Non Impediti Ratione Cogitationis – Unencumbered by Thought
June 9, 2012 – 11:49 am | 16 Comments

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Twitter – From New Idea to No Idea?

Submitted by on February 10, 2009 9 Comments

It is enormous fun to watch the machinations of the Twitter team, Evan Williams and Biz Stone, walk a tight balancing act between promise and reality. The promise is that Twitter can evolve from a fun tool to a valuable tool, something that people will be prepared to pay for. The reality is that it does not pay for itself, and today they have no clear path to revenue.

It is interesting from the fact that this is now a widely known tool that many people have tried and has enjoyed wide attenion. It is not often that you get to see a company grow up that is allowed to survive without a clear understanding what they are purposed to do for the shareholders. I can just see the VC meetings now. Just like when Jerry and George pitch their show to the NBC executives.…what is your business about…nothing….how to you make money….we dont….it is a business about nothing and we don’t make any money !!!…. brilliant, I’m in. From New Yorker:

He talks about branding, provoking growth, and, yes, “scalability.” Twitter lives in its own bubble of The Future, while the rest of us are barnacles unfortunate enough to scrape by in the present. He sounds like everyone I worked with back in the dot-com days. He has the hot product. He might be right. But back then we all thought we were right, too.

Unlike Facebook, Twitter has no real estate to sell advertising on. The interface with Twitter is through your SMS client on your phone so an advertising supported system faces real challenges. They cannot create a subscription model without potentially alienating their customers. I reason that had they thought that it would have worked, they would have tried it by now. This also means that the value contribution (in the hands of the customer) that they make is not that large to enough people to monetize that value.

I believe that the corner that they got themselves into is that they did start this as a hobby, a means to solve a problem that they themselves did have, and that is how to communicate to a group of people over mobile infrastructure easily. This is a function of SMS capability that is sadly lacking in the mobile infrastructure. It is certainly available in Instant Message infrastructure and should be available inside the SMS infrastructure. Perhaps building a standard business that sells telecom infrastructure to carriers is unsexy, and hence not dignified to

That being said, the opportunity to sell it to wireless carriers as a piece of infrastructure is also a challenge because it is now out there in the “free” internet and you have gotten people used to “free”. Any attempt to modify the relationship between the user and the service will result in some very unhappy customers.

I do believe that Twitter belongs as part of the SMS infrastructure but now the cat is out of the bag, it is much harder to make this angle work although it is not impossible. The great thing about twitter is that it generates extra activity for the carriers, and can be sold as a premium product. One of the carriers will sign up to support a premium product that can be marketed to their customers, perhaps with a corporate angle where a license can be sold to a company to use it as part of their infrastructure.

Twitter can also be used as part of an event alerting infrastructure where components can be tied into public safety networks to provide emergency or other notification services. People can opt into different notification services such as concert tickets or other premium offers. American Express can tie into their Gold and Platinum customers to keep track of concierge type services.

The real value of Twitter is not in it’s social component, but in the infrastructure itself which makes it attractive to build out scalable notification services that could benefit corporates and keep carriers happy. However this part of the business is unsexy and quite frankly difficult, it is much easier to wear designer jeans and dream about changing the world through social networks.

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