (456.873) $ (521.031] $ (577 820] $1645,323) Fat loss per share attributable to common stockholders Bills and diluted (0.15) 10.651 (0.79) (0.96) $ (341] Weighted average shares used to compute not loss per share attributable to common stockholders Back and douted 732.702 702.135 662 424 604 940 Other Financial Information 189.510 Added EN TOA $ 862.986 $ 751.493 Non-MAP net Income joss) $ 557.807 $ 300.696 $ 328,859 $ 75.430 $ 264,406 $ 180.486 Scarce Twithe, be Anrun Rapon 2017. 5 68.438 $ (19.057) message into an MP3 hosted on the Internet. One of Odeo's early investors was a former Google employee. Evan Williams, who got very involved with the company As Odeo grew, more employees were hired including a Web designer, Jack Dorsey, and Christopher "Biz" Stone, a friend of Odco's new CEO, Evan Williams,PART 2 Cases In Crafting and Executing Strategy EXHIBIT 2 Twitter Inc.'s Consolidated Balance Sheets, 2016-2017 (in thousands, except par value) December 31. December 31. 2017 2016 Assets Current assets $1.630,413 $ 988,598 Gosh and cash equivalents 2.764,089 2.785.981 Short term Investments Accounts receivable. not of allowance for doubtful accounts of $5,430 and $7.216 0s of December 31, 2017 and 664.268 650.650 December 31, 2016, respectively 226 967 Prepold expenses and other current assets 254.514 4.652.196 Total CurTone 835015 5.321.084 Property and equipment not 773.715 783.901 intangible assets, net 49.654 95,334 Goodwill 1,189,935 1. 185,315 Other assets 78,289 153.619 Total assets $7.412,477 $6.870.365 Liabilities and stockholder' equity Current Bablation Accounts payable $ 170969 $ 122.236 Accrued and other current liabilities 327.333 380,937 SE Capital leases, short-com 84.976 80.848 Total current liabilities 583 278 584.021 Convertible notes 1,627.460 1.538,967 Capital leases, long-term 81.308 66.837 Deferred and other long-term tax liabilities, net 13.240 7.556 Other long-term liabilities 59.973 68.049 Total Mabursts 2.365,259 2.265.430 Commitments and contingencies Stockholders' equity Preferred stock, $0 000005 parvalue-200,000 shares authorized none Issued and outstanding Common stock. $0 000005 parvalue-5,000,000 shares A authorized: 746,902 and 721 572 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively Ack donal pald-In capital Accumulated other compochimthe loss 7,750,522 7.224.534 Accumulated deficit (31.579] (69,253) Total stockholders equity [2.671.729) (2.550,350) Total Jabilities and stockholders' equity 5047,218 4,604.935 $7.412,477 $6.870.365 Source: Twitter Inc. Annual Report 2017.CASE 13 Twitter Inc. in 2018: Too Little Too Late? CHI Twitter was quite simple: tweets were limited to Williams decided that Oden's future was not in 140 characters until late 2017 when the limit was podcasting, and directed the company's employees to develop ideas for a new direction, Jack Dorsey, who raised to 280. The character constraint made it easy had been doing cleanup work on Odeo, proposed a for users to create, distribute, and discover content product that was based on people's present status, that was consistent across the Twitter platform as well of what they were doing at a given time. In February as optimized for mobile devices, Consequently, the 2006. Glass, Dorsey, and a German contract devel large volume of Tweets drove high velocity informa- oper proposed Dorsey's idea to others in Odeo, and tion exchange. Twitter's aim was to become an indis- over time, a group of employees gravitated to Twitter pensable daily companion to live human experiences. while others focused on Odeo. At one point, the The company did not have restrictions on whom entire Twitter service was run from Glass' laptop. a user could follow, which greatly enhanced the Noah Glass presented the Twitter idea to breadth and depth of available content and allowed Odeo's Board in summer of 2006; the Board was not users to find the content they cared about most. Also. enthused. Williams proposed to repurchase the Odeo users could be followed by hundreds of thousands, or stock held by investors to prevent them from taking millions of other users without requiring a reciprocal a loss, and they agreed. Five years