Chris Sacca, one of Twitter’s earliest investors, argued Wednesday that Google should buy Twitter.
“It’s an instant fit,” Sacca said during a CNBC on-air appearance, calling a Twitter acquisition a “fantastic use” of Google’s cash.
“This is the thing that Google never had,” he added. “They’ve never understood social, have never understood those personal interactions. This bolts in quite clearly.”
Sacca’s controversial comments arrive hours after the investor published “What Twitter can be,” a critical, 8,500-word post on Twitter’s current state, and just minutes prior to Twitter’s annual shareholder meeting. The memo also followed a briefer — if it can be called that — 1,100-word post last week entitled, “I Bleed Aqua.”
Like his inflammatory CNBC appearance, Sacca’s latest, epic memo maintained that Twitter will become a huge service — far bigger than it is now — and pointed to positives like revenues, which are growing 74% year-over-year, and strong acquisitions like Periscope and TellApart. But Twitter also faces plenty of challenges.
- New user growth has stalled.
- Almost one billion users have tried Twitter and not stuck around.
- Direct response advertising has fallen short of hopes.
- Wall Street’s confidence in the management team has diminished.
- Twitter has been unable to convince investors of its potential upside.
Sacca prescribed a course of action for Twitter that includes making bolder, faster bets on features as well as tweaking the user experience to emphasize what a user might see as the “best tweets” versus just the most recent tweets — a strategy he acknowledges Twitter has made some progress on, given more recent features like While You Were Away and Highlights for Android.
He also argued that while Periscope was a sound acquisition and will become “bigger than you think,” Twitter can still do better when it comes to surfacing content about live events, an experience he dubbed “Live Twitter” that could live as a separate section in Twitter proper or work as a standalone app.
Some of Sacca’s more sensational remarks, like the idea of a Google acquisition, would be easier to dismiss if it wasn’t for Sacca himself.
Some of Sacca’s more sensational remarks, like the idea of a Google acquisition, would be easier to dismiss if it wasn’t for Sacca himself. The angel investor is highly respected in Silicon Valley for pouring money into more than 40 startups and businesses over the years, including Uber, Instagram, Stripe and WordPress parent company Automattic. Translation: Sacca knows his stuff.
And while a Google acquisition of Twitter is highly unlikely, Sacca’s criticism of Twitter — particularly around emphasizing best relevant tweets versus most recent — have some merit. The social network needs to find more ways to make content “sticky” for the hundreds of millions of logged-out users in the mainstream who consume Twitter content online, but don’t want to dip into the services 30 times a day to keep track of potentially relevant tweets.
That’s where something like Flipboard, the digital magazine app that pulls in content from users’ social media accounts (among other sources), could have helped had acquisition talks not stalled earlier this year.
Twitter is now capable of curating and suggesting tweets to users that are hours old, again via features like While You Were Away and Highlights, but a service like Flipboard leapfrogs those efforts, surfacing potentially relevant content that may be days old. And it does so with a graphic interface that’s far more visually appealing than Twitter, despite Twitter’s efforts over the last two years to emphasize photos and be easier on the eyes overall.
More intriguing is Sacca’s timing. Why make these public, inflammatory remarks just before the company’s annual shareholder meeting? Is this his way of forcing CEO Dick Costolo’s resignation, much the same way billionaire Carl Icahn last year successfully stumped for a PayPal spin-off?
His exact motives remain unclear for now, but one thing is for sure: expect to hear much more from Sacca in the coming months.
Facebook increasingly plays copycat to Twitter and other Silicon Valley upstarts when it comes to innovation, but with over 1.1 billion active users, Facebook can afford to be a fast follower. Indeed, the right strategy may well be to simply copy or acquire others’ innovations as they become popular. After all, as much as people may wring their hands about Instagram or Snapchat beating Facebook to this or that feature, the hardest feature of all to copy is a massive, built-in audience.
A Quick History Of Facebook Imitations (Er, “Innovations”)
A quick review of Facebook’s most recent product updates suggests that the company is having trouble coming up with novel features. Hashtags are the latest feature to arrive, a clear rip-off of Twitter, and just before that Instagram Video, which looked suspiciously like Twitter’s Vine. Or how about its check-in feature, which mimicked Foursquare?
While some might pillory Facebook for lacking creativity, the fact is that being a fast (or even slow) follower is arguably the right strategy for a company with such a deep installed base. When was the last time you or your friends actually celebrated Facebook changing its interface or otherwise altering your comfortable Facebook experience?
And did anyone really want Facebook Home? This counts as real innovation and it also counts as a serious innovation misstep.
It turns out that copying others’ functionality is not only safe, it’s smart.
Just ask Apple. Apple hasn’t innovated the portable music player, smartphone or tablet. Yet it still dominates either market share or profit share in all of these markets by improving upon others’ innovations. Predicting the future is really hard and frankly doesn’t usually lead to big paydays. But making that future safe and easy for a large audience? That pays big dividends.
Facebook’s Numbers Suggest It’s Doing Things Right
While Facebook has a lot of work to do on its monetization strategy, and its advertising still leaves something to be desired, as Hunter Walk points out, the company continues to print money. Critics howled that the company didn’t “get” mobile, but each quarter the percentage of Facebook’s company’s revenue derived from mobile keeps growing, most recently jumping to 30% in its Q1 2013, up from 23% a year ago.
Two-thirds of its 1.1 billion monthly active users log into Facebook through their mobile phones. Facebook doesn’t need to dazzle these users with Home or some other contraption. Facebook simply needs to maintain its comfortable experience for existing users while adding in functionality that takes off elsewhere, like Instagram Video (copying Twitter) or check-ins (copying Foursquare).
While some numbers have suggested a teenage exodus off the platform, the truth is more complex.
Facebook’s Willingness To Bet (And Buy) Big
And when a rival service shows enough growth with teens or other desirable demographics to warrant it, Facebook can simply acquire the product. While the company already dominated photo sharing, Facebook acquired Instagram to give its mobile photo business a jumpstart. Facebook can afford to buy out rivals, given the mountainous cash hoard it raised in its IPO.
This is why I’m sanguine on Facebook’s future. The social networking giant is in the perfect position to survey the market for rising innovations and blend them into the existing Facebook experience in ways that complement the comfortable Facebook experience. Usually this can be done through home-grown development, but when an acquisition is needed, the company has shown the willingness to spend big on a category leader.
This is in stark contrast to another market leader that has generally embraced the embrace-and-extend approach to innovation: Microsoft. As The Wall Street Journal‘s Rolfe Winkler puts it, “Microsoft keeps hitching its fortunes to lame horses,” turning to Nokia, Yahoo!, Dell, Barnes and Noble and other great companies whose market presence has faded.
So long as Facebook is willing to clone or acquire the best rival innovations, it should be able to continue growing its revenue even as it improves its utility to new and existing users.