Twitter's sale fail shows problem of complacency

Some Twitter employees are about to find out that working in Silicon Valley isn't all vacation days, celebrity visits and unlimited kombucha. CEO Jack Dorsey recently announced the social media company will sack around 8% of its workforce.

The fact the news only came after Twitter failed to sell to either Alphabet (NASDAQ:GOOGL), Salesforce (NYSE:CRM) or The Walt Disney Company (NYSE:DIS) is revealing. For a long time, many observers thought Twitter's strategy was to get acquired rather than find a business model that actually worked.

This latest move appears to back up that view, as does the spending of more than US$3bn on R&D since 2010, little of which has led to a user experience that might attract more, err, users. It wasn't until last year's return of Dorsey — who is said to have been against a sale — that Twitter's biggest changes occurred, which happens to be a move into live streaming.

The company has acquired the digital rights to broadcast one NFL game a week with major league baseball and hockey beginning next year. This could fundamentally change the business, perhaps helping Twitter to become a kind of live-Netflix (NASDAQ:NFLX).

Twitter has always had the bones of a potentially great company but its lack of innovation and complacent management limited that potential. The move into live sports streaming could push the company into a better place.

There are lessons here for Australian businesses. Few can afford to rest on their laurels and expect the good times to continue, no matter how strong that industry once was.

A recent look at the media industry indicates this better than most, with the likes of Fairfax (ASX:FXJ), Nine Entertainment (ASX:NEC) and News Corp (ASX:NWS) turning (belatedly?) to digital businesses, some with more successes than others.

Twitter's business model hasn't yet been disrupted but it does show that even new-age tech businesses can find themselves in strife. Facebook (NASDAQ:FB), in comparison, has been adding new features (and making acquisitions) for years and is as profitable and popular as ever.

Right from the beginning, Twitter has disappointed investors, showing that even some of the world's best-known brands aren't above competition. If you own stocks in your portfolio exhibiting similar complacency, they may be heading for trouble.

Disclosure: The author owns shares in The Walt Disney Company