Twitter Portfolio Final

Running Head: TWITTER BUSINESS PORTFOLIO
Twitter Business Portfolio
Tanner Karp
Oregon Institute of Technology
TWITTER BUSINESS PORTFOLIO
Table of Contents
Background, History, and SWOT Analysis 3
History 3
Company Mission 5
Comprehensive SWOT 6
Ethics and CSR 8
Twitter Stakeholders 8
Twitter’s Ethical practices 8
Management and HR Analysis 11
Twitter’s Organizational Structure 11
Twitter Human Resources 12
Twitter Financial Analysis 14
Twitter’s Financial Statements 14
Twitter Stock price 16
References 17
2
History
The history of Twitter is much more interesting than it appears on the surface, mostly
because the history is covered up by current ownership. In the beginning, there was no
Twitter. In fact, there was a company called “Odeo”. This company was a startup that
gave people a platform to make and share podcasts. Odeo was founded by Evan
Williams, a former Google employee who had just sold his company “Blogger” to
Google for a large sum of money, and Noah Glass who created the technology that
allowed user to create and publish podcasts via their cellphone. Odeo started with four
employees working out of an apartment. As Odeo raised capital from investors, they
moved into an office space and hired new employees including Jack Dorsey, a web
designer. Odeo was steadily growing until the Fall of 2005 when they ran into two big
problems. First, Odeo employees noticed they weren’t using the technology that much,
were not listening to podcasts, and didn’t feel invested in Odeo (Carlson, 2011). The
second and larger problem was Apple’s announcement that they were going to include
a podcast app as a part of the ITunes store. At this point, Odeo was struggling to see
how they would stay relevant amid the Apple news. CEO, Evan Williams figured that
podcasts could not be the way of the future for Odeo. Williams challenged his
employees to come up with new ideas. The company had “hackathons” which were
entire days for employees to team up and work on projects that could dictate the future
direction of Odeo. It was during this collaborative time that Jack Dorsey created the
spark that ignited Twitter. Dorsey had been brewing an idea for years. The idea was a
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new product based around people’s “status”. A product focused on what people were
doing in the very moment. At first, Noah Glass had trouble understanding what Dorsey
saw in this idea, but eventually he had an “ah ha” moment where he understood the
impact this product could make. Glass thought long and hard on a name for this product
and initially came up with “Twttr” (MacArthur, 2017). Eventually it would be changed to
“Twitter”. Glass and Dorsey presented the idea in February of 2006. Their idea was
system that allowed you to send a text to one phone number and the message would be
broadcasted to friends. Many former employees agree that Glass was the most
enthusiastic about Twitter and its potential (Carlson, 2011). CEO Evan Williams was not
yet sold on Twitter, but put Glass in charge of a team to develop it (MacArthur, 2017).
By March of 2006, Glass’ team had developed a working prototype. Employees began
racking up hundreds of dollars in texting charges, which the company agreed to pay for.
At one point, Odeo’s office in San Francisco experienced a small earthquake.
Employees used Twitter to communicate with each other (Carlson, 2011). In this
moment, Glass and other employees saw just how valuable Twitter could be. In the fall
of 2006, Twitter had around 5000 users. Glass eventually took the idea of Twitter and
presented it to the Odeo board of directors. They were not impressed. In September of
2006, Evan Williams wrote a letter to investors. In the letter he explained the troubles
that the Odeo podcast platform had experienced, and reported that there was no future
for it with Odeo. In a small section of the letter, he noted that Twitter did show a small
amount of hope. Concluding his letter, he made an offer to buy back any Odeo shares.
