From Fail Whale To Uncaged Bird, Twitter’s IPO Drumbeat Will Get Louder
I can’t wait for Twitter’s IPO. There’s a lot that’s going to happen between now and then, and I tried to capture what some of the main issues are, especially in the wake of Facebook’s IPO. I wrote this column a few weeks back…
Do you hear that faint drumbeat? In the background, barely noticeable, amid the frenzy around Facebook’s stock price resurgence, or the noise of your Twitter stream, there is a slow, steady drumbeat afoot looking out to 2014 and the public offering for the microblogging platform. In the rocky year since Facebook’s much-discussed IPO, the rollercoaster of the stock price has highlighted both challenges and opportunities facing Twitter as it prepares itself for the next test. Perhaps from this post onward, prepare yourself to read a lot more posts leading up to this event, even more Twitter icons on television, even more Twitter handles in the mainstream media, a mainstream book on the formation and early days of Twitter by a New York Times writer, and a sharp hum of increasing chirping among the chattering classes all the way to the scrappiest of incubators. The drumbeat to Twitter’s IPO has begun.
The irrational exuberance that fueled Facebook’s IPO and subsequent price fluctuations appears to have, at least for the time being, been vindicated, as Facebook’s share price is now either at or above its initial offering price a year ago. During that time, many doubted Facebook’s overreach and greed at the time of offering, marveled at the savviness of the Instagram acquisition, remained worried about how mobile applications seem to unbundled Facebook’s core value proposition, and internalized the stock’s fall and correction as indication that the Valley was regaining interest in enterprise-oriented businesses over consumer ones and, of course, that Twitter may suffer as a result and through no fault of their own.
Well, what a difference a year makes. While it remains to be seen if Facebook can continue to diversify their revenue streams and apply leverage through mobile ads, one has to believe that, at least for the near-term, Wall Street is going to give the social network back its sky-high multiple, especially when considering Instagram continues to grow on the main mobile platforms and could itself turn into a revenue-generating juggernaut if and when Zuck wants to flip the switch. Therefore, in a world where Facebook has stabilized, the Twitter birds can now safely come out of the birdhouse, peek around, and see clear skies ahead. The time is right.
Lucky for Twitter, its older brother down south blazed a trail for it, and took some lashes in the process, providing some key lessons that should be studied. First, instead of gunning for a valuation public markets would only support for a few business days, Twitter would be wise to make sure both retail investors and the investment bankers underwriting the offering are given a chance at the upside action. It may be easy to charge back against the advice, claiming real founders want to buy money as cheaply as possible, but there is an unquantifiable risk to employee morale in having public stock fluctuations become a story spun out of control. Second, of course, Twitter is in the process of solidifying and diversifying the nature of its ad products, which work seamlessly on mobile. In fact, I cannot think of another service where the ad units looks just like native content. Third, while Twitter has embarked on a strategy of lock-in over the past 18-24 months, there remains more to clean up, and it all won’t be rosy, but these types of decisions will need to made in order to diversify away from ads to publishing, transactions, and other activities that could exist within Twitter’s own walled birdcage.
I’m just going to be lazy and assume they’ll do everything that needs to be done, as they’ve made it through many gauntlets and emerged stronger. They’ll fix the DMs, and they’ll figure out “read it later,” and every other little thing you can imagine. And, they don’t need to figure out mobile because it was designed from mobile from the beginning. Not too shabby. The company has come too far to do anything else, and, well, the world needs Twitter more than anything.
And here’s the part that’s hard to analyze – the fact that using Twitter essentially changed and bolstered my work and career, whatever it turns out to be in the end. I can’t put a value on it. I can’t put a value on remembering when, back in 2008 when I was living in Boston and trying to find new people to connect with during a time in life when I really had no idea what I wanted to do. Back in 2008, when friends back east would laugh at me for using Twitter. “Why would you want to do that?,” they’d ask. I usually responded with answers around utility, such as “It’s how I get my news.” But that’s the just surface. Over five years of heavy use, it is how I connect with things that interest me, how I create, test, and refine new ideas, how I meet new people and monitor their moves, and how I interact with the web at large. It is my own personal window into the web.
I’d gather many of you reading this feel somewhat similar. And, that’s the only thing that concerns me. Once Labor Day rolls around in a few weeks, I’m expecting all sorts of news stories, magazine features, television programs, books, speaking tours, and chattering about the Twitter IPO — all deserving. There will be noise, oh yes, but that should distort the signal that Twitter, as a company and product, is just beginning. The noise is inevitable, and while this post may contribute to a bit of that noise, my hope is that this post will also dampen the frenzy a bit, a quiet yet important reminder of what recent social network IPO history has gifted us. I hope that expectations are tempered around the initial offering, that it’s more like LinkedIn’s IPO than Facebook’s, that folks on the inside won’t mind leaving some breadcrumbs on the porch for the bankers and mom-and-pop investors to scoop up, not just because it’s a noble thing to do, but because making everyone a part of the action is what Twitter is about and will set a strong foundation for what will otherwise be, in my mind, a perpetually undervalued asset.