later, the assets relationship, enhancing the ability of users to reach of Odco that the original investors sold for about a broad audience. Twitter's public platform allowed $5 million were worth $5 billion. both the company and others to extend the reach of After Williams repurchased Odeo, he changed Twitter content: media outlets distributed Tweets to the name to Obvious Corp, and fired Odeo's founder complement their content by making it more timely. and the biggest supporter of Twitter. Noah Glass, relevant, and comprehensive. Tweets had appeared Christopher "Biz" Stone left Twitter in 2011 and pur- on over one million third-party websites, and in the sued an entrepreneurial venture with Obvious Corp. second quarter of 2013 there were approximately for six years. In mid-2017, he returned to Twitter full 30 billion online impressions of Tweets. time. As of the second quarter, 2018, only three of the original Twitter founders remained active in the THE TWITTER BRAND IMAGE company: Biz Stone, Jack Dorsey as the company's CEO, and Evan Williams who was on the Board. Twitter had a powerful brand image. Its mascot bird Twitter provided an almostimmediate access was not chosen because birds make tweeting sounds, channel to global celebrities. The majority of the top but rather because "whether soaring high above the 10 most followed Twitter accounts were entertainers earth to take in a broad view, or flocking with other who used the service to communicate with their fans. birds to achieve a common purpose, a bird in flight spread news, or build a public image. The near-instant is the ultimate representation of freedom, hope and gratification from direct updates from celebrities such Limitless possibility." as Rihanna, Jimmy Fallon, Lady Gaga, and Taylor Twitter was initially named "Jitter" and "Twitch." Swift and the feeling of inclusion in a specific group of fans was a major reason for social media users because that is what a phone would do when it to use Twitter. The accounts of high interest people received a tweet. However, neither name evoked the such as entertainers, politicians, or others at risk of image that the founders wanted, Noah Glass got a impersonation were verified by Twitter to authenti- dictionary and went to "Twitch," then to subse- cate their identity. A badge of verification was placed quent words starting with "Two he found the word on confirmed accounts to indicate legitimacy. Major "Twitter," which in the Oxford English dictionary sporting events and industry award shows such as the means a short inconsequential burst of information. Super Bowl or Academy Awards generated significant and chirps from birds. Dorsey and Glass thought that online action. The online discussion enabled users "twitter" described exactly what they were doing, so to partic pate in the success of celebrities who often they decided on that name, The name was already posted behind-the scenes photo tweets or commen- owned, but not being used, and the company was laries. Onset of in-concert tweets were other meth- able to buy it very cheaply. oda utilized by celebrities to enhance their appeal. In 2012, the old Twitter bird was redesigned, and fan interaction. slightly resized, changed from red to blue. and named Larry the Bird ( named after NBA star Larry Bird).PART 2 Cases In Crafting and Executing Strategy C-14: Although the world's leaders had millions of The lower case "t" icon and the text "twitter" were followers, others have far more. As of June 2018. removed; the company name was no longer on the Katy Perry had over 108,000,000 followers, Justin logo. The blue bird alone communicated the Twitter Bieber 106.5 million, former U.S. President Barack brand. "Twitter achieved in less than six years what Obama 103 million, Rihanna 88.6 million, Lady Gaga Nike. Apple. and Target took decades to do: To be 78.85 million, and Justin Timberlake 66 million. recognizable without a name, just an icon." The miraculous plane crash on New York's According to a Twitter survey conducted to help Hudson River in 2009 was broken on Twitter, and on understand the company's brand legacy, 90 percent of May 1, 2011. an IT