Twitter’s IPO offering on its first day opened at $26 a share and after a trading frenzy closed at $44.90 a share – 73 percent above the IPO price for an initial valuation of $31.7 billion. The stock closed at $41.65 – down about 5%.
This initial activity is testimony that in today’s world: Opinions matter more than facts. Making noise matters more than making things. Financial markets matter more than business models. In a strange way, it also illustrates that being disconnected is more important than being connected. Finally, it represents the triumph of smoke and mirrors over stuff and gears.
Let’s examine why. Before doing so, let us confess that one of us twitters on occasion and the other by choice does not.
Twitter not only has tremendous market appeal. It has tremendous crowd appeal as well. Recent research discloses that Twitter has has over 200 million active twitter users in countries around the globe. The top five countries in number of active users in order are: China, India, U.S., Brazil, and Mexico. The top five individuals in order who have the most twitter followers are: Katy Perry (46.5m ), Justin Bieber (46.49m), Lady GaGa (40.4m), President Obama (39.27m), and Taylor Swift (36.25m).
There is no doubt that Twitter is an effective micro-blogging and social media tool. As such, at this point in time, it is primarily a vehicle for marketing, promotion and mass communications. It is not, in the main, a means for informing, educating or enlightening. That’s not a bad thing. It’s just a statement of fact about an opinion machine.
Technologically, Twitter is a relative of Facebook which means that it is focused on sharing and disseminating messages rather than ideating and innovating products. Again, that’s not a bad thing. Unless, of course, one believes that making things and expanding our manufacturing capacity is one of the keys to restoring the nation’s competitive advantage and creating good paying jobs that stimulate economic growth and individual economic well-being here in the United States.
Then, there’s the case of Twitter’s business model – or lack of one. There’s been a debate on the existence and nature of that model since Twitter secured its major investment capital infusion in 2009.
That debate continued in the run-up to the IPO offering in 2013 with Antoine Gara writing for thestreet.com, “The power of Twitter’s platform and its value to users may be unimpeachable; the company’s business model isn’t.” Forbes contributor Jonathan Salem Baskin chimed in with similar concerns astutely noting at the end of his article, “…the Twitter IPO will prove only one thing with absolute certainty: the social media business model is to profit from selling social media.”
In other words, Twitter’s business model itself was basically irrelevant to the offering. It appears Twitter’s co-founders, Evan Williams and Biz Stone, understood this. In a 2012 interview, they asserted that when they started Twitter they “actually did have a business model, but did not use it because they had to focus on the product first.” That’s kind of a build it and they will come philosophy.
And, that philosophy works in today’s technology financial marketplace. It works because, as Alexandra Stevenson and Nicole Perlroth reported in their New York Times article the day after the Twitter offering, there are individuals such as Suhail R. Rizvi who runs a private investment company that helped assemble large amounts of capital to drive the Twitter offering by “bringing in many prominent names in at the ground floor, including the Saudi prince and some of JP Morgan’s wealthiest clients.” At the end of the first day, it was Mr. Rizvi’s “art of the deal” model rather than the underdeveloped and relatively unproven Twitter business model that took the stock prices and some in the investor class to the top of the financial capital mountain
Time will tell where those prices will stay. Time will also tell whether Twitter will evolve from a simple platform for advertising and messaging to one that can be used for building true connectedness and social capital.
Over the past decade, the internet and social media has spawned a number of platforms for “social networking”. Each of those sites allows people to connect electronically. The connections can be made easily, frequently and at a low cost in terms of time and dollars spent. The question is whether these platforms make us more connected in human terms and build social capital. We believe the answer is “not yet.”
In fact, they create the potential for social entropy. We could mistake constant contact with authentic communication. We could perceive the state of virtual connectedness as the existence of an actual connection. We could substitute superficial and shallow exchanges for legitimate involvement. We could be sacrificing part of our humanity on technology’s cross.
We write this not as luddites ignorant or fearful of technology. One of us has owned a highly successful information technology firm. The other was an executive for a period of time in an IT company.
We write it instead as observers who believe social networking platforms have the potential for the development of social capital and uniting us in meaningful ways. Twitter began as a geeky, celebrity-based phenomenon used for postings, musing and meanderings, rather than for meaningful exchanges and advancing society. It remains basically thus now.
With Twitter going public there is the potential for it to contribute to the creation of social capital as well as financial capital. We are poised on the twitter-totter.
Iran, Egypt and Libya showed that tweeting can serve another purpose. The internet has gone from academic and business use to a communications tool for the masses.
Tweeting needs to go in the other direction. And, it has begun to do so as non-profit, charitable and civic groups use the platform for fund-raising and other purposes.
The first steps have been taken but there are miles to go to make Twitter – and its internet brethren – transformational in a social capital sense. Twitter could be used to develop communities of interest around important social issues and problems. New apps could be created to allow these communities to explore alternatives, options and solutions. This migration would be the basis for bringing us closer together and uniting us on matters that matter for the heart and the soul.
As we conclude, we can see: A “social media” future that could be a positive force in making a world of difference in a world that needs that difference. We can see: An electronic future that could move us from star- and self-absorption to mutual concern and collaborative communities.
We hope that vision is realized. We need 140 characters with something there. If we do not get there, our epithet could read, “The world, as we knew it ended, not with a bang or a whimper but with a twitter.”