It is unclear how much Williams bought back, but the total capital Odeo had raised
4
before then was near fivemilliondollars. This generous act from Williams came as a
surprise. What came next was a bigger shock. Williams fired Noah Glass from the
company. There are several speculated reasons why Williams would fire the workhorse
behind the company’s only bright spot. Some believed it was rooted in their clashing
personalities (Carlson, 2011). Others believe it was Glass’ desire to split Twitter off into
its own company and become the CEO that scared Williams. Williams changed the
name of Odeo to Obvious Corp. Within six months from buying back the shares from
investors, Twitter blew up. The fivemillionsdollars in shares have grown to an
estimated elevenbilliondollars in value (Hempel, 2016). Controversy has swirled
around Williams offer to buy back shares. Some investors who took up the offer to stay
have raised questions about whether Williams was completely forthcoming about
Twitter’s potential. Twitter’s official story is that Evan Williams, Jack Dorsey, and
Christopher Stoner (William’s friend from Google who invested early in Odeo and
occasionally stopped by to help with Twitter) all were the cofounders of Twitter. Noah
Glass is awarded no credit as a founder, or for his important work. All that is left of
Glass is his Twitter profile which reads “i started this” in the biography and his last tweet
which wishes Twitter good luck. Twitter eventually spun off into its own company and
has had a number of different CEO’s including Evan Williams and currently Jack
Dorsey.
Company Mission
5
As outlined in the company’s history, the initial mission of Twitter was to offer
users a communication tool based off their current “status” and activity. It is important to
remember that in Twitter’s early years, social media was not as common place as it is
today. Facebook was only a couple years old. The idea of connecting people to the rest
of the world through current status was revolutionary. Since 2013, when Twitter decided
to go public, they have stuck to one fundamental mission statement that reads “Our
mission: To give everyone the power to create and share ideas and information
instantly, without barriers” (Fox, 2014). In the words “share ideas and information
instantly”, you can see the initial goal still lives on. In the rest of the statement you can
infer more focus on making Twitter a global tool that anyone can access. It is clear over
the years Twitter has been used as social change platform that gives a voice to the
oppressed. A user with ten followers can share a video they just recorded on their
phone of something unjust they have witnessed or encountered themselves and that
tweet could instantly explode and end up headlining the evening news. This is how
Twitter gives people power and creates a level playing field.
A Comprehensive SWOT
One of Twitter’s greatest strengths is that they are a household name. They are
considered among the four major social media platforms (Facebook, Twitter, Instagram,
Snapchat). This gives Twitter exceptional exposure. Another strength is their ability to
sell ad space. They have a platform that allows large corporations and small business
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owners alike to reach new customers. Finally, Twitter is the goto social media platform
for events happening now. It’s considered the inthemoment social media.
Weaknesses Twitter faces include their large competition. While Facebook and
Instagram are different social media platforms, they are both owned by Facebook. This
means Twitter is fighting against a much larger company for users. Another weakness
for Twitter is their lack of a live story feature like each of the other big four social
medias. The final weakness for Twitter is their advertising dashboard is very complex. It
makes it difficult for small business owners to efficiently use it without confusion.
Twitter has an abundance of opportunities that would allow it to grow. Among
them is a new advertising service it will offer for $99/month that lets businesses sit back
while Twitter uses algorithms to decides which Tweets to promote for the company. A
second, more controversial opportunity is changing the character limit on tweets from
140 to 280. Twitter has been testing this for close to a month and is getting mixed
feedback. The final opportunity Twitter could take advantage of is expanding the
possible reactions you can have to a tweet beyond the “favorite”. With so much social
activism, it can feel counterintuitive to favorite a tweet about something unjust.
Finally, a threats Twitter faces is that it could eventually fall behind like Myspace
while new platforms steal users. Other social media platforms might begin to steal
unique features from Twitter similar to how Instagram has copied Snapchat. And lastly,
most social medias are at risk of rouge employees promoting tweets to millions that
promote certain political views and candidates.
7
Twitter Shareholders
Twitter has an assortment of high profile stakeholders who have invested heavily
in their platform. Former Microsoft CEO Steve Ballmer bought 4% stake in Twitter in
October of 2015. The richest man in the middle east, Prince AlWalid bin Talal, invested
300million dollars in Twitter (Cox, 2016). In addition to these big name investors, the
majority of Twitter stock belongs to Twitter cofounders Ev Williams and Jack Dorsey.
Williams owns 43.7million shares and Dorsey owns 15million shares (Wagner, 2016).