consultant in Pakistan unknow- Twitter users worldwide recognized the Twitter brand. ingly live tweeted the U.S. Navy Seal raid that killed Twitter's 2018 ad campaign "What's happening" used Osama Bin Laden over nine hours before the raid was only the Twitter logo and hashtag symbol. The Twitter on the news. Prince William announced his engage- brand was called "minimalization at its finest"-an ment to Catherine Middleton in 2010 on Twitter. advertising campaign that did not have one word, but yet delivered a powerful message from the brand. President Obama used Twitter to declare victory in the 2012 U.S. presidential election, with a Tweet that was viewed about 25 million times on the Twitter Twitter's Global High Profile platform and widely distributed offline in print and Twitter had become very well known because of sew- broadcast media. eral high-profile users and high profile use. Several of the world's leaders had millions of followers. TWITTER SERVICES, as shown in Exhibit 3. From May 2017 to June 2018, U.S. President Donald Trump's follow count PRODUCTS, AND REVENUE increased to 53.1 million. President Trump repu- STREAMS larly used Twitter to break news, praise his friends, campaign for supporters. and feud with his enemies. Twitter's primary service was the Twitter global consequently Twitter was in the daily news almost platform for real-time public self expression and constantly in 2017. conversation, which allowed people to create. con- sume, discover, and distribute content. Some of the EXHIBIT 3 World Leaders with the most trusted media outlets in the world, such as Most Twitter Followers as CNN, Bloomberg, the Associated Press, and BBC of May 2017 used Twitter to distribute content. Periscope was a mobile app launched by Twitter in 2015 that enabled people to broadcast and watch live video with oth- Millions of Follower ers. Periscope broadcasts could be viewed through Twitter and mobile or desktop web browsers. Pope Francis, Vatican@Por Men 33.72 Twitter Inc. generated advertising and data Donald Trump, U.S.ORmalDonaldTrump licensing revenue as shown in Exhibit 4 by provid- 30.13 ing mobile advertising exchange services through the Narendra Modi, IndianNarendraModi Twitter MoPub exchange. and offering data products Prime Minister, InclagPMDingla 1804 and data licenses that allowed their data partners to President US OPOTUS search and analyze historical and real-time data on 17.76 The White House, U.S.CWriteHouse the Twitter platform, which consisted of public tweets 14.42 and their content. Also, Twitter's data partners usu- Recup Uidopan, TurkeyORT_Erdogan 1027 ally purchased licenses to access all or a portion of the company's data for a fixed period. The company 7.92 Joko Widodo, Indoneslapkoowl operated a mobile ad exchange and received service 7.43 fees from transactions completed on the exchange. The Twitter mobile ad exchange allowed buyers and sellers to purchase and sell advertising inventory, and it matched buyers and sellers.CASE 13 Twitter Inc. in 2018: 190 Ll EXHIBIT 4 Twitter Inc. Advertising and Data Licensing Revenue, 2015-2016 (in thousands) Year Ended December 31. 2016 to 2017 2015 to 2016 2015 Change $ Change 2017 2016 [in thousands) $2.109,987 $2 248,052 $1.994.036 Advertking services 263 281.567 223,996 10% Date licensing and other 333 312 $2 218,032 131% 14% Total revenue $2,443.299 $2,529.619 2017 Compared to 2016 Revenue In 2017 decreased by $86 3 million compared to 2016. Soror Tellies, Inc. 2017 Form 10-% TWITTER RESTRUCTURES Twitter, Inc. joined the S&P 500 index on June 7. 2018, replacing Monsanto. The addition of Twitter On June 29. 