twtter strategic analysis

1

Berkimer, Brown, Davis 2016

Twitter

“just setting up my twttr”@jack

March 21, 2006December 8th, 2016

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The Start

• Evan Williams, Biz Stone, Jack Dorsey and Noah glass partnered on Odeo.

• Podcasts were not the future• Started as sending a text that would be sent to

all your friends.• SMS costs for users were extremely high

December 8th, 2016KD

3

Started OdeoEx-Google Employee

Early doubter of Twitter

Evan WilliamsFormer Odeo Employee

Web DesignerTwitter was his ideaAlso CEO of Square

Jack Dorsey

Came up with the name “Twitter”& Functional idea for Twitter

Co-Founder of Odeo

Noah Glass

Ex-Google EmployeeHelped out

occasionallyEarly doubter of Twitter

Christopher “Biz” Stone

@jack

@Biz

@Ev

@Noah

Then…


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Previously VP at Oracle

CTOAdam Messinger

CEO and Chairman of Square, Board of Walt Disney

CEOJack Dorsey

Previously CTO of FOXStepped Down November 9th

COOAdam Bain

Previously CTO of the NFL & as an Analyst/Researcher at

Goldman Sachs

CFOAnthony Noto

Leadership Today

@jack @adammessinger@anthonynoto@adambain


5

Evan Williams takes over as CEO, Twitter raises money and

gets celebrity endorsements, starts advertising on Twitter

called “Promoted Tweets”

2010RAPID GROWTH

Dorsey, Stone, Glass and Williams began to develop “twttr”

2006COMPANY FOUNDED

TIMELINE


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Twitter launches a host of new features to make timeline

more organized for users

2014NEW FEATURES

PRESENT

Twitter goes public in November at $26 giving them a valuation of $30B

2013IPO

Twitter shuts down Vine


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What we are:Twitter is the place to find out what’s happening in the world right now.

Mission:To give everyone the power to create and share ideas and information instantly, without barriers.

It’s what’s happening.

Twitter


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NFL Deal

December 8th, 2016

Deal:• Paid $10 million for 10

Thursday night games• 5th game reached 3

million users• Up 28% from the first

game

Comparable Deals:• Yahoo paid $17M for

single game in London• CBS, Comcast, NBC each

paid $45M a game for 5 games

KD

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Twitter for Good

Philanthropic Mission• Internet Safety & Education• Woman & Underrepresented Minorities in Tech• Digital Rights & Responsibilities• Universal Access & Adoption• Crisis & Emergency Response• San Francisco Initiatives


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Locations

United States: 13 OfficesHQ: San Francisco

International: 28

KDDecember 8th, 2016

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Facebook has 15,000Instagram had 13 (when

acquired)

Employees Around the World

3,860

Facebook has 75%Instagram has 80%

Accounts Outside U.S.A.

79%

Facebook users share 30B pieces of content monthlyInstagram users have sent

40B photos

Total Tweets Sent

170B

Facebook has 1.7BInstagram has

500M

Monthly Active Users

317M

By the Numbers


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65+

18-49

50-64

15-17

42 % 32 %

13 % 6 %

Twitter Age Demographics


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$75,000+

$30,000-49,000

$50,000-74,000

>$30,000

21 % 19 %

25 % 26 %

Twitter Income Demographics


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Life Cycle Curve

Intro-duction

Growth Shakedown Maturity Decline0

1

2

3

4

KDDecember 8th, 2016

15

User Hate Speech/Trolling/Abuse1

Twitter:The Problems


16


2Understanding What They Do


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3


Profitability


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Customer Switching Costs

Threat of New Entry: LOW

High Brand LoyaltyEconomies of Scale

Porter’s Forces

December 8th, 2016BB

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Cost Conditions• Monetized by AD Revenue• Fixed Costs

Competitive Rivalry: LOW

Industry DemandIndustry Competitive Structure

Porter’s Forces


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Quantity of Other Platforms & Networks

Buyer Power: HIGH

Buyers are Companies & IndividualsAd Based Revenue Structure

Porter’s Forces\


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Suppliers Are UsersQuantity of Substitute Services

Supplier Power: HIGH

Twitter’s Source of RevenueIntangible Switching Costs

Porter’s Forces\


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Cost Leadership

Threat of Substitution: Very HIGH

Product DifferentiationQuantity of Other Platforms

Porter’s Forces


23

Freedom of Speech

Privacy vs Government Regulations

Government Data RequestsUser Data Security

Macroeconomic Forces


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Competitors

Resource Availability

DevelopersUsers

Microeconomic Forces


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Strengths

Businesses interacting with customers

User engagement with other users is high

Extremely viral and real

time

Easy to integrate with other platforms

Preferred by celebrities

Speedy and concise

Vast reach


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Weaknesses

Focused in too many avenues

Haven't substantially improved their platform

No solid revenue model

Hate speech, trolling, abuse

Advertising on the platform is expensive


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Opportunities

Tailored advertisements

Partnerships with professional sports teams

Data licensing

December 8th, 2016

Advertisements on videos

BB

28

Threats

Fake celebrity accounts and influencers

Spammy with companies pushing their products

Human managed enforcement

Competitors are becoming more real time (FB live feed)

Competitors offer less expensive advertising


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Stock

December 8th, 2016TB

2014 2015 2016

$19.48

$69

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Competitors


31

Competitors


32

Financials


33

Financials


34

Financials

December 8th, 2016

2013 2014 2015

TB

35

Financials


36

Financials


37

Assets


38

Liabilities


39

Equity


40

Operating Cash


41

Investing Cash


42

Financing Cash


43

Users


44

Users


45

Users


46

Ads


47

Ads


48

Recommendations

December 8th, 2016

Better algorithms to stop hate/abuse -Cut 100 jobs at average salary of $100,000-$10M savings

Stop third party apps

TB

More data licensing -From 10% - 12% of revenue -Add $100M to top line

Potential to be acquired

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Sale Option


• Announced $50B investment in US• Bought Sprint in 2013 for $21B• 7.5x P/S

• 6x P/S = Market Cap Value $20.5B• Price per share $29• 45% premium• 35M users in Japan• Facebook has 28M users

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Questions?

December 8th, 2016