Whether you run a privately-held company or a huge publicly-traded one (or are simply in your early stages of entrepreneurship), the recent Facebook and Twitter earnings reports contain lessons for every business owner and leader.
Facebook was founded in 2004 and went public in 2012 with one of the most eagerly-anticipated IPOs in history. After a disappointing first week, the stock rebounded, but like all growing companies, it has not been without its challenges. This week, CNN reports that shares fell 19 percent, wiping out roughly $123 billion of shareholder wealth, which the New York Times called "among the largest one-day destruction of market value that a company has ever suffered" and stated that the fall "shatters faith in tech companies' invincibility."
Twitter stock also suffered a significant drop in second quarter, following a purge of millions of accounts that were idle or fake. Twitter launched in 2006 and went public in 2013.
What can you--whether you're in the technology space or in any other type of industry--take away from the rise and fall of these iconic social media brands?
- All companies that survive more than 20 years will have some significant stumbles and falls along the way. How they recover from blows to their brand and their bottom lines is ultimately what separates the true leaders from the short-term stars. Social media is a relatively new category (compared to other industries), so we don't yet have a basis for comparison. History is being written.
- Your customers and your database are your lifeblood. Treat them both with respect and quality control. When Facebook suffered a privacy breach and allowed outside companies to access customer data, they lost the trust of many users and the media.
- Related to the above, build true brand loyalty among your customer base. One common complaint among many social media users is that they can never access "a real human" when they have questions or concerns. These companies may have gone too far in using automated service to bond with their customers.
- Bring in seasoned executives and allow them to do their jobs. Although leaders from other industries may not have the depth of technology experience as their younger counterparts, they have been through crises and turnarounds. Both Facebook and Twitter have diversified their teams and now may be the best time to turn to seasoned business veterans for perspectives.
- Make sure you're managing the media well in times of crisis. Haters and sensationalists love to see successful companies fall. Taking full responsibility for errors, clearly reporting your turnaround plans, and staying on message are all important. Work with professionals on your talk points and stay on message.
- Especially in today's highly-charged political environment, avoid taking sides and allowing special interest groups to damage your brand. You can't afford to alienate any segment of your customer base or sway perception. That said, social media is a platform for open expression. Monitor what your fans are saying, but resist the urge to jump into the conversation.
- Be humble. Don't ever be cocky. Learn from mistakes. Especially as your business is evolving, you will never have all the answers. Like Facebook and Twitter, you may have huge perception crises and financial declines to face. Many 20-year olds have crashed a car, had too much to drink, or fell in with the wrong crowd. But they go on to live to 50, 75, and beyond. Business follows the same general rule. Only time will tell if you and these social media giants live to a ripe old age.