In a recent post on Twitter, I speculated on their business model by working backwards from their design priorities. Now, TechCrunch has leaked the internal Twitter documents which shed a lot more light on what’s going on in Twitter’s head.
I noted that Twitter seems to want content on the network above all and is obsessively keeping up a hip image. Thus it has de-emphasized search, following, monetization and partnerships. But when it comes time to monetize, Twitter will be torn between becoming a mass messaging platform and a tool for elite influencers to broadcast to the masses.
Looking through these documents, we see a strategic morass where Twitter is really hoping to become both a mass platform and a hub for influencers but these are likely incompatible goals:
- Twitter’s goal is to become “the pulse of the planet” with 1 billion users. Doing this requires being “open to scale” on all devices using the “lowest common denominator” techologies like SMS.
- But Twitter has no idea how to monetize this vision. $1 per user is a purported goal, but it sounds like a total shot in the dark akin to the “if we just get 1% of the market” revenue estimates found in bad business plans. The reality, as Twitters management realizes, is that “most users are not monetizable” and this is made even worse by having an open SMS-like distribution. Becoming the pulse of the planet further dilutes the possibilities: can Twitter monetize 50 million users from Brazil at $1 per user? Unlikely.
- Thus Twitter speaks at great length about monetizing corporations, celebrities and pursuing distribution deals with Google, Microsoft, etc. but they can’t bring themselves to do anything other than “verified celebrity accounts.” Twitter’s management views these as a way to get some revenue “without mobilizing the whole company around something” but that’s troublesome. It means they’re going with a tactic that is incompatible with their strategy. Servicing celebrities, ask anyone in Hollywood, is completely unlike dealing with regular users. More requests will come in from the likes of Diddy who feel that Twitter should be paying THEM for their contributions to the network. If there’s competition from better monetized sources like Google or Facebook, that just may happen.
A final issue which Twitter management seems to be struggling with is “brand”. For instance, it rejects acquisition by Facebook and partnerships with Microsoft and Google largely based upon how its brand might be perceived or developed. These brand concerns are short-hand, I think, for many issues like how do you keep early adopters happy while bringing the masses on-board, how do you keep direct relationships with users while supporting an abundance of third-party apps and how do you fend off future competitors?
The key to finding a successful brand will be making Twitter stand for an aspiration not a feature. Being the “pulse of the planet” is a feature, and indeed one that is hopelessly complicated. How can one reduce 6 billion heartbeats in multiple languages to a true pulse? Look at the case of MySpace whose CEO recently lamented that MySpace users “don’t know if we’re a social portal, a music site or an entertainment hub.” That may be right but the greater problem is that users don’t know why they should come to MySpace instead of Facebook, PEPSI instead of Coke. This is another reason why these online brands need to develop some revenue: you can’t create brands for 1 billion people just by changing “status” to “what’s happening?” You need advertising, people and a lot of expense.
Here’s my first take at an aspiration for Twitter that would emphasize the focus on celebrities: Be Somebody.
Twitter lets you hobnob with celebrities and be the cool kid that people look up to even if they don’t really know them. Where Facebook is about reflecting your static social graph, Twitter is about growing it. The business model for that implies that influencers like celebrities should be treated with kid gloves and seen as the driver of adoption. In reality, they are. Most of the 1 billion users are going to join Twitter to follow the celebrities they already know.
The users who want to become influencers, who aren’t yet celebrities, should be charged for the opportunity to promote themselves on a powerful network. These charges can be as simple as $20/user for tools and tips that help them use Twitter more effectively but they can also include charges for directly embedding video in Twitter posts, etc. There should also be an option to pay for placement in searches by topic: for instance, people who want to find “Advertising” influencers.
Finally, Twitter should provide consulting and analytic services. It’s remarkable that companies are paying consultants hundreds of thousands of dollars to train them in how to use Twitter effectively but Twitter corporate itself provides no services – not even to those consultants.
Similarly, an abundance of third-parties are building businesses which help corporations, recruiters, stock analysts and so forth to find information on Twitter. Twitter should acquire and manage many of these services for the reason that supporting them will require development by Twitter of data structures and APIs to suit them. For example, in recruiting, data structures need to be built which allow resumes and applications to be linked to job hunters and referral networks on Twitter. These changes are not inexpensive to make, market and maintain. It behooves Twitter to try to capture some value from the work it does here.
What does all of this require? More management, more focus (which will upset some employees). Tough things for a company to embrace as it grows from 50 to 500 employees but absolutely essential given Twitter’s ambitious goals.
