Hands up who's tired of Twitter?

Hands up who's tired of Twitter?

Summary: While I didn't have time to reflect on the top management changes at Twitter last week, I'm not surprised. Jack Dorsey and Ev Williams have swapped seats for one reason: Jack's a code jock and Ev's the biz guy.

SHARE:

While I didn't have time to reflect on the top management changes at Twitter last week, I'm not surprised. Jack Dorsey and Ev Williams have swapped seats for one reason: Jack's a code jock and Ev's the biz guy. Andy Beal almost nails it:

Sure, it sounds amicable–which is the norm in these situations–but you can’t help but think that investors were perhaps disappointed with Jack’s leadership of Twitter. After all, three years in and Twitter still hasn’t found a revenue model that matches its Silicon Valley hype.

I’m sorry, but I suspect that it will be only a matter of months before we hear of Jack Dorsey leaving his new role as Chairman to “explore other opportunities” or “spend more time with his family.”

Reading between the lines, it seems that Jack's time at Twitter is already done:

Jack will remain on the board and be closely consulted for all strategic decisions, while I take on day-to-day operations with the support of Biz, Jason, Greg, and the rest of this impressive Twitter team.

VC Fred Wilson who is an early Twitter backer, sounds like he's getting increasingly fed up of the same old question: When will Twitter announce a business model.

I made a boneheaded move this week as well with this quote to Chris Snyder of Wired which he reported yesterday:

“It’s like the stupidest question in the world: How’s Twitter going to make money?," said Union Square Ventures’ Fred Wilson, another investor. "It’s like 'How was Google going to make money?'

The minute I said it, I wanted it back. But it reflects my weariness with getting this question every time anyone asks me about Twitter (as well as the fact that I had flown back from SF the night before and gotten up at 6am to do a board call to London that day). Rule #1, don't talk to the press when you are tired and irritated.

It is not the stupidest question in the world. It's a terribly important question. But I don't think it's the most important question facing Twitter right now. Twitter has yet to cross the chasm to mainstream usage. It's not immediately obvious to anyone why they should use Twitter. Search and discovery doesn't work well on Twitter yet. There are a host of issues about the API and the developer ecosystem. Will recent reliability success continue? Can Twitter's architecture scale now? All of these questions loom large in my mind.

Hey Fred, we've all been there and in this mea culpa he raises many of the right questions. But seriously, at a time like now, all businesses need to focus on revenue. It is suicidal to believe that anyone other than Google wins in an ad-sponsored world. I don't care how great your service is, Google has got the ad-search market sewn up and there are few if any viable alternative ad-based business models for commercial software producers. At least none of those I've seen look that attractive.

The possible alternatives are not so palatable either. We've already seen Twitter clones turn up, demonstrating that it ain't that hard to do. At least not on a small scale. It is much harder to build a business from a service that increasingly looks more like a feature. One way around this is to come out the gate with a commercial offering that has genuine business value with a roadmap to match.

I've seen plenty of Tweets where people have said they'd willingly pay for Twitter on a subscription basis but at what price? $5 a month? I forked over for the commercial version of Jaiku but it just didn't have the 'juice' to make it to the mainstream. I didn't renew. Is Twitter that important that I'd buy into a revenue model based on consumption? Possibly. But they'd still have to offer a freebie and I can imagine most people moderating their usage to ensure they don't pay. If ads are a pain then swapping to the currently free TweetDeck solves that problem in a stroke. Unless of course Twitter forces ads on customers. That's a guaranteed death sentence in a market where alternatives abound.

It seems to me that a combination of its own relative popularity, open API and free to use model is likely to prove a significant dampener on any attempt to commercialize. It'll likely suffer from its own success and the expectations of people for 'free.' At least in the consumer world. Even if its first mover advantage plays in its favor, the click through rates are likely too low to make ad-based sponsorship worthwhile beyond a few million dollars.

The way to go is direct to the enterprise where customers will pay for guaranteed service levels, white labeling and integration. Even then I'm not sure how much there is to be had from a market that is 99% oblivious to Twitter. To repeat Fred's words: "It's not immediately obvious to anyone why they should use Twitter." That's why use cases are so vitally important and where an understanding of business problems is central to unlocking the value of micro-sharing/micro-blogging services.

But even assuming Twitter overcomes all those hurdles can it really reach Henry Blodget's assertion of a $1 billion valuation?  Believe that if you will but revenue pressure is forcing prices down which can only be counterbalanced by way of an uptick in active users. Put another way, you can take the sell-side analyst out of Wall Street, but you can't take the Pavlovian urge to sell-side pimping out of the analyst.

In the meantime I wish that Twitter would put us all out of our collective misery and tell us it's thoughts on business models. Simply parroting the 'lots of opportunities' line is wearisome. But then I've come to expect little more from a company whose reputation for secretiveness on any topic is growing by the day.

Topics: Banking, Enterprise Software, Social Enterprise

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

17 comments
Log in or register to join the discussion
  • ...Raises hand immediately...

    nt
    no_zd_user_name
  • RE: Hands up who's tired of Twitter?

    If anything am liking it better :) Twitter recently had a major upgrade to its machine architecture hence less fail whales.
    LouieZD
  • RE: Hands up who's tired of Twitter?

    Finding a good revenue stream is very important to a business like Twitter or other internet businesses. People need to know why they should spend money on your service. When you are dealing with intangibles, it is critical to let your users know what they are getting. I think Twitter will be able to figure something out that works.

