What the Tweetdeck and Ubermedia/Twitter saga tells us about dependency

By May 25, 2011Exits, Twitter

You have probably seen the news today that Twitter has acquired Tweetdeck for $40m, ending a month or two of wrangling between Twitter and Ubermedia over the business.  As well as being an interesting saga in its own right and a good result for Tweetdeck the whole affair is a good illustration of the perils of being too dependent on a company like Twitter.

Dependency on another company is never desirable, but it isn’t necessarily something to worry about too much if the partner is stable and profitable, and the relationship is mutually beneficial – e.g. Zynga is ok on Facebook.  However, if the partner has yet to find a stable business model or there is any hint of exploitation then then their policies are subject to change in ways that can undermine their erstwhile partners.  Look at the way Twitter’s acquisition of iPhone client Tweetie last year undermined other Twitter iPhone clients and the way Google’s changes to its search algorithm has hurt content farms and other aggregators.

Tweetdeck’s exit was pretty decent.  At some stage I am sure they were hoping for a bigger outcome, but given they only raised $3.8m I’m sure Ian Dodsworth and his investors have all made good money.  I think they were able to achieve this result despite their dependence on Twitter because of the scale they had achieved and because Ubermedia was/is becoming a pain to Twitter and was keen on acquiring Tweetdeck.  The latter condition is pretty hard to plan for and needed to be present for Tweetdeck to get the result it did.

Ubermedia is run and backed by some very smart people, but from what I know it is now hard to predict great things for the company.  They are as dependent on Twitter as Tweetdeck was, but unlike Tweetdeck they obviously felt they needed to fight Twitter to maximise growth, and Twitter has put them in their place both by the Tweetdeck acquisition and by suspending their apps for violating the terms of service.  It is hard to see Twitter acquiring them now.  This Business Insider article does a good job of detailing Ubermedia’s chequered history.

So in summary, of the two Twitter dependent businesses discussed here one achieved a decent result and the other still has an unclear future.  That doesn’t sound too bad, but Tweetdeck did very well to build competitive tension around its exit and I’m left thinking the same as I did before I wrote this post, that dependence on companies like Twitter brings risk to a company and is best avoided/mitigated.  It is for this reason that Tweetdeck’s strategy was to become a social media dashboard.

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  • Interesting points, with Twimbow we face similar issues, but it’s good and bad.

  • Alan P

    In this case I think UberMedi are “too big not to fail” 🙂

  • 🙂

  • Anonymous

    The problem is that if you think twitter is going to “win” in this market and become part of the plumbing of the internet (I think someone described it once as a protocol masquerading as a business) which at this point seems at least likely, then companies are going to get built that rely on the service. Yes companies can support other social networks – but the big players doing so are really only bothering with facebook and twitter and maybe linkedin – so they can all be heavily affected if twitter moves into their space or changes terms.

    I’m not sure there is a solution; perhaps it’s just part of the risk – although anyone building advertising start-ups dependant on twitter is probably making more of a risk than most; but there are lots of startups that only make sense being built on twitter – and it would be a big loss if they don’t get built because they worry about twitter’s changes.

  • Hi Chris – two thoughts:
    1) it partly comes down to scale – smaller companies are likely to be more able to ride the punches if Twitter makes changes
    2) you can make an analysis of how vulnerable you are to a change in Twitter’s T’s and C’s – I think the clients were always at risk as capturing the real estate where people use Twitter is an obvious revenue stream for a company that doesn’t have many options. Companies that leverage Twitter for customer acquisition but offer value a million miles away from the core are obviously much safer – e.g. Graze