Twitter stock is best described as common stock. Large owners of Twitter stock get to
vote on the actions of the company, unlike a preferred stock that only allows investors to
own the stock and not help guide the company. There is a recent example of Twitter
allowing their stockholder to have a say in the company’s direction when they held a
stockholder meeting in May of 2017. The stockholders had a vote on whether they
would turn the organization into a userowned company (Spencer, 2017). By becoming
userowned, Twitter would have millions of owners with such a small investment in the
company, their stock price wavering would not affect anyone drastically. The Associated
Press and Outdoor Clothing maker REI both operate successfully under this format
(Young, 2017). The decision of the vote is not public information at this time.
Twitter’s Ethical Practices
8
Every day, Twitter employees must decide how much freedom of speech they want to
give their users vs how much they want to control the conversation. Millions of tweets
are reported daily for abusive or offensive messages. Employees who are forced to
decide whether or not to delete tweets or suspend accounts are faced with tough
dilemmas every day. When there are disagreements between employees and users of
the social media, controversies form. #HeyTwitter became trending after a Jewish
Comedian called out Twitter for not deleting tweets that he found offensive. These
tweets used language such as “Jewish Pig” and “Muslim Scum” (Jeezera, 2017). Twitter
never responded directly to the comedian but continues to cite their code of conduct
which claims Twitter “prohibits the promotion of hate speech globally”. Twitter also
claims that they have seen a 25% reduction in the number of reported tweets (Ong,
2017).
Twitter is currently at the center of an ethical issue that has put them between a
rock and a hard place. Newly elected president Donald Trump infamously used Twitter
as a platform to upset then presidential favorite Hillary Clinton. Trump uses Twitter daily
to express his thoughts, sometimes recklessly. From threatening other countries that
nuclear war is immanent to attacking celebrities and political leaders on their physical
appearance. Many have asked if Trump follows Twitter’s code of conduct that often gets
some users suspended. Inside Twitter, talks of banning Trump from the platform have
taken place, but ultimately Trump does so much good for Twitter that they do not want
to ban his account (Newton, 2017). Because of his provocative tweets, Twitter is in the
main news spotlight every day. Twitter fears that if Trump were to migrate to a new
9
platform, outsiders would think Twitter was becoming old and unpopular (Newton,
2017). Summarized, the ethical dilemma Twitter faces in this situation is whether to ban
President Trump for failing to follow the codes of conduct, or allow him to continue
tweeting because he helps Twitter stay relevant.
Keeping on track with the theme of politics and Twitter colliding for controversial
issues, Twitter has been under fire for selling ads to Russian entities who have used the
ads to interfere with United States elections. The content in the ads was intentionally
misleading to confuse and anger voters. Twitter received over $250,000 in exchange for
the damaging ads.
Leaders of Twitter were forced to meet with congress in order to discuss the issue and
hand over all information they had on the scandal. Congress leader Sen. Warren
described Twitter’s presentation of information at the meeting as “inadequate on almost
every level,” (Salinas, 2017). Twitter was not the only social media to be in trouble for
selling ads to Russians, as Facebook also had to meet with congress over the same
issue. In additional response to the scandal, Twitter suspended over 200 accounts that
they identified as having links to Russian collusion (Kelley, 2017).
A separate ethical scandal that Twitter is facing is their lack of employee
diversity. As of December 2015, only 3 percent of Twitter employees were black or
Latino (Luckie, 2015). To help address this issue, Twitter hired a white male named
Jeffery Siminoff to lead as the head of diversity. Siminoff held a similar position at Apple
before coming to work at Twitter (Luckie, 2015). You can see Siminoff’s impact over the
past two years looking at Twitter’s diversity page on their website. Twitter now earns a
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perfect score on the HRC Corporate Equality Index. In addition, Twitter initiates hashtag
campaigns throughout the year for different causes including #SheInspiresMe and
#LesbiansWhoTech. These campaigns help raise the issue of diversity while
spotlighting Twitter’s improvements in diversity.
