Tweeter Pan
Everybody wants to know how Twitter will make millions. But what if it doesn’t want to grow up?
The Big Money interviewed Biz Stone, another Twitter co-founder, who recently told Portfolio that focusing on a revenue stream would be "a distraction." We wanted to know whether this was all an act, whether Twitter was really just keeping plans close to the vest. So: How often do folks sit down to talk about a revenue model. Once a week? Once a month? It's never discussed, Stone said.
Why not? Because Twitter, according to Stone, still isn't "sustainable." Stone used the S-word as an excuse repeatedly during our chat, as if it were a safety blanket made out of chainmail. Twitter wants to have both a sustainable product and business plan before it starts to capitalize on its community. The product bit makes some sense-for months Twitter's service had been plagued with glitches. But Twitter's servers have been performing relatively well for the last few months, so maybe sustainability has been achieved.
Stone's other comment—that Twitter needed a sustainable business model—was more troublesome. Here, sustainability entails finding revenue without alienating current or future users, a common refrain among Web 2.0 folk. Facebook's ill-fated Beacon advertising platform failed while trying to find that balance. Williams told Download Squad, "Our top concern when it comes to monetization will be to do so in a way that does not negatively impact users." So instead of experimenting with a business model that might accomplish that goal, Twitter's founders continue to lounge within the comfortable status quo.
There may be a deeper, psychological reason that Twitter can't follow the dollar. It may have a Peter Pan complex-it just doesn't want to grow up. Pan ultimately chooses Never Never Land because he is worried about the pains adulthood will invite into his life. For now, Twitter is choosing to do the same.
Because Twitter is so resolute in its nonmonetization, it has earned a certain amount of respect among tech entrepreneurs. They're the champions of an improbable and absurd scenario: Imagine, a company restricts its users' self-expression, builds a global community, and raises millions of dollars. It's impressive enough that somebody actually pulled it off. Even more impressive, though, would be if the geniuses who gamed the system then chose not to reap the monetary benefits. It's a brand of asceticism one can find only in Silicon Valley, and even there only in selected pockets.
It wouldn't be the end of the Internet economy if Twitter chose to go Craigslist's route and operated as a nonprofit disguised as a for-profit. But it can't. In order to get to where it is today, the site had to raise money from venture capitalists—$15.1 million worth. In exchange for the booster shot, the investors demand a considerable return on investment. That means Twitter is going to actually have to try to make some money at some point. Also of note: To get the venture capitalists onboard, Twitter's leaders presumably had to show some type of business plan, so we assume somebody, somewhere, is doing some (private) thinking about monetization.
RSS
Twitter
Comments
User base broad enough?
This was a very solid analysis. As a Twitter fan, I have to say that I sometimes wonder about its long term prospects. Though as you mention they have improved a lot of their server/scaling issues, I still wonder if Twitter is merely for tech nerds and the journalists and bloggers who are more than happy to keep writing about them. Facebook is a broad social networking technology, thus making monetization much easier in many cases and making its long term outlook more secure. But I wonder how/if the Twitter will hit a broader audience (http://tinyurl.com/5lgvpk).
Thanks again for this post.
-Chris
twittering dollars
The beloved upstart has yet to bring in revenue. There should be no problem incorporating advertising as it grows. People love twitter!
Venture Capitalist, or Patron?
I wonder if Twitter is really viewing the Venture Capitalists who poured $15 mil into them as people they'll have to pay back 10-fold, or if they're viewing these moneybanks as renaissance-style patrons interested in attaching their name to a cultural legacy. Google has provided a pretty good model for how Web-patronage can be successful: use profit to supplement services that can't ever possibly be profitable (Google Earth, Chrome). Twitter COULD easily be profitable (even if they just sold shirts and tote bags with pictures of the Fail Whale on them), but by foregoing profitability they're establishing themselves as a service more akin to a NY library than Times Square. Eventually they can grow to the extent that someone like Google or Comcast may just buy them for a ton of money simply so that their name can be associated with the success.