Musings on Twitter, networks, and mission driven businesses

By | Google, Twitter | No Comments

I read a very interesting and typically well written post from Umair Haque over the weekend titled Why Twitter’s Dying (And What You Can Learn From It). Everyone seems to be writing about Twitter at the moment, but this piece doesn’t mention Jack Dorsey or Twitter’s product challenges per se.

Umair goes deeper.

As he sees it Twitter’s challenge is that low level abuse and snarkiness is undermining the experience for most users and they are walking away.

He put it like this:

…let me be clear what I mean by abuse. I don’t just mean the obvious: violent threats. I also mean the endless bickering, the predictable snark, the general atmosphere of little violences that permeate the social web…and the fact that the average person can’t do anything about it.

We once glorified Twitter as a great global town square, a shining agora where everyone could come together to converse. But I’ve never been to a town square where people can shove, push, taunt, bully, shout, harass, threaten, stalk, creep, and mob you…for eavesdropping on a conversation that they weren’t a part of…to alleviate their own existential rage…at their shattered dreams…and you can’t even call a cop. … Twitter could have been a town square. But now it’s more like a drunken, heaving mosh pit.

These are strong words, and I think they over-state the extent of unpleasantness that exists on Twitter, but there’s a basic truth in the observation.

But these problems are not unique to Twitter.

In fact they are faced by every growing community.

Let’s take a step back and think about what makes communities work. I wrote this back in 2007:

People hang out in communities (online and offline) because they are pleasant places to be. You choose the communities you like in large part because the other people there are polite and behave in the way that you like to behave. There are unwritten rules which determine what is acceptable and what isn’t and the community is policed by its members. Think rural village or social network – it is the same for both.

When these rules work well the community thrives, and if they stop working the community can fall apart.

The challenge for Twitter and others is that rules which work well when the company is one size stop working as it grows. New rules are needed, usually to cope with rising challenges of signal vs noise, spam, and abuse.

Facebook is the best example of a company that has done a great job of evolving the rules to keep the company relevant. They constantly tinker with the algorithm which determines what shows up in the Newsfeed and offer users new features to filter stuff out and have managed to keep the balance right. Often they drive their users mad because they can’t understand the why’s and wherefore’s of what shows up, but they understand they need to disappoint some people in the short term to keep the company relevant in the long term.

Maybe Twitter’s problem is that they haven’t evolved their rules. They have done bits and pieces with lists, trends, recommended Tweets, and now Twitter Moments but for most people the experience is still looking at everything from all the people they follow in their main feed.

Towards the end of his post Umair notes that the history of revolutions is not great:

We dreamed that we created a revolution. But we did not heed the great lesson of revolution. Today’s revolutionary is tomorrow’s little tyrant. The French Revolution started as a glorious paean to people power. And it climaxed in a tidal wave of terror and bloodshed. So, too, goes every revolution too arrogant to history — including the digital revolution. Cross the line, and the inquisitors will come your way. Better then, to stay silent, than to dare the fury of the revolution itself.

Umair’s advice to Twitter, and indeed to the whole of web media, is to focus on the quality of social interaction. If the quality of social interaction is high, people will enjoy Twitter and come back to the network.

I think he’s right, but I think Twitter confused their end goal with the best way to get there.

This is Twitter’s mission statement:

Our mission: To give everyone the power to create and share ideas and information instantly, without barriers.

Independent of context this doesn’t say anything. There’s no ‘so what’. However, back in 2006 when the company was founded most people still didn’t have a voice and the idea of lowering the barriers to publish would bring more people into the conversation was hugely exciting.

But, and this is the key point, it was exciting because we all thought that with more voices the quality of the conversation would improve, democracy would improve and the world would be a better place.

I think that happened for a bit, but to Umair’s point the quality of the conversation has declined recently. If Twitter’s mission statement had been to ‘improve the quality of online conversation’ then they would have caught this early. However, because they see their role as making it easy for people to speak introducing rules to manage the quality of the conversation is somewhat awkward for them.

Extending this point to all businesses, companies with a durable mission at least stand a chance of enduring, but to be enduring the mission should talk to an enduring customer benefit. Google’s mission to “organise the world’s information and make it universally accessible and useful” is one that should stand the test of time – whether they can execute on it as the world’s information moves into silos they can’t access is a different question.