Twitter Organizational Structure
Twitter’s organizational structure highly resembles the matrix structure. Twitter’s
current CEO is Jack Dorsey. On an organizational chart, Dorsey is represented as
being at an equal management level as eight other board members. While Dorsey
doesn’t rank above the board members, he has increased power from controlling people
bellow him, which no other board members have the clear power to do. Dorsey
oversees eight division heads such as the chief financial officer, chief operating officer,
vice president of marketing, vice president of design and user research, and more
(“Twitter Organizational Chart”, 2017). The department heads are all on an equal level
of management, and some have power over even more specialized departments below
them. For example, the chief operating officer controls the revenues, operations, and
taxes divisions. The method in which Twitter’s organizational structure is formed is what
makes it a matrix structure (“Twitter Organizational Chart”, 2017). Matrix structures
combine horizontal and vertical lines of authority the express which individuals hold
power over others and which are equal. Like many corporations that utilize a matrix
structure, Twitter tends to have broader departments that oversee more and more
specialized departments.
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It can be inferred that Twitter tends to lean towards a narrow span of
management. It is clear that Twitter has heavy department specialization which leads to
many separate groups. In a narrow span of management, manager and workers must
communicate frequently in order to stay on the same page. Twitter CEO Jack Dorsey is
known for having great communication with his workers. Dorsey doesn’t have an office
at Twitter headquarters, and chooses to walk around and talk, teach, and learn with
different employees (Savitz, 2012).
Based on the fact the Twitter likes to encourage employees to have more
autonomy and make their own decisions, I would submit that Twitter is generally a
decentralized corporation. In a decentralized corporation, management makes an effort
to spread authority broadly to all levels of employees within the organization. One major
benefit of giving lower level employees more authority and autonomy to make decisions
is that employees are more motivated and happier. With more authority employees feel
more valued and important. Decentralization is important in many tech companies
because often the best ideas can spark from any level. Great ideas could be held back
if employees didn’t feel empowered to share with their colleagues.
Twitter Human Resources
When it comes to attracting top talent to tech companies, the name of the game is
perks. In order to get the attention of the best engineers and managers in the field,
money is simply not enough anymore. An amenities and luxuries arms race is taking
place in the Silicon Valley, and Twitter is competing with the best. At Twitter
12
headquarters in San Francisco, there is a built in gym that offers crossfit classes, yoga,
and massages all on the second floor. On a different floor, there is a “lodge” with two log
cabin meeting rooms. Outside the meeting rooms is a drink bar that serves coffee, beer,
wine, and even millennial sensation Kombucha (a fermented tea). To top off Twitter
headquarters, there is a rooftop deck and garden that employees can use to socialize
and work from. In addition to the onsite luxuries, Twitter employees enjoy plentiful
benefits like health benefits, dental care, maternity leave, paternity leave, extended
vacation time, and paid work days committed to giving back to the community (Lev
Ram, 2015). Twitter immediately makes employees feel welcome by setting up new
employees to have breakfast with their manager on their first day and lunch with their
coworkers the same day (Baldelomar, 2016). The perks and community feeling that
Twitter offers resulted in them being named the company with the best culture and
values in 2014 by career guide website Glassdoor.com (Huddleston, 2014).
Twitter has over 35 offices around the world in cities like San Francisco, Miami, New
York, Berlin, Dubai, Paris, Tokyo, Rio de Janeiro, and many more. Twitter finds it
important to have such a diverse number of locations because their product is a global
one. So much like monitoring trends, promoting tweets, and finding events to partner
with require Twitter to have offices in most major cities to keep up and stay culturally
informed.
The only human resource issue that has been in the news is a report that claims Twitter,
despite their efforts, is still lacking employee diversity. Publicly released statistics
claimed only threepercent of Twitter employees where black or Latino (Luckie, 2015).
13
Twitter has made attempts at hiring diversity managers but have seen little
improvement. For a company with the moto “where inclusion lives”, Twitter is doing a
poor job showcasing inclusion in their offices.
Twitter Financial Statements
Link to Twitter’s 2016 Annual Report: https://goo.gl/HKBimd
Financial ratios are important for a firm in order to understand the relationship
between two elements of a firm’s financial statements. The current ratio equals current
assets divided by current liabilities. The value that comes from this calculation shows
how many dollars of current assets a company has for every one dollar of current
liabilities. This ratio is important because it gives company leaders insight into the firm’s
ability to pay off short term creditors.