    Brian
    http://www.konnects.com
    briancjohnson
  • RE: Hands up who's tired of Twitter?

    People often say nothing when a lot is happening behind the scenes or when something is, in fact "up."

    Sigh.

    I'm not tired of Twitter. I'm one of the Twitter evangelists in my geogrphical area and circle of influence. That said, usually I get the ol' dear in the headlights look about why Twitter could be important to their "cause" or enterprise.

    And yes, it doesn't seem so hard to replicate. So if there are rollouts for enterprise, such as Yammer, why didn't they roll out prior to Yammer from Twitter? Are there multiple product offerings or will this spare piece of the social pie be "it" without anything more on the horizon?

    Enough already. Let us know what's up before we find something else out there that meets our business needs. Because I can assure you, Twitter...

    ...we're looking.
    ginakay
  • RE: Hands up who's tired of Twitter?

    Tom Davenport has a take: in a fincrisis economy, social web apps whose value doesn't drop to the bottom line will give way to...real work. "Is Web 2.0 Living on Thin Air?" http://tinyurl.com/4njzwl
    rzt
  • Don't make money, making money is EVIL... nt

    nt
    T1Oracle
  • RE: Hands up who's tired of Twitter?

    without ever having used twitter, my impression is that it is a waste of time in a very full day (and night).
    When will someone explain to us why we should take time to use it?
    dlsweb
    • No one can explain why..

      I am sure that someone at Twitter is laughing at all the people using their service that does actually nothing.

      Just another way to collect email addresses for sale later.
      fmg9800
  • I'm not a twit

    so why would I twitter?
    cwallen198031
  • RE: Hands up who's tired of Twitter?

    I never understood the attraction of twitter. I'm on and I use it for a few things, but mostly to try and understand the Twitter culture.

    However, I wonder about your idea that only Google can support an ad revenue model. That's like saying Time Magazine is the only publication that can make payroll by selling ads. It's ludicrous. It's not like people only advertise on the web in one venue. Hey, take a peek at your bosses here. Z-D net is selling a few ads and I'm sure they aren't getting poor doing so.

    There is certainly room in the playground for more than one kid, no matter how big that kid is.

    Terri
    webservant20039
  • RE: Hands up who's tired of Twitter?

    I understand the arguments made by people who say it
    offers "social glue", and I think it has utility in some of the
    cases presented here and there as 'early warning signals",
    etc. (and I follow you so I know you use it to chat and
    argue with Hugh and others ;-) but I tend to think it is a
    flash in the pan.

    The phenomenon that was blogging began changing,
    peoples' short and partial attention spans preclude
    widespread popularity for blog posts longer than 3 or 4
    paragraphs, but the impulse(s) to connect, communicate
    and collaborate remain.

    I suspect that Twitter-like capabilities will be an
    infrastructural feature of many collaborative workplace
    platforms 5 years from now, and a service (let;'s say
    Twitter) will be like digital graffiti on the inner walls of our
    skulls thanks to CNN's take-up on it (here in North
    America .. I doubt that the Brits will start flashing the
    Twitter screen up on the telly and choosing some
    comments at random as a way to instantiate the
    commentary from some talking heads, or at least not any
    time soon.

    Jon Husband
    wirearchy
  • RE: Hands up who's tired of Twitter?

    I also think there's a possible answer to the "how make
    money" lurking in this quote of the quote by Fred Wilson:

    <i>It is not the stupidest question in the world. It???s a
    terribly important question. But I don???t think it???s the most
    important question facing Twitter right now. Twitter has
    yet to cross the chasm to mainstream usage. It???s not
    immediately obvious to anyone why they should use
    Twitter. Search and discovery doesn???t work well on Twitter
    yet. There are a host of issues about the API and the
    developer ecosystem.</i>

    If twitter concentrated on making a best-in-class service
    and then white-labelling it or striking deals with all the
    major collaborative platforms (IBM Lotus, MS, Open text,
    Oracle, etc.) to embed the Twitter service into the
    collaborative platforms and charge a no. of users license
    fee or some such

    Different business than what they are probably aiming at,
    but a nice profitable business for a company of 50 - 200
    employees ?
    wirearchy
    • Not likely...

      I really don't think there's any chance of IBM Lotus, MS, Open text, Oracle, etc., paying Twitter for anything. Any of these companies could replicate the service that Twitter offers in their own suites in no time at all. Twitter's problems have nearly all been related to reliability and scalability. If you are just adding a Twitter-like service into existing infrastructure, like Lotus Notes for example, a few devs at IBM could do this in a matter of weeks (days?). In fact, I'd suggest that the only reason they haven't done this already is that they don't see the point. If their users wanted it, they'd put it in. At the moment, I don't think they do.
      dazweeja
  • I'm not tired of twitter...

    Because I have never used twitter, nor even ran across it accidentally. I never got on to the whole "Social Networking" craze. Even Instant Messaging annoyed me to death. About the only "Social Networking" I do is in games.
    D. W. Bierbaum
    • Ditto

      I so understand you mate. All these new-fangled ways of wasting time are just that. There is too much 'user' generated crap out there so I have a homepage fixed to serve the news I want and if I love you, you're in my gmail account, if not, ahem, yahoo, and Digsby is enough for all my im needs. I don't Digg, Tweet etc etc and find them all so useless in my life. Who cares! Really.
      strangefruit
  • RE: Hands up who's tired of Twitter?

    An absolute waste of time if you really do work in your life
    Bago66
  • RE: Hands up who's tired of Twitter?

    An absolute waste of time...
    Bago66