Companies without an enduring mission are in danger of being co-opted by shareholders or blindsided by technology change to the detriment of customers, and that only ends one way. Moreover, these days customers are so alive to this risk that they seek out businesses with durable and authentic missions from the get go.


Facebook remains the dominant social network

By | Advertising, Facebook, Twitter | No Comments

screen-shot-2013-12-30-at-15-54-02It may be that teenagers are deserting Facebook and that their future prospects aren’t as rosy as they were maybe a year ago, but the chart above makes it clear that Facebook is in a much stronger competitor than any of it’s competitors. LinkedIn, Pinterest, Twitter and Instagram are all great businesses that either have their use as marketing channels or soon will do, but Facebook remains the grand-daddy of them all. With the exception of LinkedIn these are all advertising based businesses so think of it this way – if you are targeting all US online adults you will find 70% of your target market on Facebook, and only around 20% on each of the other sites.

Twitter ad revenue near $1bn in 2014

By | Advertising, Twitter | 4 Comments

I’m rather late to this, but this morning I was pointed towards an eMarketer projection of Twitter revenues from March this year which has them hitting $950m in 2014, up from $583m this year.

Screen Shot 2013-08-29 at 13.39.10

That’s some growth given the scale they are at and explains why people are talking more and more often about Twitter’s IPO. eMarketer puts the growth down to Google and Facebook focusing on mobile, Twitter’s ads API, and the fact that its ads are truly native (i.e. a genuine part of the native user experience).

Two other interesting facts:

  • Twitter has 550m active users, so their ARPU is about $1. The takeaway: it takes a lot of users to build a substantial ad based business. I can’t find any information on profits so it’s hard to know what this means for their valuation. Clearly they will need very high net margins to reach the mooted $10bn IPO value.
  • Only 17% of their revenues come from outside of the US. The takeaway: there’s an opportunity to help European advertisers spend more money on Twitter.

Twitter ad revenues forecast to near $1bn in 2014

By | Twitter | One Comment

I have been wondering lately how Twitter was getting on. Anecdotally people and companies seem to be getting more and more out of the site and its data but the chat I’ve heard about the efficacy of its advertising products has largely been negative. Well it turns out the business is doing very well. As you can see from the chart above revenues have now reached a reasonable scale and continue to grow very fast. 100% year-on-year growth for a business of this scale is impressive.

Moreover, their star is rising, according to Forbes a year ago eMarketer was forecasting Twitter’s 2014 revenues at $540m, 43% less than the $950m they are now forecasting. Over half of ad revenues are on mobile and an IPO could come next year.

Twitter’s self-serve ad platform goes live

By | Advertising, Twitter | One Comment

Mashable reported yesterday that Twitter’s self-serve ad platform has gone live.

The interesting thing about this announcement for me is that it comes quite late in the day for Twitter.  One has to ask the reason for that, and the possible answers are:

  1. They have raised so much money that they don’t care too much about revenues, or
  2. They weren’t convinced it would bring in a lot of money

I’m sure there were elements of both these points in Twitter’s decision making, but I’m guessing it is more about the latter.  It is true that Twitter has raised a lot of money (including from DFJ) but they are still sensitive to valuation, and revenues are a key driver of valuation.

I think the truth of the matter is that self-service ad platforms only work when they are a no-brainer for advertisers – and that means on a platform with a very powerful brand and an easy to understand advertising proposition.  Self-service ad platforms are targeted at small businesses and small business owners don’t have the time or understanding to be interested in anything else.

In Twitter’s case they have had the brand for a while, but the advertising products haven’t been simple.

My main reason in writing this post is that many consumer internet companies plan to build self-service ad platforms relatively early in their lives – i.e. before they meet the criteria of powerful brand and an easy to understand proposition.  In the majority of cases they will be better off following Twitter’s example and waiting – even if that means finding an alternative way to drive revenues.

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A developer and his app leave the Twitter ecosystem due to poor treatment

By | Twitter | 4 Comments

I have long been a user of the Topify service which provides email alerts to events on my Twitter account.  My primary use case has been to quickly see who has started following me and to efficiently follow some of them back by simply replying to the Topify email.

Unfortunately the service is being shut down on August 5th.  The email below explains why (highlights mine).


A week ago, without any prior notice, Twitter changed their backend resulting in removing headers from their emails which we used to provide you the Topify service. Once I discovered about this change, I asked on their official developers support forum about it and twice sent a mention to @TwitterAPI account. All of these were unanswered until today. Today they finally posted a clarification:

  • Many of the emails we send have X-Twitter* headers in them, with pieces of information about the event which triggered them. You might have noticed we’ve started decommissioning these headers.