Current assets
Current Ratio =
Current liabilities
$ 4,652,196,000
Current Ratio= =$ 7.97 current assets per $ 1 current liabilties
$ 584,021,000
The average current ratio in the technology industry is about 1.89. While Twitter’s
current ratio is much higher than the industry average, it is quite reasonable when
compared to Snapchat, 8.60, and Facebook, 13.37. A high current ratio indicates that
Twitter may have issues using its current assets.
The second ratio I will use to evaluate Twitter is the return on assets ratio. The
return on assets is equal to net income over total assets. This ratio provides the
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company with information on how effectively the firm’s assets are being used to
generate profits.
Net income
Returnon Assets Ratio=
Total assets
(456,873,000)
Return on Assets Ratio= =( .066 )
6,870,365,000
A negative return on assets ratio is not a good sign for Twitter. This means Twitter is
investing heavily in the development of their service while simultaneously not making
much income (Harrison, 2017). The industry average for return on assets ratio is
10.63%. In the final quarter of 2016, Facebook had a return on assets ratio of 15.73%.
The final formula I will use to evaluate Twitter’s financial position is the net
working capital ratio. Net working capital ratio is equal to current assets minus current
liabilities. This ratio provides Twitter with the information regarding to whether they can
meet their current obligations with their current assets.
Current assets
New Working Capital Ratio=
Total liabilities
4,652,196,000
New Working Capital Ratio= =2.05
2,265,430,000
A net working capital over 2, means that the company is not investing excess assets.
For most companies, a net working capital between 1.25 and 2 works. Facebook has a
net working capital of 3.74.
15
Twitter Stock Price
Throughout the beginning of the term, the Twitter stock price fluctuated around
$17 and $18. Everything changed on October 26th when stock price jumped to $20.32
amid news that Twitter had overachieved it’s third quarter estimates and was looking to
have their first profitable quarter in the next quarter. Twitter reported a net loss of $21
million. While it may not look impressive, it is much better than the previous quarter that
had a net loss of $103 million (Spangler, 2017).
Twitter Stock Price

23
22
21
20
19
Price ($)
18
17
16
15
Date
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Over Twitter’s 11year life, they have never had a profitable quarter. They are working
towards achieving this by becoming more cost efficient, cutting unnecessary waste, and
focusing on user growth.
Twitter has only been publicly traded on the New York Stock Exchange since
November 14th, 2016. The stock opened at $18.75. With the latest stock price closing
at $20.32, Twitter is doing well at the moment. At the beginning of this exercise, Twitter
was only at $16.85. Had I invested $1000 into Twitter at the beginning of the exercise, I
would be well in the black having made $205.90 profit. This is more than I would have
made investing in the Dow Jones Industrial Average, $46.50, and the S&P500, $28.80,
combined.
Twitter Stock Price DJIA Stock Price S&P500 Stock Price

September 28th, 2017 $16.85 $22381.20 $2510.06
November 10th, 2017 $20.32 $23422.21 $2582.30
$1000 investment value $1205.90 $1046.50 $1028.80
It is typically a safer option to invest in larger stocks such as the DJIA and S&P500 but
investing in Twitter would have been a gamble that paid off. It will be interesting to see if
Twitter really does report their first profitable quarter and how their stock value
continues to fluctuate with their success.
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References:
Angelo, Y. (2017, Jun 4). Meet the tech activists who want to turn Twitter into a user
owned coop. Retrieved from: https://www.salon.com/2017/06/04/meetthetech
activistswhowanttoturntwitterintoauserownedcoop/
Baldelomar, R. (2016, Mar 22). Is Twitter’s Retention Strategy Enough To Attract Top
Talent?
https://www.forbes.com/sites/raquelbaldelomar/2016/03/22/istwittersretentionstrategy
enoughtoattracttoptalent/#412c5fbb3e90
Carlson, N. (2011, Apr 13). The Real History of Twitter. Retrieved from:
http://www.businessinsider.com/howtwitterwasfounded20114?page=1
Cox, E. (2016, Oct 4). Twitter Sale: Top 5 Stakeholders With Decision Making Influence.
