What the Twitter Sale Reveals About Twitter, Itself

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What the Twitter Sale Reveals About Twitter, Itself

The plain truth about the struggling social-media company has become clear in its highly public, and theatrical, auction.
October 3, 2016 5:00 am
Digital Colorization by Ben Park; From P.M. Images/Getty Images.

The first real offer for Twitter came in 2007, when Yahoo tried to buy the nascent social network for a then-whopping $12 million. In 2008, on the eve of that year’s presidential election, Mark Zuckerberg upped the ante by offering a few hundred million for the company that he would later refer to as a “clown car that drove into a gold mine and fell in.” Ashton Kutcher tried to purchase a piece, too, while poolside in Los Angeles, naturally, as the founders of Twitter nervously sat next to Demi Moore, who was sunbathing in a black bikini. Zuckerberg came back a couple of years later for another unsuccessful overture. Former Vice President Al Gore made his informal offer after a long night in which he and a couple of co-founders got drunk on tequila at his home in the St. Regis Hotel. Google’s Larry Page made his acquisition attempt inside a Google conference room, having drawn the blinds, even though the conference room was on an upper floor, to ensure that no one could see him talking to a Twitter founder. During his tenure as the C.E.O. of Microsoft, Steve Ballmer showed interest to another Twitter founder while sitting on the porch of Bill Gates’s home. Apple even considered an investment that would give it a stake in the company.

Each time, Twitter passed. In fact, the company responded with a resounding no. The reasons varied and evolved alongside the company itself. In the very early days, the offers were too low (the Yahoo offer, for instance, was $88 million short of the asking price). But as Twitter grew in both influence and stature, its founders rebuffed the overtures because they sensed that they were changing the world and didn’t want to sell to another outlet that, rightly so, might screw that up. Eventually, the board of directors passed on the incoming offers because they saw the opportunity to take Twitter public and build it into a viable business—even, as one board member once told me, potentially a “$100 billion business.”

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But in between all of those reasons, there remained one constant at the company: Twitter was a hothouse that succeeded in spite of an undercurrent of chaos, consumed by furtive battles over power and control and subsequently, vision. (Was it a social network? A media company? A messaging platform?) Into this void, Twitter, which became all of those things and more, also became a haven for excreta. And whoever was running Twitter, which has essentially had five chiefs in its decade of life as a company, wanted to prove that they were the ones who could tame the beast and solve all of its problems. This chaos, perhaps more than anything else, is what really stopped potential suitors from swooping up Twitter—and for a long time, that was just the serendipity of the situation.

Yet now, for the first time in the company’s history, numerous news outlets have reported that Twitter is seriously considering selling itself. What’s changed? For one, it’s becoming apparent that Twitter can’t be saved in its current instantiation. Adding new media content, like live N.F.L. video streams for users to consume, and banning Milo Yiannopoulos, an alt-right defender of ultra-conservatism, for attacking celebrities, are moves that are a couple of C.E.O.s too late to save the service. While Twitter inarguably holds a tremendous amount of influence in our society (Exhibit A: Donald Trump; Exhibit B: #BlackLivesMatter), it’s also apparent that the company has been unable to eradicate malevolent trolls, or to change the direction of the product in order to entice new users, and—most importantly for this conversation—to prove its importance to investors, who prefer monetary influence over media prowess. (Its stock price, which peaked at $69 in 2014, was trading in the mid-teens before the sales rumors started.) The reality is that Twitter, in its current state, is un-fixable and a sale is likely the best way out of this predicament. (A Twitter spokeswoman said in an e-mail, “as a matter of policy we don’t comment on rumors or speculation.”)

Companies aren’t just a mirror of their current leaders’ views. Companies are the result of everything that their leaders have done while they were in charge. And Twitter is the result of more than a decade of infighting at virtually every level of the institution. For a while, there was literally a new C.E.O. coming into power every couple of years. Each time a new chief took the helm, the ship was steered in a different direction. It should come as no surprise that, in addition to trolls, Twitter has become a home for ISIS and other anti-Western groups. How do you grow a start-up when some of your most powerful users quit the service on a regular basis? While Jack Dorsey might have finally returned to lead the social network that he helped create in 2006, he now finds himself running a feral product that isn’t really housebroken and is too old to be trained otherwise. Twitter, after all, was raised by dozens and dozens of former executives who were, seemingly as often as not, concerned with their own history as that of the company.

Someone very close to Twitter recently told me that if it wasn’t for all the rumors around an acquisition, the company’s stock would likely be in the low single digits. Investors don’t appear confident in the future of the social network under its current direction; Twitter has been given underperform or hold ratings by major investment firms. One equity analyst went as far as to say that, “the stock is overvalued as business fundamentals have deteriorated significantly over the past 12 months.” It’s easy to blame Dorsey for this. But given what I know about the company, after covering it for the better part of the past 10 years, I think that you could resurrect Steve Jobs, give him a brand new turtleneck, and even he wouldn’t be able to save Twitter. It’s too late.

This is apparently why news in the Valley last week was overrun with rumors suggesting that all kinds of companies might buy Twitter. The whispers oscillated from somewhat boring, but perhaps logical acquirers, like Salesforce or AT&T, to far sexier options, such as Disney or Apple, to a dozen possibilities in between. But during the intervening days, some investors have come out and said that a Twitter acquisition by Disney is a terrible idea. Others have noted that the $30 billion that Twitter is reportedly seeking is a staggering amount for a company that is not profitable and has barely grown its user base over the past couple of years.

On some level, the chatter surrounding the sale of Twitter reflects the internal problems of the company. I remember when Facebook acquired Instagram in 2012, someone asked me, “Who broke the news?” I replied, “Facebook.” That’s because neither company allowed their auction process to become a public theater. At Twitter, however, the various potential suitors’ names and the asking price have already been leaked to the press.

This isn’t to say that Twitter isn’t worth billions. As this election cycle makes evident, it is unquestionably the place to talk politics and the media’s coverage of it, among other things. Twitter may have struggled to keep up with the growth of other social-media companies, but when was the last time that you heard someone say, “Did you see what Trump said on SnapChat?” Or, “I can’t believe Clinton posted that on Instagram!” Instead, the conversation is all taking place on Twitter. (One of my morning stops for Trump news isn’t FiveThirtyEight or The New York Times; it’s Sopan Deb’s Twitter feed.) But for investors, the question is whether people will still be ready to slurp up the service after November 8th. (My take: if Trump wins, yes; if it’s Clinton, probably not. And, please God, let’s not let Trump win.)

What happens next to Twitter is anyone’s guess. But I do know that, for the first time, Twitter now has a Plan B. A few months ago, while reporting a feature story about the future on the company for Vanity Fair, I asked a number of executives what might happen if Dorsey, who seemed like a Hail Mary option, couldn’t turn Twitter around. What was Plan B, I asked them? “There is no Plan B,” I was told. “This is it.”

I admired their fortitude, but there was no denying that an acquisition had to be the next option on the table. And one executive humored me in a guessing game about who the dream buyer might be. But after I ticked off all the usual suspects—Yahoo, Google, Facebook, Apple, Microsoft—that tried to buy Twitter years ago, in one way or another, I was met with the same resounding answer: “no.”

“Then who?” I asked this executive.

To which the executive replied, elusively, “It’s a small world after all.”

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Nick Bilton Nick Bilton is a special correspondent for Vanity Fair.

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