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Twitter Inc (TWTR) And Its Product Development Problems

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Twitter Inc (NYSE:TWTR) has been in the news all week since it debuted at the New York Stock Exchange on Thursday. The company hasn’t had a profitable quarter yet, but if it is going to find success as a public company, that will have to change. And one of the ways it will change is through the introduction of new products. Unfortunately though, this is one place where Twitter has a problem, according to Mike Isaac of All Things D.

Twitter Inc (TWTR) And Its Product Development Problems

Twitter seems to like creativity

According to Isaac, Twitter Inc (NYSE:TWTR) does hold its official “Hack Week” a few times a year, allowing engineers to work on whatever they want to work on. The idea is to breed creativity so that engineers can come up with great new products which will appeal to Twitter’s users and advertisers. Unfortunately, however, some say that most of the creative new products which are born on Hack Week never see the light of day. Or they’re feebly rolled out to a very small percentage of Twitter users for testing only to languish in that stage forever without a decision of whether to roll them out to everyone or kill them completely.

Isaac says the product culture is the opposite of that at Facebook Inc (NASDAQ:FB), which moves quickly to roll out new products and features. He also says that this isn’t something new because it has been plaguing Twitter for many years now. Unfortunately, however, since Twitter is now a publicly traded company, it’s make it or break it time. Investors want to see new products that will rake in the dollars and bring in the new users. Without signs of growth toward profitability, Twitter itself will be in trouble.

Twitter investors check in with reality

Shares of Twitter Inc (NYSE:TWTR) opened at $45 a share on Thursday after their initial public offering price of $26 a share. Demand for the stock was high, and investors were excited about it. But then on Friday reality started to set in as investors realized just how far away Twitter might be from any kind of meaningful profitability.

Analysts were positive on the company leading into the IPO, but they changed their tune afterward when they saw just how high Twitter shares went. Investors are going to be in for an even greater reality check if these product pipeline products continue. Fortunately though, Isaac has a solution.

Solving Twitter’s problem

He notes that Twitter Inc (NYSE:TWTR) has shown some signs that it wants to change recently, pushing out in-stream photos and Vine videos to enhance the home stream. The company rarely does anything to the home stream, so these steps were a big deal. However, his sources said those changes had been planned for “years,” indicating just how long it has taken Twitter to roll them out.

Another change was the addition of a blue line to the Twitter app to help users who aren’t on very often to more easily follow conversations among those they know. However, Twitter management considered getting rid of it because people just didn’t like it. They ended up changing it to grey so that it’s less noticeable.

Adjusting Twitter’s chain of command

One of the problems may have something to do with Twitter’s chain of command. All Things D’s sources said vice president Michael Sippey now reports to Chief Operating Officer Ali Rowghani for growth and product issues rather than to CEO Dick Costolo. That appears to be a demotion, although it should assist with some of the concerns about getting new products to market.

However, many insiders at Twitter Inc (NYSE:TWTR) were confused about the move since Rowghani apparently doesn’t have much background in those areas. Also it’s unusual for a company’s product vice president to report to the chief operating officer. And Twitter has done reorganization like this frequently over the last two years, moving executives around or replacing them, and the issue hasn’t been fixed yet.

One thing that will be telling is whether Twitter does take huge strides toward its planned major redesign, which is meant to bring the mainstream public into the Twitter fold. If the company does move toward that by the end of the year, it could be a sign that product launches are being sped up a tiny bit.

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