Retrieved from: http://heavy.com/tech/2016/10/twittersalemajorshareholdersbuyout
rumorsoffergooglesalesforcemicrosoft/
Facebook Financial Statement Trends. (2017). Macroaxis. Retrieved from:
https://www.macroaxis.com/invest/ratioPatterns/FB
Financial Ratio Analysis. (n.d). Retrieved from:
http://www.accountingverse.com/managerial
accounting/fsanalysis/financialratios.html
Fox, J. (2014, Nov 13). Why Twitter’s Mission Statement Matters. Retrieved from:
https://hbr.org/2014/11/whytwittersmissionstatementmatters
Harrison, S. (2017, Sep 26). Can you have a negative return on assets? Retrieved from:
https://bizfluent.com/info12102782cannegativereturnassets.html
Hempel, J. (2016, Feb 8). Twitter is now worth less than many of the unicorns.
Retrieved from:
https://www.wired.com/2016/02/twitterisnowworthlessthanmanyoftheunicorns/
Huddleston, T. (2014, Aug 22). Twitter tops all in culture and values, employees say.
Retrieved
from: http://fortune.com/2014/08/22/twittertopslistcompanyculture/
Jazeera, A. (2017, Aug 9). Man paints 30 hate tweets from trolls at Twitter HQ.
Retrieved
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from: http://www.aljazeera.com/news/2017/08/manpaints30hatetweetstrollstwitter
hq170809100740331.html
Kelley, E. (2017, Sep 28). Twitter removed 200 accounts that targeted facebook users
during election. Retrieved from:
https://www.usatoday.com/story/tech/2017/09/28/twitterfound200accountslinked
russianswhotargetedfacebooksowpoliticalunrestduringelectio/713986001/
LevRam, M. (2015, Mar 5). Twitter’s most Tweetable Perks. Retrieved from:
http://fortune.com/2015/03/05/twitterbestperks/
Luckie, M. (2015, Dec 30). Twitter still has a major problem with employee diversity.
Retrieved from: https://www.theverge.com/2015/12/30/10688126/twitterdiversityjeffrey
siminoff
MacArthur, A. (2017, Apr 26). The Real History of Twitter, In Brief. Retrieved from:
https://www.lifewire.com/historyoftwitter3288854
Newton, C. (2017, Jan 12). Inside Twitter, employees reckon with Trump. Retrieved
from:
https://www.theverge.com/2017/1/12/14256818/donaldtrumptwitterbanemployee
reaction
Reuters Business. (2017). Technology Overview). Retrieved from:
http://www.reuters.com/assets/curtainMainContentLoader?view=RSMUSCurtain
MainContentSectorTechnology
Salinas, S. (2017, Sep 28). Twitter details how Russianlinked accounts bought
$270,000 of
ads during election. Retrieved from: https://www.cnbc.com/2017/09/28/twitterrussian
linkedadbuystotaled270000.html
Savitz, E. (2012, Oct 17). Jack Dorsey: Leadership secrets of Twitter and Sqaure.
Retireved from:
https://www.forbes.com/sites/ericsavitz/2012/10/17/jackdorseytheleadershipsecrets
oftwitterandsquare/#702297ec5e2b
Spangler, T. (2017, Oct 26). Twitter Beats Q3 Earnings Targets, Discloses That It Has
Overstated User Metrics for Three Years. Retrieved from:
http://variety.com/2017/digital/news/twitterq32017earningsuseroverstated
1202599733/
Spencer, K. (2017, May 21). Twitter shareholders set to vote on whether to convert
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company into coop. Retrieved from: https://www.salon.com/2017/05/21/twitter
shareholderssettovoteonwhethertoconvertcompanyintocoop/
Twitter Official Organization Structure Board. (2017, Sep 2017). Retrieved from:
https://www.theofficialboard.com/orgchart/twitter
Wagner, K. (2016, Aug 11). Who owns Twitter? A look at the players who could make or
break a deal. Retrieved from: https://www.recode.net/2016/8/11/12417064/twitterstock
ownershiptakeoveracquisitionchallenges
What is ‘Working Capital’. (n.d). Investopedia. Retrieved from:
https://www.investopedia.com/terms/w/workingcapital.asp
Yahoo Finance. (2017). Twitter (TWTR) stock history. Retrieved from:
https://finance.yahoo.com/quote/%5EGSPC/history/
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