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Should users own Twitter?

Twitter shareholders see community ownership as a way to save the platform

Twitter shareholders see community ownership as a way to save the platform

If you bought $100 worth of Twitter stock when it went public in the fall of 2013, today that would be worth around $56.

At Monday’s Twitter general shareholder meeting in San Francisco, the chief grievance aired will likely be about the social media company’s dismal performance over the past couple of years. One unusual proposal on the table for investors to consider: a request for Twitter’s leadership to investigate the possibility of making Twitter cooperatively owned by its 313 million monthly active users.

“A community-owned Twitter could result in new and reliable revenue streams, since we, as users, could buy in as co-owners, with a stake in the platform’s success,” reads the proposal, from an April SEC filing. “Without the short-term pressure of the stock markets, we can realize Twitter’s potential value, which the current business model has struggled to do for many years.”

Twitter’s main problem is not being able to consistently add users and sell ads against them at the same pace as its rivals. While Facebook, Instagram, and Snapchat have all added more people over the past four years, Twitter’s growth has mostly plateaued. In its most recent quarterly report, Twitter said its revenue had slipped 8 percent.

The most well-known cooperatively run enterprise in the U.S. is probably the NFL’s Green Bay Packers, and other examples include outdoor apparel retailer REI and credit unions. The model is more popular in Europe, where the EU counts 250,000 cooperatively owned enterprises owned by 163 million people across the 28-nation bloc.

The argument for cooperative ownership by users rests on the idea that Twitter is something like a public utility; after all, it’s where Donald Trump broadcasts whatever’s in his head at any given moment. But Jim McRitchie, a longtime advocate for shareholders (and a Twitter stock owner) who’s backing this proposal, says it makes good business sense, too.

“When customers are owners, companies are more likely to be in touch with a customer need;  when employees are owners, they’re more incentivized to collaborate and push new ideas,” says McRitchie, citing an approving study from the global management consulting firm McKinsey.

This proposal has little chance of actually getting the support of a majority of shareholders at Monday’s meeting. Institutional investors, like hedge funds, represented by proxies do the bulk of the voting, and SEC data show that they hold a slim majority of all outstanding Twitter shares.

And Twitter’s leadership is opposed, saying that examining the idea would be a waste of time and money. “We believe that preparing a report on the nature and feasibility of selling the ‘platform,’ and doing so only to ‘its users,’ would be a misallocation of resources and a distraction to our board of directors and management — resources and management time that could otherwise be used to build the long-term value of Twitter,” the company said in an SEC filing.

McRitchie and the proposal’s other backers, however, aren’t looking to win 51 percent. Three percent is their magic number for Monday: if they’re able to garner enough interest from Twitter’s retail investors — normal people who happen to own Twitter stock — to hit 3 percent support across all shareholders, then they can resubmit the proposal next year.

But in Silicon Valley, where ideas ahead of their time have a curious way of resurrecting themselves, cooperative ownership might stick around longer than some might expect.

UPDATE Monday, May 22, 2017, 2:36 p.m.: Preliminary results show the proposal failed, however, the initiative did get support from 4 percent of all shareholders according to Jim McRitchie, meaning that it can be resubmitted for next year’s meeting. McRitchie added that he spoke with CEO Jack Dorsey and members of Twitter’s investor relations team, and that they had a productive conversation about how to move forward.

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