Julius Benedict: My name is Julius and I am your twin brother.
Vincent Benedict: Oh, obviously! The moment I sat down I thought I was looking into a mirror. – Twins 1988
Want to know why I have been so bullish and long Facebook since it first collapsed after coming public and why I’ve never bought any Twitter even after its recent collapse after having come public? Take a look at the following two headlines, as they underscore exactly why I’m long Facebook and have no position in Twitter.
See, right there it is. Put simply, Facebook and Mark Zuckerberg are pushing hard on developing technology while Twitter is twiddling with looks. Facebook’s “Paper” app is part of its approach of developing new apps that utilize the underlying Facebook platform but each of which do specific, unique and hopefully very cool different things. Meanwhile, there’s big pushback over whether or not Twitter
Twitter’s long-held stubbornness is already haunting them. They’ve locked themselves into the 140 character and other limitations of the Internet from when the company first built up its now huge user base. Twitter will heretofore constantly have to try to balance their hard-core and early adopter user base with trying to keep with 2015 and eventually 2020 technologies. Facebook however has already established and everybody knows that the site and the apps will continually change in feel and look as innovation allows.
Facebook spends about twice what Twitter does on Research & Development every year, according to their SEC filings, with Facebook creeping towards $2 billion a year and Twitter trending at about half the rate. But that’s not what I care about. I’ve written in years past about how Apple and Steve Jobs were spending about 1/7th that Microsoft spends. (See: Stat of the day: Apple spends less than 15% of what Microsoft does on research and development, for example.)
But Facebook is clearly getting much more bang for their buck and innovating at a much faster rate than Twitter is. It is what is is and if you don’t believe me look at how much each has changed since 2007. “Twitter 2007” Google Image Search and “Facebook 2007” Google Image Search.
Fast-forward from 2007 and each has reached critical mass and it’s not like I expect Twitter to collapse or something. But the vast amount of rich media and app development that Facebook world is doing is going to be much more monetizable and with much higher revenue per user than the Twitter-verse, even with its Vine app, which is foolishly staying with an ever older-looking and feeling and less useful technological approach.
Without real innovation and improvement, sites and apps and technologies can lose all critical mass over time. And as movie stars and pop stars get headlines for the number of Twitter followers they have, there’s a lot of people who just want to use Twitter for something more meaningful and deep.
I’m sure many of you subscribers use Twitter, so take for example the literally millions of investors and traders who currently use Twitter and the Twitter apps for getting their stock market news and trying to stay up with real-time tweets for individual stocks. And see, while Twitter was dinking with the colors of their old website, my Scutify website and apps have now had a huge running start and are seeing the positive feedback loops of garnering ever more users which brings ever more contributors, which brings ever more users. And Scutify has already innovated the ability to let users literally “follow” stocks, and not just other users. And why the headache of having to deal with the old Twitter 140 character limit? We did away with it at Scutify. I’m sure other sites, apps and networks have already far out innovated Twitter for this particular and other demographics.
Twitter could have and probably someday will try to catch up with us, but notice that I didn’t mention anybody out-innovating Facebook? There’s nobody gonna catch up with Facebook and what it does as it continues to smartly invest huge money into developing new apps and ways for its one billion user base to use their data.
Neither stock is “cheap”, as I used to argue that Facebook was back when it was near $20 a share and I was pounding the table and adding it to the Revolution Investing Portfolio. But if there’s going to be an AOL or a MySpace of the 21st century, I expect its going to be a company like Twitter that’s just not got the leadership, the vision, the pathway and the drive for innovation that Facebook does. I’ve spent a lot of time analyzing and laying out my bullish case for Facebook and clearly, there’s more analysis required for investing in any stock, much less FB and TWTR, than I’ve laid out for you here. But in a nut shell, there you have. The reason I own Facebook and not Twitter is because I don’t think Twitter will be able to monetize as well over the next few years because of a lack of innovation and rich-media content.
We’re not identical twins