Dick Costolo destroyed Twitter

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com, or follow me on Twitter.

So sad:

The roots of Twitter’s decline were actually established in the Summer of 2010–on the day the company’s board pushed Evan Williams out as CEO and replaced him with Dick Costolo, a man who looked at Twitter and saw a media company in the advertising business.

While the details of the events that led to that moment are fascinating and involve enough infighting, backstabbing, and subterfuge to make a Byzantine emperor proud, they aren’t relevant to this essay.

The abridged version is that between February and July of 2009, Twitter’s then-CEO Evan Williams was contemplating a massive future for Twitter, which involved growing to a billion users and becoming “the pulse of the planet.”

But just over a year later, the board pushed Williams out and replaced him with Costolo. And the new CEO’s agenda was a slightly less ambitious than his predecessor’s: put an end Twitter’s recurring downtime issues and start monetizing the product, stat.

Given that Costolo had joined Twitter from Google, and given that he’d joined Google after Google acquired the media and advertising technology company he’d co-founded, it’s perhaps not surprising that Costolo looked at Twitter in 2010 and saw a media and advertising business.

The seeds of Twitter’s stagnation were planted the day Dick Costolo decided that Twitter was a media company in the advertising business

More than any other single factor, Dick Costolo’s conclusion that Twitter was a media company in the advertising business is responsible for all of the struggles with revenue growth and profitability Twitter is experiencing today.

Because once you’re in the media and advertising business, your entire strategy–across product development, hiring, marketing, and sales–revolves around harvesting your users’ attention, maximizing their engagement, and selling pieces of that attention and engagement to advertisers.

Once harvesting attention, maximizing engagement, and selling both to advertisers become your objectives, you have tremendous incentives to consolidate your users on properties you control.

It was THESE incentives above all else that led Twitter to clamp down on third-party access to its APIs: when your main source of revenue comes from monetizing attention on your own properties, any successful third party client becomes an instant threat

But of course, while consolidating your users on your own website and apps is necessary for an ad business, it kinda defeats the point if they’re not coming back again and again. So you also must keep them engaged…very, very engaged.

For many business models built around a direct correlation between engagement and revenue, “keeping your customers engaged” often means finding ways to exploit human frailty to make your products more addicting. In others, it simply means not doing anything that alienates your most engaged users.

Post external references

  1. 1