In some respects, Twitter (TWTR +0.00%) co-founder Evan Williams' recent interview with Forbes magazine was a breath of fresh air. Williams certainly didn't pull any punches, and was refreshingly honest about his feelings toward rival social media platform Instagram and its parent, Facebook (FB 1.91%). Unlike how most board members of a publicly traded company would approach an interview, Williams let his emotions shine through.
A senior executive speaking from the heart would usually be a good thing, instilling in shareholders the knowledge that senior management is passionate about its products or services. The problem with Williams' raving -- in addition to simply crossing the professional line in some instances -- was that the gist of his views countered recent statements from Twitter's CEO, Dick Costolo.
He said what?
If you follow social media, you've likely heard that Instagram, which Facebook acquired for a cool $1 billion in 2012, recently surpassed 300 million monthly active users, or MAUs. That's an impressive feat, considering it amounts to a 50% jump in MAUs this year alone. Facebook CEO Mark Zuckerberg hasn't been shy relating his intentions for Instagram, which include increasing MAUs above the vaunted 1 billion mark. If 2014 is any indication, it's a matter of when, not if.
Not surprisingly, Instagram's meteoric rise to 300 million-plus monthly users brought the inevitable comparisons to Twitter and its 284 million MAUs. And it's not just the fact that Instagram has surpassed Twitter's current MAUs, it's how quickly. At the end of 2014's Q1 Twitter boasted 255 million MAUs. By Q2, Twitter had 271 million, and finished its third quarter with the aforementioned 284 million MAUs. In other words, in about the same time Instagram jumped from 200 million MAUs to over 300 million, Twitter added just 29 million.
When asked about Instagram surpassing the number of Twitter users, Williams said, "Why is users the only thing we talk about? The crazy thing: Facebook has done an amazing job of establishing that as the metric for Wall Street." He added that Facebook, and by extension Instagram, lack "depth" and instead rely on "breadth" -- sort of a quality vs. quantity argument.
Williams also points out that Facebook Connect, an app that allows users to view "partner" sites via their Facebook log in, is included in its MAU figure, rendering the data "so abstract [as] to be meaningless." As for Instagram, Williams will have none of the comparisons with Twitter. When asked, Williams noted that world leaders tweet and breaking news is shared via Twitter. Instagram? "I frankly don't give a [bleep] if Instagram has more people looking at pretty pictures."
Herein lie the problems
Clearly, Williams has heard enough about Facebook, Instagram, and MAUs. But as we heard during last month's inaugural analyst day, Costolo still recognizes the importance of growing and retaining MAUs. Concerns surrounding Twitter's slowing user growth is nothing new, which is why Costolo outlined steps to address the problem.
Costolo introduced Twitter's new "instant timeline" to make getting started easier for new users, and also discussed plans to incorporate video throughout the site, both to improve engagement -- another concern of industry pundits and investors -- and generate additional ad revenue. As Facebook knows firsthand via its video ad testing initiative, nothing sells like video spots.
Finally, Costolo spoke of the 500 million visitors to Twitter that either aren't enrolled in the service, or choose not to sign in, as another opportunity to jump-start sluggish user growth. The upcoming quarters should provide insight into whether or not Costolo's user efforts are working, but either way, it's obvious Twitter's CEO understands the importance of MAUs, even if its co-founder doesn't.
Williams' statement that Facebook MAUs lack depth, particularly when you include data garnered from Connect and Instagram, is short-sighted, at best. Facebook is renowned not only for its sheer volume of user information, but how well it utilizes that data to target ads. Which, in turn, translates to advertising rates Twitter can only dream about. If a user is accessing data via Facebook or one of its properties, it's a win, plain and simple.
Williams is right: "Twitter makes a hell of a lot more money than Instagram," but Zuckerberg hasn't begun ramping up Instagram as a meaningful revenue source yet. Williams' passion is good, but checking some of it at the door, along with getting on the same page as the CEO and investors, is even better.