2018, Dorsey announced that he was was unusual because the S&P regulations required restructuring Twitter to make the company quicker that the sum of a member company's four most recent and more creative, as Ed Ho. VP of product and quarters, as well as the last quarter, were positive. In engineering. stepped down to a part-time position. April of 2018, Twitter reported its second consecu- Twitter employees would be organized in functional live profitable quarter, which followed 16 consecutive groups such as engineering. as opposed to the pres- quarters of losses. The addition of Twitter to the S&P ent product teams. Dorsey decided on the structural 500 Index would increase the number of individual change to simplify the way the company worked and investors who owned the stock through index funds to make the organization "more straightforward." He that track the large company stock gauge. Twitter's believed that a "pure end-to-end functional organiza- addition to the index fueled a rally that pushed the tion" would help make decision making clearer, allow the company to build a stronger culture, and prepare company's stock to more than $40.00/share, which was its highest price since March of 2015. the company for increased creativity and innovation. Dorsey believed that Twitter must enter a creativity phase to be relevant and important to the world. TWITTER'S MAJOR TWITTER'S STOCK COMPETITORS PERFORMANCE Facebook Twitter went public on November 7. 2013 with an IPO Facebook was the world's largest online social net- price of $26.00. and the stock closed up 73 percent working and social media company. It was founded ($44.94) on its first trading day. The stock hit its all- in February 2004 by Mark Zuckerberg, Eduardo time high of $69.00 on January 3. 2014, and began a Saverin, Dustin Moskivitz, Chris Hughes, and Andrew long downtrend. On August 21. 2015, Twitter shares Mccollum. As was common among online social net- dropped below the IPO price to $25.87, rebounded working companies. Facebook was not immediately slightly. and then slid to $14.10 on May 13, 2016. The profitable: however, after becoming profitable in stock did not get above the IPO price of $26.00 until 2010, it had its IPO in 2012 at $38/share. Although early February 2018. On the last trading day of June 2018, Twitter stock was trading at $43.67. Exhibit 5 the stock price dropped to under $20 in August tracks Twitter's market performance between 2012, it rebounded and was selling at $197.00/share November 2013 and June 2018. in June 2018. In the first quarter of 2018. Facebook had 2.2 billion users worldwide-India had the larg- est number of users at 270 million, the United StatesPART 2 Cases in Crafting and Executing Strategy EXHIBIT 5 Monthly Performance of Twitter Inc.'s Stock Price, November 2013-June 2018 $ Is) Trend In Twitter's Common Stock Price 60 50 40 Stock Price 20 10 17 18 16 14 15 Year (5) Performance of Twitter's Stock Price versus the 56P 590 Index + 4596 4 30%% SAP 500 + 15% (November 2013 = 0) Percent change 15%% Twitter's 30 stock price 60% -7536 14 15 17 18 Year was second with 240 million, and Indonesia was for users was much less than texting. The company third with 140 million. grew quickly and within a few months of startup Facebook averaged 1.7 billion average monthly WhatsApp added a service charge to slow down its users, and $3 percent of the total users were from growth rate. In 2014. WhatsApp was acquired by outside the United States. Facebook's year-over-year Facebook in 2014 for $21.94 billion. growth rate in the first quarter of 2018 was 13 percent. In early 2018, after a long feud with Facebook A financial summary for Facebook, Inc. for 2013 to 2017 is presented in Exhibit 6. founder and CEO Mark Zuckerberg about how to get additional revenue from WhatsApp. Koum and Acton resigned from Facebook. Zuckerberg was focused on WhatsApp using targeted ads to WhatsApp's large user base; WhatsApp was a freeware and cross platform messag Koum and Acton were believers in privacy and had ing and IP service owned by Facebook. The company no interest in the potential commercial applications. was founded in 2009 by ex-Yahoo employees Jan When WhatsApp was sold to Facebook, the found- Koum and Brian Acton. WhatsApp used the Internet ers pledged privacy of WhatsApp. Four years later. to send messages, audio, video, and images, and was Facebook pushed WhatsApp to change its terms of similar to a text messaging service. However, because service and give Facebook access to WhatsApp users' WhatsApp sent messages over the Internet, the cost phone numbers. Facebook also wanted a unified profile that could be used for ad targeting and data\f\f\f\f
