As usual, Fred McClimans got me to thinking with this blog post in a tweet:
Are we witnessing the beginning of the profitability of Twitter AND the end of its present value? @berkson0 @nigelcameron
— FRED MCCLIMANS (@fredmcclimans) June 30, 2012
It’s my basic operating premise that most businesses don’t know what business they’re in. Theodore Levitt expressed this sentiment well in his iconic Harvard Business Review paper “Marketing Myopia.” So, a while back I wrote that RIM’s major challenge was in not understanding what business they were in. I think the same applies to Twitter. The recent blog post by Twitter about their API and the decision by LinkedIn to discontinue their cross-posting relationship show a conflict within how Twitter views how they’ve grown and how they will continue to grow and generate revenue.
Let’s also consider exactly who are Twitter’s users. To a large extent I’m not a Twitter user. I have a Twitter account, but the bulk of my interactions with Twitter are through 3rd party applications like Hootsuite and Bufferapp. There is a healthy ecosystem of third party apps that have provided value, I would argue, beyond anything Twitter could have accomplished on their on. It’s this very ecosystem — what Phil Simon would call their platform — combined with it’s ease and simplicity that has fueled its growth and success.
In a recent post for GigaOM, Matthew Ingram writes:
Some observers have argued that Twitter is just doing what it has to do in order to control its network and build a sustainable business, and that third-party developers don’t have any right to expect favorable treatment, since they are piggybacking on its API and resources. Longtime Twitter users, however, say the service’s behavior is a betrayal of all of the other services and apps that helped generate most of the goodwill it is now busy monetizing [emphasis added].
I consider these questions:
- Do I browse the Internet with Verizon or Time Warner or Cablevision? Or do I browse it with IE, Firefox or Chrome?
- Is Twitter an infrastructure utility service, like my internet connection or cell service, that allows me to connect with other people?
- How many of the people who are “consuming” my tweets are doing so on Twitter.com? Or are they also using third party applications as I do?
So what business is Twitter in?
Jon Ferrara of Nimble likes to talk about “swimming in the social river.” Doing business in a world of pervasive communications is like trying to grab a handful of water from a running stream — cup your hands and you can take a drink; squeeze it and the water will flow out through your fingers. You can’t capture water with a fist.
Consider this: If Google+ set up a 140 character platform that automatically allowed me to follow everyone I follow on Twitter and connected to Hootsuite, would I still need Twitter?
Reduce Friction
I have always felt that the best interests of Twitter would be served as being an infrastructure company. It’s the ease and simplicity of it’s product that has made it successful. As Eric Kim of Twylah likes to say, “Twitter is friction-less”. As perhaps the most pervasive of communications social platforms, Twitter should be taking steps to make it even more friction-less, not creating more friction.
How do they make more money from their 140 million users? Twitter needs to double down on the strategy that got them to where they are today. They need to find ways to further leverage the robust 3rd party ecosystem they’ve created. The ideas are out there.
Does Twitter try to squeeze their fist to get more from who they perceive are their customers or leverage the intellectual capital of the rest of the world?
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.