    If for some reason you were using these headers programmatically in order to detect / process events, you should stop doing it and switch to one of the means supported by the API. For example, the Streaming API. Please let us know if you needed help or if you had questions!


I considered switching to using the Streaming API in the past, but the only option for Topify is to use the Site Streams version of it. But Site Streams are still in beta, and according to the documentation there is no estimated date for it to exit beta. Considering this last episode and other actions by Twitter in the past year, I have no desire to expriment with their beta offerings. Not only this can result in unstable service for you, they might just shut it down one day.

If Twitter (or any other company) wants third party developers to leverage their platform then they need to offer as much certainty and predictability as they can.  Without that rational developers will determine that the risk reward equation isn’t good enough and focus their efforts elsewhere, as Topify is now doing.

In this case that is to the detriment of both individual Twitter customers who had been using Topify (like me) and to the ecosystem generally as my levels of engagement will now take a hit.

It is unclear to me at this point whether Twitter really sees itself as a platform company or a consumer focused internet service.  In light of developments like this it feels more and more like the latter, in which case better notification emails and email based interaction with the service would be high on my list of feature requests.

Twitter is too small to be subject to anti-trust inquiries

By | Twitter | No Comments

You may have seen the news today that the US anti-trust regulator is making Twitter inquiries.  I really hope the world’s favourite short messaging service is exonerated because to me this is crazy.  I’m a believer in appropriate regulation and I think anti-trust laws have an important part to play in controlling company behaviour, but their purpose is to prevent abuse of dominant market positions and I don’t think a company should be classed as dominant until it is much bigger in revenue terms than Twitter’s estimated $150m this year, and is making significant profits.

Seeking to regulate behaviour before that point will undermine the search for a scalable and profitable business model which isn’t good for the company itself, ecosystem partners or innovation in general.

I’m not defending Twitter’s behaviour in the spat with Ubermedia or how they have treated their other ecosystem partners, that is not the point here.  The important thing is that many people love Twitter (now running at 200m Tweets per day) and that the company be given the best chance possible to find a way to scale revenues and generate profits so it can keep the service alive and growing.

This may seem a little harsh on developers in the Twitter ecosystem, but as mentioned above, ultimately they need Twitter to be successful, and in addition, one would hope that they took the time to understood the risks of building on top of a commercially unstable platform before they became a Twitter partner.

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

By | Exits, Twitter | 5 Comments

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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All of our gardens have walls now

By | Apple, Facebook, Google, Twitter | 5 Comments

There was a post on Techcrunch over the weekend titled The walled garden has won.  Regular readers will know I’m a big proponent of open systems and hence I read this piece with interest.  Regrettably I think the title is accurate, although I don’t think the news is all bad.

Let me explain.

Firstly the concept of a walled garden has mostly been applied to the web offerings of AOL and mobile operators which gave consumers access to only a limited portion of the web.  Carefully curated, but limited.  That sort of walled garden has emphatically lost. 

What we have instead is a more subtle form of control – rather than the sites we can visit the control is over our identity, over updates of the software on our devices and over the services we can use.  The Techcrunch article points out the following:

  • every phone has a unique ID that is regularly uploaded to the servers of our app providers
  • Amazon can arbitrarily delete books from our Kindles
  • consumers don’t take responsibility for managing their own security on smartphones which means the control necessary to do so has passed to Google, Apple and mobile carriers

Not mentioned in the article is the fact that the most open of mobile OS’s Android comes with a cast iron requirement to use Google Maps and Google Search.  Finally, I would be remiss if I failed to mention that you can only run Apple approved software on your iPad and iPhone.

Last summer I wrote a couple of blog posts about how the web ecosystem is maturing and getting more complicated making it harder for startups to grow to scale without working in partnership with companies like Facebook, Twitter, Google and Apple.  I think that is doubly true on mobile where not only is it hard to scale without partnerships a startup remains dependent on its partners for continued prosperity even after it has hit scale.

In many ways I would prefer it if the web and mobile web were as open and free as they used to be, largely because that made it easier for startups, but as I wrote above the news that the ecosystem is to an extent controlled by the large players isn’t all bad.  With the control comes and ease of use which has massively accelerated usage growth, particularly on the mobile web.

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